Audit Report 09.30.1987 CITY OF OKEECHOBEE, FLORIDA
FINANCIAL STATEMENTS
(WITH AUDITORS ' REPORT THEREON )
SEPTEMBER 30, 1987
DiBartolomeo, McBee & Sloan
rortifiori niihlir arrniini- ntc
I i'tLii i ilrul J 1.. \ i' -'
BPIIrm!) Jac I. MJ cc.C P A
Rita B. Sloan.C.1' A
Kim T Bolin,C.P.A.
Susan Tibus,C P.A.
DiBartolomeo, McBee & Sloan Certified Public Accountants
April 4 , 1988
Ms. Bonnie Thomas
City of Okeechobee
55 S.E. Third Avenue
keec hobez, FL 34974
Dear Ms. Thomas:
I wanted to recap our conversation of last week concerning one
method of possibly reducing the deficit situation with the water
and sewer operating fund. I suggest we look at the possibility
of using the trust funds whenever available for the improvements
and extensions of the system_ In effect we are using operating
funds to expand the system which reduces the availability of
funds for covering operating expenses, as has occurred in the
past. By not using the trust funds we are "stockpiling" these
assessments which were generated for a particular purpose but not
being used . This method of funding the expansion and
improvements could help to alleviate both problems.
If there are any other questions concerning this please call me.
Sincerely,
J,ay\\\L\, McBee
Certified Public Accountant
� t
JLM/j e
cc : L. C. Fortner
900 Professional Centre Medallion Building
900 Virginia Avenue, Suite 12, 1981 S.F. Port St. Lucie Boulevard
P.O. Bo\ 2546, Ft. Pierce, FL 34954 Port St. Lucie, Florida 34952
(3051 461-8833 (305) 335-0007
1
' CITY OF OKEECHOBEE, FLORIDA
1 FINANCIAL STATEMENTS
' (WITH AUDITORS' REPORT THEREON)
SEPTEMBER 30, 1987
1
1
CITY OF OKEECHOBEE, FLORIDA
FINANCIAL STATEMENTS
' SEPTEMBER 30, 1987
CITY COUNCIL
Oakland Chapman
Mayor, Chairman
Andy Rubin Dowling Watford
Councilmember, Vice Chairman Councilmember
' Richard R. Collins Oscar Thomas
Councilmember Councilmember
ADMINISTRATIVE
John Drago Jerald Bryant
City Administrator City Attorney
' Bonnie S. Thomas, CMC L.C. Fortner, Jr.
City Clerk Public Utilities
' Louis K. Tomey II Director
Chief of Fire Department Charles Elders
' Director of Public
Works
Larry Mobley
Chief of Police
Gerald A. DiBarl lorne .lr ,I'.A.
Ja} L. McBee ,P.A.
015 Rita B. Sloan; p.A.
Kim T.Bolin,RA.
Susan Tibus,V.A.
DiBartolomeo, McBee & Sloan Certified Public Accountaits
April 4 , 1988
Ms. Bonnie Thomas
City of Okeechobee
55 S.E. Third Avenue
nI -- .1.. ' 3 4 7 4
Dear Ms. Thomas:
T wanted to recap our conversation of last week concerning one
method of possibly reducing the deficit situation with the water
and sewer operating fund. I suggest we look at the possibility
of using the trust funds whenever ,available for the improvements
— and extensions of the system_ In effect_ we are using operating
funds to expand the system which reduces the availability of
funds for covering operating expenses, as has occurred in the
past. By not using the trust funds we are "stockpiling" these
assessments which were generated for a particular purpose but not
being used . This method of funding the expansion and
improvements could help to alleviate both problems.
If there are any other questions concerning this please call me.
Sincerely,
k
,,,,, ;:,_; i' V'''\-4;--
Jay LA McBee
Cser ified Public Accountant
V
JLM/j e
cc : L.C. Fortner
900 Professional Centre Medallion Building
900 Virginia Avenue, Suite 12, 1981 S.E. Port St. Lucie Boulevard
P.O. Box 2546, Ft. Pierce, FL 34954 Port St. Lucie, Florida 34952
(305) 461-8833 (305) 335-0007
CITY OF OKEECHOBEE, FLORIDA
' FINANCIAL STATEMENTS
SEPTEMBER 30, 1987
TABLE OF CONTENTS
PAGE
Auditors ' Report 1-2
Combined Balance Sheet - All Fund Types and Account Groups 3-4
Combined Statement of Revenues, Expenditures, and Changes
in Fund Balances - All Governmental Fund Types 5
' Combined Statement of Revenues, Expenditures, and Changes
in Fund Balances - Budget and Actual - Governmental Funds 6
Combined Statement of Revenues, Expenses, and Changes in
Retained Earnings/Fund Balances - Proprietary Fund
and Employee Pension Trust Funds 7
Combined Statement of Changes in Financial Position -
' All Proprietary Fund Types and Employee Pension Trust Funds 8
Notes to Combined Financial Statements 9-25
Supplementary Information to Financial Statements
General Fund
Schedule of Revenues (Budget and Actual) 26-27
Schedule of Expenditures (Budget and Actual ) 28-29
' Special Revenue Fund - Federal Revenue Sharing -
Statement of Revenues and Expenditures
(Budget and Actual) 30
' Debt Service Fund - Statement of Revenues and
Expenditures (Budget and Actual) 31
Pension Trust Funds
Combining Balance Sheet 32
Combining Statement of Revenues, Expenses and
Changes in Fund Balance 33
Combining Statement of Changes in Financial Position 34
Statistical Information
Summary of Insurance Coverage - Unaudited 35
I Schedule of Assessed Values, Tax Levies and Rates -
Unaudited Last Ten Years 36
Schedule of Certain Revenues Unaudited
Last Ten Years 37
CITY OF OKEECHOBEE, FLORIDA
' FINANCIAL STATEMENTS
SEPTEMBER 30, 1987
TABLE OF CONTENTS
' PAGE
Report on Controls over Nonmajor Federal Assistance
Programs 38-40
Report on Compliance Related to Nonmajor Federal
Assistance Programs 41
Report on Schedule of Federal Financial Assistance 42
' Schedule of Federal Financial Assistance 43
Federal Revenue Sharing Separate Report on Compliance 44
Management Letter 45-52
I
I Gerald A.DiBartolomeo Jr.,C.P.A.
Jay L. McBee,C.P.A.
I 175 Rita B. Sloan,C.P.A.
Kim T.Bolin,C.P.A.
Susan Tibus,C.P.A.
DiBartolomeo, McBee & Sloan Certified Public Accountants
I
I The Honorable Mayor and Members
of the City Council
City of Okeechobee, Florida
IWe have examined the general purpose financial statements of the
City of Okeechobee, Florida as of and for the year ended September
I 30, 1987, as listed in the accompanying table of contents. Except
as set forth in the following paragraph, our examination was made
in accordance with generally accepted auditing standards and,
I accordingly, included such tests of the accounting records and
such other auditing procedures as we considered necessary in the
circumstances.
I The City has not maintained adequate detail records in support of
the cost of the water and sewer utility plant in service (carrying
value of $9 ,473,989 at September 30, 1987 ) and land and
I improvements, buildings and improvements, furnishings and
equipment, and rolling stock included in the general fixed assets
group of accounts (carrying value of $1, 821,459 at September 30,
I 1987) and we were unable to obtain sufficient supporting
documentation to form an opinion with respect to the stated cost
of these items acquired in years prior to October 1, 1981 (cost
$4, 098,761 and $973, 891 respectively) or the accumulated
I depreciation applicable to the water and sewer utility plant in
service at September 30, 1987 or the provision for depreciation
for the year then ended. Accordingly, we are unable to express,
I and we do not express an opinion on the accompanying financial
statements of the proprietary fund type and the general fixed
assets group of accounts.
IIn our opinion, except that, as described in the preceding
paragraph, we do not express an opinion on the proprietary fund
type and general fixed assets group of accounts, the
I aforementioned general purpose financial statements present fairly
the financial position of the City of Okeechobee, Florida, at
September 30, 1987, and the results of its operations and the
I changes in financial position of its fiduciary pension trust fund
types for the year then ended, in conformity with generally
accepted accounting principles applied on a basis consistent with
that of the preceding year.
I
-
900 Professional Centre 1 _ Medallion Building
I 900 Virginia Avenue, Suite 12 1981 S.E. Port St. Lucie Boulevard
P.O. Box 2546, Ft. Pierce, FL 34954 Port St. Lucie, Florida 34952
(407) 461-8833 (407) 335-0007
The Honorable Mayor and Members
' of the City Council
City of Okeechobee, Florida
Page 2
Our examination was made for the purpose of forming an opinion on
the combined financial statements taken as a whole. The
supplementary information, as listed in the accompanying table of
contents, is presented for purposes of additional analysis and is
not a required part of the general purpose financial statements.
' Such information, except for that portion marked "unaudited, " on
which we express no opinion, has been subjected to the auditing
procedures applied in the examination of the combined financial
' statements and, in our opinion, is fairly stated in all material
respects in relation to the general purpose financial statements
taken a whole.
1
,8 , hi. t-sue.
' DiBartolomeo, McBee & Sloan
Certified Public Accountants
1
March 10, 1988
1
1
- 2 -
I
1
CITY OF OKEECHOBEE, FLORIDA
COMBINED BALANCE SHEET
ALL FUN.) TYPES AND ACCOUNT GROUPS
YEAR ENDED SEPTEMBER 30, 1987
ASSETS
Fiduciary
Prop rieta ry Funds Account Groups
Governmental Funds Fund Employee General General Totals
Special Debt Water Pension Fixed Long Term (Memorandum
General Revenue Service and Sewer Trust Funds Assets Debt Only)
ASSerS
Cash $ 117,683 $ - $ 1,307 $ 150 $ 1,241,999 $ - $ - $ 1,361,139
Investments 200,000 - 12,432 7,280 87,703 - - 307,415
Receivables (less
allowances for
doubtful accounts)
Taxes 79,657 - - - - - - 79,657
Customer accounts,
less allowances of
1,605 11,078 - - 140,953 - - - 152,031
Due from other 3
goverment agencies 68,040 - - - 62,813 - - 130,858
Accrued interest - - 78 - - - - 78
Due from other funds 2,272 - - 27,759 - - - 30,031
Inventory 5,702 - - - - - - 5,702
Prepaid expenses 10,930 - - - - - - 10,930 I
Restricted assets:
Cash 809 - - 793,642 - - - 794,451 i
Investments - - - 858,795 - - - 858,795 I
Due from operating
account - - - 230,457 - - - 230,457
Property, plant, and
equipment, net (where
applicable) of
accumulated depreciation - - - 9,473,989 - 1,821,459 - 11,295,448
Bond issuance costs,
net of amortization - - - 159,625 - - - 159,265
Amount available in Debt 3
Service Fund - - - - - - 11,685 11,685
Amount to be provided for
retirement of general
long-term debt - - - - - - 336,087 336,087
TOTAL ASSETS $ 496,171 $ - $ 13,817 $11,692,290 $ 1,392,520 $ 1,821,459 $ 347,772 $15,764,029
See notes to financial statements
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CITY OF OKEECHOBEE, FLORIDA
COMBINED BALANCE SHEET
ALL FUND TYPES AND ACCOUNT GROUPS
YEAR ENDED SEPTEMBER 30, 1987
LIABILITIES AND FUND EQUITY
Fiduciary
Proprietary Funds - Account Groups
Governmental Funds Fund Employee General General Totals
Special Debt Water Pension Fixed Long Term (Memorandum
General Revenue Service and Sewer Trust Funds Assets Debt Only)
LIABILITIES
Accounts payable $ 1,526 $ - $ - $ 12,003 $ - $ - $ - $ 13,529
Customer deposits - - - 206,193 - - - 206,193
Accrued liabilities 18,126 - - 23,873 - - 59,607 101,606
Due to restricted
assets - cash - - - 230,457 - - - 230,457
Payable from restricted
assets
Accounts payable - - - 120,333 - - - 120,333
Retainage payable - - - 18,061 - - - 18,061
Accrued interest on
bonds payable - - - 94,377 - - - 94,377
Matured bonds and interest
coupons - - 2,012 - - - - 2,012
Due to other funds 30,031 - - - - - - 30,031
Deferred revenues 23,939 - - - - - - 23,939
Long-term indebtedness - - - 4,861,579 - - 288,165 5,149,744
73,622 - 2,012 5,566,875 - - 347,772 5,990,282
FUND EQUITY
Contributed capital - - - 4,492,202 - - - 4,492,202 1
Investment in general
fixed assets - - - - - 1,821,459 - 1,821,459
Retained earnings
Reserved for -
revenue bond
retirement - - - 533,365 - - - 533,365
Unreserved - - - 1,099,847 - - - 1,099,847
Fund balance
Reserved for -
employees' retire-
ment system - - - - 1,392,520 - - 1,392,520
Debt service - - 11,805 - - - - 11,805
Inventory 5,702 - - - - - - 5,702
Prepaid expenses 10,930 - - - - - - 10,930
Encumbrances 6,155 - - - - - - 6,155
Undesignated 399,762 - - - - - - 399,762
422,549 - 11,805 6,125,414 1,392,520 1,821,459 - 9,773,747
TOTAL LIABILITIES
AND FUND EQUITY $ 496,171 $ - $ 13,817 $11,692,290 $ 1,392,520 $ 1,821,459 $ 347,772 $ 15,764,029
I
See notes to financial statements
- 4 -
CITY OF OKEECH OBEE, FLORIDA
COMBINED SINE D STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES -
ALL GOVEEIMENTAL FUND TYPES
YEAR ENDED SEPTEMBER 30, 1987
Totals
Special Debt (Memorandum
General Revenue Service Only)
REVENUES
Taxes $ 838,254 $ - $ 17,785 $ 856,039
Intergovernmental 748,494 1,270 - 749,764
Charges for services 277,401 - - 277,401
Licenses and permits 44,888 - - 44,888
Fines and forfeitures 49,071 - - 49,071
Interest income 21,618 - 1,714 23,332
Miscellaneous 8,942 - - 8,942
1,988,668 1,270 19,499 2,009,437
EXPENDITURES
Public safety 882,101 - - 882,101
General government 325,553 - - 325,553
Transportation 379,904 - - 379,904
Physical environment 261,646 - - 261,646
Health and human services 26,775 - - 26,775
Parks and recreation 6,278 - - 6,278
Intragovernment service - public works 30,412 - - 30,412
Debt service
Principal retirement - - 20,000 20,000
Interest charges - - 19,088 19,088
Professional fees - - 500 500
1,912,669 - (39,588) 1,952,257
Revenues over (under) expenditures 75,999 1,270 (20,089) 57,180
OTHER FINANCING SOURCE'S (USES)
Operating transfers in 14,002 - - 14,002
Operating transfers out - (14,002) - (14,002)
14,002 (14,002) - -
Revenues and other financing sources
over (under) expenditures and other uses 90,001 (12,732) (20,089) 57,180
Fund Balance, September 30, 1986 332,548 12,732 31,894 377,174
Fund Balance, September 30, 1987 $ 422,549 $ - 0 - $ 11,805 $ 434,354
See notes to financial statements
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CITY OF OKEECHOBEE, FLORIDA
COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL - GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30, 1987
Totals
General Fund Special Revenue Fund Debt Service Fund Memorandum Only
Actual (On Variance Actual (On Variance Variance Actual (On Variance
Budgetary Favorable Budgetary Favorable Favorable Budgetary Favorable
Budget Basis) (Unfavorable) Budget Basis) (Unfavorable) Budget Actual (Unfavorable) Budget Basis) (Unfavorable)
REVENUES
Taxes $ 854,735 $ 838,254 $ (16,481) $ - $ - $ - $ 18,477 $ 17,785 $ (692) $ 873,212 $ 856,039 $(17,173)
Intergovernmental 686,640 748,494 61,854 12,000 1,270 (10,730) - - - 698,640 749,764 51,124
Charges for services 262,028 277,401 15,373 - - - - - - 262,028 277,401 15,373
Licenses and permits 31,000 44,888 13,888 - - - - - - 31,000 44,888 13,888
Fines and forfeitures 25,900 49,071 23,171 - - - - - - 25,900 49,071 23,171
Interest income 23,000 21,618 (1,382) - - - - 1,714 1,714 23,000 23,332 332
Miscellaneous 5,617 8,942 3,325 - - - - - - 5,617 8,942 3,325
1,888,920 1,988,668 99,748 12,000 1,270 (10,730) 18,477 19,499 1,022 1,919,397 2,009,437 90.040
EXPENDITURES
Pubic safety 934,077 883,672 50,405 - - - - - - 934,077 883,672 50,405
General government 305,598 326,028 (20,430) - - - - - - 305,598 326,028 (20,430)
Transportation 602,093 382,816 219,277 - - - - - - 602,093 382,816 219,277
Physical environment 260,175 261,646 (1,471) - - - - - - 260,175 261,646 (1,471)
Health and human services 21 ,436 26,775 (5,339) - - - - - - 21,436 26,775 (5,339)
Parks and recreation 5,800 6,278 (478) - - - - - - 5,800 6,278 (478)
Intragovernment service -
public works 30,341 30,785 (444) - - - - - - 30,341 30,785 (444)
Debt service - - - - - - 39,118 39,588 (470) 39,118 39,588 (470)
2,159,520 1,918,000 241,520 - - - 39,118 39,588 (470) 2,198,638 1,957,588 241,050
1
Revenues over (under)
expenditures (270,600) 70,668 341,268 12,000 1,270 (10,730) (20,641) (20,089) 552 (279,241) 51,849 331,090
OTHER FINANCING SOURCES
(USES)
Operating transfers in 12,000 14,002 2,002 - - - - - - 12,000 14,002 2,002
Operating transfers out - - - (12,000) (14,002) (2,002) - - - (12,000) (14,002) (2,002)
12,000 14,002 2,002 (12,000) (14,002) (2,002) - - - - - -
Revenues and other
Financing sources over
(under) expenditures
and other uses $ (258,600) 84,670 $ 343,270 $ - (12,732) $ (12,732) (20,641) (20,089) $ 552 $ (279,241 ) 51,849 $ 331,090
Fund balance -
September 30, 1986 332.548 12,732 31,894 377,174
Adjustment for encumbrances 5,331 - - 5,331
Fund balance,
September 30, 1987 $ 422,549 $ - $ 11,805 $ 434,354
See notes to financial statements
- 6 -
CITY OF OKEECHOBEE, FLORIDA
COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED
EARNINGS/FUND BALANCES - PROPRIETARY FUND AND EMPLOYEE PENSION TRUST FUNDS
YEAR ENDED SEPTEMBER 30, 1987
Proprietary Fiduciary
Fund Funds
Employee Totals
Water Pension (Memorandum
and Sewer Trust Funds Only)
OPERATING REVENUES
1
Charges for services $ 1,451,865 $ - $ 1,451,865
i
Interest income - 79,564 79,564
Contributions - 166,914 166,914
1,451,865 246,478 1,698,343
OPERATING EXPENSES
Personal services 493,303 - 493,303
Contractual services 62,817 - 62,817 '
Depreciation 264,233 - 264,233
Materials and operating supplies 258,488 - 258,488
Utilities 124,007 - 124,007
Rentals and leases 3,353 - 3,353
Insurance 94,022 - 94,022
Repairs and maintenance 92,965 - 92,965
Administrative supplies and expense 20,609 - 20,609
Contribution refunds - 37,939 37,939
General Fund administative charge 48,900 48,900
1,462,697 37,939 1,500,636
OPERATING INCOME (;ASS) (10,832) 208,539 197,707
NONOPERATING INCOME (EXPENSE)
Impact fees 111,964 - 111,964
Tap fees 40,078 - 40,078
Interest incase 62,864 - 62,864
Interest expense (338,417) - (338,417)
Other fiscal charges (3,596) - (3,596)
Miscellaneous 6,567 - 6,567
Legal and engineering fees - lawsuit (296,996) - (296,996)
(417,536) - (417,536)
NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (428,365) 208,539 (219,829)
Loss on refinancing of debt 161,407 - 161,407
NET INCOME (LOSS) (589,775) 208,539 (381,236)
Retained Earnings/Fund Balance, September 30, 1986 2,222,987 1,183,981 3,406,968
Retained Earnings/Fund Balance, September 30, 1987 $1,633,212 $1,392,520 $3,025,732
See notes to financial statements
- 7 -
1
CITY OF OKEECHOBEE, FLORIDA
COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION -
ALL PROPRIETARY FUND TYPES AND EMPLOYEE PENSION TRUST FUNDS
YEAR ENDED SEPTEMBER 30, 1987
;
I
Proprietary Fiduciary
Fund Funds
Employee Totals
Water Pension (Memorandum
and Sewer Trust Funds Only)
SOURCES OF WORKING CAPITAL
Operations
Net inane $ - $ 208,539 $ 208,539
Proceeds of long-term debt 4,858,900 - 4,858,900
Contributed capital - federal grant 250,344 - 250,344
5,109,244 208,539 5,317,783
USES OF WORKING CAPITAL
Operations
Net loss 589,775 - 589,775
Items not requiring working capital
Depreciation Dep (264,233) - (264,233)
Amortization of bond discount (5,307) - (5,307)
Loss on refinancing debt (24,907) - (24,907)
Working capital used by operations 295,328 - 295,328
Retirement of revenue bonds 3,481,771 - 3,481,771
Issuance costs 160,626 - 160,626
Acquisition of property, plant, and equipment 493,796 - 493,796
Increase in restricted assets 1,115,198 - 1,115,198
5,546,719 - 5,546,719
INCREASE (DECREASE) IN WORKING CAPITAL $ (437,475) $ 208,539 $ (228,936)
ELEMENTS OF NET INCREASE (DECREASE) IN WORKING CAPITAL
Cash $ (216,038) $ 37,721 $ (178,317)
Investments 7,280 108,000 115,280
Accounts receivable (10,440) - (10,440)
Due from other funds 170 - 170
Accounts and retainage payable 77,032 - 77,032
Due from other governmental units - 62,818 62,818
Bonds payable 27,000 - 27,000
CUstaners' deposits (26,554) - (26,554)
Accrued liabilities (295,585) - (295,585)
INCREASE (DECREASE) IN WORKING CAPITAL $ (437,475) $ 208,539 $ (228,936)
See notes to financial statements
8 -
CITY OF OKEECHOBEE, FLORIDA
NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 1987
1
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City of Okeechobee was originally incorporated in 1915 and its
present charter was adopted in 1919 under Chapter 8318 of Special
' Acts of 1919 . The City operates under the council form of government
and provides the following services as authorized by its charter:
public safety, public works, and culture and recreation.
' It is the policy of the City of Okeechobee to conform its accounting
policies to generally accepted accounting principles applicable to
governmental units. The following is a summary of the more
significant principles and practices used in the preparation of these
financial statements.
' (a) BASIS OF PRESENTATION - FUND ACCOUNTING
The accounts of the City are organized on the basis of funds or
account groups, each of which is consideredd a separate
1 accounting entity. The operations of each fund are accounted
for with a separate set of self-balancing accounts that comprise
its assets, liabilities, fund balance/retained earnings,
' revenues, and expenditures/expenses. The various funds are
summarized by type in the financial statements. The following
fund types and account groups are used by the City:
GOVERNMENTAL FUNDS
Governmental Funds are those through which most governmental
' functions of the City are financed. The acquisition, use, and
balances of the City' s expendable financial resources and the
related liabilities (except those accounted for in proprietary
' funds) are accounted for through governmental funds. The
measurement focus is upon determination of changes in
financial position, rather than upon net income determination.
' The following are the City' s governmental fund types:
GENERAL FUND
' The General Fund is the general operating fund of the City.
It is used to account for all financial resources except
those required to be accounted for in another fund.
SPECIAL REVENUE FUND
' The Special Revenue Fund is used to account for the proceeds
of specific revenue sources (other than special assessments,
expendable trusts, or major capital projects) that are
legally restricted to expenditures for specified purposes.
- 9 -
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
' NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
I
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
' DEBT SERVICE FUNDS
Debt Service Funds are used to account for the accumulation
of resources for, and the payment of, general long-term debt
principal, interest, and related costs.
PROPRIETARY FUND TYPE
The Proprietary Fund is used to account for the City' s ongoing
' organizations and activities which are similar to those often
found in the private sector. The measurement focus is upon
determination of net income. The following is the City' s
proprietary fund type:
ENTERPRISE FUND
' The Enterprise Fund is used to account. for operations (a)
that are financed and opera._ed in a manner similar to
private business enterprises - where the intent of the
' governing body is that the costs (expenses, including
depreciation) of providing goods or services to the general
public on a continuing basis be financed or recovered
'
primarily through user charges; or (b) where the governing
body has decided that periodic determination of revenues
earned, expenses incurred, and/or net income is appropriate
for capital maintenance, public policy, management control
' accountability, or other purposes.
FIDUCIARY FUNDS
' Fiduciary Funds are used to account for assets held by the
City in a trustee capacity for individuals and/or other funds.
' TRUST FUNDS
Trust Funds include pension trust funds. Pension trust funds
' are accounted for and reported as proprietary funds since
capital maintenance is critical .
The accrual basis of accounting is used by proprietary funds
and pension and nonexpendable trust funds.
- 10 -
DiBartolomeo, McBee & Sloan certified public accountants
IICITY OF OKEECHOBEE, FLORIDA
INOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
II
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
IFIXED ASSETS AND LONG-TERM LIABILITIES
I The accounting and reporting treatment applied to the fixed
assets and long-term liabilities associated with a fund are
determined by its measurement focus. All governmental funds
are accounted for on a spending or "financial flow"
I 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
I considered a measure of "available spendable resources. "
Governmental fund operating statements present increases
(revenues and other financing sources) and decreases
II (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.
II Fixed assets used in governmental fund operations (general
fixed assets) are accounted for in the General Fixed Assets
Account Group, rather than in governmental funds. No
Idepreciation has been provided on general fixed assets.
All fixed assets are valued at historical cost. Donated fixed
I assets are valued at their estimated fair value on the date
donated.
Long-term liabilities expected to be financed from
1 governmental funds are accounted for in the General Long-Term
Debt Account Group, not in the governmental funds.
I The two account groups are not "funds. " They are concerned
only with the measurement of financial position. They are not
involved with measurement of results of operations.
IBecause of their spending measurement focus, expenditure
recognition for governmental funds excludes amounts for
noncurrent liabilities. Since they do not affect net current
I assets, such long-term amounts are not recognized as
governmental fund expenditures or fund liabilities. They are
instead reported as liabilities in the General Long-Term Debt
IIAccount Group.
II
1
- 11 -
II
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
' NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
' NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
FIXED ASSETS AND LONG-TERM LIABILITIES (CONTINUED)
' The proprietary fund is accounted for on a cost of services or
"capital maintenance" measurement focus. This means that all
assets and all liabilities (whether current or noncurrent)
' associated with their activity are included on their balance
sheets. Depreciation of all fixed assets on the balance sheet
used in the proprietary fund is charged as an expense against
operations.
1 (b) BASIS OF ACCOUNTING
' All governmental funds are accounted for using the modified
accrual basis of accounting. Revenues are recognized when they
become measurable and available as a resource to finance
operations of the current year. Uncollected ad valorem taxes
are not recorded as revenues because, although measurable, they
are not available until collected. Accounts receivable for
refuse collection and interest on investments are recorded as
' earned.
Expenditures are generally recognized, under the modified
' accrual basis, in the accounting period in which the liability
is incurred. Exceptions to the rule include accumulated unpaid
employee vacation and sick pay, which would not normally be
' liquidated with expendable available resources within 60 days,
principal and interest on general long-term debt which is
recognized when due, and recognizing prepaid expenses so as to
allocate expenditures between years.
Proprietary Funds and Pension Trust Funds are accounted for on
the accrual basis. Revenues are recognized when earned and
' expenses are recognized when incurred. Unbilled water and sewer
utility service revenues ($31, 860 at September 30, 1987 ) are
recorded at year end.
(c) BUDGETARY DATA
The City enacts an annual budget for the governmental funds, by
' ordinance, after conducting the required public hearings. The
budget adopted is on a basis consistent with the accounting
principles followed by the City.
- 12 -
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
' NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d) ENCUMBRANCES
' The governmental funds use encumbrance accounting, under which
purchase orders, contracts, and other commitments for the
expenditure of funds are recorded in order to reserve that
' portion of the applicable appropriation. Open encumbrances are
reported as reservations of fund balances since the commitments
will be honored through subsequent years' budget appropriations.
Encumbrances do not constitute expenditures or liabilities. As
' of September 30, 1987 encumbrances in the General Fund amounted
to $6, 155.
(e) CASH
Cash accounts for the City are maintained in interest-bearing
' accounts.
(f) INVESTMENTS
' Investments, consisting of certificates of deposit and money
market accounts, are stated at cost which approximates market.
' Deposits
Florida Statutes require state and local governmental units to
' deposit monies with a financial institution classifed as a
"Qualified Public Depository, " which is a state insurance pool
for banks and other financial institutions. The pool requires
each bank to render as collateral a percentage of all state and
' local monies on deposit. Upon default of a particular financial
institution within the pool, the polled collateral is used to
reinstate the state and local government deposits. This pool is
additional insurance above the federal depository insurance.
The City has deposits only with qualifying institutions as of
September 30, 1987 .
' The following is a list of the City' s investments by categories
of risks established by GASB 3 :
1
- 13 -
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
' NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(f) INVESTMENTS (CONTINUED)
' Uninsured and Unregistered, With Securities Held by the Counter
Party' s Trust Department as Agent in the Entity' s Name
' Book Value Market
General Fund
Long-term certificiate of
deposit $ 200, 000 $ 200, 000
Pension Trust Fund
Money market investment 87 ,703 87 .703
Debt Service Fund
' Long-term certificate cf
deposit 2, 132 2, 132
Money market investment 10,300 10, 300
' Water and Sewer Fund
Money market investments _ 866, 075 366, 075
TOTAL INVESTMENTS $ 1 , 166, 210 $ 1, 166, 210
' (g) INVENTORY
The inventory of motor fuels is stated at cost determined on a
' first-in, first-out basis.
(h) PROPERTY, PLANT AND EQUIPMENT
' Property, plant and equipment acquired for general governmental
purposes are recorded as expenditures in the General Fund and
capitalized at cost in the general fixed assets group of
accounts. No depreciation has been provided on general fixed
assets. The utility plant and equipment utilized in the City' s
water and sewer system is stated at cost.
Depreciation has been provided principally at a composite rate
of 2-1/2% per year for assets acquired prior to October 1, 1981 .
Assets acquired after October 1, 1981 are depreciated by the
- 14 -
II
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
' NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
' NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(h) PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
straight-line method over their estimated useful lives for
periods of five to forty years. Interest costs on construction
in progress for the City' s sewer plant are capitalized and added
' to the cost of construction and will be amortized over the
estimated useful life of the plant (See Note 4) .
(i) ALLOCATION OF ADMINISTRATIVE CHARGES
' Certain administrative expenses are incurred by the City' s
General Fund on behalf of the City' s Water and Sewer Fund. The
' General Fund charges for these services based upon estimates of
City management personnel . The reimbursement for these services
is recorded as an operating expense of the Water and Sewer Fund
and as a reduction of !financial and administrative expense of
the General Fund. For the year ended September 30, 1987, these
charges amounted to $48, 900.
' (j ) VACATION AND SICK LEAVE
Full-time and permanent employees accrue a paid vacation ranging
from six days after six months of continuous service up to 20
days after fifteen years of service. Unused vacation may be
accumulated up to a maximum of thirty days.
' Sick leave for employees is accumulated at the rate of 12 days
per year. Payment for unused sick leave upon termination of
employment may be made for employees with 10 years or more of
continuous service at a rate of 25% of the unused sick leave
balance.
' The amount of vacation leave to be paid from current financial
resources is included with accrued liabilities in the General
Fund whereas the vested portion of sick leave and balance of
' vacation leave is included under long-term debt.
(k) TOTAL COLUMNS ON COMBINED STATEMENTS
The columns entitled "Totals (Memorandum Only) " included in the
combined financial statements section of this report are
presented only to facilitate financial analysis. These total
' columns are not comparable to consolidated financial information
as the basic reporting entity is by fund type which utilizes
differing bases of accounting. In addition, interfund
' eliminations have not been made in the aggregation of this data.
- 15 -
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
1
' NOTE 2 - PROPERTY TAXES
The City' s property tax is levied each October 1 on the assessed
value listed as of the prior January 1 for all real and tangible
' personal property located in the City. Assessed values are
established by the County Property Appraiser at 100 percent of
estimated market value. The assessed value for the 1986/87 levy was
' $100, 260, 605.
Taxes are due no later than March 31 with discounting of taxes
offered for early payment. Discounts range from 4% if taxes are paid
' in November to 1% for taxes paid in February. Current tax
collections for the year ended September 30, 1987 were 96 .99% of the
tax levy.
NOTE 3 - PROPERTY, PLANT, AND EQUIPMENT
' The carrying value of property, plant, and equipment recorded in the
water and sewer fund as of September 30, 1987 i13 summarized as
follows:
' Utility plant in service -
Balance, September 30, 1986 $ 10, 906, 367
Acquired during the year ended
' September 30, 1987 (including
additions to construction-in-
progress of $355, 222) 493,796
' Total 11,400, 163
Less accumulated depreciation 1, 926, 174
NET BOOK VALUE $ 9,473, 989
' The carrying value of property, plant and equipment at September 30,
1987 included $2, 851 , 885 in carrying value of assets acquired prior
to October 1, 1981 . Depreciation expense for the year ended
September 30, 1987 was $264, 233 .
Construction-in-progress additions for the current year included
$1,443 of capitalized interest associated with the new wastewater
' collection system presently being constructed by the City (See Note
11 ) .
' A summary of changes in General Fixed Assets for the year ended
September 30, 1987 is as follows:
I
- 16 -
II
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
NOTE 3 - PROPERTY, PLANT, AND EQUIPMENT (CONTINUED)
Balance Retire- Balance
10-1-86 Additions ments 9-30-87
Land and improvements $ 805, 358 $ - $ - $ 805, 358
Buildings and improve-
ments 257, 905 - - 257, 905
Furnishings and equipment 381,793 34,726 416, 519
Rolling stock 331, 397 10,280 - 341, 677
TOTAL $1,776,453 $ 45, 006 $ - $1, 821,459
NOTE 4 - CONSTRUCTION IN PROGRESS
Reflected within the Property, Plant, and Equipment account in the
Water and Sewer Fund is $556, 263 which represents engineering fees
and construction costs for the expansion to the wastewater treatment
system and the interceptor sewer system. The balance of $2, 017, 505
in construction in progress is the wastewater collection system for
the wastewater treatment facilities. The City is presently involved
in litigation with the contractor for that project, a joint venture
of Taddie Undergroud Utility Company, Inc. and M & M Contracting
Company, concerning substandard work. That portion of the project
was stopped during the previous year prior to completion. During the
course of the year no interest expense was capitalized on this
portion of the project because there was no active construction in
the year.
NOTE 5 - LONG-TERM DEBT
Long-term debt as of September 30, 1987 is summarized as follows:
GENERAL LONG-TERM DEBT
$480, 500 original issue General Obligtion
Bonds, due in annual installments of
$15, 000 to $35, 000 through July 1, 1996 $ 260, 000
Notes payable:
7% capital improvement notes to a bank
' due $9, 500 semiannually, plus interest,
through May 1988; secured by and payable
from a pledge of the City' s share of one
half cent Florida State sales tax 19 , 000
- 17 -
DiBartolomeo, McBee & Sloan certified public accountants
ICITY OF OKEECHOBEE, FLORIDA
' NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
' NOTE 5 - LONG-TERM DEBT (CONTINUED)
8% capital improvement note to a bank,
due $9 , 167 annually, plus interest, through
' 1988 ; collateralized by funds other than ad
valorem taxes 9, 165
TOTAL GENERAL LONG-TERM DEBT $ 288, 165
' REVENUE BONDS
$5, 000, 000 original issue Water and Sewer
Refunding and Improvement Revenue Bonds,
Series 1987, due in annual installments
' ranging from $60, 000 to $405, 000 through
January 1, 2017 ; interest ranging from
5% to 7 .875% (issue includes $1, 235, 000
' of Serial Bonds and $3,765, 000 of Term
Bonds) ; net of unamortized discount of
$138, 421 . $4, 861, 579
Less current portion - - 0 - _
$4, 861, 579
The 1987 Water and Sewer Revenue Bonds, are secured by a pledge of
the net revenues of the water and sewer system, public service taxes,
franchise revenues and state revenue sharing funds.
A summary of the changes in all long-term debt for the year ended
September 30, 1987 is as follows:
- 18 -
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF 0IEE HOBEE, FLORIDA
NOTES TO COINED FINANCIAL SrA'rE ENrS (CONPINUED)
SEPTEMBER 30, 1987
NOTE 5 - LON-TERM DEBT (CONrINMJED)
Proprietary
General Long-Term Debt Water and Sewer Revenue Bonds
General Total
Obligation Notes 1972 1983A 1983B 1987 Long-Term
Bonds Payable Total Series Series Series Series Total Debt
Balance, September 30, 1986 $ 280,000 $ 63,433 $ 343,433 $ 342,000 $ 970,000 $ 2,196,771 $ - $ 3,508,771 $ 3,852,204
Additions - - - - - - 5,000,000 5,000,000 5,000,000
Payments during the year (20,000) (35,268) (55,268) (342,000) (970,000) (2,196,771) - (3,508,771) (3,564,039)
TOTAL 260,000 28,165 288,165 - - - 5,000,000 5,000,000 5,288,165
Less unarrortized bond discount - - - - - - 138,421 138,421 138,421
Balance, September 30, 1987 S 260,000 $ 28,165 $ 288,165 $ - $ - $ $ 4,861,579 $ 4,861,579 $ 5,149,744
Annual principal requirements
for the next five years are
as follows:
Year ended September 30,
1988 $ 25,000 $ 28,165 $ 53,165 - - 53,165
1989 25,000 - 25,000 60,000 60,000 85,000
1990 25,000 - 25,000 60,000 60,000 85,000
1991 25,000 - 25,000 65,000 65,000 90,000
1992 30,000 - 30,000 70,000 70,000 100,000
Thereafter 130,000 - 130,000 4,745,000 4,745,000 4,875,000
TOTAL $ 260,000 $ 28,165 $ 288,165 $ 5,000,000 $ 5,000,000 $ 5,288,165
f
t
t - 19 -
CITY OF OKEECHOREE, FLORIDA
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
NOTE 5 - LONG-TERM DEBT (CONTINUED)
Proprietary
Water and Sewer
General Long-Term Debt Revenue Bonds
General Total
Obligation Notes 1987 Long-Term
Bonds Payable Total Series Total Debt
The annual requirements to
amortize all debt outstanding
as of September 30, 1987,
including interest payments
totalling $7,935,930 are as
follows:
Year ended September 30,
1988 $ 42,738 $ 29,385 $ 72,123 $ 377,509 $ 377,509 $ 449,632
1989 41,050 - 41,050 436,009 436,009 477,059
1990 39,363 - 39,363 432,934 432,934 472,297
1991 37,675 - 37,675 434,571 434,571 472,246
1992 40,95E - 40,956 435,771 435,771 476,727
1993 38,894 - 38,894 436,509 436,509 475,403
1994 36,831 - 36,831 431,934 431,934 468,765
1995 39,769 - 39,769 432,049 432,049 471,818
1996 37,362 - 37,362 431,683 431,683 469,045
1997 - - - 435,649 435,649 435,649
1998 - - - 433,918 433,918 433,918
1999 - - - 431,639 431,639 431,639
2000 - - - 433,603 433,603 433,603
2001 - - - 429,849 429,849 429,849
2002 - - - 430,409 430,409 430,409
• • 2003 - - - 430,044 430,044 430,044
2004 - - - 428,806 428,806 428,806
2005 - - - 431,600 431,600 431,600
2006 - - - 428,425 428,425 428,425
2007 - - - 429,282 429,282 429,282
2008 - - - 428,847 428,847 428,847
2009 - - - 427,112 427,112 427,112
2010 - - - 429,000 429,000 429,000
2011 - - - 424,509 424,509 424,509
2012 - - - 423,641 423,641 423,641
2013 - - - 426,000 426,000 426,000
2014 - - - 421,588 421,588 421,588
2015 - - - 425,206 425,206 425,206
2016 - - - 421,659 421,659 421,659
2017 - - - 420,947 420,947 420,947
TOTAL $ 354,638 $ 29,385 $ 384,023 $12,840,702 $12,840,702 $13,224,725
- 20 - il
CITY OF OKEECHOBEE, FLORIDA
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
NOTE 5 - LONG-TERM DEBT (CONTINUED)
On July 29 , 1987 , the City issued the Water and Sewer Refunding and
' Improvement Revenue Bonds, Series 1987 , effective date of issuance
was July 1, 1987 . The $5, 000, 000 issue provided for retirement of :
a) the 1972 Revenue Bonds with a remaining balance of $335, 000 of
' principal plus accrued interest, b) the 1983 Series A Bonds with a
remaining balance of $950, 000 plus accrued interest, c) the 1983
Series B and C Bonds with a remaining balance of $2, 196,771 plus
accrued interest. The balance of funds was used to pay issuance
t costs, provide a required sinking fund and reserve account, and cash
for additional construction.
' In conjunction with the issuing of the 1987, Refunding and
Improvement Revenue Bonds, the City entered into an escrow deposit
agreement with Barnett Banks Trust Company, N.A. of Jacksonville,
Florida for depositing sufficient funds in escrow to fund the
' remaining principal and interest payments of the 1983 Water and Sewer
Serial Bonds, Series A issue and to pay all costs associated with the
management of the escrow account.
' The 1983 Series A, bonds maturing after January 1, 1994 and prior to
January 1, 2000 are redeemable by payment of a premium ranging from
3% to 1/2%. Bonds maturing after January 1, 2000 are redeemable at
par. The 1983 Series B, bond principal payments maturing after
September 1, 1992 and prior to September 1, 2004 are redeemable by
payment of a premium ranging from 4% to 1%. Bond principal payments
' maturing after September 1, 2004 are redeemable at par. The bonds
are held by the Farmers Home Administration. The City has the option
of redeeming the bonds without a premium on any interest due date.
An extraordinary loss on early extinguishment of debt was realized in
the current year of $161,407 due to this transaction.
NOTE 6 - CONTRIBUTED CAPITAL
The source and additions to contributed capital are as follows:
- 21 -
1
DiBartolomeo, McBee & Sloan certified public accountants
I
CITY OF OKEECHOBEE, FLORIDA
INOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
ISEPTEMBER 30, 1987
INOTE 6 - CONTRIBUTED CAPITAL (CONTINUED)
Balance Balance
ISource 10-1-86 Additions 9-30-87
Connection fees $ 421,758 $ - $ 421,758
I Developers 338,761 - 338,761
Federal grant 747 , 310 747, 310
Local Public Works Grant 417 ,740 417 ,740
Federal Revenue Sharing Funds 619, 572 - 619, 572
I General Fund 100, 000 - 100, 000
Okeechobee Beach Water
Association 275, 000 - 275, 000
I Environmental Protection
Agency Grant 1, 321 ,717 250, 344 1, 572, 061
TOTAL $4, 241, 858 $ 250, 344 $4,492, 202
NOTE 7 - REVENUE BOND RESERVE AND RETIREMENT FUNDS
IThe 1972, 1983 Series A and 1983 Series B Water and Sewer Revenue
Bond ordinances require, among other things, deposits on a monthly
I basis, of amounts necessary to provide for semi-annual and annual
interest and annual principal requirements. In addition the 1972
Revenue Bond ordinance requires a reserve of $24 , 350 while the 1983
Revenue Bond ordinance requires a reserve equal to the maximum annual
I debt service requirement on outstanding bonds, which is $124,750 for
the Series A and $21, 527 for the Series B. These accounts were
combined with additional monies to set up the sinking and reserve
I funds for the 1987 issue. At September 30, 1987 , the amounts on
deposit are as follows:
I 1987
Revenue
Bonds
I Maximum reserve
Sinking Fund accrued interest
and capitalized interest $ 94, 377
IReserve Fund 438, 988
ISeptember 30, 1987 $ 533 , 365
I
- 22 -
1
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
' NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
NOTE 7 - REVENUE BOND RESERVE AND RETIREMENT FUNDS (CONTINUED)
At September 30, 1987 , amounts included in restricted assets (cash
' and investments) in the accompanying combined balance sheet for these
requirements totalled $1 , 052, 438.
' NOTE 8 - PENSION PLANS
The City has three pension plans covering substantially all the
City' s regular employees. Total pension expense for the year was
' $46, 098 including, with respect to the general employees benefit
plan, amortization of past service cost over a 33 year period. It is
the City' s policy to fund pension expense as determined by actuarial
' valuation. Mandatory employee contributions to the plans are at the
rate of 5% of earnings. Accumulated employee contributions at
September 30, 1987 are as follows:
tGeneral $ 232, 372
Police 75,760
Fire _ 31, 214
' TOTAL $ 339, 346
The City' s contribution by fund for the year ended September 30, 1987
was:
' General Fund $ 28, 448
Proprietary Fund 23, 992
TOTAL $ 52,440
The plans covering the City' s firefighters and police officers are
also funded by the State of Florida from a tax on fire insurance
premiums collected. State contributions to these plans totalled
1 14, 874 and 47, 943, respectively, during the year ended September 30,
1987 , which was accrued but not received by September 30, 1987 .
A summary of the actuarial present value of accumulated plan benefits
' and plan net assets as of October 1, 1987 (the most recent valuation
date) is as follows:
1
- 23 -
II
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE. FLORIDA
' NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
NOTE 8 - PENSION PLANS (CONTINUED)
General Police Fire
' VESTED BENEFITS -
Terminated members $ 12,740 $ $ -
Other members 277,763 77, 529 31, 215
290, 503 77, 529 31, 215
Nonvested benefits 3, 375 15, 125 3, 398
TOTAL ACTUARIAL PRESENT VALUE
OF ACCUMULATED PLAN BENEFITS $ 293, 878 $ 92, 654 $ 34 , 613
NET ASSETS AVAILABLE FOR BENEFITS $ 716, 949 $ 495, 312 $ 180, 259
ACTUARIAL ASSUMED INVESTMENT
RATE OF RETURN 7% 7% 7%
Principal actuarial assumptions used in the valuation above are
summarized as follows:
' Mortality - The 1951 Group Annuity Mortality
Table Projected by Scale C to 1970
(regraduated) ; females set back 5 years.
Interest 7% per year compounded annually, net
of expenses.
' Retirement age - 60 for police officers and fire-
fighters, 65 for all other employees,
' immediately if over assumed retirement age.
Salary increases - 6% for police and general ; 7%
' for firefighters, until the assumed retirement
age.
Funding method - Frozen entry age actuarial cost
method.
- 24 -
II
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMBER 30, 1987
NOTE 9 - HOSPICE GRANT
The City applied for and received a Community Services Block Grant of
$5, 625. Hospice of the Treasure Coast-Okeechobee Branch was the
subgrantee. The City received the funds and, upon presentation of
invoice by Hospice, would disburse the funds thereto accordingly, up
' to the total amount of grant monies. Also disbursed in the current
year was $1, 429 applicable to the prior year grant.
' NOTE 10 - COMMITMENTS AND CONTINGENCIES
As of September 30, 1987 , the City has been awarded. grants totalling
$1, 339,700 and $297, 428 from the Environmental Protection Agency to
be used in connection with construction of the City' s new wastewater
treatment plant. During the current fiscal year, $250, 344 was
received from the grant.. Additional grant allocations of
approximately $117,700 from the Environmental Protection Agency have
been allowed due to cost overruns through September 30, 1987 .
1
1
- 25 -
r
DiBartolomeo, McBee & Sloan certified public accountants
ICITY OF OKEECHOBEE, FLORIDA
I GENERAL FUND
SCHEDULE OF REVENUES
(BUDGET AND ACTUAL)
IYEAR ENDED SEPTEMBER 30, 1987
IVariance
Favorable
Budget Actual (Unfavorable)
I TAXES
Ad valorem taxes $ 399, 180 $403, 574 $ 4, 394
Franchise fees 233, 038 214, 036 (19, 002)
I Utility service taxes 205, 800 219 , 661 13, 861
Public service taxes 983 983
838, 018 838, 254 236
I INTERGOVERNMENTAL REVENUES
State shared revenue
Cigarette tax 100, 000 93, 910 (6, 090)
State revenue sharing 176, 000 190, 680 14, 680
;Mobile home licenses 1, 000 1, 516 516
1/2 cent sales tax 115, 000 125, 219 10, 219
I Alcoholic beverage licenses 1, 200 1, 296 96
Gasoline tax refund i, 300 1, 300 (500)
Local. option gasoline tax 190, 000 235, 682 45, 682
Firefighters supplement - 880 880
I585, 000 650,483 65,483
Shared revenues from other
I local units
County occupational
licenses 4, 200 4,759 559
City share of 5th and
I
6th cent gas tax 97, 440 93, 252 (4, 188)
101, 640 98, 011 (3 , 629 )
TOTAL INTERGOVERNMENTAL
IREVENUES 686, 640 748, 494 61, 854
CHARGES FOR SERVICES
I Sanitation fees 278, 620 276,486
915 (2, 134 )
Miscellaneous 125 790
278,745 277,401 (1 , 344 )
ILICENSES AND PERMITS
Occupational licenses 31, 000 44, 888 13, 888
31, 000 44, 888 13 , 888
IFINES AND FORFEITURES
Court fines 25, 000 47 , 955 22, 955
I Police education -900 546 (354 )
Code enforcement fines 250 250
Miscellaneous - 320 320
I25, 900 49, 071 23, 171
- 26 -
II
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
' GENERAL FUND
SCHEDULE OF REVENUES (CONTINUED)
' (BUDGET AND ACTUAL)
YEAR ENDED SEPTEMBER 30, 1987
Variance
' Favorable
Budget Actual (Unfavorable)
INTEREST EARNINGS $ 23, 000 $ 21,618 $ (1, 382)
MISCELLANEOUS
Hospice Grant (Note 10) - 3, 910 3, 910
Other 300 1, 526 1, 226
Sale of assets 2, 088 105 (1, 983 )
' Rents and royalties 3, 229 3, 300 71
Refunds of prior year
expenditures - 101 101
5, 617 8, 942 3 , 325
TOTAL $1, 888, 920 $1, 988, 668 $ 99 ,748
- 27
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
GENERAL FUND
SCHEDULE OF EXPENDITURES
(BUDGET AND ACIUAL)
YEAR ENDED SEPTEMBER 30, 1987
Encumbrances Actual on Variance
Prior Budgetary Favorable
Budget Actual Year 1987 Basis (Unfavorable)
PUBLIC SAFETY
Law Enforcement
Personal services $ 479,641 $ 461,954 $ - $ - $ 461,954 $ 17,687
Operating expenses 128,042 98,765 - 374 99,139 28,903
Capital outlay 22,200 35,485 711 - 34,774 (12,574)
629,883 596,204 711 374 595,867 34,016
Fire Control
Personal services 229,384 215,830 - - 215,830 13,554
Operating expenses 56,699 57,218 - 1,449 58,667 (1,968)
Capital outlay 18,111 12,849 - 459 13,308 4,803 1
304,194 285,897 - 1,908 287,805 16,389
TOTAL PUBLIC SAFETY 934,077 882,101 711 2,282 883,672 50,405
GENERAL GOVERNMENT
Legislative
Personal services 27,147 27,419 - - 27,419 (272)
Operating expenses 52,278 63,683 - 50 63,733 (11,455)
Capital outlay 4,749 5,635 - - 5,635 (886)
84,174 96,737 - 50 96,787 (12,613)
. Executive
Personal services 54,812 54,013 - 16 54,013 799
Operating expenses 12,091 16,275 - - 16,291 (4,200)
Capital outlay 1,699 2,357 - - 2,357 (658)
68,602 72,645 - 16 72,661 (4,059)
Financial and Administrative
Personal services 122,754 119,605 - - 119,605 3,149
Operating expenses 44,552 51,722 - 472 52,194 (7,642)
Capital outlay 749 184 - - 184 565
Allocation of administrative
charges (53,363) (48,900) - - (48,900) (4,463)
114,692 122,611 - 472 123,083 (8,391)
- 28 -
CITY OF OLGLOBEE, FLORIDA
GENERAL FUND
SCHEDULE OF EXPENDITURES (CONTINUED)
(BUDGET AND ACTUAL)
YEAR ENDED SEPTEMBER 30, 1987
Encumbrances Actual on Variance
Prior Budgetary Favorable
Budget Actual Year 1987 Basis (Unfavorable)
GENERAL GOVERNMENT (CONTINUED)
Judicial
Personal services $ 26,168 $ 25,490 $ - $ - $ 25,490 $ 678
Operating expenses 11,462 7,493 113 50 7,430 4,032
Capital outlay 500 577 - - 577 (77)
38,130 33,560 113 50 33,497 4,633
TOTAL GENERAL GOVERNMENT 305,598 325,553 113 588 326,028 (20,430) 1
TRANSPORTATION
Road and Street Facilities
Personal services 162,690 160,327 - - 160,327 2,363
Operating expenses 129,826 123,661 - 2,896 126,557 3,269
Capital outlay 309,577 95,916 - 16 95,932 213,645
602,093 379,904 - 2,912 382,816 219,277
PHYSICAL ENVIRONMENT
Garbage/Solid Waste Control
Services
Operating expenses 260,175 261,646 - - 261,646 (1,471)
260,175 261,646 - - 261,646 (1,471)
HUMAN SERVICES
. Health
Operating expenses 21,436 26,775 - - 26,775 (5,339)
21,436 26,775 - - 26,775 (5,339)
CULTURE/RECREATION
Parks and Recreation
Operating expenses 4,800 4,400 - - 4,400 400
Capital outlay 1,000 1,878 - - 1,878 (878)
• 5,800 6,278 - - 6,278 (478)
INPRACCOVERNMENT SERVICES
Public Works
Personal services 26,801 28,084 - - 28,084 (1,283)
Operating expenses 3,240 2,079 - 373 2,452 788
Capital outlay 300 249 - - 249 51
30,341 30,412 - 373 30,785 (444) 1
TOTAL EXPENDITURES $2,159,520 $ 1,912,669 $ 824 $ 6,155 $ 1,918,000 $241,520
II
- 29 -
1
CITY OF OKEECHOBEE, FLORIDA
' SPECIAL REVENUE FUND - FEDERAL REVENUE SHARING
STATEMENT OF REVENUES AND EXPENDITURES
(BUDGET AND ACTUAL)
YEAR ENDED SEPTEMBER 30, 1987
Variance
' Favorable
Budget Actual (Unfavorable)
1 REVENUES
Revenue sharing entitlements $ 12, 000 $ 1, 270 $ (10,730)
EXPENDITURES - - -
12, 000 1, 270 (10,730)
' OTHER FINANCING USES -
Operating transfers out 12, 000 14, 002 (2, 002)
EXPENDITURES OVER REVENUES $ --- $ (12,732) $ (12,732)
I
- 30 -
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
' DEBT SERVICE FUND
STATEMENT OF REVENUES AND EXPENDITURES
t (BUDGET AND ACTUAL)
YEAR ENDED SEPTEMBER 30, 1987
Variance
' Favorable
Budget Actual (Unfavorable)
REVENUES
Ad valorem taxes $ 18,477 $ 17,785 $ (692)
Interest income 1,714 1,714
18,477 19, 499 1, 022
' EXPENDITURES
Bond principal retirements 20, 000 20, 000 -
' Bond interest expense 19, 118 19, 088 30
(5
Professional fees 500 (500)
39, 118 39, 588 (470)
' REVENUES OVER (UNDER)
EXPENDITURES $ (20, 641) $ (20, 089) $ 552
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DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
' PENSION TRUST FUNDS
COMBINING BALANCE SHEET
' SEPTEMBER 30, 1987
Police General
Officers ' Firemen' s Employees '
'
ASSETS Retirement Retirement Retirement
Fund Fund Fund Total
' Investments in savings
certificates and
money market accounts
(at cost, which
approximates market) $ 447, 369 $ 165, 384 $ 716, 949 $ 1, 329,702
Due from State of Florida 47, 943 14, 875 - ' 62, 818
TOTAL ASSETS $ 495, 312 $ 180, 259 $ 716, 949 $ 1, 392, 520
' FUND BALANCE
Fund balance -
II Reserved for
retirement $ 495, 312 $ 180, 259 $ 716 , 949 $ 1, 392, 520
1
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II
DiBartolomeo, McBee & Sloan certified public accountants
I
CITY OF OKEECHOBEE, FLORIDA
IPENSION TRUST FUNDS
COMBINING STATEMENT OF REVENUES, EXPENSES
IAND CHANGES IN FUND BALANCE
YEAR ENDED SEPTEMBER 30, 1987
I
Police General
I Officers' Firemen' s Employees '
Retirement Retirement Retirement
Fund Fund Fund Total
IREVENUES
State tax on
insurance premiums $ 47 , 943 $ 14, 875 $ - $ 62, 818
I Employer' s
contributions - 419 45, 679 46, 098
Employees '
I contributions 12, 886£3 7 ,706 37 , 406 57, 998
Interest earnings 27, 57 i0, 081 41, 896 79, 564
88, 416 33, 081 124, 981 246,478
I EXPENSES
Employees ' contribution
refunds 9, 206 7, 393 21, 340 37, 939
9, 206 7, 393 21, 340 37 , 939
REVENUES OVER
IEXPENSES 79, 210 25, 688 103 , 641 208, 539
Fund balance,
September 30, 1986 416, 102 154, 571 613, 308 1, 183, 981
IFund balance,
September 30, 1987 $495, 312 $180, 259 $716, 949 $1, 392, 520
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- 33 -
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEECHOBEE, FLORIDA
' PENSION TRUST FUNDS
COMBINING STATEMENT OF CHANGES IN FINANCIAL POSITION
YEAR ENDED SEPTEMBER 30, 1987
Police General
Officers ' Firemen' s Employees '
' Retirement Retirement Retirement
Fund Fund Fund Total
SOURCES OF WORKING
CAPITAL
Excess of revenues
over expenses $79, 210 $25, 688 $103, 641 $208, 539
' INCREASE IN
WORKING CAPITAL $79, 210 $25, 688 $103,641 $208, 539
ELEMENTS OF INCREASE
IN WORKING CAPITAL
' Cash $ 9,767 $ 2, 813 $ 25, 141 $ 37 ,721
Investments, at cost 21, 500 8, 000 78, 500 108, 000
Due from State of
Florida 47, 943 14, 875 - 62, 818
INCREASE IN
WORKING CAPITAL $79, 210 $25, 688 $103, 641 $208, 539
- 34 -
DiBartolomeo, McBee & Sloan certified public accountants
1
CITY OF OKEECHOBEE, FLORIDA
' SUMMARY OF INSURANCE COVERAGE - UNAUDITED
SEPTEMBER 30, 1987
' DESCRIPTION COVERAGE
' FIRE AND EXTENDED COVERAGE
Buildings and contents (90 percent
co-insurance - $500 deductible) $ 500, 000
COMPREHENSIVE GENERAL LIABILITY
Personal injury liability 601, 000
' LAW ENFORCEMENT LIABILITY
Bodily injury, personal injury,
property damage ($5, 000 deductible) 1, 000, 000
WORKERS' COMPENSATION AND EMPLOYER' S LIABILITY 500, 000
' VEHICULAR EQUIPMENT
Bodily injury and property damage 500, 000
Collision ($250 deductible) ACV
Comprehensive ($250 deductible) ACV
SCHEDULED PROPERTY FLOATER ($250 DEDUCTIBLE) 452, 346
' PUBLIC OFFICIALS BONDS
City clerk 20, 000
Other employees 20, 000
' PUBLIC OFFICIAL LIABILITY ($1, 000 DEDUCTIBLE) 1, 000, 000
- 35 -
II
DiBartolomeo, McBee & Sloan certified public accountants
I
CITY OF OKEECHOBEE, FLORIDA
ISCHEDULE OF ASSESSED VALUES, TAX LEVIES
IAND RATES - UNAUDITED
LAST TEN YEARS
I
Assessed Values
I Real Personal Homestead
Year Property Property Total Exemption
I 1987 $85, 234, 122 $15, 026,483 $100, 260,605 $21,793, 353
1986 70, 533, 985 14 , 573, 190 85, 107, 175 20,715, 053
1985 59, 835, 384 14, 042,767 73, 878, 151 19, 504, 959
1984 57, 820, 098 13, 060, 620 70, 880,718 19 , 007, 098
I 1983 54,725,644 12, 102, 101 66, 827,745 17, 665, 060
1982 57, 589, 660 10, 664, 660 68, 254, 320 14 , 162, 210
1981 57, 036, 510 10,475,123 67, 511, 633 14, 061, 980
I 1980 51, 225,720 9,725, 167 60, 950, 887 5, 173,430
1979 34,756, 690 8,787 , 664 43 , 544, 354 5, 034,700
1978 34, 065, 350 8, 587, 844 42, 653, 194 4, 905,430
I
Tax Levies and Applicable Rates
I Levies , Rates _
Debt General
Debt General Service Government
IYear Service Government Mills Mills
1987 $18, 308 $416 , 082 $ . 150 $4 .150
1986 15, 873 361,791 .150 4 .251
1985 14, 008 314, 056 .150 4 .251
1984 13,483 307, 480 .150 4 .338
1983 12, 674 261, 497 .150 3 .913
I 1982 8, 668 291, 007 .127 4 .250
1981 8, 574 286, 924 .127 4 .250
1980 36, 386 335, 209 . 58 5.500
I 1979 40, 248 179,780 . 83 4 .137
1978 41, 852 168, 054 .88 3 .940
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II
DiBartolomeo, McBee & Sloan certified public accountants
CITY OF OKEEC.'HOBEE, FLORIDA
Schedule of Certain Revenues - Unaudited
LAST TEN YEARS
REVENUES - OTHER THAN PROPERTY TAXES - GENERAL FUND
State
Revenue Fire Anti-
Sharing Occupational Utility Fines and Franchise Department Recession
Year (Note) Licenses Taxes Forfeitures Fee Permits Interest Payment Fund Miscellaneous
1987 $ 409,809 $ 44,888 $ 219,661 $ 49,071 $ 214,036 $ - $ 21,618 $ - $ - $ 5,846
1986 398,901 41,498 207,756 29,731 206,335 - 30,978 - - 12,952
1985 349,607 38,484 196,168 28,092 208,614 16,268 31,791 - - 9,573
1984 346,742 42,119 133,768 22,764 185,428 25,508 34,363 - - 31,083
1983 329,260 40,138 118,812 20,493 152,921 14,836 25,091 - - 21,985
1982 251,194 32,175 114,551 23,031 154,823 10,493 64,132 - - 43,250
1981 257,325 22,228 108,286 13,813 137,759 23,459 69,536 - - 4,240
1980 243,055 20,084 100,857 19,827 110,587 12,995 61,733 - - 1,671
1979 251,212 20,551 93,107 18,125 93,232 10,856 76,173 - - 2, 035
1978 243,923 17,974 92,458 18,317 87,758 7,401 54,990 7,776 25,863 7,076
Connection
Sewer Charges i
Service Water Impact Delinquent Interest On (in Aid of Hydrant
Year Charges Billings Fees Charges Miscellaneous Investments Construction) Rental
1987 $ 354,741 $ 1,031,691 $ 111,964 $ 31,119 $ 31,401 $ 62,864 $ 40,078 $ 9,480
1986 277,353 1,064,484 260,382 30,417 21,141 103,288 44,888 9,360
1985 184,075 946,425 212,787 20,671 8,583 233,511 110,181 7,320
1984 135,993 1835,234 29,012 14,573 9,663 110,367 20,112 7,320
1983 130,189 712,251 26,775 20,146 11,219 52,912 25,163 27,000
1982 109,448 701,272 - 17,372 22,324 73,181 13,400 27,000
1981 82,359 569,905 - 12,228 6,647 70,738 24,525 27,000
1980 79,453 535,973 - 9,580 6,732 53,657 15,650 23,280
1979 66,844 494,849 - 9,280 5,557 33,288 23,460 22,440
1978 59,724 436,451 - 9,140 3,658 30,961 19,975 25,000
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Note - Includes additional two-cent cigarette tax and 1/2 cent sales tax
- 37 -
IGerald A.DiBartolomeo Jr., C.P.A.
175 Jay L. McBee,C.P.A.
Rita B. Sloan,C.P.A.
I Kim T.Bolin,C.P.A.
Susan Tibus,C.P.A.
DiBartolomeo, McBee & Sloan Certified Public Accountants
I
To the City Council
I
City of Okeechobee
Okeechobee, Florida
IWe have examined the general purpose financial statements
of the City of Okeechobee, Florida for the year ended
I September 30, 1987 and have issued our report thereon dated
March 10, 1988. As part of our examination, we made a
study and evaluation of the internal control systems,
including applicable internal administrative controls, used
I in administering the Federal financial assistance programs
to the extent we considered necessary to evaluate the
systems as required by generally accepted auditing
standards, the standards for financial and compliance
audits contained in the Standards for Audit of Governmental
Organizations, Programs, Activities, and Functions, issued
by the J.S. General Accounting Office, the Single Audit Act
I of 1984 . and the provisions of OMB Circular A-128, Audits
of State and Local Governments. For the purpose of this
report, we have classified the significant internal
I accounting and administrative controls used in
administering the Federal financial assistance program in
the following categories:
ICycles of activity
a. Revenue/receipts
Ib. Purchases/disbursements
Financial Statement categories
Ia. Cash
b. Receivables
I c. Property and equipment
d. Payables and accrued liabilities
e. Notes and leases payable
f. Fund balance
II
Accounting applications
I a. Billings
b. Receivables
c. Cash receipts
d. Accounts payable
e. Cash disbursements
f. Payroll
Ig. General ledger
I 900 Professional Centre _ Medallion Building
900 Virginia Avenue, Suite 12 38 — 1981 S.E. Port St. Lucie Boulevard
P.O. Box 2546, Ft. Pierce, FL 34954 Port St. Lucie, Florida 34952
(407) 461-8833 (407) 335-0007
To the City Council
' City of Okeechobee
Page 2
The management of the City of Okeechobee, Florida, is
responsible for establishing and maintaining internal
control systems used in administering the Federal financial
' assistance programs. In fulfilling that responsibility,
estimates and judgments by management are required to
assess the expected benefits and related costs of control
' procedures. The objectives of internal control systems
used in administering the Federal financial assistance
programs are to provide management with reasonable, but not
' absolute, assurance that, with respect to the Federal
financial assistance programs, resource use is consistent
with laws, regulations, and policies; resources are
safeguarded against waste, loss, and misuse; and reliable
data are obtained, maintained, and fairly disclosed in
reports.
' Because of inherent limitations in any system of internal
accounting and administrative controls used in
administering the Federal financial assistance programs,
' errors or irregularities may nevertheless occur and not be
detected. Also, projection of any evaluation of the
systems to future periods is subject to the risk that
procedures may become inadequate because of changes in
' conditions or that the degree of compliance with the
procedures may deteriorate.
' Our study included all of the applicable control categories
listed in the first paragraph. During the year ended
September 30, 1987, the City of Okeechobee, Florida, had
' two major Federal financial assistance programs and
expended all of its total Federal financial assistance
under the following major and nonmajor Federal financial
assistance programs: Water Management Division of
' Environmental Protection Agency, Federal Revenue Sharing
and Community Services Block Grant. With respect to
internal control systems used in administering these major
' and nonmajor Federal financial assistance programs, our
study and evaluation included considering the types of
errors and irregularities that could occur, determining the
' internal control procedures that should prevent or detect
such errors and irregularities, determining whether the
necessary procedures are prescribed and are being followed
satisfactorily, and evaluating any weaknesses.
' With respect to the internal control systems used solely in
administering the major Federal financial assistance
' program of the City of Okeechobee, Florida, our study and
evaluation was limited to a preliminary review of the
' - 39 -
1
To the City Council
1 City of Okeechobee
Page 3
systems to obtain an understanding of the control
environment and the flow of transactions through the
accounting system. Our study and evaluation of the
1 internal control systems used solely in administering the
nonmajor Federal financial assistance programs of the City
of Okeechobee, Florida, did not extend beyond this
1 preliminary review phase.
Our study and evaluation was more limited than would be
1 necessary to express an opinion on the internal control
systems used in administering the Federal financial
assistance programs of the City of Okeechobee, Florida.
Accordingly, we do not express an opinion on the internal
1 control systems used in administering the Federal financial
assistance programs of the City of Okeechobee, Florida.
1 Also, our examination, made in accordance with the
standards mentioned in the first paragraph, would not
necessarily disclose material weaknesses in the internal
control systems, for which our study and evaluation was
1 limited to a preliminary review of the systems, as
discussed in the fifth paragraph of this report.
1 However, our study and evaluation and our examination
disclosed no condition that we believe to be a material
weakness in relation to the Federal financial assistance
1 programs of the City of Okeechobee, Florida. Nonmaterial
weaknesses and matters did come to our attention that we
are communicating to the City of Okeechobee, in a letter to
management.
1 This report is intended solely for the use of management,
U.S. Environmental Protection Agency, U.S. Department of
1 Health and Human Services, and U.S. Department of Treasury
and should not be used for any other purpose. This
restriction is not intended to limit the distribution of
1 this report, which, upon acceptance by the City of
Okeechobee, Florida, is a matter of public record.
1 :
g
Di artolomeo, McBee & Sloan
Certified Public Accountants
1 March 10, 1988
i
11 - 40
I Gerald A. DiBartolomeo Jr.,C.P.A.
Jay L. McBee,C.P.A.
175 Rita B. Sloan,C.P.A.
I Kim T.Bolin,C.P.A.
Susan Tibus,C.P.A.
DiBartolomeo, McBee & Sloan Certified Public Accountants
ITo the City Council
City of Okeechobee
II Okeechobee, Florida
We have examined the general purpose financial statements
II of the City of Okeechobee, Florida for the year ended
September 30, 1987, and have issued our report thereon
dated March 10, 1988. Our examination was made in
I accordance with generally accepted auditing standards; the
standards for financial and compliance audits contained in
the Standards for Audit of Governmental Organizations,
Programs, Activities, and Functions, issued by the U.S.
' General Accounting Office; the Single Audit Act of 1984 ;
and the provisions of OMB Circular A-128, Audits of State
and Local Governments, and accordingly, included such tests
II of the accounting records and such other auditing
procedures as we considered necessary in the circumstances.
' The management of the City of Okeechobee, Florida, is
responsible for the City' s compliance with laws and
regulations. In connection with the examination referred
to above, we selected and tested transactions and records
II from the major and nonmajor Federal financial assistance
program to determine the City' s compliance with laws and
regulations, noncompliance with which we believe could have
I a material effect on the allowability of program
expenditures.
The results of our tests indicate that for the transactions
I
and records tested, the City of Okeechobee, Florida
complied with the laws and regulations referred to above.
Our testing was more limited than would be necessary to
II express an opinion on whether the City of Okeechobee,
Florida, administered those programs in compliance in all
material respects with laws and regulations, noncompliance
II with which we believe could have a material effect on the
allowability of program expenditures; however, with respect
to the transactions that were not tested by us, nothing
came to our attention to indicate that the City of
IIOkeechobee, Florida, had violated laws and regulations.
' DiBartolomeo, McBee & Sloan
Certified Public Accountants
IMarch 10, 1988
900 Professional Centre Medallion Building
I 900 Virginia Avenue, Suite 12 — 41 — 1981 S.E. Port St. Lucie Boulevard
P.O. Box 2546, Ft. Pierce, FL 34954 Port St. Lucie, Florida 34952
(407) 461-8833 (407) 335-0007
Gerald A.DiBartolomeo Jr.,C.P.A.
175 Jay L. McBee,C.P.A.
Rita B. Sloan,C.P.A.
Kim T.Bolin,C.P.A.
Susan Tibus,C.P.A.
DiBartolomeo, McBee & Sloan Certified Public Accountants
1
To the City Council
City of Okeechobee
Okeechobee, Florida
We have examined the general purpose financial statements
of the City of Okeechobee, Florida, for the year ended
September 30, 1987, and have issued our report thereon
' dated March 10, 1988. Our examination of such general
purpose financial statements was made in accordance with
generally accepted auditing standards and the standards for
' financial and compliance audits contained in the Standards
for Audit of Governmental Organizations, Programs,
Activities, and Functions issued by the U.S. General
Accounting Office, and accordingly, included such tests of
the accounting records and such other auditing procedures
as we considered necessary in the circumstances.
' Our examination was made for the purpose of forming an
opinion on the general purpose financial statements taken
as a whole. The accompanying schedule of Federal financial
' assistance is presented for purposes of additional analysis
and is not a required part of the general purpose financial
statements. The information in that schedule has been
subjected to the auditing procedures applied in the
examination of the general purpose financial statements
and, in our opinion, is fairly stated in all material
respects in relation to the general purpose financial
statements taken as a whole.
DiBartolomeo, McBee & Sloan
Certified Public Accountants
' March 10, 1988
' 900 Professional Centre — 42 — Medallion Building
900 Virginia Avenue, Suite 12 1981 S.E. Port St. Lucie Boulevard
P.O. Box 2546, Ft. Pierce, FL 34954 Port St. Lucie, Florida 34952
(407) 461-8833 (407) 335-0007
CITY OF OKEECHOBEE, FLORIDA
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
YEAR ENDED SEPTEMBER 30, 19 87
Cash Cash
October September
1, 1986 30, 1987
Federal Award Beginning Ending
Federal Grantor/Program Title CFDA No. Amount Balance Receipts Disbursements Balance
U.S. ENVIRONMENTAL PROTECTION AGENCY
Water Management Division 66.418 $ 1,339,700 $ - $ 173,601 $ 173,601* $ -
297,428 - 76,743 76,743 -
U.S. DEPARTMENT OF TREASURY
Federal Revenue Sharing 21.300 70,058 12,732 1,270 14,002 -
I
U.S. DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Community Services Block Grant 13.665 5,625 1,428 A 3,910 5,338 A -
* Disbursements include expenditures from prior year which
were reimbursed by grantors during the current fiscal year.
A Disbursements include expenditures in the current year which
were advanced from a contract in the prior year.
- 43 -
' Gerald A.DiBartolomeo Jr.,C.P.A.
Jay L.McBee,C.P.A.
175 Rita B. Sloan,C.P.A.
Kim T.Bolin,C.P.A.
Susan Tibus,C.P.A.
DiBartolomeo, McBee & Sloan Certified Public Accountants
1
I
Honorable Mayor and City Council
City of Okeechobee, Florida
' We have examined the general purpose financial statements of
the City of Okeechobee, Florida as of September 30, 1987 and
for the year then ended, and have issued our report thereon
' dated March 10, 1988. Our examination was made in accordance
with generally accepted auditing standards and, accordingly,
included such tests of the accounting records and such other
auditing procedures as we considered necessary in the
circumstances.
' In connection with our examination, we also (1) performed tests
of compliance with the Revenue Sharing Act and regulations as
detailed in the "Commentary on the Audit Requirements of the
Local Government Fiscal Assistance Amendments of 1983, " issued
' by the Office of Revenue Sharing, U.S. Department of the
Treasury, and (2) compared the data on the appropriate Bureau
of Census Form with the audited records of the City of
' Okeechobee, Florida.
In our opinion, for the items tested, the City of Okeechobee,
Florida, complied with the aforementioned provisions of the
Revenue Sharing Act and regulations. Further, based on our
examination and the procedures referred to above, nothing came
to our attention to indicate that the City of Okeechobee,
Florida, had not complied with the aforementioned provisions of
the Revenue Sharing Act and regulations.
' "16-11.40
1 � artw.
DiBartolomeo, McBee & Sloan
' Certified Public Accountants
' March 10, 1988
900 Professional Centre _ 4 4 — Medallion Building
' 900 Virginia Avenue, Suite 12 1981 S.E. Port St. Lucie Boulevard
P.O. Box 2546, Ft. Pierce, FL 34954 Port St. Lucie, Florida 34952
(407) 461-8833 (407) 335-0007
1 Gerald A. DiBartolomeo Jr.,C.P.A.
Jay L. McBee,C.P.A.
175 Rita B. Sloan,C.P.A.
Kim T.Bolin,C.P.A.
1 Susan Tibus,C.P.A.
DiBartolomeo,
McBee & Sloan Certified Public Accountants
i
1
The Honorable Mayor and
1 Members of City Council
City of Okeechobee, Florida
1 We are presenting, for your consideration, our comments and
recommendations regarding the internal accounting controls of the
City. These comments and recommendations came to our attention
1 during the course of our examination of the general purpose
financial statements of the City of Okeechobee, Florida (the
"City") for the year ended September 30, 1987 which was reported
1 upon on March 10, 1988 .
As a result of our examination, we became aware of a material
weakness in the internal accounting control for the City' s
1 general fixed asset group of accounts and property, plant, and
equipment of the City' s water and sewer fund, which is discussed
in Exhibit I. This information should be considered in light of
1 Exhibit III which describes the purpose of our study and
evaluation of internal accounting controls as part of our
examination, and such information is intended solely for the use
1 of your management in assessing the control environment.
The comments and recommendations presented in Exhibit II are
intended to improve the system of internal accounting control and
1 are divided into the following major objectives:
Protecting Assets
1 Improving Operational Efficiency
We would like to take this opportunity to acknowledge the
1 courtesy and assistance extended to us by the personnel of the
City during the course of our examination.
LoAL,„ v74-6„,
DiBartolomeo, McBee & Sloan
Certified Public Accountants
1 March 10, 1988
1
900 Professional Centre Medallion Building
900 Virginia Avenue, Suite 12 45 1981 S.E. Port St. Lucie Boulevard
P.O. Box 2546, Ft. Pierce, FL 34954 Port St. Lucie, Florida 34952
(407) 461-8833 (407) 335-0007
EXHIBIT I
ESTABLISHMENT OF FIXED ASSETS CONTROLS
The City has not maintained adequate detailed records in support of
the recorded cost of the water and sewer plant in service or the
amounts included in the general fixed assets group of accounts and we
' were unable to obtain sufficient supporting documentation to form an
opinion with respect to (a) the stated cost of property items
acquired in years prior to October 1, 1981 (b) the accumulated
depreciation applicable to the water and sewer utility plant in
service at September 30, 1987 or the provision for the year then
ended.
' Sound financial administration in safeguarding the City' s investment
in fixed assets is of utmost importance in the exercise of
stewardship responsibilities. The responsibilities can be
effectively discharged only through adequate fixed assets accounting.
By maintaining fixed assets records, the City will realize several
' benefits:
Fixed assets can be inventoried periodically to ensure
' that they are properly controlled.
Responsibility for custody and effective use of fixed
assets can be clearly established.
iInformation regarding sources of supply, prices, and
useful lives will be readily available. If information
' regarding maintenance costs is also included in the
subsidiary ledgers, ratios of cumulative maintenance
costs to original costs can be developed.
Records will be readily available to substantiate the
amount of grants used to finance expenditures for fixed
assets. Furthermore, the determination of costs for
building or equipment use is facilitated. The latter is
important to obtain reimbursement for the use of
buildings and equipment in Federal and State aid programs.
' Information is readily available both to determine
insurance needs and to substantiate losses recoverable
' from insurance.
Information is available for the preparation of a
Statement of General Fixed Assets.
Establishing fixed assets records when none existed before can be a
difficult and time consuming task. One approach is to:
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DiBartolomeo, McBee & Sloan certified public accountants
IEXHIBIT I
IESTABLISHMENT OF FIXED ASSETS CONTROLS (CONTINUED)
I i . Define clearly what constitutes the fixed assets
categories, (e.g. , land, buildings, improvements other
than buildings, equipment) ; a fixed asset (i.e. , minimum
dollar value and useful life) ; and the location "control"
Iareas.
2 . Plan and perform a complete inventory of all fixed assets.
I In creating the inventory records, obtain as much of the
information to be included in the individual assets
records as is possible, e.g. , asset description, location,
vendor or manufacturer and acquisition date. Fixed assets
Iidentification tags should be affixed at the time the
physical inventory is taken.
I 3 . Assign values to each fixed asset according to accepted
principles. More specifically, the AICPA Industry Audit
Guide, "Audits of State and Local Governmental Units, "
I sets forth the basis for valuing fixed assets of a
governmental unit: "Such assets should be recorded at
historical cost, or estimated historical cost, if the
original cost is not available, or, in the case of gifts
Ior contributions, at the fair market value at the time
received. '
ISeveral procedures can be used to determine the valuation.
Reference to the historical records, such as
I vendors' invoices, contracts, purchase orders,
capital expenditure authorizations, cancelled
checks, gift acknowledgements, or other documents
hand.
Ion
Correspondence with vendors, donors, etc.
I Use of an asset valuation reasonably reflective of
historical value, provided it is reliable, if
historical or fair market value is not available.
IHistorical cost as reasonably estimated by
employees for small items of relatively low value,
e.g. , tools, office furniture, and equipment.
IReliance on independent outside appraisals for
assets which cannot be valued by one of the above
I methods or some other reasonable method. It is
important to emphasize, however, that the
appraisal should be based upon estimated
I historical cost, not on replacement cost or some
other basis.
I
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DiBartolomeo, McBee & Sloan certified public accountants
EXHIBIT I
ESTABLISHMENT OF FIXED ASSETS CONTROLS (CONTINUED)
' Evaluation of fixed assets in the above manner
will enable the City to establish reasonably
accurate initial fixed asset values.
t Once initial records are established, the City will want to
concurrently implement the kinds of controls and procedures enabling
it to maintain control over the fixed assets. These procedures
' should include:
Control over the proper input into the records for all
' fixed asset additions, sales, abandonments, and transfers.
Periodic reconciliations of detail ledgers to the general
ledger.
Periodic inventory of fixed assets by location.
t Verification that any asset traded in for a new
acquisition is properly removed from the records.
The City is maintaining current additions in a manner as noted above.
The City has complied with the provisions of Chapter 10.400, rules of
the Auditor General concerning the physical count of tangible
personal property, with the limitations as noted.
' CUSTOMER DEPOSITS
' A detail listing of customer deposits in the water and sewer fund
should be generated from the computer on a monthly basis. This
listing should be used to reconcile the amount shown on the general
ledger to the account balance. This point was also noted in the
prior year' s letter.
1
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DiBartolomeo, McBee & Sloan certified public accountants
' EXHIBIT II
IMPROVING OPERATIONAL EFFICIENCY
' PURCHASE ORDERS
The present use of purchase orders is handled in a manner which
' circumvents their actual purpose. Purchase orders are prepared after
the fact, usually from invoices or other supporting documentation.
The purchase orders should be used in a proper and timely manner.
' For a certain time period, purchase orders were not used during the
year. This point was also noted in the prior year' s letter.
' CASH DISBURSEMENTS
The City currently uses manual checks to pay some vendors' invoices
rather than process them through its accounts payable system. When
manual checks are employed to pay invoices, care should be taken to
ensure that any outstanding purchase order is removed from
encumbrances . To alleviate problems which may occur by the use of
manual checks and the failure to properly relieve encumbrances, the
City should consider increasing the frequency of payment of accounts
payable; whereby all checks could be computer generated. This point
was also noted in the prior year' s letter.
GENERAL LEDGER RECONCILIATION
The detail account balances should be compared to the balance in the
general .ledger to assure agreement. During the year the cash
accounts ' reconciliations did not agree to those balances shown in
' the general ledger for any period throughout the year. Numerous
adjustments were required to bring these accounts into agreement.
These detail accounting and reconciliation procedures delayed the
' audit process for an extended period of time and also cost the City
for the additional services required. These reconciliations should
be performed by the City's finance department on a regular and timely
basis.
ACCOUNTS RECEIVABLE - CUSTOMER ACCOUNTS
Customer accounts receivable for garbage service and water and sewer
charges should be reconciled to the general ledger accounts on a
monthly basis. During the year, this reconciliation was not
' performed. After June, 1987, there were not detail listings of
customer accounts receivable generated to make this reconciliation
possible. Accounts receivable detail listings should be available
for each month.
1 ADJUSTMENTS TO ACCOUNTS
' When making adjustments to accounts, an original handwritten copy of
that adjustment, with a detailed explanation for its purpose, should
be maintained as a basic source of documentation in the accounting
system. This point was also noted in the prior year' s letter.
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DiBartolomeo, McBee & Sloan certified public accountants
EXHIBIT II
' CURRENT INFORMATION
' Bank accounts should be reconciled in a timely manner and monthly
financial reports generated before the end of the next month.
Noncurrent financial information cannot be used to make management
decisions or provide for future planning. This point was also noted
' in the prior years letter.
DATA PROCESSING SYSTEM INTEGRATION
' The City' s utility and payroll software applications operate
independently from the City' s general ledger software application
necessitating manual accumulation of utility billings, adjustments
U and collections, and payroll information for posting to the general
ledger accounts. The City should consider having the necessary
software modifications to fully integrate its utility and payroll
programs with the general ledger. Integration of the various
applications should reduce time in accumulating financial information
and decrease the likelihood of error in recording information. This
point was also noted in the prior year' s letter.
DATA PROCESSING SYSTEM
The total of detail accounts did not agree to the total shown in the
control account for encumbrances .
' The encumbrances and reserve for encumbrances accounts did not agree
to the detail nor were these accounts always updated in a similar
fashion. Concerning the above comments we suggest the City work in
' conjunction with the company responsible for the software and devise
a useful manual which shows how the programs affect accounts and
process transactions to provide a more complete understanding of the
computerized portion of the accounting system. This point was also
' noted in the prior year' s letter.
VACATION ACCRUAL
' During the fiscal year various employees' vacation accrual exceeded
the maximum allowed for carryover. City policy should encourage all
' employees to use their vacation time annually. This practice allows
for another employee to perform that job duty and is also encouraged
for basic internal operating control for the City. This point was
also noted in the prior year' s letter.
DEPARTMENT OF BANKING AND FINANCE
' The City has filed the annual report with the Department of Banking
and Finance. This state report is in material agreement with the
audited financial statements for the same period.
1
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DiBartolomeo, McBee & Sloan certified public accountants
EXHIBIT II
PENSION PLANS
' During the year the administrative boards of the Police and Fire
Pension Funds were not in accordance with State requirements.
Therefore, funding through the State was withheld. All efforts
' should be made to maintain compliance with State requirements.
SUMMARY
' The implementation of changes recommended in this letter can be
facilitated if management and Council :
Consider and establish priorities for implementing the
changes.
Develop an overall plan and method of implementation that
reflects the priorities.
Assign the responsibility for carrying out each change to a
specific individual .
Establish time-frames for implementation of each change.,
Schedule progress reports from the responsible City officials
and conduct progress meetings to further discuss progress and
to resolve problems that arise.
1
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DiBartolomeo, McBee & Sloan certified public accountants
EXHIBIT III
' INTERNAL CONTROL
' As part of an examination of financial statements, we perform a study
and evaluation of an entity' s system of internal accounting control
to the extent we consider necessary to evaluate the system as
required by generally accepted auditing standards. The purpose of
' our study and evaluation is to determine the nature, timing and
extent of the auditing procedures necessary for expressing an opinion
on an entity ' s financial statements. Our study and evaluation is
' more limited than would be necessary to express an opinion on the
system of internal accounting control taken as a whole.
' The City' s management is responsible for establishing and maintaining
a system of internal accounting control . In fulfilling this
responsibility, estimates and judgments made by management are
required to assess the expected benefits and related costs of control
' procedures. The objectives of a system are to provide management
with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, and
' that transactions are executed in accordance with management' s
authorization and recorded properly to permit the preparation of
financial statements in accordance with generally accepted accounting
principles,,
' Because of inherent :limitations in anv system of internal accounting
control , errors or irregularities may nevertheless occur and not be
' detected. Also, projection of any evaluation of the system to future
periods is subject to the risk that procedures may become inadequate
because of changes in conditions or that the degree of compliance
with the procedures may deteriorate.
' A study and evaluation made for the limited purpose describe above
would not necessarily disclose all material weaknesses in the system.
' Accordingly, an expression of an opinion on the system of internal
accounting control taken as a whole cannot be made.
1
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DiBartolomeo, McBee & Sloan certified public accountants