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2004 Audit .. .. .. ... .. iIIllI TOWN OF WAPPINGER, NEW YORK iIIIIII FINANCIAL STATEMENTS III AS OF AND FOR THE YEAR ENDED DECEMBER3!.2004 .. .. .. iIIllI .. iIIllI iIIllI iIIllI .. iIIllI .. .. III ... TOWN OF WAPPINGER, NEW YORK TABLE OF CONTENTS DECEMBER 31.2004 .. ... DESCRIPTION PAGE (S) Independent Auditors' Report................ ............. ......................................................................... 1-2 .. ... Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards .................................................................. 3-4 .. Management's Discussion and Analysis (unaudited) For The Year Ended December 31, 2004 ............... .......................................... ........................ 5-9 ... BASIC FINANCIAL STATEMENTS: Government- Wide Financial Statements .. Statement of Net Assets - December 31, 2004................................................................................ .....................................10 ... Statement of Activities - For The Year Ended December 31, 2004 .................... ........ ................. .................................................................. 11-12 .. FUND FINANCIAL STATEMENTS: .. Balance Sheet - Governmental Funds - December 31, 2004................... ............... ....... ...............13 .. Reconciliation of Governmental Funds Balance Sheet To The Statement of Net Assets - December 31, 2004........ ........................ ................. ........... ..14 ... Statement of Revenues, Expenditures and Changes In Fund Balances- Governmental Funds - F or the Year Ended December 31, 2004.................................................................................... .15 ... Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities - For the Year Ended December 31, 2004....... .................................... .16 .. ... ... IiIlII III .. Statement of Net Assets - Fiduciary Funds - December 31,2004 .................................. ..17 Notes to Basic Financial Statements.............. .............. ................................ .... ......... ............... 18-41 III REQUIRED SUPPLEMENTAL INFORMATION SECTION: III Exhibit I Budgetary Comparison Schedule - General Fund - For the Year Ended December 31, 2004..... ......... .............................. ........... ..42 III OTHER SUPPLEMENTAL INFORMATION SECTION: .. Exhibit II Combining Balance Sheet - Non-Major Governmental Funds - December 31, 2004 ........................................................................43-44 III Exhibit III Combining Statement of Revenues, Expenditures .. and Changes in Fund Balances - Non-Major Governmental Funds For the Year Ended December 31, 2004............ ......................................... .............. 45-46 ... Schedule of Findings and Recommendations....... ........... .................................................... .... 47-48 .. Town of Wappinger Responses to Audit Findings and Recommendations................................. ............................................................... ...... .49-50 III ... III .. III ... ... ... iIIIII ~~ II SEDORE & COMPANY Beechwood Office Park II INDEPENDENT AUDITORS' REPORT 2678 South Road Poughkeepsie, NY 1260] tel 845.485.55]0 fax 845.485.5547 Certified Public Accountants, pc. .. iIIIII To the Supervisor and Members ofthe Town Board Town of Wappinger, New York 20 Middlebush Road Wappingers Falls, New York 12590 Beilco" 845.83] .0542 www.sedoreco.com .. James L. Sedore, Jr, Cl'll l'viilrk S. US,,!!iViIIl, CPA II. Jillnes F Letterio, J1:, CI~1 Linda Ai Hanlll~~i1n, C/'lI Karen T Hallsen, CI'lI lflii We have audited the accompanying basic financial statements of the Town of Wappinger, New York as of December 31, 2004, and for the year then ended as listed in the foregoing Table of Contents. These basic financial statements are the responsibility of the Town of Wappinger, New York's management. Our responsibility is to express an opinion on these basic 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 the Government Auditing Standards issued by the Comptroller General ofthe United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. .. .. It As described in Note A, Summary of Significant Accounting Policies, the Town of Wappinger, New York has implemented a new financial reporting model, as required by the provisions of GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments, as of December 31, 2004. lflii In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the Town of Wappinger, New York as of December 31, 2004 and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. lflii It In accordance with Government Auditing Standards, we have also issued our report dated September 8,2005, on our consideration ofthe Town of Wappinger, New York's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. .. II. ~t .. Large Firm Expertise'"' Local Firm Service III IlIIiI Management's Discussion and Analysis and Exhibit I, budgetary comparison information, listed in the Table of Contents, are not a required part of the basic financial statements, but are supplementary information required by accounting principles generally accepted in the United States of America. We applied limited procedures, consisting principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. We did not audit the information and express no opinion thereon. III III .. Our audit was performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The combining fund statements listed in the Table of Contents as Exhibits II and III, are presented for purposes of additional analysis and are not a required part of the basic financial statements ofthe Town of Wappinger, New York. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements taken as a whole and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. III ill .. S. ~d- ~ I c...f"....!.s Wappingers Falls, New York September 8, 2005 ill ... III .. III III .. .. .. .. 2 .. .. ~~ ... SEDORE & COMPANY Beechwood Office Park .. REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 2678 South Road Poughkeepsie, NY 12601 tel 845.485.55]0 fax 845.485.5547 Beacon 845.831.0542 www.sedoreco.com .. Certified Public Accountants, pc. .. .. James L. Sedore, Jr., CPA Mark S. OSullivan, Cl'i1 .. To the Supervisor and Members of the Town Board Town of Wappinger, New York 20 Middlebush Road Wappingers Falls, New York 12590 jillll"S F Letterio, jI:, CI'i1 Linda At. H'ZIInigal/, CPA Karen T HilfLW'I/. Cl'i1 .. We have audited the basic financial statements ofthe Town of Wappinger, New York as of and for the year ended December 31, 2004, and have issued our report thereon dated September 8, 2005. We have 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 the Government Auditing Standards issued by the Comptroller General of the United States. .. .. Compliance .. As part of obtaining reasonable assurance about whether the Town of Wappinger's basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions oflaws, regulations, contracts and grants, 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 no instance of noncompliance that is required to be reported under Government Auditing Standards. We noted certain immaterial instances of noncompliance that we have also reported to management of the Town of Wappinger in the Schedule of Findings and Recommendations as listed in the Table of Contents. ill .. .. Internal Control Over Financial Reportine .. In planning and performing our audit, we considered the Town of Wappinger's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the basic financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the basic financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be .. .. .. .. Large Firm Expertise'"' Local Firm Service 3 .. .. material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management ofthe Town of Wappinger, New York, as described in the accompanying Schedule of Findings and Recommendations as listed in the Table of Contents. III III This report is intended for the information and use ofthe Supervisor, Town Board, Finance Director and Management, and is not intended to be and should not be used by anyone other than these specified parties. III s..~cr ~J c.p)Q-lj Wappingers Falls, New York September 8, 2005 III III III III III III III .. lit III .. .. .. 4 .. .. .. .. MANAGEMENT'S DISCUSSION AND ANALYSIS .. 1. Overview of the Financial Statements .. These audited financial statements consist of five parts. The Independent Auditors Report on our Financial Statements, Managements Discussion and Analysis (this section), Government- Wide Financial Statements, Fund Financial Statements and Notes to the Financial Statements. .. .. -Government- Wide Financial Statements provide both long term and short term information about the Town's overall financial status. They report information about the Town as a whole using accounting methods similar to private sector companies. .. .. -Fund Financial Statements focus on the individual parts of the Town government, reporting the Town's operations in more detail than the Government-Wide Financial Statements. They focus on the most significant or "major" funds-not the Town as a whole. See Note A in the notes to the financial statements for information regarding individual types of funds. .. -Notes to the Financial Statements provide further explanation and support for the information contained in the financial statements. .. 2. Financial Analysis of the Town as a Whole .. GENERAL FUND III The majority of activity for the Town is located in the General Fund. Net Assets for the General Fund decreased by $218,014 from 2003 to 2004. The major reason for this decrease was the increase in Interfund Transfers to the Highway Fund and to the Camwath/Greystone Restoration Project. .. .. Total General Fund Equity for 2004 is approximately $1,850,106 and $750,514 of this is unappropriated fund balance. .. The fluctuations in the budget are explained in the revenue and expense summary above. ... - III 5 .. 1M III The Following Charts describe significant categories of General Fund revenues and expenses: III General Fund Revenues 2004 ... 27% .. 33% 3% . Property Taxes . State Aid o Sales and Franchise Tax o Real Property Tax Items . Departmental Inc orne . Licenses and Permits . All Other Permits .. .. 5% .. 24% .. .. .. General Fund Expenses 2004 .. 12% . General government support .. .. . Public safety D Culture and Recreation iIIIII III D Home and community servIces . Employee benefits 13% II All Other .. .. 6 ... . .. HIGHWAY FUND .. The Highway Fund ended the year with $41,470. Fund Balance. Contractual expenses for machinery maintenance expenses increased by $22,866. Due to new contribution requirements implemented by the State New York State Retirement System, employee benefits increased by $58,971. These items account for the decrease in the Fund Balance. The following charts describe the significant categories of Highway Fund revenues and expenses: .. ... Highway Fund Revenues 2004 ... .. 6% 1% ... . Property Taxes . Transfers from Other Funds o State Aid o Other Revenue ... ... 85% .. ... Highway Fund Expenses 2004 ill 21% . Street Maintenance ill . 44% . Pennanent Road Improvements o Snow Removal III o Machinery Purchase and Maintenance . Employee Benefits .. 11% 5% . Brush and Weeds .. .. .. .. WATER FUND .. The Town operated twelve water districts during 2004 with an overall Fund Balance of $334,693. Operating revenues totaled $1,189,721 with the expenses totaling $1,238,225 resulting in excess (deficiency) of revenues over (under) expenditures in the amount of ($48,954). The Town has appropriated Fund Balance in the amount of$122,602 in the 2005 Budget and will continue to monitor available Fund Balance. .. .. SEWER FUND .. The Town operated nine Sewer Districts during 2004 with an overall Fund Balance $2,326,712. Two of the Districts represent debt service only and account for $906,712 of the total Fund Balance. These fund balances will be used to reduce debt service payments in the future budgets. The Town has appropriated Fund balance in the amount of $153,801 for 2005 Budget. .. .. 3. Activities regarding capital assets and long-term debt .. .. The Town spent over three million dollars on fifteen capital projects in 2004. The top five projects were: the Central Wappinger Water Improvement Area 1999-2R, the Wappinger Water District Connection and Expansion Project, the Dutchess County Airport Closure Project, the Sewer Improvement Area #4 Project and Highway equipment purchases. The expenditures for these projects accounted for seventy one percent (71 %) of the total capital expenditures. .. .. The Central Wappinger Water Improvement Area 1999-2R project has connected six of the Town's water districts to a common source of water. It is expected that the proj ect will be completed in the year 2005. The project expenses are funded entirely by the members of the district. Bonding to finance the construction of the project will take place in 2005 with long term financing to be issued in 2006. Total bonding for the project will be approximately $8,590,000. .. .. The other projects related to purchase of highway equipment, road blacktopping and drainage, technology project, recycle center and water and sewer district improvements, other than grant revenue, are funded by the General, Highway Funds or by the members of each water and sewer district. Future bonding is expected to be issued. Please review the notes to the financial statements for information regarding these issues. .. .. The Town has received a grant from the Community Development Block Grant through Dutchess County in the amount of $102,150 for the Wappinger Park Water District Connection and Expansion project. The total projected cost of the project is $780,000. .. .. 8 .. .. ilia LONG TERM DEBT .. The Town received a Moody's rating of Aa3 when it issued new bonds in 2003 and has maintained this rating during 2004. This is the fourth highest rating possible and the highest for a municipality in Dutchess County. .. .. Total long term debt at the end of 2004 was $24,913,556. Only $4,577,025 of this balance is General Fund debt. The majority of this relates to water districts amounting to $1,264,893 and sewer districts amounting to $19,071,638. This debt is financed by the members of each district. Please review the notes to the financial statements for further information regarding long term debt. .. .. III ... ... ... ... ... .. .. ... ... ... 9 .. TOWN OF WAPPINGER, NEW YORK STATEMENT OF NET ASSETS .. DECEMBER 31. 2004 GOVERNMENTAL ACTIVITIES .. ASSETS Current assets: Cash and cash equivalents $ 8,024,350 .. Restricted cash 584,925 Receivables (net) 1,838,771 Inventories 33,360 .. Deposits with other governments 5,000 Prepaid expenses 49,333 Total current assets 10,535,739 .. Capital assets: Land 7,782,217 .. Infrastructure, net of depreciation 2,248,341 Buildings, machinery and equipment, net of depreciation 5,525,526 Construction in Progress 6,638,467 - Total capital assets 22,194,551 Total assets $ 32,730,290 .. LIABILITIES Current Liabilities: Accounts Payable $ 815,587 .. Accrued liabilities and retainage payable 555,331 Notes payable 10,596,600 Deferred revenue 72,913 .. Due to other governments 92,026 Current portion 0 f long -term liabilities Landfill remediation liability 14,426 .. Bonds payable 1,848,556 Total current liabilities 13,995,439 Non-current liabilities: .. Judgment and claims 80,000 Compensated absence liabilities 155,791 Landfill remediation liability 1,187,743 .. Bonds payable 23,065,000 Total non-current liabilities 24,488,534 .. Total liabilities 38,483,973 NET ASSETS .. Invested in Capital Assets, net of related debt 5,614,308 Restricted for: Recreation 65,587 - Unrestricted (deficit) (11,433,578) Total net assets (5,753,683) Total liabilities and net assets $ 32,730,290 .. The accompanying Notes to the Financial Statements .. should be read in conjunction with these Financial Statements. 10 .. TOWN OF WAPPINGER, NEW YORK STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31.2004 .. .. FUNCTIONS/PROGRAMS Governmental Activities: General government support Public safety Health Transportation Economic assistance & opportunity Culture and recreation Home and community services Interest on long-term debt CHARGES FOR SERVICES OPERATING GRANTS AND CONTRIBUTIONS .. EXPENSES $ 3,262,995 653,088 328,915 2,229,015 32,684 880,786 2,073,883 1,371,296 $ 16,313 170,282 $ 9,656 .. Total governmental activities 10,832,662 General revenues Taxes: Real property taxes Non-property tax items Sales tax Mortgage tax Franchise taxes Payments from other governments Grants and contributions not restricted to specific programs Unrestricted investment earnings Special item-Gain on sale of property and compensation for loss Miscellaneous Total general revenues, special items and transfers Change in net assets before extraordinary item Extraordinary item - Landfill remediation cost Change in net assets Net assets - beginning Net assets - ending .. .. .. .... .. .. .. .... .. The accompanying Notes to the Financial Statements should be read in coniunction with these Financial Statements. .... 11 .. - - - - - 12 - . TOWN OF WAPPINGER, NEW YORK BALANCE SHEET . GOVERNMENTAL FUNDS DECEMBER 31.2004 . CAPITAL NON- TOTAL GENERAL PROJECTS MAJOR GOVERNMENTAL FUND FUND FUNDS FUNDS .. ASSETS Cash and cash equivalents $ 1,083,887 $ 4,734,510 $ 2,205,953 $ 8,024,350 Restricted cash 584,925 584,925 .. Receivables: Charges for services 636,777 636,777 Other 157,333 131,851 1,197 290,3 81 . Deposits with other governments 5,000 5,000 Due from other funds 349,647 70,000 126,319 545,966 Due from other governments 419,916 419,916 State and federal receivable 409,797 81,900 491,697 - Inventory, at cost 33,360 33,360 Prepaid expenses 29,481 19,852 49,333 Total assets $ 2,450,061 $ 5,608,186 $ 3,023,458 $ 11,081,705 - LIABILITIES AND FUND EQillTY - LIABILITIES Accounts payable $ 355,333 $ 237,211 $ 223,043 $ 815,587 - Accrued liabilities 6,390 10,548 16,938 Retainage payable 154,523 154,523 Bond anticipation notes payable 10,596,600 10,596,600 - Due to other funds 156,206 278,338 111,422 545,966 Due to other governments 82,026 10,000 92,026 Deferred revenues 72,913 72,913 - Total liabilities 599,955 11,349,585 345,013 12,294,553 FUND BALANCE - Fund balance (deficit): Reserved for: Encumbrances 16,690 16,690 - Prepaids and inventory 29,481 53,212 82,693 Miscellaneous 402,900 402,900 Unreserved: - Subsequent year's expenditures 676,372 280,496 956,868 Undesignated 724,663 (5,741,399) 2,344,737 (2,671 ,999) Total fund balance 1,850,106 (5,741,399) 2,678,445 (1,212,848) . Total liabilities and fund balance $ 2,450,061 $ 5,608,186 $ 3,023,458 $ 11,081,705 - The accompanyilll1: Notes to the Financial Statements - should be read in conjunction with these Financial Statements. 13 - .. TOWN OF WAPPINGER, NEW YORK RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS DECEMBER 31. 2004 .. .. .. Total fund equity for governmental funds $ (1,212,848) .. Total net assets reported for governmental activities in the statement of net assets are different because: ... Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 22,194,551 ... Long-term liabilities, including bonds payable, compensated absences, service award program liability, judgement and claims .. and landfill remediation liabilities are not due and payable in the current period and therefore are not reported in the funds. (26,351,516) .. Inventories are not reported in the funds .. Accrued interest is not reported in the funds. (383,870) Total net assets of governmental activities $ (5,753,683) .. .. .. .. .. .. 11M .. The accompanying Notes to the Financial Statements should be read in conjunction with these Financial Statements. 14 .. .. TOWN OF WAPPINGER, NEW YORK STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES ... GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31. 2004 iIIIII CAPITAL NON- GENERAL PROJECTS MAJOR TOTAL FUND FUND FUNDS FUNDS REVENUES .. Real property taxes $ 1,291,664 $ $ 4,256,701 $ 5,548,365 Real property taxes items 61,216 28 61,244 Non property taxes items 1,458,173 1,458,173 .. Departmental income 165,251 2,018,654 2,183,905 Intergovernmental charges 2,596 2,596 Use of money and property 189,969 58,420 550,300 798,689 Licenses and permits 245,321 245,321 .. Fines and forfeitures 144,305 144,305 Sale of property and compensation for loss 7,590 277,749 5,895 291,234 Miscellaneous local sources 6,900 91,993 3,838 102,731 .. State aid 1,774,916 104,534 1,879,450 Federal aid 93,900 93,900 Total revenues 5,345,305 522,062 6,942,546 12,809,913 .. EXPENDITURES General government support 2,008,171 1,143,608 1,293 3,153,072 .. Public safety 496,097 496,097 Health 3,920 322,434 326,354 Transportation 176,438 422,204 1,350,813 1,949,455 .. Economic assistance & opportunity 32,684 32,684 Culture and recreation 671,080 37,238 708,318 Home and community services 582,116 1,563,045 1,990,661 4,135,822 Employee benefits 620,724 377,154 997,878 .. Debt service 747,223 4,340 3,211,974 3,963,537 Total expenditures 5,338,453 3,170,435 7,254,329 15,763,217 .. Excess of revenues over expenditures 6,852 (2,648,373) (311,783) (2,953,304) Other financing sources: BANs redeemed from appropriations 623,250 623,250 .. Operating transfers in 19,133 84,000 361,641 464,774 Operating transfers out (244,000) (220,774) (464,774) Total other financing sources (224,867) 486,476 361,641 623,250 .. Excess (deficiency) of revenue and other sources over expenditures and other uses (218,015) (2,161,897) 49,858 (2,330,054) .. Fund Balance, December 31, 2003 2,068,121 (3,579,502) 2,628,587 1,117,206 Fund Balance, December 31, 2004 $ 1,850,106 $ (5,741,399) $ 2,678,445 $ (1,212,848) .. The accompanying Notes to the Financial Statements should be read in conjunction with these Financial Statements. 15 .. - .. .. TOWN OF WAPPINGER, NEW YORK RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31. 2004 ... ... .. Net change in fund balance - total government funds ... The change in net assets reported for governmental activities in the statement of activities is different because: .. Governmental funds report all capital outlays as expenditures. However, in the statement of activities, the cost of certain assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation expense in the current period. ... .. Bond proceeds are reported on the financing sources in governmental funds and thus contribute to the change in fund balance. In the statement of net assets, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net assets. .. .. Debt issued: Bonds payable Bond anticipation note redeemed Repayments: Bond anticipation note principal Bond principal l1li .. .. In the statement of activities, interest is accured on outstanding bonds, whereas in governmental funds, an interest expenditure is reported when due. l1li Some expenses reported in the statement of activities, such as materials' inventory, compensated absences and landfill liabilities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. .. .. Net change in net assets of governmental activities .. (623,250) 623,250 2,011,000 .. The accompanying Notes to the Financial Statements should be read in conjunction with these Financial Statements. .. $ (2,330,054) 1,996,092 2,011,000 (42,009) (201,575) $ 1,433,454 16 ~ TOWN OF WAPPINGER, NEW YORK STATEMENT OF FIDUCIARY NET ASSETS .. FIDUCIARY FUND DECEMBER 31. 2004 .. AGENCY .. FUNDS ASSETS .. Cash and cash equivalents $ 848,861 .. Total assets 848,861 .. LIABILITIES .. Escrow funds returnable and other liabilities 848,861 Total liabilities 848,861 iIIIIII NET ASSETS .. Total liabilities and net assets $ 848,861 - III .. .. .. .. .. .. The accompanying Notes to the Financial Statements should be read in conjunction with these Financial Statements 17 .. III .. .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31. 2004 .. NOTE A - Summary of Sig:nificant Accounting: Policies The Town of Wappinger, New York (lithe Town") was incorporated on May 20, 1875, under the provisions of the State of New York. The Town operates under a Town Board form of government, consisting of a Supervisor and four Councilmen/women. The Supervisor serves as the Chief Executive Officer and as the Chief Fiscal Officer of the Town. .. .. - The Town provides the following services: highway maintenance, water, sewer, planning, zoning, building and safety inspection, lighting, and culture and recreation. The Town's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America as applied to governmental units (GAAP). The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements (Statements and Interpretations). The Town is also required to follow the pronouncements of the Financial Accounting Standards Board (FASB) issued through November 30, 1989 (when applicable) that do not conflict with or contradict GASB pronouncements, .in preparing its government-wide financial statements. The more significant accounting policies established by GAAP and used by the Town in preparing its government-wide and fund financial statements are discussed below. ... ... .. .. 1. The Reporting: Entity The Town, for financial purposes, includes all of the funds relevant to the operations of the Town of Wappinger, New York. The financial statements include organizations, function and activities that are controlled by or dependent upon the Town. Control or dependence is determined on the basis of budget adoption, taxing authority, funding and appointment of the respective governing board. Under these criteria, no other entities are included in the Town's financial statements. - .. .. .. .. .. - .. 18 . ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31.2004 .... .. NOTE A - Summarv of Sh!:nificant Accountine: Policies (Continued) 2. Basic Financial Statements - Government-Wide Statements .. The Town's basic financial statements include both government-wide (reporting the Town as a whole) and fund financial statements (reporting the Town's major funds). Both the government-wide and fund financial statements categorize primary activities as either governmental or business type activities. The Town's parks and recreation, public works, and general administrative services are classified as governmental activities. The Town's water services are also classified as governmental activities since user fees are not intended to cover all costs including depreciation. .. III .. In the government-wide Statement of Net Assets, the governmental activities columns is presented on a consolidated basis by column, and is reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The Town's net assets are reported in three parts-invested in capital assets, net of related debt; restricted net assets; and unrestricted net assets. The Town first utilizes restricted resources to finance qualifying activities. .. III The government-wide Statement of Activities reports both the gross and net cost of each of the Town's functions or activities. The functions are also supported by general government revenues (property and sales taxes, certain intergovernmental revenues, fines, permits and charges, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. Program revenues must be directly associated with the function (public works, community and youth services, etc.). Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. III .. .. The net costs are normally covered by general revenue (property, sales or mortgage taxes, intergovernmental revenues, interest income, etc). .. This government-wide focus is more on the sustainability of the Town as an entity and the change in the Town's net assets resulting from the current year's activities. .... .. ... ... ... 19 .. ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31. 2004 ... .. NOTE A - Summary of Sie:nificant Accountine: Policies (Continued) 3. Basic Financial Statements - Fund Financial Statements .. The financial transactions of the Town are reported in individual funds in the fund financial statements. Each fund is accounted for by providing a separate set of self- balancing accounts that comprises its assets, liabilities, reserves, fund equity, revenues and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the Town or meets the following criteria: .. .. a. .. b. .. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental fund are at least 10 percent of the corresponding total for all funds of that category or type; and Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. The following fund types are used by the Town: .. A. Governmental Funds .. The focus of the governmental funds' measurement (in the fund statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. .. The following is a description of the governmental funds ofthe Town: .. 1. General fund is the general operating fund of the Town. It is used to account for all financial resources except those required to be accounted for in another fund. The General Fund is considered a major fund and is presented separately. .. 2. Capital projects fund is used to account for financial resources to be used for the acquisition and construction of major capital facilities. The Capital Projects Fund is considered a major fund and is presented separately. However, no budgetary comparison schedule is presented as required supplemental information, as the Town is not legally required to adopt an annual budget for the Capital Projects Fund. .. .. - 3. Non-major funds include those that are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. - - 20 . .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31.2004 .. .. NOTE A - Summary of Si2nificant Accountin2 Policies (Continued) B. Fiduciary Funds .. Fiduciary Funds are used to report assets held in a trustee or agency capacity for others and therefore are not available to support Town programs. The reporting focus is on net assets and changes in net assets and are reported using accounting principles similar to proprietary funds. The Town's fiduciary funds are presented in the fiduciary fund financial statements. Since by definition these assets are being held for the benefit of a third party and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. .. .. .. 4. Basis of Accountin2 .. Basis of accounting refers to the point at which revenues or expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made regardless of the measurement focus applied. .. A. Accrual .. The governmental activities in the government-wide financial statements and fiduciary fund financial statements are presented on the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. .. B. Modified Accrual .. The governmental funds financial statements are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. "Available" means collectible within the current period or within 60 days after year-end. Expenditures are generally recognized under the modified accrual basis of accounting when the related liability is incurred. The exception to this general rule is that principal and interest on general obligation long-term debt, if any, is recognized when due. .. .. .. ... ... ... 21 ... ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31. 2004 .. ... NOTE A - Summary of Sienificant Accountine Policies (Continued) 5. Financial Statement Amounts ... A. Cash and Investments .. Cash includes amounts in demand and time deposits, as well as, short-term investments. State statutes and the Town's own written investment policy govern the investment policies of the Town. The Town may invest its funds in banks or trust companies authorized to do business in the State of New York, as well as investing in obligations of the U. S. Treasury, U.S. Agencies, and obligations of the State of New York and its political subdivisions. Deposits not covered by Federal Deposit Insurance, are collateralized by the banking institutions with investments governed under state statutes. Short-term investments consist of investments in repurchase agreements. The repurchase agreements involve purchases by a broker of portfolio securities concurrently with an agreement by the broker to sell the same securities at a later date at a fixed price. Generally, the effect of such a transaction is that the Town can invest its excess cash balances at competitive interest rates. The Town reports its repurchase agreements at market value, which approximates cost plus accrued interest. .. ... .. .. The cash and investments of the Town at December 31,2004, are as follows: ... NON- CAPITAL GENERAL MAJOR PROJECTS FUND FUNDS FUND TOTAL Non-Interest Bearing Accounts $ 800 $ $ $ 800 Interest Bearing Accounts 1.083.087 2.205.953 4.734.510 8.023.550 Subtotal 1,083,887 2,205,953 4,734,510 8,024,350 Restri cted - Interest Bearing Accounts 584.925 584.925 TOT ALS $ 1,083.887 $ 2,205.953 $ 5.319.435 $ 8.609.275 ... .. ... ... .. ... ... ... 22 .. ... .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31. 2004 ... NOTE A - Summarv of Sie:nificant Accountine: Policies (Continued) 5. Financial Statement Amounts (Continued) ... A. Cash and Investments (Continued) ... The restricted cash represents unspent bond proceeds whose use is limited to funding certain construction projects and related debt service. This restricted cash is further described in Note I - Commitments and Contingent Liabilities, Items 3 and 4 - Tri-Municipal Sewer Plant Expansion. ... Deposits and investments at year-end were entirely covered by federal deposit insurance, or by collateral held by a third party custodian in the Town's name. .. Disclosures relating to risk and type of investment as presented are indicative of activity and positions held during the year. III B. Inventories ... Inventories consist of significant expendable supplies primarily sand and road salt and are carried at cost. ... C. Capital Assets Capital assets purchased or acquired with an original cost of $500 or more are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on the straight-line basis over the following estimated useful lives: III III III Buildings Infrastructure - Water & Sewer Infrastructure - Roads Machinery and equipment Improvements 15-40 years 40 years 15 years 5-15 years 10-30 years III III GASB Statement No. 34 requires the Town to report and depreciate new infrastructure assets effective with the beginning of the current year. Infrastructure assets include roads, bridges, underground pipe (other than related to utilities), traffic signals, etc. These infrastructure assets are likely to be the largest asset class of the Town. Neither their historical cost nor related depreciation has historically been reported in the financial statements. The retroactive ... ... ... 23 ... .. .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31. 2004 .. NOTE A - Summarv of Sie:nificant Accountine: Policies (Continued) 5. Financial Statement Amounts (Continued) .. C. Canital Assets (Continued) ill reporting of infrastructure is subject to an extended implementation period and is first effective for fiscal years ending in 2006. The Town has implemented the general provisions of GASB Statement No. 34 in the current year and expects to implement the retroactive infrastructure provisions in the year ending December 31, 2005. ill D. Accumulated Comnensated Absences .. .. It is the Town's policy to permit employees of the Highway Department to accumulate a limited amount of earned but unused vacation and sick leave, which will be paid to employees upon separation from the Town's service. Other Town employees may accumulate a limited amount of unused compensated absences as well. However, for other Town employees, only unused vacation leave will be paid upon separation from the Town's service. The Town accrues a liability for compensated absences, which meet the following criteria: .. .. 1. The Town's obligations relating to employees' rights to compensation for future absences is attributable to employee's services already rendered; 2. The obligation relates to rights that vest or accumulate; .. 3. Payment of the compensation is probable; 4. The amount can be reasonably estimated. ill In accordance with the above criteria, the Town has accrued a liability for vacation pay, which has been earned and not taken by Town employees as of December 31, 2004, in the amount of$156,386. The non-current portion (the amount estimated to be used in subsequent fiscal years) for governmental funds is maintained separately and represents a reconciling item between the fund and government-wide presentations. It is anticipated that none of these liabilities will be liquidated with expendable available financial resources. .. .. E. Interfund Activity .. Interfund activity is reported as either loans, services provided, reimbursements or transfers. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government- wide financial statements. .. .. .. 24 ... ... .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31. 2004 ... NOTE A - Summary of Si2nificant Accountin2 Policies (Continued) S. Financial Statement Amounts (Continued) F. Bud2ets .. .. The Town employs formal budgetary accounting as a management tool, on a basis consistent with generally accepted accounting procedures. During the year, a budget was adopted and modified by the Town Council for the General Fund and Non-major Funds. Budgetary controls are established or adopted for the Capital Projects Fund on a project basis. Unused appropriations of the annually budgeted funds lapse at the end ofthe year. ... G. Pension Plans III Plan Description .. The Town of Wappinger participates in the New York State and Local Employees' Retirement System (ERS), the New York State and Local Police and Fire Retirement System (PFRS) and the Public Employees' Group Life Insurance Plan (Systems). These are cost-sharing multiple-employer retirement systems. The Systems provide retirement benefits as well as death and disability benefits. Obligations of employers and employees to contribute and benefits to employees are governed by the New York State Retirement and Social Security Law (NYSRSSL). .. III As set forth in the NYSRSSL, the Comptroller of the State of New York (Comptroller) serves as sole trustee and administrative head of the Systems. The Comptroller shall adopt and may amend rules and regulations for the administration and transaction of the business of the Systems and for the custody and control of their funds. The Systems issue a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to the New York State and Local Retirement Systems, 110 State Street, Albany, NY 12244. .. ... Funding Policy .. .. The Systems are noncontributory except for employees who joined the New York State and Local Employees' Retirement System after July 27, 1976 who contribute 3% of their salary. Under the authority of the NYSRSSL, the Comptroller shall certify annually the rates expressed as proportions of payroll of members, which shall be used in computing the contributions required to be made by employers to the pension accumulation fund. III 11M - - 25 III - .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31. 2004 .. NOTE A - Summary of Sh!:nificant Accountine: Policies (Continued) 5. Financial Statement Amounts (Continued) .. G. Pension Plans: Plan Description (Continued) .. The Town of Wappinger is required to contribute at an actuarially determined rate. The required contributions for the current year and two preceding years were: .. ERS 2004 $ 210.000 2003 $ 115.996 2002 $ 21.258 .. . The Town's contributions made to the Systems were equal to or in excess of 100 percent of the contributions required for each year. H. Post Emplovment Benefits .. .. In addition to providing pension benefits, the Town provides health insurance coverage and survivor benefits for retired employees and their survivors. Substantially all of the Town employees may become eligible for these benefits if they reach normal retirement age while working for the Town. Health care benefits and survivors benefits are provided through an insurance company whose premiums are based on the benefits paid during the year. The Town recognizes the cost of providing benefits by recording its share of insurance premiums as an expenditure in the year paid. .. . For the year of 2004, $46,721 was paid on behalf oftwelve retirees, and recorded as expenditures in the General and Special Revenue Funds. .. I. Property Taxes The Town submits an approved budget to the Dutchess County Commissioner of Finance by December 5th of the previous year. The County then establishes the warrant for the year, which is due and payable on or about January 1 of each year. The Town collects the taxes on behalf of the Town and County without penalty through February 28th and with penalties and interest through August 31st. The Town's portion of the taxes is recognized and transferred prior to the County's portion. Therefore, the Town receives its entire tax, leaving the unpaids to be collected by the County Commissioner of Finance. 11III .. .. - .. 26 .. .. TOWN OF WAPPINGER, NEW YORK . NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31.2004 - - NOTE A - Summary of Sie:nificant Accountine: Policies (Continued) 5. Financial Statement Amounts (Continued) .. J. Lone:- Term Liabilities - Long-Term Debt is recognized as a liability of a governmental fund when due, or when resources have been accumulated for payment early in the following year. For other long- term obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. The remaining portion of such obligations is only reported in the statement of net assets, Long-Term Liabilities. .. .. K. Reservations of Fund EQuitv - The Town records indicate that portions of the fund equity are segregated for specific future uses. The following details the description and amounts of the reserves used by the Town: General Fund BALANCE AT 12/31/04 .. .. .. Reserved for Encumbrances Reserved for Miscellaneous: Inspection Fees $ 16,690 TOTAL FUND EQUITY RESERVES 402,900 419,590 $ - .. L. Risk Manae:ement .. - The Town of Wappinger assumes the liability for most risk including, but not limited to, property damage and personal injury liability. Such risks are covered by the purchase of commercial insurance. Judgments and claims are recorded when it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. Workers compensation coverage is provided through a retrospective policy, wherein premiums are recorded based on the ultimate cost of the experience to date of workers in similar occupations. The Town does not estimate claims, which may have occurred but are not reported in areas where the Town is not insured. .. - .. 27 ... ... ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D) DECEMBER 31. 2004 ... NOTE A - Summary of Sie:nificant Accountine: Policies (Continued) 5. Financial Statement Amounts (Continued) M. Use of Estimates .. .. The preparation of basic 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 amounts reported in the basic financial statements and the accompanying notes. Actual results could differ from those estimates. .. NOTE B - Other Receivables .. Other Receivables at December 31, 2004, consist of the following: .. ... NON GENERAL MAJOR FUND FUNDS TOTAL ACCOlUlts Receivable $ 157,333 $ 1,197 $ 158,530 Water & Sewer Rents Receivable 636,777 636,777 TOTALS $ 157,333 $ 637,974 $ 795,307 .. .. .. III .. .. - ... 28 - - .. ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 ... .. NOTE C - Interfund Receivables and Pavables and Transfers The following is a summary of amounts due from and due to other funds, as of December 31, 2004. These interfund balances have been eliminated as part of the aggregation of fund balances. Such balances arise through the use of a pooled cash disbursement account and the temporary funding of capital projects. .. .. AMOUNT AMOUNT FUND RECEIVABLE PAYABLE General $ 349,647 $ 156,206 Capital Projects 70,000 278,338 Non-Major 126,319 111,422 TOTALS $ 545,966 $ 545,966 ... III III TRANSFERS FROM General General Capital Projects Capital Projects TOTALS TRANSFERS TO Non-Major Capital Projects Non-Major General AMOUNT $ 160,000 84,000 201,641 19,133 $ 464,774 .. .. ... .. .. .. - - 29 .. .. .. .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 ... NOTE D - Capital Assets The following is a summary of changes and adjustments in the Capital Assets, for the year ended December 31, 2004: .. BALANCE BALANCE JANUARY 1, DECEMBER 31, .. 2004 ADDITIONS (DISPOSALS) 2004 Land $ 7,761,540 $ 20,677 $ $ 7,782,217 .. Build~ 5,563,634 20,569 5,584,203 llllprovements Other Than Buildin~ 693,686 693,686 .. Roads 298,617 195,246 493,863 Infrastructure 1,035,235 844,961 1,880,196 .. Machinery & Equipment 3,703,671 307,944 4,011,615 Construction in Progress 5,557,095 1,081,372 6,638,467 .. Total 24,613,478 2,470,769 27,084,247 Less accumulated depreciation .. Buildin~ 1,751,838 144,029 1,895,867 Improvements Other Than Buildin~ 516,219 15,469 531,688 .. Roads 19,908 32,924 52,832 Infrastructure 25,881 47,005 72,886 Machinery & .. Equipment 2,101,174 235,249 2,336,423 Total accumulated depreciation 4,415,020 474,676 4,889,696 .. Governmental activities capital assets, net $20,198,458 $ 1,996,093 $ $ 22,194,551 .. * Depreciation was charged to governmental activities as follows: General government support 110,764 . Public safety 54,163 Transportation 216,933 .. Home and community services 30,623 Culture and recreation 62,193 Total depreciation expense $ 474,676 ... .. 30 ... - - .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 NOTE E - Bond Anticination Notes Payable (Continued) .. Changes in Bond Anticipation Notes Payable as of December 31, 2004, are as follows: PURPOSE BALANCE BALANCE JANUARY1~ NEW DECEMBER 31, 2004 ISSUES PAYMENTS 2004 $ 120,000 $ 810,000 $ (201,400) $ 728,600 1,387,000 240,000 (174,000) 1,453,000 5,135,000 3,580,000 (300,000) 8,415,000 $6,642,000 $ 4,630,000 $ (675,400) $ 10,596,600 Mil Mil .. Various Purposes Highway Equipment Water TOTALS .. NOTE F - Lone:-Term Liabilities Mil 1. Serial Bonds Mil Serial Bonds may be issued for any object or purpose for which a period of probable usefulness has been established. The Serial Bonds Payable, as of December 31, 2004, are as follows: PURPOSE ORIGINAL FINAL ISSUE MATURITY INTEREST DATE DATE RATE ORIGINAL AMOUNT OF ISSUE AMOUNT OUTSTANDING AT DECEMBER 31, 2004 .. .. - Water $ 148,070 $ 9,150 Sewer 362,000 22,425 Town Hall 700,000 43,425 12/01/85 06/01/05 7.75% 1,210,070 75,000 Sewer - Tri- Municipal 11/12/92 09/15/12 5.80%-6.65% 4,342,000 1,429,000 Sewer - Tri- Municipal 08/07/02 06/15/12 2.00%-4.40% 1,718,000 1,396,000 Sewer - Tri- Municipal 03/14/02 04/15/21 1.21%-4.98% 9,836,556 8,476,556 Sewer - Tri- Municipal 11/26/02 05/15/15 3.18%-5.99% 8,519,786 5,050,000 Sewer - Tri-Municipal 06/01/95 11/15/15 3.70%-5.55% 2,610,054 1,605,000 Water - Fleetwood 07/30/98 10/15/18 3.70%-5.15% 510,000 390,000 .. Mil - ... - 32 - ... ... ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 .. NOTE F - Lone:- Term Liabilities (Continued) 1. Serial Bonds (Continued) iIlIlIl AMOUNT OUTSTANDING ... ORIGINAL FINAL ORIGINAL AT ISSUE MATURITY INTEREST AMOUNT DECEMBER 31, PURPOSE DATE DATE RATE OF ISSUE 2004 .. Greystone Property Purchase 1 % 1/00 10/01/20 4.75%-6.50% 2.085.000 1.825.000 .. Water 452,732 309,000 Sewer 288,876 199,300 Drainage 1,253.392 871,700 .. 10/02/01 08/15/11 3.77% 1,995.000 1,380.000 Emergency Services Building 06/01/95 11/15/15 3.70%-5.55% 1,275.000 1,030.000 .. Water 564,000 556,743 Sewer 905,000 893,357 .. Lighting 785.000 774.900 02/25/03 03/01/23 4.00%-4.50% 2.254.000 2.225.000 .. TOTALS $ 36.355.466 $ 24.881,556 2. Statutory Installment Bonds .. The Town may borrow an amount in the form of a statutory installment bond not to exceed $1,000,000 for any purpose, which has a period of probable usefulness. .. The Statutory Installment Bonds Payable as of December 31, 2004 are as follows: PURPOSE ORIGINAL FINAL ISSUE MATURITY INTEREST DATE DATE RATE ORIGINAL AMOUNT OF ISSUE AMOUNT OUTSTANDING AT DECEMBER 31, 2004 .. .. .. Emergency Services Building 05/04/00 05/04/05 5.50% $ 160,000 $ 32,000 .. TOTALS $ 160,000 $ 32,000 33 .. .. .. .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 .. NOTE F - Lon2- Term Liabilities (Continued) 3. In-Substance Defeasance of Debt .. In October 2001, the Town issued $3,270,000 of General Obligation Bonds in two series, Series A yielding a true interest rate of 3.72% and Series B yielding a true interest rate of 4.00%. The purpose of these bonds was to advance refund two issues, 1991 Public Improvement debt, with an outstanding balance of $1,870,000 and bearing interest at 6.5%; and 1994 Public Improvement debt, with an outstanding balance of $1,155,000 and bearing interest at 6.00%. The net proceeds of $3,190,941, after payment of $92,160 of underwriting, insurance and other costs of issuance, and net of an original issue premium of $13,101, was used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on both the 1991 and the 1994 Series bonds. The refunding resulted in a net decrease in debt service payments of $250,540, representing an economic (present value) gain of $213 ,899. As a result, the 1991 and 1994 Series bonds are considered to be in-substance defeased, and the liability for those bonds has been removed from the General Long Term Debt. On February 12, 2002, Series A was called and paid in full. As of December 31, 2004 $960,000 in Series B bonds considered defeased were outstanding. .. ill .. .. 4. Chan2es .. The changes in the Town's indebtedness during the year ended December 31, 2004, are summarized as follows: .. BALANCE BALANCE AMOUNTS JANUARY 1, DECEMBER 31, DUE WITHIN 2004 INCREASE (DECREASE) 2004 ONE YEAR .. Serial Bonds Note F.l $ 26,860,556 $ - $ (1,979,000) $ 24,881,556 $ 1,816,556 .. Statutory Installment Bonds Note F.2 64,000 (32,000) 32,000 32,000 Compensated Absences Note A.8 135,502 20,884 156,386 .. LandfIll Post Closure Costs Note J.l 201,574 (14,426) 187,148 14,426 .. Judgement & Claims Note I.l 80,000 80,000 TOTALS $ 27,341,632 $ 20,884 $ (2,025,426) $ 25,337,090 $ 1,862,982 .. .. .. 34 .. ... ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 ... III NOTE F - Lone:- Term Liabilities (Continued) 5. Debt Service Reauirements .. The annual requirements to amortize bonded debt, as of December 31, 2004, are as follows: .. YEAR END IN G DECEMBER 31, 2005 2006 2007 2008 2009 2010-2014 2015-2019 2020-2024 TOTALS .. .. .. .. .. .. .. III III .. .. .. .. PRINCIPAL $ 1,848,556 1,790,000 1,830,000 1,875,000 1,920,000 9,050,000 4,600,000 2,000,000 $ 24,913,556 INTEREST $ 1,135,267 1,063,155 990,782 912,304 828,509 2,751,613 1,033,636 126,683 $ 8,841,949 TOTAL $ 2,983,823 2,853,155 2,820,782 2,787,304 2,748,509 11,801,613 5,633,636 2,126,683 $ 33,755,505 35 .. - .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 .. NOTE G - Operatinf! Leases .. The Town is committed under various leases for office equipment and communication equipment. These leases are considered for accounting purposes to be operating leases. Lease expenditures for the year ended December 31, 2004 amoUnted to $39,649. At December 31, 2004, the approximate annual operating lease commitments, subject to appropriation of funds, were as follows: .. YEAR ENDING DECEMBER 31. OPERATING LEASES .. .. 2005 2006 2007 2008 2009 thereafter Total minimum lease payments $ 41,899 34,918 21,591 19,206 15,360 3,840 136.814 .. .. $ .. NOTE H - Deficit Fund Balances .. Certain Capital Projects had fund equity deficits at the end of the year. Certain of those deficits arose through the funding of expenditures by issuing bond anticipation notes. As these notes are paid, revenue will be recognized and the deficits will be eliminated. There were twelve such capital projects with accumulated fund equity deficits totaling $6,877,355. In addition, there were four capital proj ects with accumulated fund equity deficits totaling $234,841, whose expenditures were funded by loans from other funds. .. NOTE I - Commitments and Continf!ent Liabilities .. 1. Lawsuits .. The Town is a defendant in various lawsuits and tax certiorari cases. The outcome of the majority of these cases and lawsuits, as determined by the Town Attorney, should not result in material unfavorable settlements. Any return of property taxes made as a result of the settlement of a tax certiorari case is funded by an increase in the property taxes collected in the year subsequent to payment. The Town has recorded an estimated liability amounting to $80,000 as Judgment and Claims, representing possible future settlements on tax certiorari cases. .. - .. .. 36 .. ill .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 NOTE I - Commitments and Continl!ent Liabilities (Continued) .. 2. Grants .. The Town has received amounts from grantor agencies, principally the Department of Housing and Urban Development. Any allowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures, which may be disallowed by the grantor agency, cannot be determined at this time. III 3. Tri-Municinal Sewer Plant Exnansion .. As a result of a consent judgment signed between the Town and the New York State Department of Environmental Conservation, regarding alleged environmental violations, the Town was required to fund construction of a sewer line to the Tri-Municipal Sewer Treatment Plant, plus a one million gallon expansion of said plant. The plant is owned and operated by the Tri- Municipal Sewer Commission, made up of representatives of the Town of Poughkeepsie and the Village of Wappingers Falls. The Town, therefore, does not have ownership rights, nor does it have voting rights on the Commission's governing board. .. .. ill Funding for the project has been provided by two authorizations, for a total estimated project cost of $19,630,054. Through December 31, 2004, $17,189,840 in bonds have been issued through the Environmental Facility Corporation (EFC), and $2,060,414 in Bond Anticipation Notes had been issued. .. Total project costs incurred through December 31, 2002, amounted to $18,590,291. The unspent construction funds are periodically being applied toward the Town's principal and interest payments. The balance available to the Town as of December 31, 2004 amounted to $119,040, and is included in Cash from obligations - restricted. .. .. 4. Tri Municinal Sewer Plant Exnansion - Phase IliA In January 1999, the Town Board authorized the Phase 3A Sewer Improvement Project to further expand the Commission's sewage treatment facility, from 2.4 million gallon per day capacity to 3.4 million gallon per day capacity, the costs of which to be funded by the Town. The Town estimated construction and related project costs to be $10,400,000, which was increased to $10,900,000 in April 2001. The Town has incurred $10,390,430 in professional fees and project costs to date. The Town issued bond anticipation notes through the Environmental Facilities Corporation totaling $10,900,000 to fund present and future project costs. Unspent bond proceeds are included in Cash from obligations - restricted, $465,885, representing cash held by the Environmental Facilities Corporation and, included in Deposits with other governments, is $5,000, representing cash held by the Tri-Municipal Sewer Commission for project expenditures to be paid by that entity. .. .. .. .. On March 14,2002, long-term financing for the project was issued through the New York State Environmental Facilities Corporation in the amount of $9,836,556. In addition, the Town of Wappinger renewed a bond anticipation note in the amount of $955,444 to cover costs not eligible for bonding on the project through New York State Environmental Facilities Corporation. .. 37 .. III ... .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 .. NOTE I - Commitments and Contine:ent Liabilities (Continued) 5. Central Wappine:er Water Imnrovement Area 99-2R .. .. In February 2001, the Town Board adopted a Bond Resolution authorizing the issuance of $8,590,000 in serial bonds to pay the costs of water improvement. As of December 31, 2004 the Town Board has the issued of $7,520,000 in bond anticipation notes to pay for the costs of aforesaid project. III The Town is planning to apply for long-term financing for the project through the New York State Environmental Facilities Corporation. The costs incurred on the project amounted to $6,004,036, as of December 31, 2004. III III ill III ill III ill ill ill .. .. 38 .. ... ill. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 .. ill. NOTE I - Commitments and Contin2ent Liabilities (Continued) 6. Authorized Debt .. As of December 31, 2004 the Town has authorized, but not issued, the following new debt: .. AuthoriDltion Authorized Un-issued PURPOSE Date Amount Amount Refimding Bonds 02/01/99 $ 4,700,000 $ 1,430,000 Central Wappinger Water 02/12/01 8,590,000 1,070,000 Town Recreation Center 09/1 % 1 2,496,000 2,496,000 Road Improvement OS/27/03 3,300,000 2,670,000 Computer Hardware and Software 03/12/03 550,000 300,000 Joint Landfill 01/26/04 850,368 430,368 Fleetwood Water 11/22/04 88,500 88,500 Real Property Revaluation 12/13/04 575,000 575,000 TOTALS $ 21,149,868 $ 9,059,868 NOTE J - Municipal Landfills 1. Castle Point Landfill .. .. .. .. .. .. .. The Town has voluntarily entered into a Consent Order with the New York State Department of Environmental Conservation to close, cap and monitor the landfill at Castle Point. The closing and capping project was completed in 1999. The costs of monitoring, which could be required for up to thirty years after closure, are currently estimated to amount to $187,538. The Town has recorded this liability in the Long Term Debt. The costs of both closure and post closure monitoring are ordinarily recognized over the expected useful life of the landfill. However, since the landfill has stopped accepting refuse and is now closed, any additional costs over the estimate is being recognized as incurred. The Town incurred $14,426 in monitoring costs during 2004. The future costs may be higher due to inflation, changes in technology or subsequent changes in regulations. .. .. .. .. The Town has been awarded $274,722 in grant funds through the New York State Department of Environmental Conservation Landfill Closure Assistance Program, based on eligible construction expenditures. The Town has received 100% of these grant monies from the State. .. 39 III - .. .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31. 2004 ... NOTE J - Municipal Landfills (Continued) 2. Poue:hkeepsie-Wappine:ers-LaGrane:e Joint Landfill .. .. The Town has shared in the monitoring costs of a closed landfill, the Poughkeepsie- Wappinger-LaGrange Joint Landfill. This joint activity includes the City and Town of Poughkeepsie, New York, the Village ofWappingers Falls, New York, the Town of LaGrange, New York and the Town of Wappinger, New York. All costs associated with monitoring are recognized as incurred. The Town's share of monitoring costs, for the year ended December 31, 2004, amounted to $1,884. .. .. The following is a summary of unaudited financial information at December 31,2004, which is included in the separate financial statements available from the Joint Landfill Board of Governors c/o Joseph Davis, Town of Poughkeepsie, One Overocker Road, Poughkeepsie, New York, 12603: .. Total Assets Total Liabilities Total Venture Equity Total Revenues Total Expenditures $ 2,333,640 $ 3,338 $ 2,330,302 $ 2,483,088 $ 250,988 - .. .. During 2002, violations were documented at the landfill and in 2003 an Order of Consent was issued through the New York State Department of Environmental Conservation to remediate Environmental Conservation Law and New York Codes Rule and Regulations violations. To comply with this order the municipalities need to perform final closure of the landfill under current regulations by December 31, 2005 and perform post closure care and monitoring for a minimum of thirty years thereafter. The estimated cost of final closure is $10,000,000. The estimated post closure and monitoring costs are $3,192,400. All costs will be borne proportionately by each municipality; the Town of Wappinger's share is 14.1728%. During 2004, the Town paid $348,084 to the Joint Venture for its share of the planning for final closure. .. .. .. To finance this project the municipalities have applied for a grant through the NYSDEC's LCSAP program to the extent of $2,000,000. Additional funding will come from the issuance of debt by each municipality. ill .. .. .. 40 ... ... ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31.2004 ... NOTE K - Subseauent Events 1 The Town has issued the following new debt: ... TYPE ISSUE DATE MATURITY DATE Rate PURPOSE AMOUNT ... .. Bond Anticipation Note 06/02/05 08/11/05 2.47% Real Property Revalutaion Vehicles Roads $ 575,000 $ 123,000 $ 500,000 $ 1,198,000 III III Bond Anticipation Note 08/10/05 08/10/06 4.00% Fleetwood Water North Wappinger Water Joint Landfill Renewal of previously issued Notes $ 88,500 $ 200,000 $ 430,368 .. III $ 3.706.050 $ 4,424,918 III 2. The Town has authorized, but not issued, the following new debt: .. DATE TYPE PURPOSE AUTHORIZED AMOUNT Tax Anticipation Note Revenue advance 01/24/05 $ 300,000 Serial Bond Joint Landfill 07/05/05 $ 566,912 III llII .. ... .. III 41 - .. .. .. .. - ... REQUIRED SUPPLEMENAL INFORMATION .. .. .. .. .. .. .. .. .. .. .. ... .. EXHIBIT I TOWN OF WAPPINGER, NEW YORK .. BUDGETARY COMPARISON SCHEDULE GENERAL FUND FOR THE YEAR ENDED DECEMBER 31.2004 .. GENERAL FUND VARIANCE ORIGINAL FINAL FAVORABLE .. BUDGET BUDGET ACTUAL (UNFAVORABLE) REVENUES Rea] property taxes $ 1,291,802 $ 1,291,802 $ 1,291,664 $ (138) .. Real property tax items 55,000 60,000 61 ,216 1,216 Non property tax items 1,158,600 1,264,600 1,458,173 193,573 Departmental income 88,000 61,360 165,25 I 103,891 Intergovernmental charges 84,000 92,000 (92,000) .. Use of money and property 164,000 171,500 189,969 18,469 Licenses and permits 89,600 172,600 245,321 72,721 Fines and forfeitures 132,500 142,500 144,305 1,805 ... Sale of property and compensation for loss 7,590 7,590 Miscellaneous local sources 1,000 4,200 6,900 2,700 State aid 958,800 1,713,100 1,774,916 61,816 III Federa] aid Total revenues 4,023,302 4,973,662 5,345,305 371,643 Appropriation of prior's year's fund balance 750,514 799,733 (799,733) III Total revenues and appropriation of prior year's fund balance 4,773,816 5,773,395 5,345,305 (428,090) III EXPENDITURES AND ENCUMBRANCES General Government Support 1,689,618 2,031,718 2,008,171 23,547 ... Public safety 399,277 516,767 496,097 20,670 Health 3,000 3,960 3,920 40 Transportation 187,592 182,372 176,438 5,934 Economic assistance & opportunity 27,225 33,445 32,684 761 III Culture and recreation 702,989 705,628 687,770 17,858 Home and community service 409,862 637,252 582,116 55,136 Employee benefits 506, I 98 670,198 620,724 49,474 .. Debt service 748,055 748,055 747,223 832 Total expenditures and encumbrances 4,673,816 5,529,395 5,355,143 174,252 III Excess (deficiency) of revenues and appropriation of prior year's fund balance over (under) expenditures and encumbrances 100,000 244,000 (9,838) (253,838) .. Other financing sources (uses) Operating transfers in 19,133 19,133 .. Operating transfers out (100,000) (244,000) (244,000) Total other financing sources (100,000) (244,000) (224,867) 19,]33 III Excess (deficiency) of revenues and appropriation of prior year's fund balance and other sources over (under) expenditures, encumbrances $ $ $ (234,705) $ (234,705) ... The accompanying Notes to the Financial Statements should be read in conjunction with these Financial Statements. . 42 - - IlIII IlIII - - .. .. OTHER SUPPLEMENTAL INFORMATION .. .. .. .. .. .. .. .. IlIII - - .. TOWN OF WAPPINGER, NEW YORK III COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS DECEMBER 31, 2004 IlIiII III HIGHWAY WATER SEWER LIGHT FUND FUND FUND FUND ASSETS IlIiII Cash and cash equivalents $ 54,353 $ 184,480 $ 1,918,078 $ 9,210 Receivables: IlIiII Charges for services 190,212 446,565 Other 1, 197 IlIiII Due from other funds 118,000 5,219 3,100 Inventory, at cost 33,360 Prepaid expenses 19,493 359 .. Total assets $ 226,403 $ 380,270 $ 2,367,743 $ 9,210 .. - EXHIBIT II - - TOTAL - MISC SPECIAL NON-MAJOR GRANT GRANT GOVERNMENTAL FUND FUND FUNDS - $ 37,828 $ 2,004 $ 2,205,953 - 636,777 - 1,197 126,319 33,360 - 19,852 $ 37,828 $ 2,004 $ 3,023,458 . - - $ 96,286 $ $ 223,043 10,548 - 111,422 96,286 345,013 - . 53,212 . 280,496 liliiii (58,458) 2,004 2,344,737 (58,458) 2,004 2,678,445 .. $ 37,828 $ 2,004 $ 3,023,458 .. 44 - .. TOWN OF WAPPINGER, NEW YORK COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2004 - .. HIGHWAY WATER SEWER - FUND FUND FUND REVENUES Property taxes $ 1,592,748 $ 545,964 $ 1,914,939 .. Property tax items Departmental income 624,097 1,394,557 Intergovernmental charges 2,596 - Use of money and property 8,305 11,084 528,366 Sale of property and compensation for loss 2,695 3,200 Miscellaneous local sources 3,838 .. State aid 104,534 Total revenues 1,714,716 1,184,345 3,837,862 .. EXPENDITURES .. General government support 118 Health Transportation 1,324,971 .. Home and community services 682,998 1,307,663 Employee benefits 370,447 5,052 1,219 Debt service 215,568 550,175 2,446,231 .. Total expenditures 1,910,986 1,238,225 3,755,231 .. Excess (deficiency) of revenues over expenditures (196,270) (53,880) 82,631 Other financing sources: .. Operating transfers in 160,000 4,926 196,715 Total other financing sources 160,000 4,926 196,715 lIIIl Excess (deficiency) of revenue and other sources over expenditures and other uses (36,270) (48,954) 279,346 III Fund Balance, December 31,2002 102,940 383,647 2,047,366 .. Fund Balance, December 31,2003 $ 66,670 $ 334,693 $ 2,326,712 See independent auditor's report ... 45 .. .. .. EXHIBIT III lilt .. TOTAL SPECIAL NON-MAJOR .. LIGHT MISC GRANT GOVERMENT AL FUND FUND FUND FUNDS - $ 24,250 $ 178,800 $ $ 4,256,701 28 28 2,018,654 .. 2,596 218 2,306 21 550,300 5,895 .. 3,838 104,534 - 24,468 181,134 21 6,942,546 .. 1,175 1,293 322,434 322,434 .. 25,842 1,350,813 1,990,661 436 377,154 .. 3,211,974 25,842 324,045 7,254,329 .. (1,374) (142,911) 21 (311,783) .. 361,641 .. 361,641 .. (1,374) (142,911) 21 49,858 8,198 84,453 1,983 2,628,587 .. $ 6,824 $ (58,458) $ 2,004 $ 2,678,445 - 46 .. .. - - - TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS AND RECOMMENDATIONS FOR THE YEAR ENDED DECEMBER 31.2004 - CURRENT YEAR FINDING: Findin!! 1 - Vacation time - .. Findin!!: As part of our examination ofthe compensated absence liability, we noted that the employee in charge of payroll, rolled forward an additional week of unauthorized vacation time for herself, from prior year to current year. .. Cause: Improper calculation of vacation time due. - Effect: Town could be potentially liable for additional compensated time should an employee be credited with time to which they have not earned. .. Recommendation: The Comptroller should review attendance cards, as well as accrued vacation time, for all employees in the Comptrollers' Office, during each payroll cycle. .. .. OTHER MATTERS: PRIOR YEAR FINDINGS - CONTINUING: .. Findin!! 2 - Buildin!! Department Software .. Findin!!: During the audit we tested revenue in the Building department. Our test work revealed the following: .. . The clerks cannot enter receipts simultaneously; . If receipts are received after 3pm, cash is stored in unlocked file cabinet until the following day, which are then given to Town Clerk; . Daily receipts are not reconciled with the system-generated monthly report; .. .. - - .. 47 .. .. .. TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS AND RECOMMENDATIONS FOR THE YEAR ENDED DECEMBER 31. 2004 - OTHER MATTERS: PRIOR YEAR FINDINGS - CONTINUING: .. Findin22 - BuildiD!!: DeDartment Software - Cont'd .. Cause: The system does not allow for simultaneous receipt entry. The Town Clerks office does not accept funds for deposit after they have went to the bank for the day which is at 3pm. Monthly cash receipts report are difficult to reconcile due to timing of deposits and re-entering of receipts. .. .. Effect: The system is not being used to develop the monthly reports. Cash could be misappropriated. .. Recommendation: The Town should restructure where the cash is being received for the building department. Cash could be collected in the Tax receiver's office or at the Town clerk's office for fees charged by the building department. The building department should use the SCA software "Cash Receipts Report" to reconcile to daily deposits and create monthly report. .. III Findin2 3 - Escrow Funds Findin2: Payments have been made in excess of escrow amounts collected resulting in excess payments to individual project owners/developers. III .. Cause: The Town collects escrow funds to ensure that costs incurred by the Town, while projects or subdivisions are being considered by the Planning Board, are borne by the applicants. The Town maintains records for each project/applicant so that balances can be monitored; however, in some cases the disbursements exceeded the escrow collected. .. Effect: Unanticipated liabilities could be incurred by the Town for which no revenues/funds had been provided. III Recommendation: We note that the Town Board authorized legislation during 2002 which provided for policies and procedures to ensure that the Town does not subsidize applicant review costs. However we continue to note that as of December 31, 2004 some debit balances remain, amounting to $95,677. We recommend that the Town continue to review the projects involved, determining collectibility of these amounts and make adjustments as necessary. .. .. .. Status of Prior Year Findin2s: Satisfied/N 0 Lon2er ADDlicable: - Prior Year Findin2s #3 48 - ililII ililII ililII - ililII ililII TOWN OF WAPPINGER FINDINGS AND RECOMMENDATIONS RESPONSES TO AUDIT FOR THE YEAR ENDING DECEMBER 31, 2004 .. .. .. .. .. .. .. .. .. .. - - ililII - TOWN OF WAPPINGER - SUPERVISOR JOSEPH RUGGIERO TOWN COUNCIL VINCENT BETTINA MAUREEN McCARTHY JOSEPH P. PAGLONI ROBERT L. VALDATI - .. .. SUPERVISOR'S OFFICE 20 MIDDLEBUSH ROAD WAPPINGERS FALLS, NY 12590 (845) 297-2744 FAX: (845) 297-4558 .. .. Town of Wappinger FINDINGS AND RECOMMENDATIONS RESPONSES TO AUDIT FOR THE YEAR ENDING DECEMBER 31,2004 .. Current Year Finding .. Finding 1 : Vacation Time- Employee in charge of payroll rolled forward an additional week of unauthorized vacation time for herself. .. Response 1: The calculation of the vacation was done in error. The error has been corrected and the comptroller is reviewing the attendance cards on a monthly basis .. Prior Year Findings .. .. Finding 2: Building Department Software- The system does not allow for simultaneous receipt entry. The Town Clerks office does not accept funds for deposit after they have went to the bank for the day which is at 3:00pm. Monthly cash receipts report are difficult to reconcile due to the timing of deposits and re-entering of deposit. .. Response 2: Receipts received by the Building Department after 3 :OOpm, will be entered in the system and be given to the Town Clerk for safekeeping in the safe. At month end, if a receipt is processed after 3 :OOpm, it should be record as an In-transit item on there report and give the receipt to the Town Clerk for safekeeping in the safe. .. .. - - - 49 - .. .. .. .. Finding 3: Escrow Funds- Payments have been in excess amounts collected resulting In excess payment to individual projects owners/developers. .. Response 3: The Town Comptrollers office continues to review these accounts and effect November 2005 will take over the billing and collecting offunds related to the Planning and Zonings escrows. Adjustments have been made in 2005 to correct posting errors to escrow accounts for Article 78 proceeding in the amount of$34,593.28, and escrows dating back to 1990 and up to 2001 has been reviewed with $10,379.11 being charged off to the Escrow Reserve. Additional funds have collected since 12/31/2004 on Meadowood Project- $10,000.00, will additional billing in process, and $11,605.00 on the Silver Fox Estates project. .. .. - .. .. .. .. .. .. .. - - .. 50 " ~~ SEDORE & COMPANY POBox918 62 East Main Street Certified Public Accountants, P. C. Wappingers Falls, NY 12590 teI845.297.1111 fax 845.297.1432 Poughkeepsie 845.485.5510 Beacon 845.831.0542 www.sedoreco.com September 20, 2004 To the Supervisor and Members of the Town Board Town of Wappinger 20 Middlebush Road Wappingers Falls, New York 12590 James L. Sedore, Jr., CPA Mark S. O'Sullivan, CPA James F Letterio, Jr., CPA Linda M. Hannigan, CPA Karen T Hansen, CPA We have audited the financial statements of the Town of Wappinger for the year ended December 31, 2003, and have issued our report thereon dated September 20, 2004. Professional standards require that we provide you with the following information related to our audit. Our Responsibility Under U.S. Generally Accepted Accounting Standards and Government Auditing Standards As stated in our engagement letter for the year ended December 31, 2003, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute assurance about whether the financial statements are free of material misstatement. Because an audit is designed to provide reasonable, but not absolute, assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. As part of our audit, we considered the internal control of the Town of Wappinger. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. As part of obtaining reasonable assurance about whether the Town of Wappinger's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions. Large Firm Expertise..- Local Firm Service I Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the Town as described in Note A to the financial statements, the Town of Wappinger changed accounting policies related to financial statements prepared using full accrual accounting for all of the Town's activities, (except for infrastructure) by adopting Statement of Governmental Accounting Standards GASB Statement No. 34, Basic Financial Statements-and Management's Discussion and Analysis-for State and Local Governments, in 2003. Accordingly, the cumulative effect of the accounting change as of the beginning of the year is reported in the reconciliation of statement of revenues, expenditures and changes in fund balances of governmental funds to the statement of activities for the year ended December 31, 2003. We noted no transactions entered into by the Town during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions 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 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 significantly from those expected. The most sensitive estimates affecting the financial statements were the estimated refunds of tax certiorari cases. Management's estimate of the refunds of tax certiorari cases is generally based on information provided to management by the Town's tax certiorari attorney who handles defense of such cases. We believe that the use of this basis is reasonable in relation to the financial statements taken as a whole. Audit Adjustments For purposes of this letter, professional standards define an audit adjustment as a correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment mayor may not indicate matters that could have a significant effect on the Town's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the Town, either individually or in the aggregate, indicate matters that could have a significant effect on the Town's financial reporting process. 2 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 financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Consultation with Other Inde.pendent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the Town's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the Town's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our relationship. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. This information is intended solely for the use of the Town of Wappinger, and management of the Town of Wappinger and is not intended to be and should not be used by anyone other than those specified parties. Very truly yours, __~ C'~ V-. (<1rY'i )(j---r '-p C't, I~ f/. -5 Sedore and Company, C.P.A.'s, P.C. 3 TOWN OF WAPPINGER GENERAL BINDER MEMO-PASSED ADJUSTMENTS 12/31/2003 EFFECT ON EFFECT ON W/P FINANCIAL RESULTS OF FUND PASSED ADJ REF POSITION OPERATIONS TA CASH ALF A-7 21.97 21.97 ALF Payroll ALF 20 (2,987.66) (2,987.66) H CASH HA 3.00 3.00 H CASH-TRI MUNI H A-5 (1,971.78) (1,971.78) H Restricted Cash @ EFC H C-2 1,022.89 1,022.89 H Recievable H C-3 2,937.90 2,937.90 -~~-~ ----- -_.~- ------ -- -- -- H AP HAA 265.00 265.00 B Reserve for Encumbrance B RR - - F Revenue F 10-1 2.86 2.86 TA Cash TA-A 352.30 352.30 W Landfill Retainage Recievable WDD 27.76 27.76 TOTAL (325.76) (325.76) GB 9 MEMO 1/25/2005