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1997-12-31 l L ~, L. " l... ; ... ~ ~ L. ,. ~ ... TOWN OF WAPPINGER, NEW YORK .\, FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1997 ~ (, ( .. :'- ~ .. L l L L L L l ... I .... L L RECEIVED JUl 28 1999 ELAINE SNOWDEN TOWN CLeRK L l L t II. ! ... ~; I.. L ... f.! ft ... 1 .. l L L ! L. l L L ~ L. L. TOWN OF WAPPINGER, NEW YORK TABLE OF CONTENTS DECEMBER 31, 1997 DESCRIYfION PAGElS) Independent Auditors' Report ............ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. I Independent Auditors' Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of General Purpose Financial Statements Performed in Accordance With Government Auditing Standards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3 GENERAL PURPOSE FINANCIAL STATEMENTS: Combined Balance Sheet - All Fund Types and Account Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7 Combined St8:tements of Revenues, Expenditures and Changes in Fund Equity - All Governmental Fund Types . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8 Combined Statements of Revenues, Expenditures and Encumbrances - Budget and Actual - General and Budgeted Special Revenue Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 9-10 Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 11-26 REQUIRED SUPPLEMENTAL INFORMATION Year 2000 (Y2K) Issue .................................................... 27 OTHER SUPPLEMENTAL INFORMATION Schedule of Findings and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Town of Wappinger Responses to Findings and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 29 L ~ L, Sedore, 0' Sullivan, Letterio & Barschi L. Certified Public Accountants, PC. l L L INDEPENDENT AUDITORS' REPORT l To the Supervisor and Members of the Town Board Town of Wappinger, New York Wappingers Falls, New York 12590 L We have audited the accompanying general purpose financial statements of the Town of Wappinger, New York as of December 31, 1997, and for the year then ended as listed in the foregoing Table of Contents. These general purpose financial statements are the responsibility of the Town of Wappinger, New York's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. L L L l L We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments." Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose fmancial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. l L In our opinion, the general purpose 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, 1997, and the results of its operations for the year then ended in conformity with generally accepted accounting principles. t L. In accordance with Government Auditing Standards, we have also issued our report dated January 22, 1999 on our consideration of the 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. l ~dM-e; tJ ~JLv~n I ~~:-" .&u~ t Wappingers Falls, New York .. January 22, 1999 L 62 East Main Street. P.O. Box 918. Wappingers Falls NY 12590 Wappingers (914) 297-1111 /fax (914) 297-1432 . Beacon (91Jl) 831-0542/fax (914) 831-5114 . Newburgh (914) 565-1373 ~ ... f .. Sedore, 0' Sullivan, Letterio & Barschi f t.. Certified Public Accountants, Pc. ~.. ~' I.. REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS ~ L. ~. L. I .. To the Supervisor and Members of the Town Board Town of Wappinger Wappingers Falls, New York L We have audited the general purpose financial statements of the Town of Wappinger, New York, as of and for the year ended December 31, 1997, and have issued our report thereon dated January 22, 1999. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. I ... , L. Compliance L As part of obtaining reasonable assurance about whether the Town of Wappinger, New York's general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, 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 instances of noncompliance that are required to be reported under Government Auditing Standards. We also noted certain immaterial instances of noncompliance that we have reported to the management of the Town of Wappinger, New York, in the Schedule of Findings and Recommendations listed in the Table of Contents. L L L 1. Internal Control Over Financial Reportin~ l .. In planning and performing our audit, we considered the Town of Wappinger, New York's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose 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 L k W .. 2 \ I. 62 East Main Street. P.O. Box 918 . Wappingers Falls NY 12590 Wappingers (914) 297-11 1 l/fax (914) 297-1432 . Beacon (914) 831-0542/fax (914) 831-5114 . Newburgh (914) 565-1373 ~ \, ( .. \ L. B' ~ II. II. I.. .. II. i. II. i.. ~ .. ... ... g II. .. ... 1. .. 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 general purpose 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 material weaknesses. We noted other matters involving the internal control over financial reporting that we have reported to the management of the Town of Wappinger, New York, in the Schedule of Findings and Recommendations listed in the Table of Contents. This report is intended for the information of the Supervisor, Town Board and Management. However, this report is a matter of public record and its distribution is not limited. ~d~'le, tJ ~~Ltr;', '/ ~/<'-L ,,;- Wappingers Falls, New York January 22, 1999 , /7 v~:s- c2/Z <:::2/'A--1 3 TOWN OF WAPPINGER, NEW YORK COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS DECEMBER 31, 1997 J ... GOVERNMENTAL FUND TYPES GENERAL FUND ASSETS Cash and cash equivalents Cash from obligations - restricted Investments Receivables: Charges for services Other Due from other funds Due from other governments State and federal receivable Property. building and equipment Amounts to be provided for the payment of: Landfill closure costs Compensated absence obligations Long-term debt Total Assets $2.330.516 The accompanying Notes to the Financial Statements are an integral part of this financial statement. 4 SPECIAL REVENUE FUND $2.281.311 .. CAPITAL PROJECTS FUND .. ... ... ... .. $3.132.288 ... .. 11II .i ;j .. '~ "j .. I .. IlllIi ..i ... .. ~ ~ ~ .. FIDUCIARY FUND TYPE ... TRUST & AGENCY FUND i.. $338,780 ... ... ... ... ACCOUNT GROUPS LONG- TERM DEBT $- 550,000 129,996 21,793,000 GENERAL FIXED ASSETS $- 17,005,406 TOTALS (MEMORANDUM ONLY) $2,421,677 1,109,227 2,853,111 583,539 64,453 800,226 178,664 71,998 17 ,005;406 550,000 129,996 21,793,000 __~38,78Qo ~--------- $22.472.996 _$17,005,406= _ $47,561,297 ... L. ~: ... 1. it .. .. f J:' ... l .. " i.. l... L. 5 TOWN OF WAPPINGER, NEW YORK COMBINED BALANCE SHEET, (CONT'D.) - ALL FUND TYPES AND ACCOUNT GROUPS DECEMBER 31, 1997 ... .. GOVERNMENTAL FUND TYPES GENERAL FUND LIABILITIES AND FUND EQUITY LIABILITIES Accounts payable and accrued liabilities Retainage payable Bond anticipation notes payable Due to other funds Deferred revenues Other liabilities Landfill closure costs Compensated absence obligations Long-term debt Total liabilities FUND EQUITY Investments in general fixed assets Fund balance (deficit): Reserved for: Encumbrances Miscellaneous Unreserved: Designated for: Subsequent years' expenditures Undesignated Total fund equity Total liabilities and fund equity SPECIAL REVENUE FUND ... CAPITAL PROJECTS FUND ... ... $37,189 $99 ,235 $47,980 6,087 32,290 2,436,000 55,983 744,243 12,334 37,189 55,411 550,012 783,088 904,816 2,293,327 $2,330,516 The accompanying Notes to the Financial Statements are an integral part of this financial statement. 6 173,639 118,969 811,340 1,177,363 2,107,672 $2.281.311 .. .. 3,260,513 ... ... .. (128,225) (128,225) .~~ ... $3.132.288 1 ... .. .. ... .. ... ... .. i.. ;'" .. FIDUCIARY FUND TYPE ACCOUNT GROUPS .. TRUST & AGENCY FUND WNG- TERM DEBT GENERAL FIXED ASSETS TOTALS (MEMORANDUM ONLY) b ill ... $2,282 $- $- $186,686 38,377 2,436,000 800,226 ... 12,334 336,498 336,498 550, ()()() 550,000 ;: 129,996 129.996 .. 21 ,793, ()()() 21,793.000 --------- _~8,780 22,472,996 0 26,283,117 --- ------ - ---- ... 17,005,406 17,005,406 ... 174;380 550,012 g, .. 17,005,406 1,594,428 1,953,954 21,278,180_ L. o 0 ~----- l $338.780 $22.472,996 $17.005.406 $47.561.297 .. ... ~ .. ... 7 .. .. ... ... TOWN OF WAPPINGER, NEW YORK COMBINED STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND EQUITY - ALL GOVERNMENTAL FUND TYPES FOR THE YEAR ENDED DECEMBER 31, 1997 II.. .. GOVERNMENTAL FUND TYPES SPECIAL CAPITAL TOTALS GENERAL REVENUE PROJECTS (MEMORANDUM FUND FUND FUND ONLY) $1,018,609 $3,915,068 $- $4,933,677 49,808 49,808 811,953 811,953 173,883 1,750,300 1,924,183 1,185 3,588 4,773 235,959 643,830 79,645 959,434 64,009 64,009 127,917 127,917 4,680 4,153 8,833 4,622 2,134 3,986 10,742 548,381 328,409 876,790 13,177 13, 177 3,041,006 6,661,256 83,631 9,785,296 REVENUES ... Real property taxes Real property tax items Non property tax items Departmental income Intergovernmental charges Use of money and property Licenses and permits Fines and forfeitures Sale of property and compensation for loss Miscellaneous local sources State aid Federal aid l.. .. IIIot Total revenues EXPENDITURES 1,202,768 310,474 1,513,242 225,325 225,325 2,581 231,700 234,281 104,460 1,649,466 1,753,926 1,102 1,102 455,779 455,779 270,356 1,618,832 758,619 2,647,807 260,183 207,998 468,181 603,850 2,973,874 3,577,724 3,126,404 6,681,870 1,069,093 10,877,367 (85,398) (20,614) (985,462) (1,092,071) 668,000 668,000 118,000 118,000 (118,000) (118,000) ~_.._- 0 0 668,000 668,000 (85,398) (20,614) (317,462) (424,071) 2,318,725 1,992,711 384,812 4,696,248 60,000 135,575 (195,575) 0 $2,293,327 $2,107,672 ($128.225) $4,272.177 .. General government support Public safety Health Transportation Economic assistance and opportunity Culture and recreation Home and community services Employee benefits Debt service .. ... ~; t .. Total expenditures Excess (deficiency) of revenue over expenditures ... Other financing sources (uses): BANS redeemed from appropriations Operating transfers in Operating transfers (out) Ii. Total other financing sources ( uses) ~. E Ii. Excess (deficiency) of revenue and other sources over expenditures and other uses Fund Equity, December 31,1996 Residual equity transfer .. Fund Equity, December 31,1997 .. The accompanying Notes to the Financial Statements are an integral part of these fmancial statements. 8 II.. .. Ii .. TOWN OF WAPPINGER, NEW YORK COMBINED STATEMENTS OF REVENUES, EXPENDITURES AND ENCUMBRANCES - BUDGET AND ACTUAL - GENERAL AND BUDGETED SPECIAL REVENUE FUNDS FOR THE YEAR ENDED DECEMBER 31, 1997 i ~ IlIIII GENERAL FUND iii VARIANCE REVISED FAVORABLE BUDGET ACTUAL (UNFAVORABLE) REVENUES ; Real property taxes $1,018,609 $1,018,609 $0 IIIlii Real property tax items 49,385 49,808 423 Non property tax items 580,000 811,953 231,953 Departmental income 81,548 173,883 92,335 .. Intergovernmental charges 1,185 1,185 Use of money and property 319,120 235,959 (83,161) Licenses and pennits 45,100 64,009 18,909 Fines and forfeitures 104,673 127,917 23,244 .. Sale of property and compensation for loss 0 4,680 4,680 Miscellaneous local sources 723 4,622 3,899 State aid 400,198 548,381 148,183 ~ Federal aid Total revenues 2,599,356 3,041,006 441,650 Appropriation of prior's year's fund balance 1,616,000 80,809 (1,535,191) IIIlii Total revenues and appropriation of prior year's fund balance 4,215,356 3,121,815 (1,093,541) EXPENDITURES AND ENCUMBRANCES .. General government support 1,508,958 1,227,402 281 ,556 Public safety 242,386 225,325 17,061 ,~ Health 2,722 2,581 141 J Transportation 115,446 104,460 10,986 Economic assistance and opportunity 7,600 1,102 6,498 Culture and recreation 515,930 462,954 52,976 IIIIlIi Home and community services 462,860 293,958 168,902 Employee benefits 328,878 260,183 68,695 Debt service 610,576 603,850 6,726 Total expenditures and encumbrances 3,795,356 3,181,815 613,541 .II Excess (deficiency) of revenues and appropriation of prior year's fund balance over (under) IIIlii expenditures and encumbrances 420,000 (60,000) (480,000) Other financing sources (uses): Operating transfers in 60,000 (60,000) IlIIII Operating transfers (out) (480,000) 480,000 Total other financing sources (uses) (420,000) 0 420,000 ~ Excess (deficiency) of revenues, appropriation of prior year's fund balance and other sources over (under) expenditures, encumbrances IIIlii and other uses $0 ($60.000) ($60.000) The accompanying Notes to the Financial Statements are an integral part of these fmancial statements. ... 9 ... ~ ... ... ... BUDGETED SPECIAL REVENUE FUND VARIANCE REVISED FAVORABLE BUDGET ACTUAL (UNFAVORABLE) __ __ 7,139 ,571. ______~.&86,3_M____._ _ __ __--.1253,247) .. ... 231,700 231,700 0 1,800,776 1.651,466 149,310 ... 1,967,767 1,725,660 242,107 300,218 207 ,998 92,220 2,974,685 ----'1:....973,8]4 811 .. __7,275,146_ 6,790,698 484,448 it. (135,575) 95,626 231,201 ... (118,000) (118,000) ill 135,575 0 ----- - $0 $95,626 $95,626 .. 10 '- .. L. .. ~. .. TOWN OF WAPPINGER, NEW YORK NOTES TO TIlE FINANCIAL STATEMENTS DECEMBER 31, 1997 .1, .. NOTE A - Summary of Accountina: Policies ... The Town of Wappinger, New York ("the 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 financial statements of the Town have been prepared in conformity with generally accepted accounting principles (GAAP), as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles, some of which are as follows: .. .. 1. The Reporting Entity 2. The Town, for fmancial purposes, includes all of the funds and account groups relevant to the operations of the Town of Wappinger, New York. The financial statements include organizations, functions 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. Fund Accounting The accounts of the Town are organized on the basis of funds or account groups, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts, which are comprised of each fund's assets, liabilities, fund equity, revenues and expenditures. Government resources are allocated to and for individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into fund types and two account groups, as follows: ... .. .. .. .. ... GOVERNMENTAL FUND TYPES .. The accounting and reporting treatment applied to assets and liabilities associated with a fund are determined by its measurement focus. All governmental fund types are accounted for on a spending "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. Their reported fund balance (net current assets) is considered a measure of "available .. .. .. ... 11 L .. .... l.. TOWN OF WAPPINGER, NEW YORK NO~ TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31, 1997 ... Summary of Accounting Policies (Continued) ... ... spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. General Fund ... ... The 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. ... Special Revenue Fund Special Revenue Fund is used to account for the proceeds of specific revenue sources (other than special assessments, expendable trust or m~or capital projects) that are legally restricted to expenditures for specified purposes. Capital Projects Fund ~ .... This fund is used to account for financial resources to be used for the acquisition and construction of major capital facilities. ... FIDUCIARY FUND TYPE ... Trust and Agency Fund Trust and Agency Fund is used to account for assets held by the Town in a trustee capacity, or as an agent for individuals, other governments, and/or other funds. These include Expendable Trust and Agency Funds. Expendable Trusts are accounted for in essentially the same manner as governmental funds. Agency funds are custodial in nature (assets equal liabilities), and do not involve measurement of results of operations. ... k ... ACCOUNT GROUPS ... Account groups are used to establish accounting control and accountability for General Fixed Assets and General Long-Term Debt. The two account groups are not "funds." They are concerned only with the measurement of financial position. They are not involved with the measurement of the results of operations. ... .... 12 TOWN OF WAPPINGER, NEW YORK NOTES TO TIlE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 Summary of Accounting Policies (Continued) General Fixed Assets Account Group Property, plant and equipment used in governmental fund type operations are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. No depreciation has been provided on such property, plant and equipment. All property, plant and equipment are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated property, plant and equipment are valued at their estimated fair value on the date donated. Interest costs incurred during construction have not been capitalized, however. The Town has adopted the accounting policy of not capitalizing "infrastructure" general fixed assets (roads, bridges, curbs and gutters, streets and sidewalks, drainage system, lighting systems and similar assets) that are immovable and of value only to the Town. General Long-Term Debt Account Group Long-term liabilities expected to be financed from governmental fund types are accounted for in the General Long-Term Debt Account Group, not in the governmental funds. They are recorded at the par value of the principal amount. No liability is recorded for interest payable to maturity. Because of their spending measurement focus, expenditure recognition for governmental fund types is limited to exclude amounts represented by non- current liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. They are instead reported as liabilities in the General Long-Term Debt Account Group. Basis of Accounting .. II. i.. .. .. .. .. .. II. .. I.. .. ... .. ... .. .. .. ... 3. Basis of accounting refers to when revenues and expenditures are recognized in the accounts, and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied. All governmental and expendable trust funds are accounted for using the "modified accrual basis" of accounting. Their revenues are recognized when they become measurable and available as net current assets. All major revenues are susceptible to accrual. 13 .. ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 .. ... Summary of Accounting Policies (Continued) Expenditures are generally recognized under the "modified accrual basis" of accounting when the related fund liability is incurred. Exceptions to this general rule include: (1) accumulated unpaid vacation, sick pay, and other employee amounts which are not accrued; (2) principal and interest on general long-term debt which is recognized when due; and (3) expenditures for inventory-type items which are recognized at the time of purchase. Expenditures for judgments and settled claims are also recognized when the related liability is incurred, that is when the judgment has been rendered or settlement has been reached. Unsettled claims and contingencies are recognized only if it is probable that an asset has been impaired or a liability has been incurred and the amount of the impairment or liability can be reasonably estimated. ... ... .. .... 4. Budgets ... The Town employs a formal budgetary accounting system as a management tool. During the year, a budget was adopted and modified by the Town Board for the General Fund and Special Revenue Fund. However, for the Capital Projects Fund, budgets are established at the project level and continue until the project is completed. Unused appropriations of the annually budgeted funds lapse at the end of the year. ... 5. Encumbrances .. 6. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded for budgetary control purposes to reserve that portion of the applicable appropriations, is employed as a control in preventing over expenditure of established appropriations. Open encumbrances are reported as reservations of fund balance since they do not constitute expenditures or liabilities and will be honored through budget appropriations in the subsequent year. Budget and Actual Comparison The budget and actual Comparison for Special Revenue Funds, included in the Combined Statement of Revenues and Expenditures - Budget and Actual, reflects budgeted and actual amounts for funds with legally authorized (appropriated) budgets. Certain Special Revenue Funds have not been included in the comparison because they do not have legally authorized (appropriated) budgets. The actual activity of these unbudgeted funds, as follows, is provided in order to reconcile to the total combined balances of the Special Revenue Funds: .. .. .. ... ... ... i. ... 14 '- , ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 Summary of Accounting Policies (Continued) Ii. .. JANUARY 1, REVENUES & (EXPENDITURES DECEMBER 31, 1997 _ OTHER SOURCES & OTHER USES) 1997 .. Total for funds Included in Budget Comparison $1,992,584 $6,904,818 $(6,884,202) $2,013,200 .. Funds not included in Budget Comparison 127 10.014 (10.141) o .. Total Special Revenue Funds $1.992.711 $6.914.832 $(6.894.343) $2.013.200 7. 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. 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. Market value of the repurchase agreements approximates cost plus accrued interest. The cash and investments of the Town at December 31, 1997, are as follows: .. .. ill. SPECIAL CAPITAL TRUsr & GENERAL REVENUE PROJECfS AGENCY FUND FUND FUND FUND TOTAL Non-Interest Bearing Accounts $ 700 $ $ $ $ 700 Interest Bearing Accounts 473,656 458,712 1,149,829 338,780 2,420,977 Repurchase Agreements 923.205 1.056.674 873.232 2.853.111 TOTAL $1.397.561 $1.515.386 $2.023.061 $338.780 $5.274.788 All of the Town's deposits were covered by Federal Deposit Insurance or collateralized with securities held by a third party custodian in the Town's name. .. ... .. .. ... Cash from obligations - restricted represents unspent bond proceeds whose use is limited to funding certain construction projects. This restricted cash is more further described in Note I - Commitments and Contingent Liabilities, Item 3 - Tri-Municipal Sewer Plant Expansion. II. 15 .. Summary of Accounting Policies (Continued) 8. Accumulated Compensated 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 accumulate unused compensated absences. However, such earned, but unused compensated absences, must be used during their period of employment with the Town. No payment will be made upon separation from the Town's service. In governmental and fiduciary funds, the cost of vacation and sick leave is recognized when payments are made to employees. A long-term liability of $129,996 of accrued vacation and sick leave at December 31, 1997, has been recorded in the General Long- Term Debt Account Group of Accounts, representing the Town I s commitment to fund such costs from future operations. Pension Plans .. .. ! ... i.. it. ... ... ... ... .. ... .. .. i.. ... ... ill. it. ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 9. Plan Description The Town of Wappinger participates in the New York State and Local Employees' Retirement System (ERS), 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). 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, Gov. Alfred E. Smith State Office Building, 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. 16 ... ... TOWN OF WAPPINGER, NEW YORK NOTES TO mE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31, 1997 Summary of Accounting Policies (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: .. 1M ... 1997 1996 1995 ERS im ... The Town's contributions made to the Systems were in excess of 100 percent of the contributions required for each year. The Town has not recorded a deferred asset for the excess contributions made since the additional funds have been applied to the pension credits described below. ... Since 1989, the System's billings have been based on Chapter 62 of the Laws of 1989 of the State of New York. This legislation requires participating employers to make payments on a current basis, while amortizing existing unpaid amounts relating to the System's fiscal years ending March 31, 1988 and 1989 (which otherwise were to have been paid on June 30, 1989 and 1990, respectively) over a 17-year period, with an 8.75% interest factor added. Local governments were given the option to prepay this liability. The Town of Wappinger paid this liability in full in 1989. However~ during the 1990 Legislative session Chapter 210 was enacted which required a change in funding method. This change was subsequently ruled unconstitutional but Chapter 210 also required that an)' credits created by the initial change be applied to the Chapter 62 billing change liability. Although the Town had paid its liability as noted above, an amortization balance was created, which was offset by the prepaid amortization credit. The Town, therefore, did not record any net liability. In 1996, the Town elected to apply the accrued pension credits against the amortization balance. 1M 10. Deferred Compensation Plan ... ... 1M II. ... Employees of the Town of Wappinger may participate in a deferred compensation plan adopted under the provisions of Internal Revenue Code Section 457 (Deferred Compensation Plans with Respect to Service for State and Local Governments). The deferred compensation plan is available to all employees of the Town. Under the plan, employees may elect to defer a portion of their salaries and avoid paying taxes on the deferred portion until the withdrawal date. The deferred compensation amount is not available for withdrawal by employees until termination, retirement, death, or unforeseeable emergency. In October 1997 the Governmental Accounting Standards Board issued Statement No. 32 Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. This statement established accounting and financial reporting standards for Internal Revenue Code Section 457 deferred compensation plans of state and local governments. II. IIlII II. ... ... 17 IIlII Summary of Accounting Policies (Continued) On October, 1997 the New York State Deferred Compensation Board (Board) created a Trust and Custody agreement making Chase Manhattan Bank the Trustee and Custodian of the Plan. Consequently, Statement No. 32 became effective for the New York State Deferred Compensation Plan as of October 1, 1997. Since the Board is no longer the trustee of the plan, the plan no longer meets the criteria for inclusion in participant's financial statements. Therefore, municipalities which participate in New York State's Deferred Compensation Plan are no longer required to record the value of the plan assets. Effective December 31, 1997, the market value of the plan assets totaling $99,315 are no longer displayed in the Town of Wappinger's financial statements. .. II. ilia ... ... ... 11. .... ... ... .. .. ... ... .. ... iIII .. .. ... TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31~ 1997 12. Post Employment 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. Employees contribute according to a sliding scale based on years of service. For the year of 1997, $13,160 was paid on behalf of eleven retirees and recorded as expenditures in the General and Special Revenue Funds. 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 I s portion of the taxes is recognized and transferred prior to the County's portion. Therefore, the Town receives its entire tax, leaving the unpaid to the County Commissioner of Finance. Long-Term Obligations Long-Term Debt is recognized as a liability of a governmental fund when due, or when resources have been accumulated in the debt service fund 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 reported in the General Long-Term Debt Account Group. 13. 14. Insurance 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. Judgements and claims are recorded when it is probable that an 18 Ii. II. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 Summary of Accounting Policies (Continued) .. ill. 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. 15. Reserves of Fund Equity ... The Town records indicate that portions of the fund equity are segregated for a specific future use. The following details the description and amounts of the reserves used by the .. Town: BALANCE AT DECEMBER 31r 1997 A. General Fund lilt Reserved for Encumbrances $ 55,411 Reserved for Miscellaneous: Inspection Fees 330,000 .. Downstream Drainage 220.012 Total Miscellaneous Reserves 550.012 ... B. Special Revenue Fund Reserved for Encumbrances 118.969 TOTAL $668.981 .. 16. Allowance for Uncollectible Accounts .. An Allowance for Uncollectible Accounts is not reflected in the Special Revenue Fund. Past due accounts after one year are placed on the county tax rolls for collection, and reimbursed to the Town as they are put on the tax rolls by the County. ... 17. Total Columns on Combined Statements .. Total Columns on the Combined Statements - Overview are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles. Such data is not comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. ~ .. NOTE B - Other Receivables Other Receivables at December 31, 1997 consist of the following: .. GENERAL FUND .. Fines and Fees Receivable $ 64.454 .. 19 II. .. .. t ... ... .. .. .. .. .. Ii. , ~ i. ~ ... Ii. ... ... ... ... TOWN OF WAPPINGER, NEW YORK NOTES TO TIlE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 NOTE C - Interfund Receivables and Payables The following is a summary of amounts due from and due to other funds as of December 31, 1997: DlJE TO DlJE FROM General Fund $ 689,838 $ Capital Projects Fund 744,243 Special Revenue Fund 110.388 55.983 TOTAL $800.226 $800.226 NOTE D - General Fixed Assets Account Group The following is a summary of changes and adjustments in the General Fixed Assets Account Group, for the year ended December 31, 1997: BALANCE - lANUARY 1, 1997 BALANCE - DECEMBER 31, (J>ELETIONS) 1997 ADDITIONS Land Buildings Improvement Other Than Buildings Machinery and Equipment $ 5,129,650 6,197,705 $ 155,000 $ 5,284,650 6,197,705 $ 2,892,058 2,892,058 183.423 140.830 2.630.993 2.588.400 TOTAL $16.807.813 $338.423 $17.005.406 $140.830 NOTE E - Bond Anticipation Notes Payable Bond Anticipation Notes Payable are renewed annually and are not to exceed five renewals, except for water and sewer improvements which may be renewed for the life of the improvement not to exceed twenty years. The Bond Anticipation Notes outstanding as of December 31, 1997, are as follows: AMOUNT OUTSTANDING AT DECEMBER 31, 1997 PURPOSE ORIGINAL ISSUE DATE ORIGINAL INTEREST AMOUNT OF RATE ISSUE MATURITY DATE Water 09/17/91 07/10/98 3.90% $ 375,760 $ 258,000 Water 09/16/92 07/10/98 3.90% 30,500 15,425 Sewer 09/17/91 07/10/98 3.90% 4,000,000 1,109,575 Sewer 07/14/94 07/10/98 3.90% 375,000 330,000 Sewer 07111/96 07/10/98 3.90% 403.000 253.000 Subtotal 5.184.260 1.966.000 20 .. ... II. Ii. ... Ii. ... III .. .. II. ... .. .. f .. Ii. ... 1M ~i 1:- ... TOWN OF WAPPINGER, NEW YORK NOTES TO TIlE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31, 1997 NOTE E - Bond Anticipation Notes Payable (Continued) PURPOSE ORIGINAL ISSUE DATE AMOUNT OUTSTANDING ORIGINAL AT MATURITY INTEREST AMOUNT OF DECEMBER 31, DATE RATE ISSUE 1997 07/10/98 3.98% 390.000 270.000 07/10/98 3.96% 200.000 200.000 $5.774.260 $2.436.000 Emergency Service Bldg 07/14/95 Sewer Phase llIA 09/25/96 TOTAL NOTE F - Lone- Tenn Debt 1. Serial Bonds The Town borrows money in order to acquire or construct buildings and public improvements. This enables the cost of these capital assets to be borne by the present and future taxpayers receiving the benefit of the capital assets. These long-term liabilities, which are full faith and credit debt of the Town, are recorded in the General Long-Term Debt Account Group. The provision to be made in future budgets for capital indebtedness represents the amount, exclusive of interest, authorized to be collected in future years from taxpayers and others for liquidation of long-term liabilities. The Serial Bonds Payable, as of December 31, 1997, are as follows: AMOUNT OUTSTANDING ORIGINAL AT ISSUE MATURITY INTEREST AMOUNT DECEMBER 31, PURPOSE DATE DATE RATE OF ISSUE 1997 Water $ 66,000 $ 5,200 Sewer 104,000 8,000 Drainage 1.125.000 86.800 09-01-71 03-01-99 5.0% 1.295.000 100.000 Water Sewer 36,800 7,200 02-15-73 11-15-03 5.0% 55.200 10.800 92.000 18.000 Water 400,000 96,000 Sewer 500,000 117,000 Drainage 375.000 87.000 03-01-74 03-01-03 5.8% 1.275.000 300.000 21 .. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 .. NOTE F - Lona- Tenn Debt (Continued) AMOUNT .. OUTSTANDING ORIGINAL AT ISSUE MATURITY INI'EREST AMOUNT DECEMBER 31, PURPOSE DATE DATE RATE OF ISSUE 1997 .. Water 2,630,000 689,000 Sewer 3,005,000 784,000 .. Drainage 400.000 102.000 05-01-77 05-01-04 5.375% 6.035.000 1,575.000 .. Water 330,000 20,850 Sewer 222,000 14,000 Drainage 239.400 15.150 05-01-78 05-01-98 6.10% 791.400 50.000 .. Water 148,070 73,200 Sewer 362,000 179,400 ... Town Hall 700.000 347.400 12-01-85 06-01-05 7.75% 1.210.070 600.000 Water ... Machinery and Equipment 364,500 124,000 05-01-87 05-01-02 6.3% 207.000 51. 000 571.500 175.000 .. Water 824,400 580,000 Sewer 528,000 370,000 Drainage 2.192.600 1. 605 .000 ... 08-15-91 08-15-11 6.5% 3.545.000 2.555.000 Sewer - Tri-Municipal 11-12-92 09-15-12 3% - 6.65% 6.060.000 4.975.000 .. Emergency Services Building 10-01-94 10-01-14 6.01% 1.500.000 1.370.000 .. Sewer - Tri-Municipal 12-15-94 05-15-15 Variable 8.519.786 7.665.000 Sewer - Tri-Municipal 06-01-95 11-15-15 3.70-5.55% 2.610.054 2.410.000 .. $33.504.810 $21.793.000 .. The annual requirements to amortize bonded debt, as of December 31, 1997, are as follows: .. YEAR ENDING DECEMBER 31, PRINCIPAL INTEREST TOTAL .. 1998 1999 2000 2001 2002 Thereafter $ 1,443,000 1,413,000 1,388,000 1,413,000 1,438,000 14.698.000 $21. 793.000 $ 1,314,955 1,235,799 1,156,919 1,076,724 993,823 5.768.594 $11.546.814 $ 2,757,955 2,648,799 2,544,919 2,489,724 2,431,823 20.466.594 S33.339.814 .. .. 22 .. .. .. .. .. .. .. .. ... .. .. .. .. ... iIa ... ... III .. TOWN OF WAPPINGER, NEW YORK NOTES TO TIlE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 NOTE F - Long-Term Debt (Continued) 2. Changes The changes in the Town's indebtedness during the year ended December 31, 1997, are summarized as follows: BALANCE - JANUARY 1. 1997 ADDITIONS QmDUCTIONS) BALANCE - DECEMBER 31, 1997 Serial Bonds $23,191,000 $ $(1,398,000) $21,793,000 Landfill Closure and Post-Closure Costs - Note J 550,000 550,000 Compensated Absences - Note A.8 279.735 (149.739) 129.996 Total $24.020.735 L= $(1.547.739) $22.472.996 NOTE G - Operating 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, 1997 amounted to $25,486. At December 31, 1997, the approximate annual operating lease commitments, subject to appropriation of funds, were as follows: YEAR ENDING DECEMBER 31, 1998 1999 2000 2001 Thereafter OPERATING LEASES $25,912 22,443 16,061 15,708 20.299 TOTAL MINIMUM LEASE PAYMENTS $100.423 NOTE H - Deficit Fund Balances Certain Capital Projects had deficits of fund equity at the end of the year which are listed below. These deficits arose through the funding of expenditures by issuing bond anticipation notes. As the notes are paid, revenue will be recognized and the deficits will be eliminated. Oakwood Knolls Water ~(15 .239.) $(219.341) ~(42118Q2) Emergency Services Building Tri-Municipal Sewer Phase 3-A 23 L K t .. 1.. L ~ Ii. L. .. G J it. L It II. j L. L. ... .. ~ L ~ L.. .. L. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 NOTE H - Deficit Fund Balances (Cont'd) Fleetwood $(9.510) Castle Point Landfill $(\8.527) Purchase - Dean Property $(154.68J) Tri-Municipal - Plant ~(206.946) NOTE I - Commitments and Contin&ent Liabilities 1. The Town is a defendant in various lawsuits and tax certiorari cases. The outcome 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. 2. 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. 3. Tn-Municipal Sewer Plant Expansion A consent judgement was executed between the Town and the New York State Department of Environmental Conservation dated April 18, 1988 regarding alleged environmental violations. Due to numerous technical difficulties, the Town of Wappinger was unable to meet the threshold dates contained in the consent judgement, and an amended consent judgement was re-negotiated and approved by both parties. This amended consent judgement required the Town to construct a sewer line to the Tri- Municipal Sewer Treatment Plant plus a one million gallon expansion of said plant. The Town, however, does not own the plant nor does it have voting rights on the Commission's governing board. The plant is owned and operated by the Tn-Municipal Sewer Commission, made up of representatives of the Town of Poughkeepsie and the Village of Wappingers Falls. Construction is on-going; however, as a result of additional difficulties between the Tri-Municipal Sewer Commission and the Department of Environmental Conservation, delays have occurred and a Third Amended Judgement was agreed to, extending the date of completion to July 1, 1997. The Town was able to begin using the expanded capacity as of July 1, 1997, however, certain construction related costs continue to be incurred. Funding for the project has been provided by two authorizations for a total project cost of $19,630,054. Through December 31, 1997, $17,189,840 in bonds have been issued through the Environmental Facility Corporation and $2,060,414 in Bond Anticipation Notes have been issued. Total project costs incurred through December 31, 1997, amounted to $17,906,800. Under the terms of the agreements with the Environmental Facility Corporation, serial bond proceeds are required to be deposited into a Construction Fund Account, be invested in U.S. Treasury securities until drawn upon, and be subject to regulatory approvals before being drawn upon. The unspent balance in the Construction Fund Account amounted to $1,109,227 as of December 31, 1997, and is classified as a Restricted Asset. 24 ... 2. Pougbkeepsie-Wappinlers-LaGrange .loint 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, the Village of Wappingers Falls and the Town of LaGrange, as well as the Town of Wappinger. All costs associated with monitoring are recognized as incurred. No assessment of the extent and cost of future monitoring costs has been made. Any such costs will be shared equally among the five municipalities. The Town's share of monitoring costs for the year ended December 31, 1997 amounted to $2,500. Financial statements are available from the Joint Landfill's Board. .. ... l.. .. I. .. 1M.. l.. ... .. 1M.. ; , III ... , .. ~ 1. '- L. TOWN OF WAPPINGER, NEW YORK NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) DECEMBER 31,1997 NOTE I - Commitments and Contingent Liabilities (Continued) 4. Tn Municipal Sewer Plant Expansion - Pha4;e mA In May 1997, the Town entered into a contract with the Tri-Municipal Sewer Commission with regard to the further expansion of 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 will be funded by the Town. The commission has hired consultants to prepare a map, plan and report which will include environmental studies, permit applications and estimates of project costs. The funding for the map, plan and report and other related costs has been provided through Town bond resolutions totaling $575,000. Costs of the map, plan and report to date amount to $479,660. NOTE .I - 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 Town estimates the cost of closing and capping the landfill to be $550,000, as of December 31, 1997, which has been recorded in the Long Term Debt Account Group (see Note F). Construction of the capping system took place during 1998, with final payments to be made in 1999. The costs of monitoring, which could be required for up to thirty years after closure, have not been estimated since ail agreement with the Department of Conservation has not yet been reached as to the nature and extent of required monitoring. The costs of both closure and postclosure monitoring are ordinarily recognized over the expected useful life of the landfill. However, since the landfill has stopped accepting refuse, all costs are being recognized as the terms of closure and postclosure requirements are determined. The actual costs may be higher due to inflation, changes in technology or subsequent changes in regulations. The Town has been notified that it is eligible to receive up to $275,000 in grant funds through the New York State Department of Environmental Conservation Landfill Closure Assistance Program, based on eligible expenditures. This aid is expected to be received in 1999. Summarized unaudited financial information is as follows: Total Assets $30,306 $J2.OOO ~1O.30~ Total Liabilities Total Fund Balance 25 ... ~ ~ TOWN OF WAPPINGER, NEW YORK NOTES TO TIlE FINANCIAL STATEMENTS (CONTID.) DECEMBER 31, 1997 NOTE K - Subsequent Events III The Town has authorized and issued the following new debt: ... .. ... ... III .. Bond Anticipation Notes Issue Maturity Interest PuIl)ose Date Date Bale Amount Fleetwood Water District Improvements 04/16/98 10/16/98 3.80% $740.000 Castle Point Landfill 07/09/98 07/09/99 3.63% 550,000 Highway Garage Land Purchase 07/09/98 07/09/99 3.63% 155,000 Serial Bond: Fleetwood Water District Improvements * 07/30/98 10/15/18 4.93% $510,000 * Serial Bond issued as partial long-term financing of bond anticipation note issued April 16, 1998. The balance of the bond anticipation note, $230,000, was repaid from unspent initial .. proceeds. II. .. l.. i. ... ~ .. L. 26 .. .. .. .. ... III REQUIRED SUPPI..EMENTAL INFORM ATION i.. ... .. II. I .. if ... ... II. .. ... ... ... i .. i. f .. .. ... .. f " .. '- I.. L L L. b .. t: .. t Ii. II. I- .. .. '- L. TOWN OF WAPPINGER, NEW YORK REQUIRED SUPPLEMENTAL INFORMATION DECEMBER 31, 1997 The Year 2000 (Y2Kl Issue The Governmental Accounting Standards Board requires state and local governments to disclose information about the effect of the Y2K issue. The Y2K issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond the YeN 1999 troublesome. Problems affecting a wide range of governmental activities could result if computers and other electronic equipment that are dependent upon date-sensitive coding are not corrected. These problems have the potential for causing a disruption of government services and an increased demand for government services. The Y2K issue is a worldwide issue that affects governments and the private sector whose operations are interdependent in many situations. The Y2K issue could cause significant disruption of services. At December 31, 1997 there were no funds committed for Y2K compliance changes. The Town has identified certain computer systems to be critical to operations, specifically those pertaining to the processing of financial transactions and related record-keeping. The assessment, remediation and validation of these systems is expected to be performed during 1999. The Town is dependent on outside processing of portions of its revenues, specifically property tax and sales tax revenues, which are handled by Dutchess County. The Town would not be able to collect these revenues in the short term if the county's systems were unable to perform these services. The Town does have the legal authority to borrow funds in anticipation of the receipt of these revenues, although the timing of such borrowings may not coincide with the need for disbursements. While the Town is making an effort to obtain Y2K compliance in critical areas, it cannot provide assurances that it will be Y2K compliant by January 1, 2000, nor can it provide assurance that supplier's of essential services will also be Y2K compliant by January 1, 2000. 27 II. ... ... ... il. .. OTHER SUPPLEMENTAL INFORMATION I.. .. L. \ il. i k .. .. I.. II.. L L. i.. j. .. , I.. it. Ii. TOWN OF WAPPINGER, NEW YORK SCHEDULE OF FINDINGS AND RECOMMENDATIONS FOR THE YEAR ENDRD DECEMBER 31, 1997 iii. Prior Year Findine - Continuine: .. Findine 1: Payments have been made in excess of escrow amounts collected resulting in net excess payments of approximately $15,600. 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. Cause: .. .. Effect: Additional liabilities could be incurred by the Town which were not budgeted. We note that the Town has increased its efforts to collect outstanding amounts due the Town. We recommend that the Town continue to monitor escrow balances by periodically reconciling applicant balances with cash collected and by requiring additional payments when necessary. Resolution of old balances should be addressed as well. ... Recommendation: .. ... Ii. Current Year Findines: Findine 1: The Town has included inspection fees in escrow accounts where the purpose for holding these funds is unclear. These fees have been collected for inspections which may not be necessary . Funds are being held indefinitely. The Town should review its procedures for the assessment of inspection fees so that the fee is recorded in accordance with the purpose of the fee, being either refundable or a revenue. ... Cause: .. Effect: iii. Recommendation: .. , '- " .. ... 28 .. .. t .. TOWN OF WAPPINGER CONSTANCE 0, SMITH SUPERVISOR SUPERVISOR'S OFFICE 20 MIDDLEBUSH ROAD P,O. BOX 324 WAPPINGERS FALLS, NY 12590-0324 , II. ~ TELEPHONE: (914) 297-2744 FAX: (914) 297.4558 Ii. j ... L. TOWN OF WAPPINGER FINDINGS AND RECOMMENDATIONS RESPONSES TO AUDIT FOR THE YEAR ENDING DECEMBER 31, 1997 .. Prior Year Finding II. FINDING 1: Payments have been made in excess of escrow amounts collected. .. RESPONSE 1: The December 31,1996 audit addressed this same issue. We have implemented more checks and balances. The comptroller disputes the $15,600.00 excess payment amount that you indicated. He does feel that there is more likely a $3,000.00 overpayment. The Town has implemented a procedure that when the escrow reaches $500.00 balance and there will still be more work on the project, all work stops until escrow is replenished. This method should decrease outstanding escrow balances. .. ... ... Current Year Finding I. FINDING 1: The Town has included inspection fees in escrow accounts where the purpose for holding these funds is unclear. ... RESPONSE 1: The Supervisor & Comptroller will be looking at possible solutions and clarify these inspection fees with the Town Board and Planning Board to implement a clear and efficient method of handling these fees. ;;~ ... ... .. .. 29 II.