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2011 FINANCIAL REPORT HUGHSONVILLE FIRE DISTRICT December 31, 2011 Prepared for: Board of Fire Commissioners Hughsonville Fire District JUL 2 4 2013 TOWN OF WA~PING~ER T~~~~!~~ ~LE~.~ Prepared by: Vanacore, DeBenedictus, DiGovanni & Weddell, CPAs LLP 11 Racquet Road Newburgh, NY 12550 (845)567-9000 wr ~. This page intentionally left blank w r. HUGHSONVILLE FIRE DISTRICT FINANCIAL SECTION Page Independent Auditor's Report 1 - 2 Management's Discussion and Analysis 3 - 4 Financial Statements: Balance Sheet -All Fund Types and Account Groups 5 Results of Operation and Changes in Fund Equity -Governmental Funds 6 Budgetary Comparison Statement -Governmental Fund 7 Notes to Financial Statements 8 - 15 Supplementary Information: Fire District Questionnaire 16 COMPLIANCE SECTION Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 17 - 18 Schedule of Findings 19 Table of Contents S VANACORE DEBENEDICTUS `~ DiGOVANNI WEDDELL I.I]~tFtFO I,fARTT.ITY PARTNFRRHTP CF.RTIFIF.O PIJRL[C ACCOUNTANTS RIISINFRS DFYFI.OPAIFNT CONSUT.T.4N7 INDEPENDENT AUDITOR'S REPORT Board of Fire Commissioners Hughsonville Fire District P.O. Box 545 Hughsonville, NY 12537 We have audited the accompanying financial statements of the Hughsonville Fire District as of December 31, 2011 and for the year then ended. These financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note I C to the financial statements, these financial statements were prepared on the basis of accounting prescribed by New York State for the preparation of the Fire District's annual financial report, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Hughsonville Fire District as of December 31, 2011, and the results of its operations for the year then ended, in conformity with the basis of accounting described in Note I C. In accordance with Government Auditing Standards, we have also issued our report, dated June 7, 2012, on our consideration of Hughsonville Fire District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 11 Racquet koad P.O, liox I(NxN 2h22 Knuth A\~enue, N.(1. Flox 93 i20 N'hire Plains koad luite 30(I NeNlwtgh, NY 12330 N'apptn~etn I~akx, NY 123911 TatrytoNU. NY IU391 (845) 367-9000 Fu (845) 367A22R (843)903.9000 Fax (8431903.99W (643) 367.9000 Fax (8431 367.9228 h11Pf!~N'N'W.rddN',eotn http:•h~~Nx\~.eddN•. vttn Mry\>'\\A'NlPdd\r.Cnm ~i t111 it The Management's Discussion and Analysis on pages 3 through 4 is not a required part of the basic financial statements, but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. ~`" Our audit was conducted for the purpose of forming an opinion on the Hughsonville Fire District's basic financial statements. The Fire District Questionnaire included on page 16 is not a required part of the basic financial statements, but is supplementary information required by the New York State Office of the State Comptroller. The ~,,,, Fire District Questionnaire has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it. ~Iar-u;tcone, De~e~c~~a!~;t`u~, D~G~awu~i ~c ZUe~~~er°P, (~r~d 1'c~sfuted 1'i~~~~ ~a~r~na~ Newburgh, NY June 7, 2012 2 HUGHSONVILLE FIRE DISTRICT REQUIRED SUPPLEMENTAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS The accompanying management discussion and analysis of the Hughsonville Fire District's financial performance has been prepared to provide an overview of the District's financial activities for the fiscal year ended December 31, 2011. This discussion and analysis is only an introduction and should be read in conjunction with the District's financial statements. Requests For Information This report is designed to provide an overview of the District's finances for those with an interest in this area. Questions concerning any of the information found in this report or requests for additional information should be directed to the Commissioners at the Hughsonville Fire District, P.O. Box 545, Hughsonville, NY 12537. Financial Highlights - As of the close of the current fiscal year, the Hughsonville Fire District's governmental funds reported an ending fund balance of $286,636, an increase of $84,738 in comparison with the prior year. - At the end of the current fiscal year, unassigned fund balance for the General Fund was $151,762. - Real Property taxes increased by $25,849 in 2011. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Hughsonville Fire District's financial statements. The District's financial statements consist of two components: 1) fund and account group financial statements and 2) notes to the financial statements. In addition to the financial statements, this report contains supplemental information which will enhance the reader's understanding of the Hughsonville Fire District. Financial Statements The statements consist of the Fund and Account Group Financial Statements. These statements focus on the activities of the individual parts of the District. There are three parts to the Fund Financial Statements: 1) the balance sheet, 2) the results of operation and changes in fund equity and 3) the budgetary comparison statement. The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in these statements. Fund Financial Statements The fund financial statements provide a more detailed look at the District's most significant activities. The Hughsonville Fire District, like all other governmental entities in New York, uses fund accounting to ensure and reflect compliance with finance-related legal requirements, such as the General Statutes. All of the funds of the District are classified in two categories: governmental funds and fiduciary funds. Financial Analysis of the Hughsonville Fire District Funds As noted earlier, the Hughsonville Fire District uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds: The focus of the Hughsonville Fire District's govemmental funds is to provide information on near-term inflows, outflows and balances of usable resources. Such information is useful in assessing the Hughsonville Fire District's financing requirements. Specifically, unassigned fund balance can be a useful measure of a government's net resources available for spending at the end of the fiscal year. The General Fund is the chief operating fund of the Hughsonville Fire District. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $151,762. As a measure of the General Fund's liquidity, it may be useful to compare the unassigned fund balance to total fund expenditures. Unassigned fund balance represents 21.4 percent of total General Fund expenditures. At December 31, 2011, the governmental funds of the Hughsonville Fire District reported a combined fund balance of $286,636, a 42% percent increase over last year. HUGHSONVILLE FIRE DISTRICT Fiduciary Funds: The District acts in an agency capacity for assets associated with the Length of Service Award Program ("LOSAP"). These assets are recorded in a separate fund because they cannot be used to finance District ~ operations. Budgetary Highlights rr~ Actual revenues exceeded budgeted revenues by $24,581. The majority of this amount related to insurance recoveries. Actual expenditures were $39,886 more than budgeted expenditures primarily due to equipment expenditures. a" Capital Assets and Debt Administration Capital Assets: The District's investment in capital assets as of December 31, 2011 totaled $3,017,043. These assets include vehicles, buildings and machinery & equipment `` Debt: As of December 31, 2011, the Hughsonville Fire District had total debt outstanding of $583,541. The debt is backed by the full faith and credit of the District. The District's total debt decreased by $86,103 during the 2011 fiscal year. ~.. For more detailed information on capital assets and long-term debt, see the notes to the financial statements. r1r CONDENSED FINANCIAL INFORMATION 2011 2010 Balance Sheet Information: Current Assets $ 296,811 $ 204,255 ~ LOSAP Assets $ S 13,319 $ 503,772 Capital Assets $ 3,017,043 $ 2,969,440 Current Liabilities $ 10,175 $ 130,469 Long-Term Debt $ 583,541 $ 669,644 Fund Balances: Restricted $ 109,022 $ 27,318 Assigned $ 25,852 $ - `r Unassigned $ 151,762 $ 174,580 Statement of Operations: Revenue: ~"" Property Tax Revenue $ 766,785 $ 740,936 Other Revenue 25,924 913 Total Revenue 792,709 741,849 Expenditures: Equipment and Capital Outlay 122,431 632,372 Contractual 332,660 105,147 ii. Debt Principal and Interest 117,250 104,996 Other Expenditures 135,630 79,362 Total Expenditures 707,971 921,877 ~` Change in Fund Equity $ 84,738 $ (180,028) it 4 HUGHSONVILLE FIRE DISTRICT BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS Governmental Fiduciary As of December 31, 2011 Fund T pe Fund T pe Account Groups General Fixed General Long ASSETS AND OTHER DEBITS General Agency Assets Term Debt Assets: Cash $ 187,790 $ - $ _ $ _ Cash, Special Reserves 109,021 - _ _ Service Award Program Assets (Note II A) - 513,319 - Capital Assets (Note II B) - - 3,017,043 - Other Debits: Non-Current Government Liabilities - - - 583 541 Total Assets and Other Debits $ 296 811 $ 513 319 $ 3 017 043 $ 583 541 LIABILITIES, FUND EQUITY AND OTHER CREDITS Liabilities: Accounts Payable $ 9,827 $ _ $ _ $ Other Liabilities 348 - _ _ Agency Liabilities - 513,319 - Installment Purchase Debt (Note II C) - - - 503,541 Bonds Payable (Note II C) - - - 80,000 Total Liabilities 10,175 513 319 - 583 541 Fund Equity and Other Credits: Investments in Non-Current Government Assets - - 3,017,043 - Restricted Apparatus Reserve 44,636 - _ _ Building Reserve 64,386 - _ _ Assigned 25,852 - _ _ Unassigned 151762 - _ _ Total Fund Equity and Other Credits 286,636 - 3 017,043 - Total Liabilities, Fund Egui and Other Credits $ 296 811 $ 513 319 $ 3 017,043 $ 583,541 t"°' See Independent Auditor's Report and Notes to Financial Statements. ~ 5 iri HUGHSONVILLE FIRE DISTRICT RESULTS OF OPERATION AND CHANGES IN FUND EQUITY GOVERNMENTAL FUNDS For the Year Ended December 31, 2011 General Revenues: Real Property Taxes $ 766,785 Payments in Lieu of Taxes 214 Interest and Earnings 743 Insurance Recoveries 22,462 Unclassified 2,505 Total Detail Revenue 792,709 Expenditures: Fire -Personal Service 31,296 Fire -Equipment and Capital Outlay 122,431 Fire -Contractual Expenditures 332,660 Local Pension Fund 45,450 Workers Compensation 58,884 Debt Principal -Serial Bonds 40,000 Debt Principal -Installment Purchase 46,103 Debt Interest -Serial Bonds 5,160 Debt Interest -Installment Purchase 25,987 Total Detail Expenditures 707,971 Other Financing Sources/(Uses) Interfund Transfers In 81,661 Interfund Transfers Out (81,661) ~ Total Detail Other Financing Sources/(Uses) - Changes in Fund Equity 84,738 ~ Fund Equity -Beginning 201,898 Fund Equity -Ending $ 286,636 i~ See Independent Auditor's Report and Notes to Financial Statements. 6 ~Yr HUGHSONVILLE FIRE DISTRICT BUDGETARY COMPARISON STATEMENT GOVERNMENTAL FUNDS Variance with Budgeted Actual Amounts Budget For the Year Ended December 31, 2011 Amounts OCBOA Basis Positive/(Negative) GENERAL Revenues: Real Property Taxes $ 766,785 $ 766,785 $ - Payments in Lieu of Taxes - 214 214 Interest and Earnings 1,300 700 (600) Insurance Recoveries - 22,462 22,462 Unclassified - 2 505 2 505 Total Detail Revenue 768,085 792 666 24 581 Expenditures: Fire -Personal Service 33,000 31,296 1,704 Fire -Equipment and Capital Outlay 85,000 122,431 (37,431) Fire -Contractual Expenditures 328,501 332,660 (4,159) Local Pension Fund 45,450 45,450 - Workers Compensation 58,884 58,884 - Debt Principal -Serial Bonds 40,000 40,000 - Debt Principal -Installment Bonds 44,534 46,103 (1,569) Debt Interest -Serial Bonds 5,160 5,160 - Debt Interest -Installment Purchase 27 556 25 987 1,569 Total Detail Expenditures 668,085 707 971 (39,886) Other Financing Sources/(Uses) Interfund Transfers Out (100,000) (81,661) 18,339 Changes in Fund Equity - 3,034 3,034 General Fund Equity -Beginning 174,580 174 580 - General Fund Equity -Ending $ 174,580 $ 177 614 $ 3,034 RESERVE Revenues: Interest and Earnings $ - $ 43 $ 43 Other Financing Reserve Fund Equity -Ending Interfund Transfers In 100 000 81,661 (18 339) Changes in Fund Equity 100,000 81,704 (18,296) Reserve Fund Equity -Beginning 27 318 27,318 - Reserve Fund Equity -Ending $ 127,318 $ 109 022 $ (18,296) See Independent Auditor's Report and Notes to Financial Statements. 7 W~ HUGHSONVILLE FIRE DISTRICT NOTES TO FINANCIAL STATEMENTS I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Hughsonville Fire District ("the District"), located in Hughsonville, New York, was established in 1934 and is governed by the general laws of the State of New York ("the State"). The Boazd of Commissioners is the legislative body responsible for overall operations. The notes to the financial statements are an integral part of the statements and aze intended to be read with them. A. ENTITY DEFINITION CRITERIA FOR FINANCIAL REPORTING PURPOSES All activities and functions performed for the Hughsonville Fire District are its direct responsibility. No other organizations have been included or excluded from the reporting entity. The financial reporting entity includes organizations, functions and activities over which elected officials exercise oversight responsibility. Oversight responsibility is determined on the basis of financial interdependency, selection of governing authority, designation of management and accountability for fiscal matters. B. FUND ACCOUNTING The District uses funds and account groups to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain types of functions or activities. The operations of each fund aze accounted for with a sepazate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures. Resources aze allocated to and accounted for in individual funds based upon the purposes for which they aze to be spent and the means by which spending activities are controlled. The vazious funds are grouped by type in the financial statements. The following fund types and account groups aze used by the District. 1. FUND TYPES: a. Governmental Fund Types -are those through which most general functions of the District are financed. The acquisition, use and balances of the District's expendable financial resources and the related current liabilities aze accounted for through governmental funds. General Fund -The General Fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in other funds. Reserve Fund -The Reserve Fund is designed to segregate resources to provide for future contingencies and plan for major capital outlays, thereby reducing the need to rely on borrowing or outlays of current revenue to finance such events. For financial reporting purposes, the Reserve Fund is included in the General Fund. b. Fiduciazy Fund Types - aze used to account for assets held by the District in a trustee or custodial capacity. Agency Fund -The Agency Fund is custodial in nature (assets equal liabilities) and does not involve measurement of results of operations. 2. 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 aze concerned only with the measurement of financial position. They are not involved with measurement of results of operations. General Fixed Asset Account Group -This account group is established to account for the land, buildings, improvements and other equipment utilized by the District for general operating purposes. General Long-Term Debt Account Group -This account group is established to account for all long-term obligations of the District. It accounts for assets presently available for retirement of such indebtedness and the amount to be raised in future yeazs to retire those debt obligations. See Independent Auditor's Report. 8 HUGHSONVILLE FIRE DISTRICT C. BASIS OF ACCOUNTING/MEASUREMENT FOCUS The financial statements were prepared on the New York State System of Accounts basis of accounting for the Fire District annual financial report, which is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Basis of accounting refers to when revenues, expenditures and transfers -and the related assets and liabilities - 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. The accounting and reporting treatment applied to a fund is determined by its measurement focus. Measurement focus is the determination of what should be measured. All Governmental Funds are accounted for on a spending or "financial flow" measurement focus. This measurement focus means that only current assets and current liabilities are generally included on their balance sheets. Governmental Fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Real property taxes are recognized as revenue during the corresponding tax year. The taxes are collected in full during the period earned; therefore, no receivable is necessary. Penalties and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned since they are measurable and available. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include principal and interest on general long-term debt, which are recognized when due, and any service or payroll related taxes, fringes and benefits, which vest or accumulate, which are charged as an expenditure when paid or when they are to be paid with currently available resources. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent 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. D. BUDGETARY DATA The District's budget policies are as follows: 1. No later than October 5th, the treasurer submits a tentative budget to the Board of Commissioners for the fiscal year commencing the following January 1st. The tentative budget includes proposed expenditures and estimated revenues as the means of financing for all funds. 2. After public hearings are conducted to obtain taxpayers comments, but no later than Thursday after the election date, the governing body adopts the budget. Certified copies are filed with the tax roll coordinator no later than November 25th for purposes of preparing the tax levy. 3. All modifications of the budget must be approved by the Board of Commissioners. E. ASSETS, LIABILITIES AND FUND EQUITY Cash "Cash" includes (1) cash on hand (2) cash in demand deposits and (3) other types of deposits and accounts that have the same characteristics asdemand deposits (deposits or withdrawals may be made at any time without notice or penalty). Hughsonville Fire District's investment policies are governed by State Statutes. In addition, the District has its own written investment policy. District monies shall be deposited in FDIC insured commercial banks located within the State of New York. The Fire Commissioners are authorized to use demand accounts and certificates of deposit. Collateral is required for demand deposits and certificates of deposit at 102 percent of all deposits not covered by FDIC. Obligations that may be pledged as collateral are obligations of the United States and its agencies and obligations of the State and its Municipalities and School Districts. See Independent Auditor's Report. 9 HUGHSONVILLE FIRE DISTRICT Deposits: All deposits aze carried at cost plus accrued interest. FDIC insurance is unlimited for demand deposits and covers up to $250,000 per bank for time deposits. Deposits with a bank balance of $306,072 aze categorized as follows to give an indication of the level of risk inherent therein at year- end. Category 1 includes deposits that aze insured by the Federal Deposit Insurance Corporation (FDIC). Category 2 includes deposits collateralized with securities held by the pledging financial institution's trust department or its agent in the District's name. Category 3 includes deposits uncollateralized, including any bank balance that is collateralized with securities held by the pledging financial institution, or by its trust department or agent, but not in the District's name. Bank Balance Categories Totals 1 2 3 Cash and cash equivalents in banks $ 250,000 $ 56,072 $ $ 306,072 Property Tax Receivables Real property taxes are collected by the Town of Wappingers and remitted to the District. No receivable is generated because the Town remits the entire amount due to the District during the tax yeaz. Capital Assets Acquisitions of land, capital facilities and equipment aze recorded as expenditures in the vazious Governmental Funds at the time of purchase and aze also recorded in the General Fixed Asset Account Group at cost. No depreciation has been provided on general fixed assets. The District has not maintained historical cost records for some of its capital asset inventory. Due to this lack of cost basis information, the District has valued their land and certain equipment using the estimated historical cost of the capital asset calculated by back-trending. General Obligation Debt Long-term obligations expected to be financed from governmental funds aze accounted for in the General Long-Term Debt Account Group. The provision to be made in future yeazs' budgets for the repayment of ~' these obligations is also recorded in the General Long-Term Debt Account Group. Equity Classification During fiscal yeaz 2011, the District implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The purpose of this new accounting standard is to provide fund balance categories and classification that will be more easily understood by users of financial statements and consistently applied in fund balance reporting. This new standard sets forth hierazchial fund balance classifications that aze based primarily on the extent to which a government is bound to observe constraints imposed upon the use of resources reported in governmental funds. The following is a brief description of the five new fund balance classifications: Nonspendable: Amounts that cannot be spent in the current period either because of their form or because they must be maintained intact. Prepaid expenses are nonspendable assets because by definition, the money has already been spent. Restricted: Amounts that aze subject to externally enforceable legal purpose restrictions imposed by creditors, grantors, contributors or laws and regulations of other governments or though constitutional provisions or enabling ~' legislation. See Independent Auditor's Report. 10 Y1r HUGHSONVILLE FIRE DISTRICT Committed: Amounts that are subject to a purpose constraint imposed by a formal action of the government's highest level of decision making authority (the Town Board) before the end of the fiscal year. The same level of formal action is required to remove the constraint. Assigned: Amounts that are subject to a purpose constraint that represents an intended use established by the government's highest level of decision making authority or by their designated body or official. The purpose of the assignment must be narrower than the purpose of the general fund, and in funds other than the general fund, assigned fund balance represents the residual amount of fund balance. Unassigned: Represents the residual amount of fund balance in the general fund. In funds other than the general fund, this should only be used to report a deficit balance. Restricted fund balances: Various New York State statutes allow local governments to establish reserve funds for various purposes. Since the State regulates the establishment, funding and use of these reserves, the District has classified the following reserve funds as restricted fund balances: a. The Building Reserve includes reserve funds established for future repair, improvement and renovation projects. The balance at the end of 2011 was $64,386. b. The Apparatus Reserve includes reserve funds established for the acquisition of new equipment. The balance at the end of 2011 was $44,636. F. REVENUES AND EXPENDITURES Property Tax Revenue Reco nition District property tax revenues are recognized when received from the Town. G. PERVASIVENESS OF ESTIMATES The preparation of financial statements in conformity with the New York State System of Accounts basis of accounting described in Note I C requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. H. SUBSEQUENT EVENTS The date to which events occurring after December 31, 2011, the date of the most recent balance sheet, have been evaluated for possible adjustment to the financial statements or disclosure is June 7, 2012, which is the date the financial statements were available to be issued. I. RECLASSIFICATION OF AMOUNT Certain amounts for the year ended December 31, 2010 have been reclassified to conform with the presentation of amounts for the year ended December 31, 2011. There is no effect on the 2010 results from operations. See Independent Auditor's Report. 11 rri 111 HUGHSONVILLE FIRE DISTRICT II.DETAILED NOTES ON ALL FUNDS AND ACCOUNT GROUPS A. LENGTH OF SERVICE AWARD PROGRAM The information contained in this note is based on information for the Hughsonville Fire District Service Awazd Program for the program year ended on December 31, 2011, which is the most recent program year for which complete information is available. Penflex provided a valuation packet for the calendar year ended December 31, 2011 for the purposes of completing the audit. Information from that report is contained within this footnote. The Hughsonville Fire District established a defined benefit Service Awazd Program (referred to as a "LOSAP" -length of service awazd program -under Section 457(e)(11) of the Internal Revenue Code) effective January 1, 1990 for the active volunteer firefighter members of the Hughsonville Fire District. The program was established pursuant to Article I1-A of the New York State General Municipal Law. The program provides municipally-funded deferred compensation to volunteer firefighters to facilitate the recruitment and retention of active volunteer firefighters. The Hughsonville Fire District is the sponsor of the program and Penflex is the program administrator. Under the program, participating volunteers begin to be paid a service award upon attainment of the program "entitlement age". The amount of the service award paid to a volunteer is based upon the number of yeazs of service credit the volunteer earned under the program for performing active volunteer firefighter activities. Participation Vesting and Service Credit Active volunteer firefighters who have reached the age of 16 and who have completed one (1) year of firefighting service are eligible to participate in the program. Participants acquire a nonforfeitable right to a service award after being credited with five (5) years of firefighting service or upon attaining the program's entitlement age while an active volunteer. The program's entitlement age is age 55. An active volunteer firefighter is credited with a year of firefighting service for each calendar year after the establishment of the program in which he or she accumulates fifty points. Points aze granted for the performance of certain firefighter activities in accordance with a system established by the sponsor on the basis of a statutory list of activities and point values. A participant may also receive credit for five (S) years of active volunteer firefighting service rendered prior to the establishment of the program as an active volunteer firefighter member of the Hughsonville Fire District. Benefits A participant's service award benefit is paid as a ten year certain and continuous monthly payment life annuity. The amount payable each month equals $20 multiplied by the total number of years of service credit earned by the volunteer under the point system. The maximum number of years of service credit a participant may earn is 40 years under the program. Currently, there are no other forms of payment of a volunteer's earned service award under the Program. Except in the case of death or total and permanent disablement, service awards commence to be paid when a participant attains the entitlement age. Volunteers who continue to be active after attaining the entitlement age and beginning to be paid a service awazd continue to have the opportunity to earn program credit and to thereby increase their service award payments. The program provides death and disability benefits equal to the greater of $15,000 or the actuarial value of the participant's earned service award at the time of death or disablement. The program does not provide extra line-of--duty death or disability benefits. All death and disability benefits are "self insured" and are paid from the program trust fund. For a complete explanation of the program, a copy of the Program Document is available from the Fire District Secretary. Fiduciary Investment and Control After the end of each calendar yeaz, the fire company prepazes and certifies a list of names of all persons who were active volunteer members of the fire company during the yeaz and indicates which volunteers earned fifty ~"' points. The certified list is delivered to the Board of Fire Commissioners for the Boazd's review and approval. The fire company must maintain the point system records to verify each volunteer's points on forms provided and/or approved by the Boazd of Fire Commissioners. See Independent Auditor's Report. 12 r HUGHSONVILLE FIRE DISTRICT The Board of Fire Commissioners has retained Penflex to assist in the administration of the program. The services provided by Penflex are described in the following pazagraphs. Based on the certified calendar year volunteer firefighter listings, Penflex determines and certifies in writing to the Board of Fire Commissioners the amount of the service awazd to be paid to a participant or to a participant's designated beneficiary. The person(s) authorized by the Board of Fire Commissioners then authorizes, in writing, the custodian of the Hughsonville Fire District Service Awazd Program trust funds to pay the service awazd. No service award benefit payment is made without the written certification from Penflex and the written directive from the authorized representative of the Boazd of Fire Commissioners. Penflex bills the Hughsonville Fire District for the services it provides. Penflex's invoices aze authorized for payment by the Boazd of Fire Commissioners in the same manner as any other invoice presented to the Fire District for payment. The Fire District pays Penflex invoices from its General Fund. Article 11-A requires that program assets be held in trust for the exclusive purpose of providing benefits to participants and their beneficiaries or for the purpose of defraying the reasonable expenses of the operation and administration of the program. The Board of Fire Commissioners created a Service Awazd Program Trust Fund through the adoption of a Trust Document, a copy of which is available from the Fire District Secretazy. The Boazd of Fire Commissioners is the program trustee. Authority to invest the program assets is vested in the program trustee. Program assets are invested in accordance with a statutory prudent person rule and in accordance with the written investment policy statement adopted by the Boazd of Fire Commissioners. Program Financial Condition Assets and Liabilities Actuarial Present Value of Accrued Service Awards as of December 31, 2011 $ 546,380 Total Net Assets Available for Benefits as of December 31, 2010 $ 477,685 Total Net Assets Available for Benefits as of December 31, 2011 $ 513,319 Fundine MethodoloQV and Actuarial Assumptions Normal Costs The actuazial valuation methodology used by the actuary to determine the sponsor's contribution is the Attained Normal Age Frozen Initial Liability method. The assumptions used by the actuary to determine the sponsor's contribution and the actuarial present value of benefits aze: Assumed rate of return on program investments 5.50% Tables used for: Withdrawal 08400 Disability None Retirement 08400 Death (Actives) 08400 Death (Inactives) 08400 * For program cost calculation purposes, all pre-entitlement age active volunteer firefighter participants aze assumed to: survive to the entitlement age; remain active and earn 50 points each yeaz; and begin to be paid service awazds upon attainment of the entitlement age. See Independent Auditor's Report. 13 r r rrr Mr HUGHSONVILLE FIRE DISTRICT Receipts and Disbursements Plan Net Assets, January 1, 2011 i. Changes during the year + Plan Contributions + Investment Income Earned - Plan Benefit Withdrawals Plan Net Assets, December 31, 2011 $ 503,772 19,363 14,184 (24,000) $ 513,319 Contributions Amount of Fire District's contribution recommended by actuary: $ 26,088 Amount of Fire District's actual contribution: $ 19,363 B. ASSETS Capital Assets: ~ Property, Buildings and Equipment -- A summary of changes in the general fixed assets during fiscal year 2011 follows: Beginning Balance Increases Decreases Ending Balance IW Vehicles $ 2,308,075 $ - $ - $ 2,308,075 Buildings 311,418 - - 311,418 Machinery and Equipment 349,947 47,603 - 397,550 Total Capital Assets $ 2,969,440 $ 47,603 $ - $ 3,017,043 C. LIABILITIES Long-Term Debt: 1. The following is a summary of general obligation debt transactions of the District during the year ended rr December 31, 2011: Governmental Activities Debt Payable at January 1, 2011 $ 669,644 New Obligations - Obligation Payments (86,103) Debt Payable at December 31, 2011 $ 583,541 ~„ See Independent Auditor's Report. 14 r. HUGHSONVILLE FIRE DISTRICT 2. General obligation debt payable at December 31, 2011 is comprised of the following individual issues: Fiscal Year Outstanding Payable by Sale Original Interest of Final Principal and Description Date Borrowing Rate Maturity 2011 Serial Bonds Governmental Activities: Installment Purchase Debt 6/27/06 $ 611,580 4.72 % 2021 $ 452,768 Installment Purchase Debt 1/15/10 62,050 4.79 % 2015 50,773 Fire District Bonds 6/10/03 400,000 4.30 % 2013 80.000 Total Serial Bonds $ 583.541 3. The annual debt service requirements of the bonded indebtedness are as follows: Principal Interest 2012 $ 88,287 $ 27,243 $ 115,530 2013 90,575 23,235 113,810 2014 52,970 19,120 72,090 2015 55,480 16,610 72,090 2016 43,859 13,982 57,841 2017 45,929 11,912 57,841 2018 48,097 9,744 57,841 2019 50,367 7,474 57,841 2020 52,744 5,097 57,841 2021 55,233 2,608 57 841 , Total $ 583,541 $ 137,025 $ 720,566 See Independent Auditor's Report. 15 Total rri +i Hi1GHSON~LLE FIRE DISTRICT ATION ~ se _ SUPPLEMENTAR [JE pNNAIRE Y r FIRE DISTRICT Q lied with? ~~- curement policy and is it comp tements? ~~ 1) 2) 3) 4) 5) 6) 7) rrr i~r. r. rr ~'' Has your district adopted a wntten pro Has your district contracted to haTVne an independent audit of its financla s a missioners performed an internal audit of the Treasurer's -- If not, has the Board of Fire Co records and reports? olic and is it complied with? y Does your district have a written travel p y ear? $ 254, Are monthly bank reconcilliations performed? for the next fiscal y ___ 96~ our district's statutory spending limitation margin (amount) What is y h of Service Award Program (LOSAP) for volunteer Does your district have a Lengt firefighters? If so, how are the LOSAP funds invested? Marketable Securities Annuities Life Insurance Other (describe) olic as required by General Municipal Law. Has your Fire District adopted an investment p Y Section 39? See Independent Auditor's Report. 16 ~~ ~Y --- N N ~- r VANACORE DEBENEDICTUS ~DIGOVANNI LI711ftFD LfARR.Ii}•PARTIYF.R3HWEDDELL ('ERTIFIFD P[1RLIC ACCptJMANTS RUSINFSR DF~~'T:I.()P1lfFN7'tl()NS[7I.T.4NTS ' REPORT ON INTERNAL CONTROL OVER F NANO AL REPORTING AN AND OTHER MATTERS BASED ON AN AUDI OFCOMPLIANCE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Boazd of Fire Commissioners Hughsonville Fire District P.O. Box 545 Hughsonville, NY 12537 We have audited the financial statements of the Hughsonville Fire District as of and for the year ended D 31, 2011, and have issued our report thereon dated June 7, 2012. We conducted our audit in accordanc auditing standards generally accepted in the United States of America and the standards applicable to finan ber audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. a with lal Internal Control Over Financial Re ortin Management of Hughsonville Fire District is responsible for establishing and maintaining effective internal controls over financial reporting. In planning and performing our audit, we considered Hughsonville Fire District's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Hughsonville Fire District's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of Hughsonville Fire District's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. However, we identified certain deficiencies in internal control over financial reporting that we consider to be significnt deficiencies in internal control over financial reporting. A significant deficiency is a deficiency or combination of deficiencies in internal control, that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiency described in the accompanying Schedule of Findings as 11-1 to be a significant deficiency. 11 Racqun Road, Y.U. Ibx 101NH 2622 Smtth Arenue, P.U. Rnx v5 Nrw•burRh~ NY 12530 N'appween fulls. NY 12590 (R45)567-90(q Fax (R45)367-922R 1&13) )05.9000 Fax 843 903. h0p:ewww.cdda•.c°m h0p:•^wwW~s~ddw. ~n,a 9904 17 520 0.'hite plains koad Suite 31ht larg9msn. NY 10591 IR4S) 367.90pp Fax IR43) 567.9228 kys. ~:\su w.~•ddw.com ~I rr>i ,;;_ rrl Compliance and Other Matters As part of obtaining reasonable assurance about whether Hughsonville Fire District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. We noted certain matters that we have reported to management of the District in a separate letter dated June 7, 2012. This report is intended solely for the information and use of the Board of Fire Commissioners and management and is not intended to be, and should not be, used by anyone other than those specified parties. `~/a~racone, ~e~e~r~~!~aud, Di~~aw ~ Zl/e~~ale~, ~~d ,L~i~rcted ,L~ie~lkeitty ~ant~c~ra~i Newburgh, NY June 7, 2012 rw rir 18 This page intentionally left blank .~ r~ HUGHSONVILLE FIRE DISTRICT SCHEDULE OF FINDINGS A. Internal Control Findings Significant Deficiency in Internal Control 11-1 Capital Assets Condition: The District does not maintain its own capital asset listing for annual financial reporting. The listing should include important information, such as the date that each item was purchased, date of disposal (if applicable) and historical cost. In addition, the District's current capitalization policy is unreasonable low. Criteria: Capital assets are to be accurately reported on the financial statement. Cause: The District did not have a capital asset listing that matched the financial statement. Effect: The District may not be able to accurately account for its capital assets. The low capitalization policy is inefficient because it requires the District to monitor and account for assets which do not have a material effect on the financial statements. Recommendation: We recommend that the District change its capitalization policy to $20,000 and compile and maitain a list of capital assets over this amount at the District. B. Compliance Findings No compliance findings noted. 19