HomeMy WebLinkAbout2014 FIFDFishers Island Ferry District
A Component Unit of
the Town of Southold, New York
Financial Statements and
Supplementary Information
Year Ended December 31, 2014
Fishers Island Ferry District
Table of Contents
Year Ended December 31, 2014
Independent Auditors' Report
Management's Discussion and Analysis
Basic Financial Statements
Exhibit
Page No.
1
3
Required Supplementary Information
RSI
1 Statement of Revenues, Expenditures and Changes in Budgetary Fund
Balance — Budgetary Basis — Budget and Actual — General Fund 34
Other Post -Employment Benefits
2a Schedule of Funding Progress 36
2b Schedule of Employer Contributions 37
Internal Control and Compliance Reports
Government Auditing Standards Report 38
Schedule of Findings 40
Government -Wide Financial Statements
1
Statement of Net Position
10
2
Statement of Activities
11
Fund Financial Statements
3
Balance Sheet - Governmental Funds
12
3a
Reconciliation of Governmental Funds Balance Sheet to the Government -Wide
Statement of Net Position - Governmental Activities
13
4
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds
14
4a
Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
15
Notes to the Financial Statements
16
Required Supplementary Information
RSI
1 Statement of Revenues, Expenditures and Changes in Budgetary Fund
Balance — Budgetary Basis — Budget and Actual — General Fund 34
Other Post -Employment Benefits
2a Schedule of Funding Progress 36
2b Schedule of Employer Contributions 37
Internal Control and Compliance Reports
Government Auditing Standards Report 38
Schedule of Findings 40
Independent Auditors' Report
The Board of Commissioners
Fishers Island Ferry District
We have audited the accompanying financial statements of the governmental activities and each major fund
of the Fishers Island Ferry District ("District"), a component unit of the Town of Southold, New York, as of and
for the year ended December 31, 2014, and the related notes to the financial statements, which collectively
comprise the District's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation and maintenance of internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors' judgment, including the assessment
of the risks of material misstatement of the financial statements, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair
presentation of the financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of significant accounting estimates made by management,
as well as evaluating the overall presentation of the financial statements.
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities and each major fund of the District as of December 31, 2014,
and the respective changes in financial position for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
O'CONNOR DAVIES, LLP
100 Great Meadow Road, Wethersfield, CT 06109 I Tel: 860.257.1870 I Fax: 860.257.1875 I www.odpkf.com
O'Connor Davies, LLP is a memberfirm of the PKF International Limited network of legally independent firms and does not accept any responsibility or IiabiIityfor the actions or inactions on the part
of any other individual member firm or firms.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that Management's
Discussion and Analysis, budgetary comparison information and the Schedule of Funding Progress for
Pensions and Other Post -Employment Benefits be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic or historical context. We applied certain
limited procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic
financial statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 30, 2015 on
our consideration of the District's internal control over financial reporting and our tests of its compliance with
certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of
that report is to describe the scope of our testing of internal control over financial reporting and compliance
and the results of that testing, and not to provide an opinion on the internal control over financial reporting or
on compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the District's internal control over financial reporting and compliance.
June 30, 2015
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2014
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2014
Our discussion and analysis of Fishers Island Ferry District's (the "Ferry District") financial
performance provides an overview of the Ferry District's financial activities for the fiscal year
ended December 31, 2014. Please read it in conjunction with the Ferry District's financial
statements, which begin with Exhibit 1.
FINANCIAL HIGHLIGHTS
• The Ferry District's combined net position decreased by $193,548 in 2014. Unrestricted
net position increased by $97,866.
• Fund balance, a measure of the Ferry District's short term health, increased by $131,918
in 2014.
• The Ferry District's 2014 budget planned to use no fund balance to balance the budget.
The Ferry District ended the year by adding $132,622 back to fund balance in the
General Fund.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Position
and the Statement of Activities (Exhibits 1 and 2) provide information about the activities of the
Ferry District as a whole and present a longer-term view of the Ferry District's finances. Fund
financial statements start with Exhibit 3. For governmental activities, these statements tell how
these services were financed in the short term as well as what remains for future spending.
Fund financial statements also report the Ferry District's operations in more detail than the
government -wide statements by providing information about the Ferry District's most significant
funds.
Reporting the Government as a Whole
Our analysis of the Ferry District as a whole begins with Exhibit 1. One of the most important
questions asked about the Ferry District's finances is, "Is the Ferry District as a whole better off
or worse off as a result of the year's activities?" The Statement of Net Position and the
Statement of Activities report information about the Ferry District as a whole and about its
activities in a way that helps answer this question. These statements include all assets and
liabilities using the accrual basis of accounting, which is similar to the accounting used by most
private -sector companies. All of the current year's revenues and expenses are taken into
account regardless of when cash is received or paid.
These two statements report the Ferry District's net position and changes in them. You can
think of the Ferry District's net position—the difference between assets and liabilities—as one
way to measure the Ferry District's financial health, or financial position. Over time, increases
or decreases in the Ferry District's net position are one indicator of whether its financial health is
improving or deteriorating. You will need to consider other nonfinancial factors, however, such
as changes in the Ferry District's property tax base and the condition of the Ferry District's
roads, to assess the overall health of the Ferry District.
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2014
In the Statement of Net Position and the Statement of Activities, the Ferry District shows the
following activity:
• Governmental activities—The Ferry District's basic services are reported here, including the
education, public works, and general administration. Property taxes, state and federal grants
and local revenues such as fees and licenses finance most of these activities.
Reporting the Government's Most Significant Funds
Our analysis of the Ferry District's major funds begins in the section titled "The Government's
Funds". The fund financial statements begin with Exhibit 3 and provide detailed information
about the most significant funds—not the Ferry District as a whole. Some funds are required to
be established by State law and by bond covenants. However, the Board of Commissioners
establishes other funds to help it control and manage money for particular purposes or to show
that it is meeting legal responsibilities for using certain taxes, grants, and other money.
Governmental funds—The Ferry District's basic services are reported in governmental
funds, which focus on how money flows into and out of those funds and the balances left at
year-end that are available for spending. These funds are reported using an accounting
method called modified accrual accounting, which measures cash and all other financial
assets that can readily be converted to cash. The governmental fund statements provide a
detailed short-term view of the Ferry District's general government operations and the basic
services it provides. Governmental fund information helps you determine whether there are
more or fewer financial resources that can be spent in the near future to finance the Ferry
District's programs. We describe the relationship (or differences) between governmental
activities (reported in the Statement of Net Position and the Statement of Activities) and
governmental funds in a reconciliation at the bottom of the fund financial statements.
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2014
THE GOVERNMENT AS A WHOLE
The Ferry District's combined net position decreased by $193,548 from a year ago—decreasing
from $8,495,589 to $8,302,041. Last year net position increased by $8,061. Our analysis below
focuses on the net position (Table 1) and changes in net position (Table 2) of the Ferry District.
Table 1
Change in Net Position (on Exhibit 1)
Current and other assets
Capital assets
Total assets
Long-term debt outstanding
Other liabilities
Deferred inflows of resources
Total liabilities
Net position
Net investment in capital assets
Unrestricted
Total net position
Change During Year
2014
Dollars
Percent
2013
$ 1,423,798
$ 192,636
15.65%
$ 1,231,162
10,156,835
(567,414)
-5.29%
10,724,249
11,580,633
(374,778)
-3.13%
11,955,411
2,771,811
(241,324)
-8.01%
3,013,135
337,258
87,869
35.23%
249,389
169,523
(27,775)
-14.08%
197,298
3,278,592
(181,230)
-5.24%
3,459,822
7,932,835 (291,414) -3.54% 8,224,249
369,206 97,866 36.07% 271,340
$ 8,302,041 $ (193,548) -2.28% $ 8,495,589
Capital assets decreased during the year by $567,414. This was the result of $604,832
depreciation expense and $37,418 in additions during the year. The Ferry District paid a net
amount of $276,000 on debt used to finance capital assets. The result was that net investment
in capital assets decreased by $291,414 because the assets are depreciating faster than the
debt is retiring.
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2014
Revenues
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Property taxes
Interest and investment earnings
Other general revenues
Total revenues
Program expenses
General government
Ferry operations
Airport
Theater
Rental activities
Interest on long-term debt
Total expenses
Increase (decrease) in net position
Table 2
Change in Net Position (on Exhibit 2)
Change During Year
2014 Dollars Percent 2013
$ 2,792,071 $ (117,186) -4.03% $ 2,909,257
18,716 (14,972) -44.44% 33,688
398 (1,159) -74.44% 1,557
772,668 7,653
1.00% 765,015
900 336
59.57% 564
- (10,055)
-100.00% 10,055
3,584,753 (135,383)
-3.64% 3,720,136
132,299
(38,781)
-22.67%
171,080
3,557,268
157,303
4.63%
3,399,965
13,317
(42,678)
-76.22%
55,995
2,541
(8,286)
-76.53%
10,827
10,082
3,973
65.04%
6,109
62,794
(5,305)
-7.79%
68,099
3,778,301
66,226
1.78%
3,712,075
$ (193,548) $
(201,609)
-2501.04% $
8,061
The significant changes between 2014 and 2013 were as follows:
• Charges for services decreased by $117,186 due to a decrease in ferry traffic revenue of
$118,287. Ticket sales were down in 2014.
• Operating grants and contributions decreased by $14,972. In 2013, a $21,811 airport
grant was received. $11,877 was recorded as revenue from a FEMA grant in 2013. In
2014, $17,735 was recorded as revenue from a FEMA grant.
• Other general revenues decreased to $0 from $10,055 in 2013. The Special Aid Fund
project was closed in 2013 with $10,760 in revenues.
• General government expenses decreased by $38,781 from 2013 due to a $19,145
decrease in legal fees and fines and a $8,376 decrease in property taxes. The higher
than usual legal fees in 2013 was due to a legal settlement in that year. Real estate
property taxes due to New London decreased form 2013 due to a revaluation.
• Ferry operations expenses increased by $157,303 mainly due to a $183,171 increase in
General Fund expenses. These increases included a $61,176 increase in payroll
expenses, a $35,475 increase in computer operations, and a $21,301 increase in NYS
retirement benefits. The increase in computer operations was due to the new UPS
tracking system. There has been an increase in the number of employees and raises
have been given.
• Airport expenses are down by $42,678 due to additional maintenance costs for Elizabeth
Airport that were incurred in 2013 and not in 2014.
• Theater expenses decreased by $8,286 from 2013 due to the Theater being closed for
most of 2014.
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2014
Governmental Activities
Table 3 presents the cost of each of the Ferry District's governmental programs as well as each
governmental program's net cost (total cost less revenues generated by the activities). The net
cost shows the financial burden that was placed on the Ferry District's taxpayers by each of
these functions.
Table 3
Governmental Type Activities
Total Cost
of Services
2014 2013
Net Cost
Incr. of Services Incr.
Decr. 2014 2013 Decr.
Governmental Activities
General government
$ 132,299 $
171,080
-22.67% $
132,299 $
171,080
-22.67%
Ferry operations
3,557,268
3,399,965
4.63%
823,998
550,308
49.73%
Airport
13,317
55,995
-76.22%
12,919
55,023
-76.52%
Theater
2,541
10,827
-76.53%
2,541
(94)
-2803.19%
Rental activities
10,082
6,109
65.04%
(67,435)
(76,843)
-12.24%
Interest on long-term debt
62,794
68,099
-7.79%
62,794
68,099
-7.79%
Totals
$ 3,778,301 $
3,712,075
1.78% $
967,116 $
767,573
26.00%
The significant changes in the total cost of services were discussed above. The net cost of ferry
operations increased by $273,690 due to the increase in expenses and decrease in ferry traffic
revenue discussed above.
THE GOVERNMENT'S FUNDS
While the year showed a $193,548 decrease in net position in Exhibit 2, it showed a $131,918
increase in fund balance in the governmental funds as presented in Exhibits 3 and 4. The
difference for this is primarily the treatment of long-term debt and capital assets. In the fund
balance principal payments on long-term debt are a reduction in fund balance when the
payments on the debt are made. Debt payments are never a direct reduction in net position on
the government -wide statements. Likewise, purchases of capital assets are a reduction in fund
balance when the purchase is made. Capital asset purchases are never a direct reduction in
net position on the government -wide statements, except that depreciation is deducted.
General Fund Budgetary Highlights
Over the course of the year, the Board of Commissioners can revise the Ferry District budget
with additional appropriations and budget transfers. Additional appropriates increase the total
budget. Transfers do not increase the total budget, but instead pull appropriations from one
department that needs additional funding from other departments that might have excess
funding. Below is a summarized view of the final budget and actual results for the General
Fund:
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2014
Table 4
General Fund - Budget Summary
Expenditures
General Government
Final
212,479
10,189
Revenues
Budget
Actual
Variance
Ferry
$ 2,673,480
$ 2,714,554
$ 41,074
Property Tax
772,650
772,668
18
Property Management
79,809
77,517
(2,292)
Grant Revenue
-
19,858
19,858
Other
1,000
485
(515)
Total Revenues
3,526,939
3,585,082
58,143
Expenditures
General Government
222,668
212,479
10,189
Transportation
2,435,703
2,386,760
48,943
Theater
2,600
2,541
59
Employee Benefits
514,052
512,106
1,946
Debt Service
351,916
338,574
13,342
Total Expenditures
3,526,939
3,452,460
74,479
Increase (Decrease)
in Fund Balance $ - $ 132,622 $ 132,622
The original budget called for expenditures of $3,526,939. During the year no additional
appropriations were made. The budgeted revenues were $3,526,939. If everything happened
right on budget, the Ferry District would have used none of its accumulated Fund Balance to
balance the budget.
Actual revenues were $58,143 higher than anticipated and actual expenditures were $74,479
lower than budgeted resulting in the Ferry District adding $132,622 to its Fund Balance.
Significant variances are summarized as follows:
• Ferry operations and charter revenues were $41,074 more than expected.
• Theater revenues were $11,000 less than expected due to the theater not being open
during the year.
• Federal capital grants were $19,460 higher than expected.
• Dock repairs came in $22,597 under budget.
0
Fishers Island Ferry District
Management's Discussion and Analysis
December 31, 2014
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of this year, the Ferry District had $10,156,835 invested in governmental activity
capital assets. This amount represents a net decrease (including additions and deductions) of
$567,414 from last year. This is due to depreciation expense of $604,832 and only $37,418 of
new assets capitalized during the year. More detailed information about the Ferry District's
capital assets is presented in Note 3D to the financial statements.
Debt
At year end, the Ferry District had $2,224,000 in bonds and notes outstanding. This is a
decrease of $276,000 from last year. The Ferry District's general obligation bond rating
continues to carry an Aa2 rating. More detailed information about the Ferry District's long-term
liabilities is presented in Note 3E to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The Ferry District's elected and appointed officials considered many factors when setting the
fiscal -year 2015 budget and rates including trying to anticipate an accurate level of ridership,
budgeting for continued improvements to the systems while keeping expenditures in line, and
planning for future capital needs.
CONTACTING THE GOVERNMENT'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors
and creditors with a general overview of the Ferry District's finances and to show the Ferry
District's accountability for the money it receives. If you have questions about this report or
need additional financial information, contact the Board of Commissioners at Fishers Island
Ferry District, P.O. Box 607, Fishers Island, NY 06390.
9
Fishers Island Ferry District
Basic Financial Statements
December 31, 2014
Fishers Island Ferry District
Statement of Net Position
December 31, 2014
ASSETS
Cash and cash equivalents
Receivables
Due from primary government
Prepaid expenses
Capital assets
Nondepreciable
Depreciable, net of accumulated depreciation
Total assets
LIABILITIES
Accounts payable
Accrued payroll
Security deposit
Accrued interest payable
Noncurrent liabilities
Due within one year
Due in more than one year
Total liabilities
DEFERRED INFLOWS OF RESOURCES
Taxes paid in advance
NET POSITION
Net investment in capital assets
Unrestricted
Total net position
The notes to the financial statements are an integral part of this statement.
10
Exhibit 1
Governmental
Activities
$ 1,111, 694
49,033
169,524
93,547
41,717
10,115,118
$ 11,580,633
$ 246,160
60,124
9,102
21,872
1,127,535
1,644,276
3,109,069
169,523
7,932,835
369,206
$ 8,302,041
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Fishers Island Ferry District
Balance Sheet
Governmental Funds
December 31, 2014
ASSETS
Cash and cash equivalents
Receivables
Due from primary government
Prepaid expenditures
Total assets
LIABILITIES, DEFERRED INFLOWS
OF RESOURCES, AND FUND BALANCES
Liabilities
Accounts payable
Accrued payroll
Deferred revenue
Security deposit
Total liabilities
Deferred inflows of resources
Taxes paid in advance
Fund balances
Nonspendable
Assigned
Unassigned
Total fund balances
Total liabilities, deferred inflows
of resources, and fund balances
The notes to the financial statements are an integral part of this statement,
12
Exhibit 3
General
Fund
$1,111,694
49,033
169,524
61,132
$1,391,383
$ 246,160
60,124
11,133
9,102
326,519
169,523
61,132
436,870
397,339
895,341
$1,391,383
Fishers Island Ferry District
Reconciliation of Governmental Funds Balance Sheet
to the Government Wide Statement of Net Position - Governmental Activities
December 31, 2014
Fund Balances - Total Governmental Funds (Exhibit 3)
Less long-term liabilities not due and payable in current period
Bonds, notes, capital leases payable and unamortized premiums
Compensated absences and special termination benefits
Other post -employment benefits
Accrued interest payable
Plus
Difference in treatment of prepaid insurance
Deferred revenue not available to pay for current period expenditures
Net capital assets used in governmental activities are not financial resources and,
therefore, are not reported in the funds
Net position of Governmental Activities (Exhibit 1)
The notes to the financial statements are an integral part of this statement.
13
Exhibit 3a
$ 895,341
(2,224,000)
(213,432)
(334,379)
(21,872)
32,415
11,133
10,156,835
$ 8,302,041
Fishers Island Ferry District
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the Year Ended December 31, 2014
REVENUES
Ferry revenues
Property taxes
Property management
Grants
Other
Total revenues
EXPENDITURES
Current
General government
Ferry operations
Airport
Theater
Rental activities
Debt service
Capital outlay
Total expenditures
Deficiency of revenues
over expenditrues
OTHER FINANCING SOURCES
Proceeds from long-term debt
Net Change in Fund Balances
Fund balances - beginning of the year
Fund balances - end of the year
Exhibit 4
Capital Total
General Projects Governmental
Fund Fund Funds
$ 2,714,554 $ - $ 2,714,554
772,668 - 772,668
77,517 - 77,517
19,858 - 19,858
485 415 900
3,585,082 415 3,585,497
132,299 -
132,299
2,547,349 -
2,547,349
13,317 -
13,317
2,541 -
2,541
10,082 -
10,082
688,574 500,119
1,188,693
408,298 -
408,298
3,802,460 500,119
4,302,579
(217,378) (499,704) (717,082)
350,000 499,000 849,000
132,622 (704) 131,918
762,719 704 763,423
$ 895,341 $ - $ 895,341
The notes to the financial statements are an integral part of this statement,
14
Fxhihit 4a
Fishers Island Ferry District
Reconciliation of the Statement of Revenues, Expenditures and Changes
in the Fund Balances of Govenrmental Funds to the Statement of Activities
For the Year Ended December 31, 2014
Amounts Reported for Governmental Activities in the Statement of Activities are Different Because
Net Change in Fund Balances - Total Governmental Funds (Exhibit 4) $ 131,918
Transactions involving the treatment of capital outlays
Plus capital outlays treated as expenditures on Exhibit 4, but capitalized on Exhibit 1 37,418
Less depreciation/amortization expense in Exhibit 2, but not in Exhibit 4 (604,832)
Transactions involving the treatment of long-term debt
Less long-term debt issued or incurred
Issuance of general obligation bonds (849,000)
Plus principal repayments
Bonds and bond anticipation notes 1,125,000
Changes in other items not requiring the use of current financial resources
Compensated absences benefits (31,376)
Accrued interest 899
Other post -employment benefits (3,300)
Difference in the treatment of insurance expense 469
Revenue in the Statement of Activities (Exhibit 2) that was deferred in this statement
Federal grants (744)
Change in Net Position of Governmental Activities (Exhibit 2) $ (193,548)
The notes to the financial statements are an integral part of this statement.
15
Fishers Island Ferry District
Notes to Financial Statements
December 31, 2014
1. Summary of Significant Accounting Policies
The Fishers Island Ferry District (The District") was created in 1947 by a special act of legislation within
the State of New York, known as the Ferry District Enabling Act. As a district, much like a school district
or fire district, the District is allowed to levy and collect taxes in addition to collecting fares, in order to
offset its expenses. The tax levy is assigned to the property owners of Fishers Island and the collections
are kept separate from Southold Town funds. Although the District's income and expenses are handled
separately from the town's general fund, the Southold Town Supervisor is the fiscal officer of the District
and along with the Town Board, reviews, approves and executes all of the District's financial obligations,
including payroll.
The District is controlled by a five member Board of Commissioners. Each Commissioner is elected
independently from the populace of Fishers Island and serves a five year term. A chairman is elected on
an annual basis. It is the duty of the Commission to oversee the operational, fiscal and administrative
matters of the District. As the governing body of the District, all final decisions are resolved by the
Board.
The accounting policies conform to generally accepted accounting principles as applicable to governmental
units. The Governmental Accounting Standards Board ("GASB") is the accepted standard setting body for
establishing governmental accounting and financial reporting principles. The following is a summary of the
District's more significant accounting policies:
A. Financial Reporting Entity
The financial reporting entity consists of: a) the primary government; b) organizations for which the
primary government is financially accountable and c) other organizations for which the nature and
significance of their relationship with the primary government are such that exclusion would cause
the reporting entity's financial statements to be misleading or incomplete as set forth by GASB.
In evaluating how to define the financial reporting entity, for financial reporting purposes,
management has considered all potential component units. The decision to include a potential
component unit in this reporting entity was made by applying the criteria set forth by GASB,
including legal standing, fiscal dependency and financial accountability. The criterion has been
considered and there are no agencies or entities which should be presented with this
government, although, the Fishers Island Ferry District is a component unit of the Town of
Southold, New York.
B. Government -Wide Financial Statements
The government -wide financial statements (i.e., the Statement of Net Position and the Statement of
Activities) report information on all non -fiduciary activities of the primary government as a whole.
For the most part, the effect of interfund activity has been removed from these statements, except
for interfund services provided and used. Governmental activities, which normally are supported by
taxes and intergovernmental revenues, are reported separately from business -type activities (if
any), which rely to a significant extent on fees and charges for support.
M
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
1. Summary of Significant Accounting Policies (Continued)
The Statement of Net Position presents the financial position of the District at the end of its fiscal
year. The Statement of Activities demonstrates the degree to which direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. When an expense is incurred for purposes for which
both restricted and unrestricted resources are available, the District's policy is to use its restricted
resources first. Program revenues include (1) charges to customers or applicants who purchase,
use or directly benefit from goods or services, or privileges provided by a given function or segment,
(2) grants and contributions that are restricted to meeting the operational or capital requirements of
a particular function or segment and (3) interest earned on grants that is required to be used to
support a particular program. Taxes and other items not identified as program revenues are
reported as general revenues.
C. Fund Financial Statements
The accounts of the District is organized and operated on the basis of funds. A fund is an
independent fiscal and accounting entity with a self -balancing set of accounts which comprise its
assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund balances,
revenues and expenditures. Fund accounting segregates funds according to their intended purpose
and is used to aid management in demonstrating compliance with finance related legal and
contractual provisions. The District maintains the minimum number of funds consistent with legal
and managerial requirements. The focus of governmental fund financial statements is on major
funds as that term is defined in professional pronouncements. Each major fund is to be presented
in a separate column, with non -major funds, if any, aggregated and presented in a single column.
Since the governmental fund statements are presented on a different measurement focus and basis
of accounting than the government -wide statements' governmental activities column, a
reconciliation is presented on the pages following, which briefly explains the adjustments necessary
to transform the fund based financial statements into the governmental activities column of the
government -wide presentation.
Separate financial statements are provided for governmental funds. Major individual governmental
funds are reported as separate columns in the fund financial statements.
The District's resources are reflected in the fund financial statements in broad fund categories, in
accordance with generally accepted accounting principles as follows:
Fund Categories
a. Governmental Funds - Governmental funds are those through which most general government
functions are financed. The acquisition, use and balances of expendable financial resources
and the related liabilities are accounted for through governmental funds. The following are the
District's major governmental funds:
General Fund — The General Fund constitutes the primary operating fund of the District and is
used to account for and report all financial resources not accounted for and reported in another
fund.
17
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
1. Summary of Significant Accounting Policies (Continued)
Capital Project Fund — The Capital Project Fund is used to account for large, one time projects
financed by the District. Currently, transactions for improvements to the ramps are recorded in
this fund.
D. Measurement Focus, Basis of Accounting and Financial Statement Presentation
The accounting and financial reporting treatment is determined by the applicable measurement
focus and basis of accounting. Measurement focus indicates the type of resources being measured
such as current financial resources (current assets less current liabilities) or economic resources (all
assets and liabilities). The basis of accounting indicates the timing of transactions or events for
recognition in the financial statements.
The government -wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues are recorded when earned and
expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.
Property taxes are recognized as revenues in the year for which they are levied. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the provider
have been met.
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the current
period.
Property taxes and certain other revenues are considered to be available if collected within sixty
days of the fiscal year end. Property taxes associated with the current fiscal period, as well as
charges for services and intergovernmental revenues are considered to be susceptible to accrual
and have been recognized as revenues of the current fiscal period. Fees and other similar
revenues are not susceptible to accrual because generally they are not measurable until received in
cash. If expenditures are the prime factor for determining eligibility, revenues from Federal and
State grants are accrued when the expenditure is made.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting.
However, debt service expenditures, as well as expenditures, when applicable, related to early
retirement incentives, compensated absences, capital leases, post -closure landfill costs, pollution
remediation obligations, other post employment benefit obligations, certain pension obligations and
certain claims payable are recorded only when payment is due. General capital asset acquisitions
are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions
under capital leases are reported as other financing sources.
18
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net Position or Fund
Balances
Deposits, Investments and Risk Disclosure
Cash and Equivalents - The Ferry District's cash and cash equivalents are considered to
be cash on hand, demand deposits, and short-term investments with original maturities of
three months or less from the date of acquisition. Investments for the Ferry District, if any,
are generally reported at fair value.
Custodial Credit Risk — Custodial credit risk is the risk that, in the event of a bank failure,
the Ferry District's deposits may not be returned to it. The Ferry District's policy for
custodial credit risk is to invest in obligations allowable under the New York General
Municipal Law Article 10. In general this includes deposits in Federal Deposit Insurance
Corporation "FDIC" insured commercial banks or trust companies located within the State.
The Fishers Island Ferry District is authorized to use demand deposit accounts, time
deposit accounts and certificates of deposit. Permissible investments include obligations
of the U.S. Treasury, U.S. Agencies, repurchase agreements and obligations of New York
State or its political subdivisions.
Collateral is required for demand deposit accounts, time deposit accounts and certificates
of deposit at a minimum of 100% of all deposits not covered by Federal deposit insurance.
The Ferry District has entered into custodial agreements with the various banks which hold
their deposits. These agreements authorize the obligations that may be pledged as
collateral. Such obligations include, among other instruments, obligations of the United
States and its agencies and obligations of the State and its municipal and school district
subdivisions. The Ferry District's aggregate bank balances that were not covered by
depository insurance were not exposed to custodial credit risk at December 31, 2014
because of these custodial agreements
Interest Rate Risk - Interest rate risk is the risk that the government will incur losses in
fair value caused by changing interest rates. The District does not have a formal
investment policy that limits investment maturities as a means of managing its exposure to
fair value losses arising from changing interest rates.
Custodial Credit Risk — Custodial credit risk is the risk that, in the event of a bank failure,
the District's deposits may not be returned to it. The District does not have a formal
custodial credit risk policy.
Credit Risk — Credit risk is the risk that an issuer or other counterparty will not fulfill its
specific obligation even without the entity's complete failure. The District does not have a
formal credit risk policy.
Concentration of Credit Risk — Concentration of credit risk is the risk attributed to the
magnitude of a government's investments in a single issuer. The District does not have a
formal credit risk policy.
19
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
1. Summary of Significant Accounting Policies (Continued)
Taxes Receivable - Property taxes are assessed on property values as of July 1St. The tax levy
is divided into two billings; the following December 1St and May 31St. This is used to finance the
calendar year. The billings are considered due on those dates; however, the actual due date for
each respective billing is January 10th and May 31St. After this, the bill becomes delinquent and
the applicable property is subject to lien, penalties and interest.
The Town of Southold, New York is responsible for the billing and collection of the taxes through
May, at which time collection responsibility is transferred to the County. At May 31St, the county
pays any unpaid taxes to the Town tax receiver and continues the collections process in the
individual accounts.
Taxes collected in advance of the calendar year that they are levied to finance are considered
unearned until that year starts and are reported on the balance sheet as such.
All receivables are shown net of an allowance for uncollectibles. The allowance is calculated
using a formula based on prior experience.
Other Receivables - Other receivables include amounts due from other governments and
individuals for services provided by the District. Receivables are recorded and revenues recognized
as earned or as specific program expenditures/expenses are incurred. Allowances are recorded
when appropriate.
Prepaid Expenses/Expenditures - Certain payments to vendors reflect costs applicable to future
accounting periods, and are recorded as prepaid items using the consumption method in both the
government -wide and fund financial statements. Reported amounts are equally offset by
nonspendable fund balance, in the fund financial statements, which indicates that these amounts do
not constitute "available spendable resources" even though they are a component of current assets.
Due From/To Other Funds - During the course of its operations, the District has numerous
transactions between funds to finance operations, provide services and construct assets. To the
extent that certain transactions between funds had not been paid or received as of December 31,
2014, balances of interfund amounts receivable or payable have been recorded in the fund financial
statements. Any residual balances outstanding between the governmental activities and the
business -type activities are reported in the government -wide financial statements as internal
balances.
Capital Assets - Capital assets, which include property, plant, equipment, and infrastructure
assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable
governmental columns in the government -wide financial statements. Capital assets are defined
by the District as assets with an initial, individual cost of more than the capitalization threshold for
that asset type and an estimated useful life in excess of two years. Such assets are recorded at
historical cost or estimated historical cost if purchased or constructed. Donated capital assets
are recorded at estimated fair market value at the date of donation.
20
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
1. Summary of Significant Accounting Policies (Continued)
Intangible assets lack physical substance, is nonfinancial in nature and its useful life extends
beyond a single reporting period. These are reported at historical cost if identifiable. Intangible
assets with no legal, contractual, regulatory, technological or other factors limiting their useful life
are considered to have an indefinite useful life and are not amortized.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend assets lives are not capitalized. Major outlays for capital assets and
improvements are capitalized as projects are constructed.
Land is considered inexhaustible and, therefore, is not depreciated. Construction in progress has
not been placed in service and, therefore, is not deprecated. Property, plant, and equipment of
the District is depreciated or amortized using the straight line method over the following estimated
useful lives:
Capitalization
Assets Years Threshold
Land
N/A
$
5,000
Construction in progress
N/A
$
5,000
Buildings and systems
20 to 40
$
5,000
Machinery and equipment
5 to 40
$
5,000
Infrastructure
20
$
5,000
Intangible assets
Varies
$
5,000
Unearned Revenues — Unearned revenues arise when assets are recognized before revenue
recognition criteria have been satisfied. In the government -wide financial statements, unearned
revenues consist of revenue received in advance and/or amounts from grants received before the
eligibility requirements have been met.
Deferred Outflows/Inflows of Resources - In addition to assets, the statement of financial
position will sometimes report a separate section for deferred outflows of resources. This
separate financial statement element represents a consumption of net position that applies to a
future period and so will not be recognized as an outflow of resources (expense/expenditure) until
then.
In addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element represents
an acquisition of net position that applies to a future period and so will not be recognized as an
inflow of resources (revenue) until that time.
Also, deferred revenues in the fund financial statements are those where asset recognition criteria
have been met, but for which revenue recognition criteria have not been met. Such amounts in the
fund financial statements have been deemed to be measurable but not "available" pursuant to
generally accepted accounting principles.
Long -Term Liabilities - In the government -wide financial statements long-term debt and other
long-term obligations are reported as liabilities in the Statement of Net Position.
21
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
1. Summary of Significant Accounting Policies (Continued)
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are
reported as other financing sources while discounts on debt issuances are reported as other
financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received,
and debt payments, are reported as debt service expenditures.
Compensated Absences - District employees accumulate vacation and sick leave hours for
subsequent use or for payment upon termination or retirement. Vacation and sick leave expenses
to be paid in future periods are accrued when incurred in the government -wide financial
statements. A liability for these amounts is reported in the governmental funds only if the liability
has matured through employee resignation or retirement.
Net Position - Net position represents the difference between assets, liabilities and deferred
outflows/inflows of resources. Net position is reported as restricted when there are limitations
imposed on their use either through the enabling legislation adopted by the District or through
external restrictions imposed by creditors, grantors, or laws or regulations of other governments.
Net position on the Statement of Net Position includes net investment in capital assets, and
restricted, if any. The balance is classified as unrestricted.
Fund Balance - Generally, fund balance represents the difference between current assets and
current liabilities. In the fund financial statements, governmental funds report fund classifications
that comprise a hierarchy based primarily on the extent to which the District is bound to honor
constraints on the specific purposes for which amounts in those funds can be spent. Under this
standard, the fund balance classifications are as follows:
• Nonspendable fund balance includes amounts that cannot be spent because they are either
not in spendable form (inventories, prepaid amounts, long-term receivables) or they are
legally or contractually required to be maintained intact (the corpus of a permanent fund).
Restricted fund balance is to be reported when constraints placed on the use of the resources
are imposed by grantors, contributors, laws or regulations of other governments or imposed
by law through enabling legislation. Enabling legislation includes a legally enforceable
requirement that these resources be used only for the specific purposes as provided in the
legislation. This fund balance classification will be used to report funds that are restricted for
debt service obligations and for other items contained in the General Municipal Law of the
State of New York.
Committed fund balance will be reported for amounts that can only be used for specific
purposes pursuant to formal action of the District's highest level of decision making authority.
The Town Supervisor is the highest level of decision making authority. These funds may only
be used for the purpose specified unless the entity removes or changes the purpose by taking
the same action that was used to establish the commitment. This classification includes
certain designations established and approved by the entity's governing boards.
22
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
1. Summary of Significant Accounting Policies (Continued)
Assigned fund balance, in the General Fund, represents amounts constrained either by the
Town Supervisor or a person with delegated authority from the governing board to assign
amounts for a specific intended purpose including balancing the subsequent year's budget or
for encumbrances. Unlike commitments, assignments generally only exist temporarily, in that
additional action does not normally have to be taken for the removal of an assignment. An
assignment cannot result in a deficit in the unassigned fund balance in the General Fund.
Assigned fund balance in all other governmental funds represents any positive remaining
amount after classifying nonspendable, restricted or committed fund balance amounts.
Unassigned fund balance, in the General Fund, represents amounts not classified as
nonspendable, restricted, committed or assigned. The General Fund is the only fund that
would report a positive amount in unassigned fund balance. For all governmental funds other
than the General Fund, unassigned fund balance would necessarily be negative, since the
fund's liabilities, together with amounts already classified as nonspendable, restricted and
committed would exceed the fund's assets.
When both restricted and unrestricted amounts of fund balance are available for use for
expenditures incurred, it is the District's policy to use restricted amounts first and then
unrestricted amounts as they are needed. For unrestricted amounts of fund balance, the District
considers that committed amounts would be reduced first, followed by assigned amounts, and
then unassigned amounts when expenditures are incurred for purposes for which amounts in any
of these unrestricted fund balance classifications could be used.
F. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenditures/expenses during the reporting period. Actual results could differ
from those estimates.
G. Subsequent Events Evaluation by Management
Management has evaluated subsequent events for disclosure and/or recognition in the financial
statements through the date that the financial statements were available to be issued, which date is
June 30, 2015.
2. Stewardship, Compliance and Accountability
A. Budget Basis
A formal, legally approved, annual budget is adopted for the General Fund only. This budget is
adopted on a basis consistent with Generally Accepted Accounting Principles (modified accrual
basis) except revenues and expenditures from refunding or renewing long-term debt or issuing
lease financing are included in the budget as the net revenues or expenditures expected.
23
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
2. Stewardship, Compliance and Accountability (Continued)
B. Budget Calendar
The Board of Commissioners prepares detailed estimates of the revenues and expenditures for the
next calendar year. These estimates are reviewed at a public hearing held on or about August 20th
each year. After the public hearing, the Board of Commissioners meets to increase or decrease the
annual estimates and prepares final budget estimates.
The Fishers Island Ferry District's Board of Commissioners submits its budget estimates for the
subsequent calendar year to the Town of Southold, New York's Supervisor on or before September
20th. The Town Supervisor adds estimates of debt service and incorporates the Fishers Island
Ferry District budget into his Tentative Budget and files this with the Town of Southold, New York's
Town Clerk no later than September 30th. The Town Clerk presents the Tentative Budget to the
Town of Southold, New York's Town Board on or before October 5th. The Town Board makes
revisions and prepares a Preliminary Budget.
The Town Board holds a public hearing by the Thursday following the November election. The
Town Board then considers the estimates and any other matters brought to their attention at a
public meeting held subsequent to the public hearing and prior to the budget adoption. The Town
Board adopts the budget no later than November 20th
C. Budget Control
As a rule, no expenditure may be made, or any liability incurred, unless an amount has been
appropriated for the particular purpose. If, during the year, the Board of Commissioners or Town
Board determines that sufficient revenues will not be generated to finance the total appropriations
provided for in the original budget, the Board of Commissioners (subject to the approval of the
Town Board) generally may reduce appropriations to prevent making expenditures of money
available. An appropriation may not be reduced below the minimum amount required by law, nor
generally be reduced by more than the unexpended balance less the outstanding and unpaid
claims chargeable to it.
The Fishers Island Ferry District (subject to the approval of the Town Board) may make
supplemental appropriations These may be provided by transfer from the unexpended balance of
an appropriation, from the appropriation for contingencies within a fund (if any), or by borrowing
pursuant to the Local Finance Law. The expected unreserved fund balance at the end of the
current year may be utilized for this purpose. During the year no additional appropriations were
made.
D. Property Tax Limitation
The District is not limited as to the maximum amount of real property taxes which may be raised.
However, on June 24, 2011, the Governor signed Chapter 97 of the Laws of 2011 ("Tax Levy
Limitation Law"). This applies to all local governments.
The Tax Levy Limitation Law restricts the amount of real property taxes that may be levied by a
government in a particular year, beginning with the 2012 year. It expires on June 16, 2016.
24
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
2. Stewardship, Compliance and Accountability (Continued)
The following is a brief summary of certain relevant provisions of the Tax Levy Limitation Law. The
summary is not complete and the full text of the Tax Levy Limitation Law should be read in order to
understand the details and implementations thereof.
The Tax Levy Limitation Law imposes a limitation on increases in the real property tax levy, subject
to certain exceptions. The Tax Levy Limitation Law permits the government to increase its overall
real property tax levy over the tax levy of the prior year by no more than the "Allowable Levy Growth
Factor," which is the lesser of one and two -one hundredths or the sum of one plus the Inflation
Factor; provided, however that in no case shall the levy growth factor be less than one. The
"Inflation Factor" is the quotient of: (i) the average of the 20 National Consumer Price Indexes
determined by the United States Department of Labor for the twelve-month period ending six
months prior to the start of the coming fiscal year minus the average of the National Consumer
Price Indexes determined by the United States Department of Labor for the twelve-month period
ending six months prior to the start of the prior fiscal year, divided by (ii) the average of the National
Consumer Price Indexes determined by the United States with the result expressed as a decimal to
four places. The government is required to calculate its tax levy limit for the upcoming year in
accordance with the provision above and provide all relevant information to the New York State
Comptroller prior to adopting its budget. The Tax Levy Limitation Law sets forth certain exclusions
to the real property tax levy limitation of the government, including exclusions for certain portions of
the expenditures for retirement system contributions and tort judgments payable by the government.
The government may adopt a budget that exceeds the tax levy limit for the coming fiscal year, only if
the government first enacts, by a vote of at least sixty percent of the total voting power of the
government, a local law to override such limit for such coming fiscal year.
E. Application of Accounting Standards
For the year ended December 31, 2014, the Town implemented:
GASB Statement 67 — Financial Reporting for Pension Plans — This statement amends GASB
Statement 25.
• GASB Statement 69 — Government Combinations and Disposals of Government Operations -
This statement establishes accounting and financial reporting standards related to a variety of
transactions such as mergers, acquisitions, and transfers of operations.
3. Detailed Notes on All Funds
A. Cash, Cash Equivalents and Investments
Cash and investments of the District consist of the following at December 31, 2014:
Statement of Net Postion
Cash and equivalents $ 1,111,694
25
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
3. Detailed Notes on All Funds (Continued)
Cash and Cash Equivalents - As of December 31, 2014 the carrying amount of the District's
deposits with financial institutions was:
Cash and Cash Equivalents
Deposits with financial institutions
$ 1,111,694
The bank balance of the deposits was $1,105,676 and was exposed to custodial credit risk as
follows:
Covered by Federal Depository Insurance $ 315,174
Collateralized by securities held in trust
In the Town's name 790,502
$ 1,105,676
B. Receivables, Deferred Revenue and Unearned Revenue
Governmental funds defer revenue recognition in connection with resources that have been received,
but not yet earned. Taxes collected in advance in the amount of $169,523 are recorded as the deferred
inflows of resources unearned revenue at December 31, 2014.
C. Interfund Transactions
The outstanding balances between funds result mainly from the time lag between the dates that: 1)
interfund goods and services are provided or reimbursable expenditures occur; 2) transactions are
recorded in the accounting system; and 3) payments between funds are made. At December 31,
2014 there were no interfund balances.
Fund transfers are generally used to fund special projects with general fund revenues. There were
no transfers during the year ended December 31, 2014.
D. Capital Assets
Changes in the District's capital assets used in the governmental activities are as follows
Beginning Ending
Balance Increases Balance
Capital assets not being depreciated
Land
$ 41,717
$ -
$ 41,717
Capital assets being depreciated
Buildings and systems
12,583,229
-
12,583,229
Machinery and equipment
2,914,192
27,868
2,942,060
Infrastructure
3,108,854
9,550
3,118,404
18,606,275
37,418
18,643,693
Less accumulated depreciation
(7,923,743)
(604,832)
(8,528,575)
$ 10,724,249
$ (567,414)
$ 10,156,835
Depreciation expense was charged to functions/programs of the governmental activities as follows:
Ferry operations $ 604,832
W
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
3. Detailed Notes on All Funds (Continued)
E. Long -Term Liabilities
The following table summarizes changes in the District's long-term indebtedness for the year ending
December 31, 2014:
Beginning
Year of
Original
Ending
Due Within
Balance
Additions
Reductions
Balance
One Year
General obligation bonds $ 2,500,000
$ 849,000
$ (1,125,000)
$ 2,224,000
$ 1,024,000
Compensated absences 182,056
31,376
-
213,432
103,535
OPEB obligations 331,079
31,317
(28,017)
334,379
-
$ 3,013,135
$ 911,693
$ (1,153,017)
$ 2,771,811
$ 1,127,535
Each governmental funds liability is liquidated by the respective fund, primarily the General Fund.
Interest on these obligations is expensed to the respective fund, primarily the General Fund.
General Obligation Bonds
The District issues general obligation bonds to provide funds for the acquisition and construction of
major capital facilities. General obligation bonds are direct obligations of the District and pledge the
full faith and credit of the District. These bonds generally are issued as 20 -year serial bonds with
equal amounts of principal maturing each year. General obligation bonds outstanding as of
December 31, 2014 consisted of the following:
Payments to maturity on the general obligation bonds are as follows
Year of
Original
Final
Interest
Amount
Purpose
Issue
Amount
Maturity
Rates
Outstanding
New London Ferry Terminal/Wharf
2005
$ 3,000,000
2021
3.75%
$ 1,375,000
New London Ferry Terminal/Wharf
2014
$ 350,000
2015
0.74%
350,000
North Ramp
2014
$ 499,000
2015
0.74%
499,000
$ 2,224,000
Payments to maturity on the general obligation bonds are as follows
Interest cost incurred and expensed on general obligation bonds for the year ended December 31,
2014 totaled $62,794.
The Bonds due in 2014 were refinanced with $849,000 of new financing with an interest rate of
.74% per year. This is due in April 2015.
27
Governmental Activities
Governmental Activities
General Obligation Bonds
General Obligation Bonds
Year End
Principal Interest
Year End
Principal Interest
2015
$ 1,024,000 $ 58,545
2019
200,000 23,200
2016
200,000 45,700
2020
200,000 15,600
2017
200,000 38,200
2021
200,000 8,000
2018
200,000 30,700
$ 2,224,000 $ 219,945
Interest cost incurred and expensed on general obligation bonds for the year ended December 31,
2014 totaled $62,794.
The Bonds due in 2014 were refinanced with $849,000 of new financing with an interest rate of
.74% per year. This is due in April 2015.
27
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
3. Detailed Notes on All Funds (Continued)
Compensated Absences
Compensated absences include vacation and compensatory time earned by employees and carried
over to the next calendar year. A maximum of 8 days is allowed to be carried into the next calendar
year. Compensated absences also include sick time that may be paid in cash when an employee
leaves. Employees hired prior to May 1, 2009 are eligible for payment on up to 120 days of
accumulated sick time. Employees hired after May 1, 2009 are eligible for payment on up to 40 days of
accumulated sick time. Each of these benefits is describe more fully in the Ferry District's Employee
Benefit Package. The value of all compensated absences has been reflected in the government -wide
financial statements.
Legal Debt Limit
The New York State Constitution sets debt limits for most classes of local government, and establishes
numerous other conditions related to the issuance and repayment of debt. In addition, the Local
Finance Law (LFL) regulates the issuance of debt by local governments. Under the LFL, a local
government, including the Fishers Island Ferry District, must authorize debt through a resolution of its
local board. The Town of Southold's Town Board must also authorize debt issued on behalf of the
District though a resolution of the Town Board, which is subject to permissive referendum at the District
level. Furthermore, a local government must comply with certain regulations and statutory provisions for
the private or public sale of its debt. Other provisions set limits on the use of bond proceeds, refunding
protocols, and the maximum number of years that certain projects, goods or services can be debt-
financed based upon probable useful life.
F. Net Position
The components of net position are detailed below:
Net Investment in Capital Assets - the component of net position that reports the difference between
capital assets less both the accumulated depreciation and the outstanding balance of debt, excluding
unexpended proceeds, that is directly attributable to the acquisition, construction or improvement of
those assets.
Unrestricted - all other amounts that do not meet the definition of "restricted" or "invested in capital
assets, net of related debt".
28
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
3. Detailed Notes on All Funds (Continued)
G. Fund Balances
As discussed in Note 1, governmental funds report fund classifications that comprise a hierarchy
based primarily on the extent to which the District is bound to honor constraints on the specific
purposes for which amounts in those funds can be spent. These are summarized below:
General
Fund
Nonspendable
Not in spendable form
Prepaid expenditures $ 61,132
Assigned
To balance next year's budget $ 436,870
H. Pension Plan
Plan Description - The District participates in the New York State and Local Employees' Retirement
System ("ERS"). This is a cost-sharing multiple -employer defined benefit retirement plan. The ERS
provides retirement, death and disability benefits to plan members.
The New York State Retirement and Social Security Law ("NYSRSSL") govern obligations of employers
to contribute benefits to employees. As set forth in the NYSRSSL, the Comptroller of the State of New
York serves as sole trustee and administrative head of the System. The Comptroller shall adopt and
may amend rules and regulations for the administration and transactions of the business of the System
and for the custody and control of their funds.
The System issues a publicly available financial report that includes financial statements and required
supplementary information. That report may be obtained by writing the New York State and Local
Retirement System, Gov. Alfred E. Smith State Office Building, 110 State Street, Albany, NY 12224.
Funding Policy — The ERS is non-contributory except for employees in tiers 3 and 4 that have less
than 10 years of service, who contribute 3% of their salary and employees in tier 5 who also contribute
3% of their salaries for the employee retirement system (the "ERS") without regard to their years of
service and employees in tier 6 who contribute between 3% and 6% depending on salary levels and
also without regard to years of service. Contributions to ERS are certified by the State Comptroller and
expressed as a percentage of members' salary. Contribution rates are actuarially determined and
based upon membership tier and plan. Contributions to ERS consist of a life insurance portion and
regular pension contributions.
29
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
3. Detailed Notes on All Funds (Continued)
The Fishers Island Ferry District is not a separate employer under this plan. The District is included in
the plan as a part of the Town of Southold. There are no separate financial statistics available for the
District. The District contributes at an actuarially determined rate. The District's contributions made to
the System were equal to 100% of the contributions required for each year. Contribution rates for the
year ended March 31, 2013 are as follows:
Tier/Plan/Option Rate
ERS 1
75i
41J
27.7 %
3
A14
41J
20.3
4
A15
41J
20.3
5
A15
41J
16.6
6
A15
41 J 1
10.9
6
A15
41 J2
11.0
Contributions were equal to 100% of the actuarially required contribution for each year. Contributions
made to the ERS for the current and two preceding years were charged to the General Fund as follows:
Year Contribution
2014
$204,971
2013
$183,670
2012
$158,354
I. Defined Contribution Plan
The District has a defined contribution plan for all eligible employees under Internal Revenue Code
("IRS") 401(a). This is administered by Nationwide Retirement Solutions, Inc. Provisions are made
and amended as necessary by the District. Employees may contribute up to the IRS limits through an
IRS section 457 plan. The District does not match an eligible employee's contribution.
J. Other Post -Employment Benefits (OPEB)
From an accrual accounting perspective, the cost of post -employment health care benefits, like the
cost of pension benefits, generally should be associated with the periods in which the cost occurs,
rather than in the future year when it will be paid. The District recognizes the cost of post -
employment healthcare in the year when the employee services are received, reports the
accumulated liability from prior years, and provides information useful in assessing potential
demands on the District's future cash flows. The liability accumulated from the years prior to
adopting this accounting procedure will be phased in over 30 years.
Plan Description - The Fishers Island Ferry District Other Post Employment Benefit Program is a
single -employer defined benefit plan administered by the Fishers Island Ferry District. The benefits
have been established by the Board of Commissioners and can be amended by the Board. The plan
does not issue a separate financial statement and is unfunded.
30
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
3. Detailed Notes on All Funds (Continued)
Eligibility The district provides medical, prescription drug and behavioral health
to retirees and their covered dependents. The District pays up to
$3,000 of the cost for retirees, disabled retirees, spouses and
dependents. All active employees who retire or are disabled directly
from the District and meet the eligibility criteria will participate.
Eligibility criteria is age 55 and 10 years of service with the District (20
years if hired after July 1, 2003.)
Cost Sharing Retirees pay the balance of the premium over $3,000 per year.
Annual OPEB Cost ("AOC") and Net OPEB Obligation ("NOO")
Amortization Component
Actuarial Accrued Liability as of January 1, 2014
$
440,133
Assets at Market Value
-
Unfunded Actuarial Accrued Liability ("UAAL")
$
440,133
Funded Ratio
0.007/.-
.00%Covered
CoveredPayroll (Active plan members)
$
1,016,360
UAAL as a Percentage of Covered Payroll
43.30%
Annual Required Contribution
$
37,471
Interest on Net OPEB Obligation
12,415
Adjustment to Annual Required Contribution
(18,569)
Annual OPEB Cost
31,317
Contributions made
(28,017)
Increase in net OPEB Obligation
3,300
Net OPEB Obligation - Beginning of the year
331,079
Net OPEB Obligation - End of the year
$
334,379
Actuarial Methods and Significant Assumptions - The District's annual other postemployment
benefit cost (expense) is calculated based on the annual required contribution ("ARC"), an amount
actuarially determined in accordance with the parameters of GASB. GASB establishes standards for
the measurement, recognition and display of the expenses and liabilities for retirees' medical
insurance. As a result, reporting of expenses and liabilities is using a per capita claims cost will be
determined, which will be used to determine a "normal cost", an "actuarial accrued liability", and
ultimately the ARC. The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period
not to exceed thirty years.
Actuarial valuations for OPEB plans involve estimates of the value of reported amounts and
assumptions about the probability of events far into the future. These amounts are subject to
continual revision as results are compared to past expectations and new estimates are made about
the future. Calculations are based on the OPEB benefits provided under the terms of the substantive
plan in effect at the time of each valuation and on the pattern of sharing of costs between the
employer and plan members to that point. In addition, the assumptions and projections utilized do
not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern
of cost sharing between the employer and plan members in the future. The actuarial calculations of
the OPEB plan reflect a long-term perspective.
31
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
3. Detailed Notes on All Funds (Continued)
The District is required to accrue on the government -wide financial statements the amounts
necessary to finance the plan as actuarially determined, which is equal to the balance not paid by
plan members.
Other actuarial methods and significant assumptions are summarized as follows:
Latest Actuarial Date
Actuarial Cost Method
Discount Rate
Medical Inflation
Amortization Method
Remaining amortization
Healthy Mortality
Turnover
Retirement
Disability
January 1, 2014
Projected Unit Credit
3.75%
Initial rate of 9% grading down to an ultimate inflation rate of 4.75%
after 2020.
Level dollar of payroll
30 years, closed
Based on male and female pre -retirement mortality rates provided.
Based on male and female rates for age and years of service
provided.
Based on male and female rates for age and years of service
provided.
Based on male and female rates for age and years of service
provided.
Three year trend information is as follows:
Fiscal
Annual
Actual
Year
OPEB Cost
Contributions
Ended
(AOC)
Made
12/31/2014
$ 31,317
$ 28,017
12/31/2013
23,480
21,686
12/31/2012
22,792
21,918
Funding Progress
As of the last valuation date, January 1, 2014, the actuarial valuation of the plan assets was $0. The
actuarial accrued liability was $440,133. The schedule of funding progress immediately following the
notes to the financial statements presents multiyear trend information about whether the actuarial
value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits. There is no requirement for funding and the plan has not been funded.
4. Other Information
A. Litigation
The District is a defendant in various lawsuits. Although the outcome of these lawsuits is not
presently determinable, in the opinion of the District's counsel the resolution of these matters will
not have a material adverse effect on the financial condition of the District.
32
Net OPEB
Percentage
Obligation
Contributed
(NOO)
89.5%
$ 334,379
92.4%
331,079
96.2%
329,285
As of the last valuation date, January 1, 2014, the actuarial valuation of the plan assets was $0. The
actuarial accrued liability was $440,133. The schedule of funding progress immediately following the
notes to the financial statements presents multiyear trend information about whether the actuarial
value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for
benefits. There is no requirement for funding and the plan has not been funded.
4. Other Information
A. Litigation
The District is a defendant in various lawsuits. Although the outcome of these lawsuits is not
presently determinable, in the opinion of the District's counsel the resolution of these matters will
not have a material adverse effect on the financial condition of the District.
32
Fishers Island Ferry District
Notes to Financial Statements (Continued)
December 31, 2014
4. Other Information (continued)
B. Contingencies
Grants - Amounts received or receivable from grant agencies are subject to audit and adjustment
by grantor agencies, principally the federal government. Any disallowed claims, including amounts
already collected, may constitute a liability of the applicable funds. The amount, if any, of
expenditures that may be disallowed by the grantor cannot be determined at this time, although the
Ferry District expects such amounts, if any, to be immaterial.
C. Risk Management
The District is exposed to various risks of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; and natural disasters for which the District carries
commercial insurance. There have been no significant reductions in insurance coverage.
Settlement amounts have not exceeded insurance coverage for the current year or three prior
years.
D. GASB Pronouncements Issued, But Not Yet Effective
The Governmental Accounting Standards Board (GASB) is the standard setting board for
governmental entities. The following are statements which have been approved by GASB, but
are not yet effective:
• GASB Statement 68 - Accounting and Financial Reporting for Pensions — This statement, and
GASB Statement 67 applicable to pension plans, improves information provided by state and
local government employers for better decision making, accountability, interperiod equity, and
creating additional transparency. This statement is effective for fiscal years beginning after
June 15, 2014.
GASB Statement 71 — Pension Transition for Contributions Made Subsequent to the
Measurement Date — This statement is an amendment of GASB Statement 68 and should be
applied simultaneously with the provisions of Statement 68.
GASB Statement 72 — Fair Value Measurement and Application — This statement, addresses
accounting and financial reporting issues related to fair value measurements. The definition of
fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. This statement
provides guidance for determining a fair value measurement for financial reporting purposes.
This statement is effective for fiscal years beginning after June 15, 2015.
33
Fishers Island Ferry District
Required Supplementary Information
December 31, 2014
Fishers Island Ferry District
Required Supplementary Information
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual (Budgetary Basis) - General Fund
For the Year Ended December 31, 2014
REVENUES
Ferry Revenues
Ferry operations
Charters
U.S. mail
Total Ferry Revenues
Property Tax Revenues
Property taxes
Interest and penalties - real estate taxes
Total Property Tax Revenues
RSI -1
Budgeted Amounts
Variance
Appropriations
Actual with
and
Budgetary Final
Original Transfers Final
Basis Budget
$ 2,635,480 $
$ 2,635,480
$ 2,650,489 $
15,009
10,000
10,000
36,065
26,065
28,000
28,000
28,000
-
2,673,480
2,673,480
2,714,554
41,074
772,650
772,650
772,650
-
-
-
18
18
772,650
772,650
772,668
18
Property Management Revenue
30,000
(19,000)
11,000
10,064
936
Service to other governments
68,809
500
68,809
77,517
8,708
Theater
11,000
41,000
11,000
-
(11,000)
Total Property Management Revenue
79,809
26,000
79,809
77,517
(2,292)
Ferry operations, contractual expense
697,000
(55,916)
Grant Revenues
635,117
5,967
Office expense, contractual expense
14,000
NYS capital grant
-
5,777
-
398
398
Federal capital grant
3,100
4,400
U.S. mail, contractual expense
19,460
19,460
Total Grant Revenues
-
200
-
19,858
19,858
2,435,703
2,386,760
Other Revenues
Theater, contractual expense
9,000
(6,400)
2,600
2,541
Interest earnings
1,000
1,000
485
(515)
(Continued)
Total Revenues
3,526,939
3,526,939
3,585,082
58,143
EXPENDITURES
General Government
Accounting and finance
30,000
(4,000)
26,000
22,902
3,098
Legal fees
50,000
15,000
65,000
64,503
497
Insurance
77,968
1,400
79,368
79,128
240
Insurance claims
4,000
-
4,000
3,456
544
Property taxes
50,000
(6,000)
44,000
41,438
2,562
MTA payroll tax
4,300
-
4,300
1,052
3,248
Total General Government
216,268
6,400
222,668
212,479
10,189
Transportation
Elizabeth airport
30,000
(19,000)
11,000
10,064
936
Dock repairs, capital
98,000
500
98,500
75,903
22,597
Ferry operations, personal services
1,262,119
41,000
1,303,119
1,302,576
543
Ferry operations, equipment
325,000
26,000
351,000
342,477
8,523
Ferry operations, contractual expense
697,000
(55,916)
641,084
635,117
5,967
Office expense, contractual expense
14,000
14,000
8,223
5,777
Commissioner fees
7,500
-
7,500
3,100
4,400
U.S. mail, contractual expense
9,000
500
9,500
9,300
200
Total Transportation
2,442,619
(6,916)
2,435,703
2,386,760
48,943
Theater, contractual expense
9,000
(6,400)
2,600
2,541
59
(Continued)
See Accountants' Report
34
Fishers Island Ferry District
Required Supplementary Information
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual (Budgetary Basis) - General Fund
For the Year Ended December 31, 2014
Employee Benefits
NYS retirement
Social security
Unemployment insurance
Medical insurance
Total Employee Benefits
Total general government expenditures
Debt Service
Principal:
Serial bond
Bond anticipation note
Interest:
Serial bond
Bond anticipation note
Total Debt Service
Total Expenditures
Excess (deficiency) of revenues
over expenditures- Budgetary Basis
RSI -1
Budgeted Amounts
Variance
Appropriations
Actual with
and
Budgetary Final
Original Transfers Final
Basis Budget
$ 206,000
$ 200
$ 206,200
$ 204,971
$ 1,229
96,552
-
96,552
95,860
692
5,000
3,500
8,500
8,484
16
200,000
2,800
202,800
202,791
9
507,552
6,500
514,052
512,106
1,946
3,175,439
(416)
3,175,023
3,113,886
61,137
175,000
-
175,000
175,000
-
100,000
416
100,416
100,415
1
71,000
-
71,000
58,825
12,175
5,500
-
5,500
4,334
1,166
351,500
416
351,916
338,574
13,342
3,526,939
-
3,526,939
3,452,460
74,479
$ -
$ -
$ -
$ 132,622
$ 132,622
Adjustments to Generally Accepted Accounting Principles (GAAP)
Bond Anticipation Note proceeds netted with retirement of Bond Anticipation Note 350,000
Retirement of Bond Anticipation Note netted with Bond Anticipation Note proceeds (350,000)
Excess (deficiency) of revenues and other financing sources over
expenditures and other financing (uses) - GAAP basis $ 132,622
Notes to Required Supplementary Information: A formal, legally approved, annual budget is adopted for the General Fund
only. This budget is adopted on a basis consistent with Generally Accepted Accounting Principles (modified accrual basis) with
the following exceptions: (1) Revenues and expenditures from refunding or renewing long-term debt or issuing lease financing
are included in the budget as the net revenues or expenditures expected.
See Accountants' Report
35
Fishers Island Ferry District
Required Supplementary Information - Schedule of Funding Progress
Other Post Employment Benefits
Last Three Valuations
See Accountants' Report
M
RSI -2a
Unfunded
Actuarial
Actuarial
Valuation
Value of Accrued
Accrued
Date
Assets Liability
Liability
1/1/2014
$ - $ 440,133
$ 440,133
1/1/2013
$ - $ 426,393
$ 426,393
1/1/2012
$ - $ 431,452
$ 431,452
See Accountants' Report
M
RSI -2a
Unfunded
Liability as a
Percentage of
Funded
Covered
Covered
Ratio
Payroll
Payroll
0.00%
$ 1,016,360
43.30%
0.00%
$ 1,017,116
41.92%
0.00%
$ 968,682
44.54%
Fishers Island Ferry District
Required Supplementary Information - Schedule of Employer Contributions
Other Post Employment Benefits
Last Six Fiscal Years
Fiscal
Annual
Year
Required
Actual
Percentage
Ended
Contribution
Contribution
Contributed
12/31/2014
$
37,471
$
28,017
74.77%
12/31/2013
$
29,601
$
21,686
73.26%
12/31/2012
$
29,154
$
21,918
75.18%
12/31/2011
$
28,373
$
10,639
37.50%
12/31/2010
$
126,611
$
17,011
13.44%
12/31/2009
$
115,897
$
17,235
14.87%
See Accountants' Report
37
Fishers Island Ferry District
Internal Control and Compliance Reports
December 31, 2014
Report on Internal Control over Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards
The Board of Commissioners
Fishers Island Ferry District
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States, the financial statements of the
governmental activities and each major fund of the Fishers Island Ferry District ("District") as of and
for the year ended December 31, 2014, and the related notes to the financial statements, which
collectively comprise the District's basic financial statements and have issued our report thereon
dated June 30, 2015.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the District's
internal control over financial reporting ("internal control") to determine the audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the District's
internal control. Accordingly, we do not express an opinion on the effectiveness of the District's
internal control.
Our consideration of the internal control over financial reporting was for the limited purpose
described in the preceding paragraph and was not designed to identify all deficiencies in internal
control that might be material weaknesses or significant deficiencies and therefore, material
weaknesses or significant deficiencies may exist that were not identified. However, as described in
the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies
in internal control that that we consider to be material weaknesses.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees in the normal course of performing their assigned functions, to prevent,
or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or
combination of deficiencies, in internal control, such that there is a reasonable possibility that a
material misstatement of the entity's financial statements will not be prevented, or detected and
corrected, on a timely basis. We consider the deficiencies described in the accompanying
Schedule of Findings and Questioned Costs as items (identified as 10-1, 10-3, and 10-7) to be
material weaknesses.
O'CONNOR DAVIES, LLP
100 Great Meadow Road, Wethersfield, CT 06109 I Tel: 860.257.1870 I Fax: 860.257.1875 I www.odpkf.com
O'Connor Davies, LLP is a mem berfirm of the ?KF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or
inactions on the part of any other individual memberfirm or firms.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the District's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an opinion
on compliance with those provisions was not an objective of our audit, and accordingly, we do not
express such an opinion. The results of our tests disclosed instances of noncompliance or other
matters that are required to be reported under Government Auditing Standards and which are
described in the accompanying Schedule of Findings and Questioned Costs as items NC -10-1.
District's Response to Findings
The District's response to the findings identified in our audit is described in the accompanying
Schedule of Findings and Questioned Costs. The District's response was not subjected to the
auditing procedures applied in the audit of the financial statements and, accordingly, we express
no opinion on it.
Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance, and the result of that testing, and not to provide an opinion on the effectiveness of the
District's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the District's internal control and
compliance. Accordingly, this communication is not suitable for any other purposes.
June 30, 2015
Fishers Island Ferry District
Schedule of Findings
For the Year Ended December 31, 2014
Findings on Internal Controls
MW -10-1 — Entity Level Controls
Condition: Internal controls are a coordinated set of policies and procedures that
management uses to achieve their objectives and meet their fundamental
responsibilities for effectiveness, efficiency, compliance and financial reporting. The
literature recognizes five sections of internal control published by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO Report) in Internal
Control — Integrated Framework. These five interrelated components include:
• Control Environment— A favorable control environment exists when management
is knowledgeable about controls (entity wide and specific), is committed to
establishing controls and communicates its support for internal controls to all
individuals involved.
• Risk Assessment — This involves management's continual identification and
assessment of the potential risks that might prevent management from fulfilling
its responsibilities and achieving its objectives.
• Information and Communication Systems — These are the systems used to
assure that appropriate individuals have timely and accurate information to carry
out their responsibilities.
• Control Activities — These are management's response to the risks identified.
These are the specific policies and procedures that are put in place to alert
management of undesired actions in a timely manner.
• Monitoring — There is a responsibility of management to follow up on the controls
that have been put in place to assure that they continue to function and function
properly, effectively and efficiently.
The Fishers Island Ferry District does not have a framework established to deal with
each of the interrelated entity level controls over and above the specific control policies
and procedures that have been developed.
Recommendation: We recommend that as part of developing an accounting manual,
the Fishers Island Ferry District consider the entity wide controls as discussed above.
Management's Response: We have been working to develop a coordinated set of
policies and procedures. We have been working in the most critical areas first.
Ultimately, these will all be addressed.
M
Fishers Island Ferry District
Schedule of Findings
For the Year Ended December 31, 2014
MW -10-3 — Segregation of Duties - Revenues
Condition: The Ferry District does not maintain an adequate segregation of duties for
proper internal control over the financial transactions in certain areas. Proper internal
control relies on the following three aspects of processing transactions being performed
by separate individuals: authorizing transactions, custody of assets, and record keeping.
This weakness in internal controls could lead to funds being expended in a manner not
consistent with the intentions of management. These weaknesses were noted in the
following areas:
• Ticket Sales — Sales that are "no charge" are authorized and recorded by the
same individual.
• Ticket Books — Ticket Books have the same individuals able to authorize the
purchase, have custody of the physical books and cash collected and do the
record keeping for the sale.
• Freight Sales — Freight is not always counted by the freight agent. This is not
noted and corrected at the other end. Cash payments are collected and
recorded by the same individual. Individuals are able to collect payment, record
transactions and delete transactions from the system.
• Recording Revenues — Individuals are able to collect payment, record
transactions and delete transactions from the system or write off transactions in
the system.
Recommendation: The Ferry District should review the segregation of duties involved
in all the cash receipts functions. The duties of the individuals involved should be
analyzed and restructured as necessary to provide for a better system of checks and
balances. A segregation of duties is not the only tool used in internal controls, where a
segregation of duties is not possible, alternate internal control tools should be
implemented. Once a better system has been devised, it should be written, approved by
the Board of Commissioners and distributed to the individuals involved.
Management's Response: We have been working to develop a coordinated set of
policies and procedures. We have been working in the most critical areas first.
Ultimately, these will all be addressed. During the year ended December 31, 2014, the
reconciliation function was segregated from the custody function.
41
Fishers Island Ferry District
Schedule of Findings
For the Year Ended December 31, 2014
MW -10-7 — Documentation of the Components of Internal Control over Processes
Condition: The Fishers Island Ferry District has numerous internal controls in place
over significant processes and accounts. Not all of these controls are formally
documented. It is possible for controls to change over time or not be completely
understood by the individuals involved in the processes.
Recommendation: We recommend that the Fishers Island Ferry District make a listing
of its significant processes and accounts. Controls in each area should be documented
in a procedures manual. Each of the procedures should be reviewed to determine if
controls are adequate.
Management's Response: We have been working to develop a coordinated set of
policies and procedures. We have been working in the most critical areas first. As we
move through this process, we will document our policies and procedures.
Findings on Compliance
NC -10-1 Non -collusion Statements
The enabling act states in Section 13:
All contracts for public work and all purchase contracts shall be let to the lowest
responsible bidder after advertisement for bids where so required by section one
hundred three of the general municipal law.
Section 103-d of the New York General Municipal Law requires a statement of non-
collusion in bids and proposals to political subdivision of the state. Currently, the Fishers
Island Ferry District does not have a policy to obtain, nor does it obtain, any statements
of non -collusion in its bids and proposals.
Management's Response: In 2014, the Board of Commissioners approved that the
procurement policy be amended to include the required statement of non -collusion.
Management is working on amending the document and implementing it.
CF
OZONNOR
DAVIES
July 22, 2015
Board of Commissioners
Fishers Island Ferry District
P.O. Box 607
Fishers Island, NY 06390
RECEIVED
AUG 3 2015
Sduthold Town Clerk
PKF
Enclosed please find the following prepared on behalf of the Fishers Island Ferry District for you to
distribute within ten days to the following:
Financial Communication
Statements with Board
Board of Commissioners
1 1
Ferry District Manager
1 1
Official office copy
1 1
Extras
5 5
Town of Southold:
Town Supervisor
1 1
Comptroller
1 1
Town Board
5 5
Town Clerk
1 1
Extras
4 4
We have also enclosed a "pdf" file for you to use. This report includes the full audit report. Because
accounting standards dictate how a report can be divided, please contact us if you are not going to
use all of these pages so we can make sure it continues to comply with generally accepted
accounting policies.
Your Responsibilities:
Within ten days of receiving the audit report, you must (GML Article 35 paragraph 2) give public
notice with following language:
Fishers Island Ferry District
Notice is hereby given that the fiscal affairs of Fishers Island Ferry District for the calendar
year 2014, have been examined by O'Connor Davies, LLP, and that their report has been
filed in the Fishers Island Ferry District office where it is available as a public record for
inspection by all interested persons. Pursuant to section thirty-five of the general municipal
law, the Board of Commissioners of the Fishers Island Ferry District may, in its discretion,
prepare a written response to the audit report and file such response in the Fishers Island
Ferry District office as a public record for inspection by all interested persons not later than
90 days from this date.
O'CONNOR DAVIES, LLP
100 Great Meadow Road, Wethersfield, CT 06109 I Tel: 860.257.1870 1 Fax: 860.257.1875 1 www.odpk-f.com
O'Connor Davies, LLP is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or
inactions on the part of any other individual member firm or firms.
4 w y Fishers Island Ferry District Page 2
Please contact us if we can be of any additional assistance.
Sincerely,
Marcia L. Marien, CPA
Partner
OZONNOR_
DAVIES
RECEIVED
AUG 3 2015
Southold Town Clerk
Communication with the Board of Commissioners
To the Board of Commissioners
Fishers Island Ferry District
Fishers Island, NY
PKF
We have audited the financial statements of the Fishers Island Ferry District (the entity) for the
year ended December 31, 2014, and have issued our report thereon dated June 30, 2015.
Professional standards require that we provide you with the following information related to our
audit:
1. Our Responsibility under Generally Accepted Auditing Standards and Government
Auditina Standards - As communicated in our engagement letter dated January 27, 2014,
our responsibility, as described by professional standards, is to plan and perform our audit
to obtain reasonable, but not absolute, assurance that the financial statements that are the
responsibility of management with your oversight, are presented fairly, in all material
respects, in conformity with U.S. Generally Accepted Accounting Principles. Our audit of the
financial statements does not relieve you or management of your respective responsibilities.
Our responsibility, as prescribed by professional standards, is to plan and perform our audit
to obtain reasonable, rather than absolute, assurance about whether the financial
statements are free of material misstatement. An audit of financial statements includes
consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity's internal control over financial reporting.
Accordingly, as part of our audit, we considered the internal control of the Fishers Island
Ferry District solely for the purpose of determining our audit procedures and not to provide
any assurance concerning such internal control.
We are also responsible for communicating significant matters related to the audit that are,
in our professional judgment, relevant to your responsibilities in overseeing the financial
reporting process. However, we are not required to design procedures for the purpose of
identifying other matters to communicate to you.
We have provided our findings regarding significant control deficiencies over financial
reporting and material weaknesses and material noncompliance, and other matters noted
during our audit in a report at the end of your financial statements dated June 30, 2015.
2. Compliance with All Ethics Requirements Regarding Independence — The
engagement team, others in our firm, as appropriate, our firm, and our network firms have
complied with all relevant ethical requirements regarding independence.
O'CONNOR DAVIES, LLP
100 Great Meadow Road, Wethersfield, CT 06109 1 Tel: 860.257.1870 1 Fax: 860.257.1875 1 www.odpkf.com
O'Connor Davies, LLP is a member firm of the PKF International Limited network of legally Independent firms and does not accept any responsibility or liability for the actions or
inactions on the part of any other Individual member firm or firms.
Communication with the Board of Commissioners Page 2 of 3
3. Qualitative Aspects of the Entity's Significant Accounting Practices
Significant. Accounting Policies - Management has the responsibility to select and use
appropriate accounting policies. A summary of the significant accounting policies adopted
by the Fishers Island Ferry District is included' in Note 1 to the financial statements. There
have been no initial selections of accounting policies and no changes in significant
accounting policies or their application during the year ended December 31, 2014. No
matters have come to our attention that would require us, under professional standards, to
inform you about (1) the methods used to account for significant or unusual transactions and
(2) the effect of significant accounting policies in controversial or emerging areas for which
there is a lack of authoritative guidance or consensus.
Accounting Estimates - Accounting estimates are an integral part of the financial
statements prepared by management and are based on management's current judgments.
Those judgments are normally based on knowledge and experience about past and current
events and assumptions about future events. Certain accounting estimates are particularly
sensitive because of their significance to the financial statements and because of the
possibility that future events affecting them may differ markedly from management's current
judgments.
The most sensitive accounting estimates affecting the financial statements are:
Management's estimate of the depreciation expense is based on the capitalization
threshold and estimated useful life. We evaluated the key factors and assumptions
used to develop the depreciation expense in determining that it is reasonable in
relation ,to the financial statements taken as a whole.
4. Significant Difficulties Encountered during the Audit -We encountered no significant
difficulties in dealing with management relating to the performance of the audit.
5. Other Information in Documents Containing Audited Financial Statements -
Pursuant to professional standards, our responsibility as auditors for other information in
documents containing Fishers Island Ferry District's audited financial statements does not
extend beyond the financial information identified in the audit report, and we are not
required to perform any procedures to corroborate such other information. However, in
accordance with such standards, we have:
Read the information and considering whether such information, or the manner of
its presentation, was materially inconsistent with its presentation in the financial
statements.
Our responsibility also includes communicating to you any information which we believe is
a material misstatement of fact. Nothing came to our attention that caused us to believe
that such information, or its manner of presentation, is materially inconsistent with the
information, or manner of its presentation, appeadrng.in the financial statements.
6. Uncorrected and Corrected Misstatements - For purposes of this communication,
professional standards require us to accumulate all known and likely misstatements
identified during the audit, other than those that we believe are trivial, and .communicate
them to the appropriate level of management. Uncorrected misstatements consisted of only
trivial amounts.
Communication with the Board of Commissioners Page 3 of 3
None of the misstatements identified by us as a result of our audit procedures and corrected
by management were material, either individually or in the aggregate, to the financial
statements taken as a whole or applicable opinion units.
7. Disagreements with Management - For purposes of this letter, professional standards
define a disagreement with management as a matter, whether or not resolved to our
satisfaction, concerning a financial accounting, reporting, or auditing matter that could be
significant to the Fishers Island Ferry District's financial statements or the auditor's report.
No such disagreements arose during the course of our audit.
8. Representations Requested from Management - We have requested certain written
representations from management, which are included in the letter dated June 30, 2015.
9. Management's Consultations with Other Accountants - In some cases, management
may decide to consult with other accountants about auditing and accounting matters.
Management informed us that, and to our knowledge, there were no consultations with other
accountants regarding auditing and accounting matters.
10. Other Significant Findings or Issues - In the normal course of our professional
association with the Fishers Island Ferry District, we generally discuss a variety of matters,
including the application of accounting principles and auditing standards, operating and
regulatory conditions affecting the Fishers Island Ferry District, and operational plans and
strategies that may affect the risks of material misstatement. None of the matters discussed
resulted in a condition to our retention as the entity's auditors.
This report is intended solely for the use of the Board of Commissioners and management of
the Fishers Island Ferry District and is not intended to be and should not be used by anyone
other than these specified parties.
�! I
June 30, 2015
Management Representation Letter
June 30, 2015June 30, 2015June 30, 2015
O'Connor Davies, LLP
100 great Meadow Road, Suite 401
Wethersfield, CT 06109
This representation letter is provided in connection with your audit(s) of the financial statements of
Fishers Island Ferry District, which comprise the respective financial position of the governmental
activities and each major fund as of December 31, 2014, and the respective changes in financial
position, and the related notes to the financial statements, for the purpose of expressing opinions as to
whether the financial statements are presented fairly, in all material respects, in accordance with
accounting principles generally accepted in the United States of America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material. Items
are considered material, regardless of size, if they involve an omission or misstatement of accounting
information that, in light of surrounding circumstances, makes it probable that the judgment of a
reasonable person relying on the information would be changed or influenced by the omission or
misstatement. An omission or misstatement that is monetarily small in amount could be considered
material as a result of qualitative factors.
We confirm, to the best of our knowledge and belief, as of June 30, 2015June 30, 2015June 30, 2015,
the following representations made to you during your audit.
Financial Statements
1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated
January 1, 2015, including our responsibility for the preparation and fair presentation of the financial
statements in accordance with U.S. GAAP and for preparation of the supplementary information in
accordance with the applicable criteria.
2) The financial statements, referred to above are fairly presented in conformity with U.S. GAAP and
include all properly classified funds and .other financial information of the primary government and
all component units required by generally accepted accounting principles to be included in the
financial reporting entity.
3) We acknowledge our responsibility for the design, implementation, and maintenance of internal
control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
4) We acknowledge our responsibility for the design, implementation, and maintenance of internal
control to prevent and detect fraud.
5) Significant assumptions we used in making accounting estimates, including those measured at fair
value, are reasonable.
6) Related party relationships and transactions, including revenues, expenditures/expenses, loans,
transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to
related parties have been appropriately accounted for and disclosed in accordance with U.S. GAAP.
7) Adjustments or disclosures have been made for all events, including instances of noncompliance,
subsequent to the date of the financial statements that would require adjustment to or disclosure in
the financial statements.
ALG -CL -3.1
8) The effects of uncorrected misstatements are immaterial, both individually and in the aggregate, to
the financial statements as a whole. In addition, you have proposed adjusting journal entries that
have been posted to the entity's accounts. We are in agreement with those adjustments.
9) The effects of all known actual or possible litigation, claims, and assessments have been accounted
for and disclosed in accordance with U.S. GAAP.
10) Guarantees, whether written or oral, under which the District is contingently liable, if any, have been
properly recorded or disclosed.
Information Provided
11) We have provided you with:
a) Access to all information, of which we are aware, that is relevant to the preparation and fair
presentation of the financial statements, such as records, documentation, and other matters.
b) Additional information that you have requested from us for the purpose of the audit.
c) Unrestricted access to persons within the District from whom you determined it necessary to
obtain audit evidence.
d) Minutes of the meetings of Board of Commissioners or summaries of actions of recent meetings
for which minutes have not yet been prepared.
12) All material transactions have been recorded in the accounting records and are reflected in the
financial statements.
13) We have disclosed to you the results of our assessment of the risk that the financial statements
may be materially misstated as a result of fraud.
14) We have no knowledge of any fraud or suspected fraud that affects the District and involves:
• Management,
• Employees who have significant roles in internal control, or
• Others where the fraud could have a material effect on the financial statements.
15) We have no knowledge of any allegations of fraud or suspected fraud affecting the District's
financial statements communicated by employees, former employees, regulators, or others.
16) We have no knowledge of instances of noncompliance or suspected noncompliance with provisions
of laws, regulations, contracts, or grant agreements, or abuse, whose effects should be considered
when preparing financial statements.
17) We have disclosed to you all known actual or possible litigation, claims, and assessments whose
effects should be considered when preparing the financial statements.
18) We have disclosed to you the identity of the District's related parties and all the related party
relationships and transactions of which we are aware.
Government—specific
19) There have been no communications from regulatory agencies concerning noncompliance with, or
deficiencies in, financial reporting practices.
20) We have a process to track the status of audit findings and recommendations.
21) We have identified to you any previous audits, attestation engagements, and other studies related
to the audit objectives and whether related recommendations have been implemented.
22) We have provided our views on reported findings, conclusions, and recommendations, as well as
our planned corrective actions, for the report.
23) The District has no plans or intentions that may materially affect the carrying value or classification
of assets, liabilities, or equity.
24) We are responsible for compliance with the laws, regulations, and provisions of contracts and grant
agreements applicable to us, including tax or debt limits and debt contracts; and legal and
contractual provisions for reporting specific activities in.separate funds.
25) There are no violations or possible violations of budget ordinances, laws and regulations (including
those pertaining to adopting, approving, and amending budgets), provisions of contracts and grant
agreements, tax or debt limits, and any related debt covenants whose effects should be considered
for disclosure in the financial statements, or as a basis for recording a loss contingency, or for
reporting on noncompliance.
26) As part of your audit, you ' assisted with preparation of the financial statements and related notes.
We acknowledge our responsibility as it relates to those nonaudit services, including that we
assume all management responsibilities; oversee the services by designating. an individual,
preferably within senior management, who possesses suitable skill, knowledge, or experience;
evaluate the adequacy and results of the services performed; and accept responsibility for the
results of the services. We have reviewed, approved, and accepted responsibility for those financial
statements and related notes.
27) The District has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral.
28) The District has complied with all aspects of contractual agreements that would have a material
effect on the financial statements in the event of noncompliance.
29) The financial statements include all component units as well as joint ventures with an equity interest,
and properly disclose all other joint ventures and other related organizations.
30) The financial statements properly classify all funds and activities, in accordance with GASB
Statement No. 34.
31) All funds that meet the quantitative criteria in GASBS Nos. 34 and 37 for presentation as major are
identified and presented as such and all other funds that are presented as major are particularly
important to financial statement users.
32) Components of net position (net investment in capital assets; restricted; and unrestricted), and
components of fund balance (nonspendable, restricted, committed, assigned, and unassigned) are
properly classified and, if applicable, approved.
33) Provisions for uncollectible receivables have been properly identified and recorded.
34) Expenses have been appropriately classified in or allocated to functions and programs in the
statement of activities, and allocations have been made on a reasonable basis.
35) Revenues are appropriately classified in the statement of activities within program revenues,
general revenues, contributions to term or permanent endowments, or contributions to permanent
fund principal.
36) Interfund, internal, and intra -entity activity and balances have been appropriately classified and
reported.
37) Deposits and investment securities and derivative instruments are properly classified as to risk and
are properly disclosed.
38) Capital assets, including infrastructure and intangible assets, are properly capitalized, reported, and,
if applicable, depreciated.
39) We have appropriately disclosed the District's policy regarding whether to first apply restricted or
unrestricted resources when an expense is incurred for purposes for which both restricted and
unrestricted net position is available and have determined that net position is properly recognized
under the policy.
40) We are following. GASB Statement No. 54, paragraph 18, to determine the fund balance
classifications for financial reporting purposes
41) We acknowledge our responsibility for the required supplementary information (RSI). The RSI is
measured and presented within prescribed guidelines and the methods of measurement and
presentation have not changed from those used in the prior period. We have disclosed to you any
significant assumptions and interpretations underlying the measurement and presentation of the
RSI.
42) With respect to the required supplementary information on which an in -relation -to opinion is issued.
a) We acknowledge our responsibility for presenting the required supplementary information in
accordance with accounting principles generally accepted in the United States of America, and
we believe the required supplementary information, including its form and content, is fairly
presented in accordance with accounting principles generally accepted in the United States of
America. The methods of measurement and presentation of the required supplementary
information have not changed from those used in the prior period, and we have disclosed to you
any significant assumptions or interpretations underlying the measurement and presentation of
the supplementary information.
b) If the required supplementary information is not presented with the audited financial statements,
we will make the audited financial statements readily available to the intended users of.the
supplementary information no later than the date we issue the supplementary information and
the auditor's report thereon.
43) Expenditures of federal awards were below the $500,000 threshold for the year ended December
31, 2014, and we were not required to have an audit in accordance with OMB Circular A-133.
Signature:
Signature:
Title: Title: