Audit Report 09.30.1988FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
CITY OF OKEECHOBEE, FLORIDA
CITY COUNCIL AND ADMINISTRATIVE PERSONNEL
September 30, 1988
CITY COUNCIL
Oakland R. Chapman
Mayor, Chairman
Andy Rubin
Councilmember
Richard R. Collins
Councilmember
ADMINISTRATIVE
John J. Drago
City Administrator
Bonnie S. Thomas, CMC
AO City Clerk
Louis K. Tomey II
Chief of Fire
Larry Mobley
Chief of Police
Dowling Watford, Jr.
Councilmember
Oscar Thomas
Councilmember
John Cook
City Attorney
L.C. Fortner, Jr.
Public Utilities Director
Charles Elders
Director of Public Works
Lola Parker
Finance Director
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CONTENTS
Independent Auditors' Report
P A G E
1 -2
Combined Financial Statements:
Combined Balance Sheets - All Fund Types and Account Groups 3 -4
Combined Statements of Revenue, Expenditures and Changes
in Fund Balances - All Governmental Fund Types 5
Combined Statements of Revenue, Expenditures and Changes
in Fund Balances - Budget and Actual - Governmental Funds 6
Combined Statements of Revenue, Expenses and Changes in
Retained Earnings/Fund Balances - Proprietary Fund and
Employee Pension Trust Funds 7
Combined Statements of Changes in Financial Position -
All Proprietary Fund Types and Employee Pension
Trust Funds 8
Notes to Combined Financial Statements 9 -25
Supplementary Data:
General Fund -
Schedule of Revenue - Budget and Actual 26 -27
Schedule of Expenditures - Budget and Actual 28 -29
Debt Service Fund -
Statement of Revenue and Expenditures - Budget and Actual 30
Pension Trust Funds -
Combining Balance Sheets 31
Combining Statements of Revenue, Expenses and
Changes in Fund Balances 32
Combining Statements of Changes in Financial Position 33
Statistical Information:
Summary of Insurance Coverage - Unaudited 34
Schedule of Assessed Values, Tax Levies and Rates -
Unaudited 35
Schedule of Certain Revenue - Unaudited 36
Combined Independent Auditors' Report on Internal Accounting
and Administrative Controls at the Combined Financial
Statement Level and the Federal Financial Assistance
Program Level 37 -39
Combined Independent Auditors' Report on Compliance at the
Combined Financial Statement Level and the Federal
Financial Assistance Program Level 40
Independent Auditors' Report on Schedule of Federal
Financial Assistance 41
Schedule of Federal Financial Assistance 42
Management Letter 43 -49
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2222 Colonial Road
Suite 200
Ft. Pierce, FL 34950
Telephone (407) 461.8833
FAX # (407) 461 -8872
7-i-iaSPat-4Xt;/y-
CERTIFIED PUBLIC ACCOUNTANTS
February 23, 1989
The Honorable Mayor and Members
of the City Council
City of Okeechobee, Florida
Independent Auditors' Report
ICH
Other Offices:
OHIO
Youngstown (Boardman)
Youngstown
Warren
Salem
Alliance
PENNSYLVANIA
New Castle
Sharon
Meadville
FLORIDA
Stuart
Naples
Port St. Lucie
We have audited the accompanying combined financial statements of the City
of Okeechobee, Florida as of and for the year ended September 30, 1988, as listed
in the table of contents. These combined financial statements are the
responsibility of the City's management. Our responsibility is to express an
opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. 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 disclosed in Notes D and E to the financial statements, the City has not
maintained adequate detailed fixed asset records to support the cost of the water
and sewer utility plant in service in the proprietary fund and fixed assets,
included in the general fixed asset account group, with respect to the stated
cost of assets acquired prior to October 1, 1981. In addition, depreciation in
the proprietary fund is computed based on the assigned values. In our opinion,
generally accepted accounting principles require that fixed assets be stated at
cost and supported by adequate detail records. It is not practicable to
determine the effects on the combined financial statements of this departure from
generally accepted accounting principles.
-1-
MEMBER AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS DIVISION OF CPA FIRMS -SEC AND PRIVATE COMPANIES PRACTICE SECTIONS
The Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
February 23, 1989
In our opinion, except for the effects of the departure from generally
accepted accounting principles in the proprietary fund and general fixed asset
account group, as discussed in the preceding paragraph, the aforementioned
combined financial statements_ present fairly, in all material respects, the
financial position of the City of Okeechobee, Florida at September 30, 1988 and
the results of its operations and changes in financial position of its fiduciary
pension trust fund types for the year then ended in conformity with generally
accepted accounting principles.
As discussed in Note M to the combined financial statements, the City is
involved in a lawsuit regarding construction of the wastewater collection system
project. An arbitration panel decision rendered against the City has been
appealed. The ultimate outcome of the litigation cannot presently be determined.
Accordingly, no provision for any liability that may result upon adjudication has
been made in the accompanying combined financial statements.
Our audit was made for the purpose of forming an opinion on the basic
combined financial statements taken as a whole. The supplementary data listed in
the accompanying table of contents is presented for purposes of additional
analysis and is not a required part of the basic combined financial statements.
Such information, except for the portion marked "unaudited," on which we express
no opinion, has been subjected to the auditing procedures applied in the audit of
the basic combined financial statements and, in our opinion, except for the
effects on the proprietary fund and general fixed asset account group of not
maintaining adequate detailed fixed asset records as discussed in the third
paragraph above, is fairly stated in all material respects in relation to the
combined financial statements taken as whole.
<f•—/.t.7
Certified Public Accountants
COMBINED BALANCE SHEETS -
ALL FUND TYPES AND ACCOUNT GROUPS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
FIDUCIARY
PROPRIETARY FUND TYPE ACCOUNT GROUPS
GOVERNMENTAL FUND TYPE FUND TYPE EMPLOYEE GENERAL GENERAL TOTAL
DEBT WATER PENSION FIXED LONG -TERM (MEMORANDUM
GENERAL SERVICE AND SEWER TRUST FUNDS ASSETS DEBT ONLY)
ASSETS
Cosh $ 362,671 $ 50,181 $ 150 $1,625,000 -0- -0- $ 2,038,002
Investments 200,000 2,133 -0- 38,015 -0- -0- 240,148
Receivables:
Taxes 91,879 -0- -0- -0- -0- -0- 91,879
Accounts less
allowance of
$22,600 10,842 -0- 156,693 -0- -0- -0- 167,535
Accrued interest -0- -0- 11,032 -0- -0- 11,032
Due from other
government
agencies 62,089 -0- -0- -0- -0- -0- 62,089
Due from other funds 52,672 -0- 27,971 -0- -0- -0- 80,643
Inventory 4,923 -0- -0- -0- -0- -0- 4,923
Restricted assets:
Cash 2,012 -0- 438,595 -0- -0- -0- 440,607
Investments -0- 438,987 -0- -0- -0- 438,987
Due from operating
account -0- -0- 33,833 -0- -0- -0- 33,833
Fixed assets -0- -0- 10,019,109 -0- 1,862,076 -0- 11,881,185
Bond issuance costs,
net of amortization -0- -0- 153,820 153,820
Amount availoble in
Debt Service Fund -0- -0- -0- -0- -0- 3,777 3,777
Amount to be provided
for retirement of
general long -term
debt -0- -0- -0- -0- -0- 1,360,425 1,360,425
TOTAL ASSETS $ 787,088 $ 52.314 $11,269,158 $1,674,047 $1,862.076 $1.364.202 $17.008.885
See accompanying notes to combined financial statements
-3-
COMBINED BALANCE SHEETS -
ALL FUND TYPES AND ACCOUNT GROUPS (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
FIDUCIARY
PROPRIETARY FUND TYPE ACCOUNT GROUPS
GOVERNMENTAL FUND TYPE FUND TYPE EMPLOYEE GENERAL GENERAL TOTAL
DEBT WATER PENSION FIXED LONG -TERM (MEMORANDUM
GENERAL SERVICE AND SEWER TRUST FUNDS ASSETS DEBT ONLY)
LIABILITIES
Accounts payable $ 152,182 $ -0- $ 9,071 -0- -0- -0- $ 161,253
Customer deposits -0- -0- 233,392 -0- -0- -0- 233,392
Accrued liabilities 9,257 -0- 37,027 -0- -0- 64,246 110,530
Accrued interest 33,668 -0- -0- -0- -0- -0- 33,668
Due to restricted
assets - cosh -0- -0- 33,833 -0- -0- -0- 33,833
Payable from
Restricted assets:
Accounts payable -0- -0- 7,819 -0- -0- -0- 7,819
Accrued interest
on bonds payable -0- -0- 94,377 -0- -0- -0- 94,377
Matured bonds and
interest coupons -0- 2,012 2,012
Due to other funds 27,353 46,525 6,765 -0- -0- -0- 80,643
. Deferred revenues 15,519 -0- -0- -0- -0- -0- 15,519
Long -term
indebtedness -0- -0- 4,872,711 -0- -0- 1,299,956 6,172,667
TOTAL LIABILITIES 237,979 48,537 5,294,995 -0- -0- 1,364,202 6,945,713
FUND EQUITY
Contributed capital -0- -0- 4,819,212 -0- -0- -0- 4,819,212
Investment in
general fixed
assets -0- -0- -0- -0- 1,862,076 -0- 1,862,076
Retained earnings:
Reserved for
revenue bond
retirement -0- -0- 576,365 -0- -0- -0- 576,365
Unreserved 578,586 578,586
Fund balances:
Reserved for:
Employees'
retirement -0- -0- -0- 1,674,047 -0- -0- 1,674,047
Debt service -0- 3,777 -0- -0- -0- 3,777
Inventory 4,923 -0- -0- -0- -0- -0- 4,923
Encumbrances 115,329 -0- -0- -0- -0- -0- 115,329
Unreserved 428,857 -0- -0- -0- -0- -0- 428,857
TOTAL FUND EQUITY 549,109 3,777 5,974,163 1,674,047 1,862,076 -0- 10,063,172
TOTAL LIABILITIES
AND FUND EQUITY $ 787,088 $ 52,314 $11,269,158 $1,674,047 $1,862,076 $1,364,202 $17,008,885
See accompanying notes to combined financial statements
-4-
COMBINED STATEMENTS OF REVENUE, EXPENDITURES AND
CHANGES IN FUND BALANCES -
ALL GOVERNMENTAL FUND TYPES
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
TOTALS
DEBT (MEMORANDUM
GENERAL SERVICE ONLY)
REVENUE
Taxes $ 943,761 $ 32,153 $ 975,914
Intergovernmental 827,917 -0- 827,917
Charges for services 138,869 -0- 138,869
Licenses and permits 38,367 -0- 38,367
Fines and forfeitures 67,802 -0- 67,802
Interest income 27,314 3,057 30,371
Miscellaneous 27,297 -0- 27,297
TOTAL REVENUE 2,071,327 35,210 2,106,537
EXPENDITURES
Public safety 857,632 -0- 857,632
General government 380,111 -0- 380,111
Transportation 1,539,100 -0- 1,539,100
Physical environment 126,161 -0- 126,161
Health and human services 34,988 -0- 34,988
Debt service
Principal retirement 28,165 25,000 53,165
Interest charges 35,383 17,738 53,121
Professional fees 8,183 500 8,683
TOTAL EXPENDITURES 3,009,723 43,238 3,052,961
EXCESS OF EXPENDITURES OVER REVENUE (938,396) (8,028) (946,424)
OTHER FINANCING SOURCE
Proceeds from note payable 1,064,956 -0- 1,064,956
EXCESS OF REVENUE AND OTHER
FINANCING SOURCE OVER
EXPENDITURES (DEFICIENCY)
FUND BALANCES
Beginning of year
End of year
126 ,560
422,549
(8,028)
11,805
118,532
434,354
$ 549,109 $ 3.777 $ 552,886
See accompanying notes to combined financial statements
-5-
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COMBINED STATEMENTS OF REVENUE, EXPENSES AND
CHANGES IN RETAINED EARNINGS /FUND BALANCES -
PROPRIETARY FUND AND EMPLOYEE PENSION TRUST FUNDS
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
OPERATING REVENUE
Charges for services
Contributions
Interest income
TOTAL OPERATING REVENUE
OPERATING EXPENSES
Personal services
Contractual services
Depreciation
Materials and operating supplies
Utilities
Insurance
Repairs and maintenance
Administrative supplies and expense
Contribution refunds
General fund administrative charge
Bad debts expense
TOTAL OPERATING EXPENSES
OPERATING INCOME
NONOPERATING REVENUE (EXPENSE)
Impact fees
Tap fees
Interest income
Interest expense
Other fiscal charges
Miscellaneous
Legal and engineering fees - lawsuit
NET INCOME (LOSS)
RETAINED EARNINGS /FUND BALANCES
Beginning of year
End of year
PROPRIETARY
FUND TYPE
WATER
AND SEWER
FIDUCIARY
FUND TYPE
EMPLOYEE TOTALS
PENSION (MEMORANDUM
TRUST FUNDS ONLY)
$ 1,722,259 $ -0- $ 1,722,259
- 0- 180,805 180,805
- 0- 109,987 109,987
1,722,259 290,792 2,013,051
541,234 -0- 541,234
40,814 4,201 45,015
281 ,392 -0- 281 ,392
245,889 -0- 245,889
130,584 -0- 130,584
59,947 -0- 59,947
60,207 -0- 60,207
19,309 -0- 19,309
-0- 5,064 5,064
47,776 -0- 47,776
20,089 -0- 20,089
1,447,241 9,265 1,456,506
275,018 281,527 556,545
90,640 -0- 90,640
37,679 -0- 37,679
71,998 -0- 71,998
(363,428) -0- (363,428)
(2,200) -0- (2,200)
4,907 -0- 4,907
(592,875) -0- (592,875)
(753,279) -o- (753,279)
(478,261) 281,527 (196,724)
1,633,212 1,392,520 3,025,732
$ 1,154,951 $ 1.674,047 $ 2,828,998
See accompanying notes to combined financial statements
-7-
COMBINED STATEMENTS OF CHANGES IN FINANCIAL POSITION -
PROPRIETARY FUND AND EMPLOYEE PENSION TRUST FUNDS
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
SOURCES OF WORKING CAPITAL
From operations:
Net income
Contributed capital - federal grant
Decrease in restricted assets
TOTAL RESOURCES PROVIDED
USES OF WORKING CAPITAL
Operations:
Net loss
Deduct items not using working capital
Depreciation
Amortization of bond discount
WORKING CAPITAL USED BY OPERATIONS
Acquisition of fixed assets
TOTAL RESOURCES APPLIED
INCREASE IN WORKING CAPITAL
CHANGES IN COMPONENTS OF WORKING CAPITAL
Increase (decrease) in current assets:
Cash
Investments
Accounts receivable
Due to /from other funds
Accounts and retainage payable
Due from other governmental units
Customers deposits
Accrued liabilities
PROPRIETARY
FUND
WATER
AND SEWER
FIDUCIARY
FUND
EMPLOYEE TOTALS
PENSION (MEMORANDUM
TRUST FUNDS ONLY)
$ -0- $
327,010
971,479
1,298,489
478,261
281,392
16,577
180,292
826,512
1,006,804
$ 291 ,685
281,527 $ 281,527
- 0- 327,010
- 0- 971,479
281,527 1,580,016
- o-
- o-
- o-
-o-
- 0-
- 0-
478,261
281 ,392
16,577
180,292
826,512
1,006,804
$ 281.527 $ 573,212
$ -0- $ 1,625,000
(7,280) (1,291,687)
15,740 11,032
(6,553) -0-
133,507 -0-
-0- (62,818)
(27,199) -0-
183,470 -0-
INCREASE IN WORKING CAPITAL $ 291,685 $
281.527
See accompanying notes to combined financial statements
-8-
$ 1,625,000
(1,298,967)
26,772
(6,553)
133,507
(62,818)
(27,199)
183,470
$ 57'3.212
NOTES TO COMBINED FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE A - 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. The accounting policies of the City conform to generally accepted
accounting principles as applicable to governmental units. The following is a
summary of the more significant policies:
1. SCOPE OF REPORTING ENTITY
The accompanying financial statements include all organizations,
activities and functions over which the City maintains direct
manifestations of oversight responsibility, and those organizations
where other circumstances or relationships require their inclusion to
conform with generally accepted accounting principles. These
circumstances include special financing relationships and consideration
of the scope of public services provided by a particular organization
or agency.
This report includes all funds and account groups of the City.
The specific organizations and agencies included in the accompanying
financial statements, and a summary description of how the specific
elements of oversight responsibility, and other criteria, were
considered in the determination of whether or not to include the
organization in the financial statements are presented below.
The City of Okeechobee Pension Trust Funds
The three retirement plans included in the financial
statements are the General Employee's Pension Trust Fund, the
Police Officer's Retirement Trust Fund, and the Firefighters
Pension Trust Fund. All are governed by a separate Board of
Trustees subject to the requirements of local ordinances and by
applicable provisions of Florida law.
The plans require participation by all employees in the
respective governing authorities with the exception of the City
Administrator who maintains a preexisting pension trust fund.
Additionally, the organizations exist for the benefit of the
employees of the City.
NOTES TO COMBINED FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. BASIS OF PRESENTATION - FUND ACCOUNTING
The accounts of the City are organized on the basis of funds or
account groups, each of which is considered a separate accounting
entity. The operations of each fund are accounted for with a separate
set of self - balancing accounts that comprise its assets, liabilities,
fund balances /retained earnings, revenues and expenditures /expenses.
The various funds are summarized by type in the combined financial
statements. The following fund types and account groups are used by
the City:
Governmental Fund Types
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 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.
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 operated in a manner
similar to private business enterprises where the intent of
the governing body is that the costs (expenses, including
NOTES TO COMBINED FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
2. BASIS OF PRESENTATION - FUND ACCOUNTING (CONTINUED)
Proprietary Fund Type (Continued)
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 Fund Type
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 the
proprietary fund since capital maintenance is critical.
3. ACCOUNT GROUPS
Account groups are used to establish accounting control and
accountability for the City's general fixed assets and general long-
term debt. The two account groups are not "funds." They are concerned
only with the measurement of financial position. They are not involved
with measurement of results of operations. The following are the
City's account groups:
General Fixed Assets Account Group
The account group is established to account for all fixed
assets of the City used for general purposes.
General Long -Term Debt Account Group
This account group is established to account for all long -term
debt of the City expected to be paid from governmental type funds.
NOTES TO COMBINED FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
4. BASIS OF ACCOUNTING AND MEASUREMENT FOCUS
Basis of accounting refers to when revenues and expenditures or
expenses are recognized int he accounts and reflected in the financial
statements. The basis relates to the timing of measurements made,
regardless of the measurement focus applied.
All governmental funds are accounted for using the modified
accrual basis of accounting. Revenues are generally recognized when
they become measurable and available as net current assets.
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 when the related fund
liability is incurred. Exceptions to this general rule include
accumulated unpaid vacation and sick pay and principal and interest on
general long -term debt, which is recognized when due.
All proprietary funds and pension trust funds are accounted for on
the accrual basis of accounting. Revenues are recognized when earned
and expenses are recognized when incurred. Unbilled water and sewer
utility service revenues ($32,557 at September 30, 1988) are recorded
at year end.
The accounting and reporting treatment applied to the fixed assets
and long -term liabilities associated with a fund is determined by its
measurement focus. All governmental funds are accounted for on a
spending or "financial flow" measurement focus. This means that only
current assets and current liabilities are generally included on their
balance sheets. Their reported fund balance (net current assets) is
considered a measure of "available spendable resources."
Governmental fund operating statements present increases (revenues
and other financing sources) and decreases (expenditures and other
financing uses) in net current assets. Accordingly, they are said to
present a summary of sources and uses of "available spendable
resources" during a period.
Special reporting treatments are also applied to governmental fund
inventories and prepaid expenses to indicate that they do not represent
"available spendable resources," even though they are a component of
net current assets. Such amounts are generally offset by fund balance
reserve accounts.
-12-
NOTES TO COMBINED FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
5. BUDGETARY AND BUDGETARY ACCOUNTING
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 generally accepted accounting
principles except encumbrances are presented as expenditures.
The City follows these procedures in establishing the budgetary
data reflected in the financial statements:
a. The City Administrator submits to the City Council a proposed
operating budget for the fiscal year commencing on October
1st. The operating budget includes proposed expenditures and
means of financing them. A capital improvement budget is
also presented.
b. Public hearings are conducted to obtain taxpayer comments.
c. The budget is legally enacted through the passage of an
ordinance by City Council on or before the fifteenth day of
September of the fiscal year currently ending.
d. The level of budgetary control is the department. The City
Administrator is authorized to transfer budgeted amounts
within departments of any fund. Revisions that alter the
budgeted totals of any department require approval of the
City Council. Unencumbered appropriations lapse at year end.
e. The reported budgetary data represents the final approved
budget after amendments adopted by the City Council.
f. The General Fund budget is adopted on a basis consistent with
generally accepted accounting principles, except encumbrances
are presented as expenditures.
g.
Formal budget integration is not employed for Proprietary,
Debt Service, or Trust funds because effective budgetary
control is achieved by alternate measures.
Budgeted amounts are as originally adopted, or as amended by the
City Council. Individual amendments were not material in relation to
the original appropriations which were amended.
NOTES TO COMBINED FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
6. 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. Encumbrances outstanding at year end are reported as a
reserve of fund balance because they do not constitute expenditures or
liabilities. As of September 30, 1988, encumbrances in the general
fund amounted to $115,329.
7. CASH AND CASH INVESTMENTS
Cash accounts for the City are maintained in interest - bearing
accounts.
Investments, consisting of certificates of deposit and money
market accounts, are stated at cost which approximates market.
Florida Statutes require state and local governmental units to
deposit monies with a financial institution classified 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
pooled 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 and investments with
qualifying institutions of $1,532,344 and $1,625,000 which is
uncollateralized and not deposited with qualified institutions as of
September 30, 1988.
The following is a list of the City's investments in the state - qualified
institutions at September 30, 1988:
Unrestricted
General Fund
Long -term certificate of deposit
Pension Trust Fund
Money market investment
Debt Service Fund
Long -term certificate of deposit
BOOK VALUE MARKET VALUE
$ 200,000
38,015
2,133
240,148
Restricted
Water and Sewer Fund
Long -term certificate of deposit 438,987
TOTAL INVESTMENTS $ 679,135
-14-
$ 200,000
38,015
2,133
240,148
438,988
$ 679,136
NOTES TO COMBINED FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
8. INVENTORY
Inventory consists of motor fuels which is stated at cost
determined on the first -in, first -out method.
9. FIXED ASSETS
Fixed assets used in governmental funds are recorded as
expenditures in the governmental fund and capitalized at cost in the
General Fixed Assets Account Group. Donated fixed assets are valued at
their estimated fair value on the date donated. Public domain general
fixed assets ( "infrastructure "), including unimproved land, roads,
bridges, curbs and gutters, streets and sidewalks, drainage systems,
and lighting systems are not capitalized. No depreciation has been
provided on governmental fund fixed assets.
Fixed assets used in enterprise funds are capitalized at cost in
such funds. Depreciation is provided in amounts sufficient to relate
the cost of the depreciable assets to operations over their estimated
service lives on the straight -line basis.
10. 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, 1988, these charges amounted to $47,776.
11. VACATION AND SICK LEAVE
Full -time and permanent employees accrue a paid vacation ranging
from 6 days after 6 months of continuous service up to 20 days after 15
years of service. Unused vacation may be accumulated up to a maximum
of 30 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.
NOTES TO COMBINED FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
11. VACATION AND SICK LEAVE (CONTINUED)
The amount of vacation leave to be paid from current financial
resources is included with accrued liabilities in the general fund and
the proprietary fund whereas the vested portion of sick leave and
balance of vacation leave is included under long -term debt. A long-
term liability of $64,246 has been recorded in the General Long -Term
Debt Group of accounts, representing the City's commitment to fund such
costs from future operations.
12. TOTAL COLUMNS ON COMBINED STATEMENTS
Total columns on the combined financial statements are captioned
"Memorandum Only" to indicate they are presented only to facilitate
financial analysis. Data in these columns do not present financial
position, results of operations or changes in financial position in
conformity with generally accepted accounting principles. Neither is
such data comparable to a consolidation. Interfund eliminations have
not been made in the aggregation of this data.
NOTE B - COMPARISON OF BUDGET TO ACTUAL RESULTS
The adjustments for encumbrances shown on the Combined Statement of
Revenues, Expenditures and Changes in Fund Balances - Budget and Actual is as
follows:
GENERAL FUND
Actual expenditures
® Encumbrances - September 30, 1988 $ 115,329
Less prior year encumbrances paid (3,849)
Adjustment for encumbrances
EXPENDITURES ON BUDGETARY BASIS
NOTE C - PROPERTY TAXES
$ 3,009,723
111,480
$ 3,121,203
The City's property tax is levied annually on the real and personal property
located in the City on January 1st of the prior year. The assessed value on
which the 1987 -88 levy was based was $107,799,718. The assessed values are
established by the Okeechobee County Property Appraiser. Tax collections by the
Okeechobee County Tax Collector begin normally in November of each year with a
due date of March 31 of the following year. Current tax collections for the year
ended September 30, 1988 were 99.97% of the total tax levied.
-16-
NOTES TO COMBINED FINANCIAL STATEMENTS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE C - PROPERTY TAXES (CONTINUED)
The City is permitted by state law to levy taxes up to 10 mills of assessed
valuation for the General Fund. The tax rate for the 1987 -88 fiscal year was
4.15 mills.
NOTE D - FIXED ASSETS - PROPRIETARY FUND
The carrying value of fixed assets recorded in the Water and Sewer Fund as
of September 30, 1988 is summarized as follows:
Balance September 30, 1987
Acquired during the year ended
September 30, 1988
Transfer to complete
Less accumulated depreciation
UTILITY PLANT
IN SERVICE
$ 8,946,910
96,163
823,152
9,866,225
2,207,566
TOTAL $ 7,658,659
CONSTRUCTION
IN PROGRESS
$ 2,453,253
730,349
(823,152)
2,360,450
-0-
TOTAL
$ 11,400,163
826,512
-0-
12,226,675
2,207,566
$±3fin_1'f) $ 10,019,109
Included in the above construction in progress is $342,945 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
project contractor (a joint venture between Taddie Underground Utilities Company,
Inc. and M & M Contracting, Inc.) concerning substandard work. The wastewater
collection system portion of the project was stopped during 1986 prior to
... completion. During 1988, no interest expense was capitalized on the wastewater
collection system since there was no construction activity.
Construction in progress additions for the current year included $30,658 of
capitalized interest associated with the interceptor sewer system presently being
constructed by the City (see Note L).
The City has not maintained adequate detailed fixed asset records to support
the cost of the water and sewer utility plant in service for assets acquired
prior to October 1, 1981. At September 30, 1988, the cost of assets acquired
.., prior to October 1, 1981 was $4,098,761 (less $1,656,985 of accumulated
depreciation). Depreciation expense recorded for these assets was $102,469 in
1988.
ION
-17-
AIN
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE E - CHANGES IN GENERAL FIXED ASSETS
A summary of changes in general fixed assets for the year ended September
30, 1988 is as follows:
BALANCE BALANCE
OCTOBER 1, 1987 ADDITIONS RETIREMENTS SEPTEMBER 30, 1987
Land and improvements $ 805,358 $
Buildings and
improvements
Furnishings and
equipment
Rolling stock
257,905
416,519
341,677
$ 1,821,459
- 0- $ -0- $ 805,358
- 0- -0- 257,905
21,564 -0-
19,053 -0-
$ 40.617 $ -0-
438,083
360,730
$ 1,862,076
The City has not maintained adequate detailed fixed asset records to support
the cost of general fixed assets acquired prior to October 1, 1981. At September
30, 1988, the value assigned to general fixed assets acquired prior to October 1,
1981 was $973,891.
NOTE F - LONG -TERM DEBT
Long -term debt as of September 30, 1988 is summarized as follows:
GENERAL LONG -TERM DEBT:
General Obligation Bonds:
$480,500 original issue General Obligation
Bonds, due in annual installments of
$15,000 to $35,000 through July 1, 1996
$ 235,000
Notes payable:
8.23% capital improvement notes to a bank,
payment of $195,753, including interest,
due annually beginning December 1989
through December 1998; collateralized by
and payable from a pledge of the City's
share of one -half cent Florida State
sales tax; loan draws to date $1,064,956;
total amount approved is $1,300,000 1,064,956
TOTAL GENERAL LONG -TERM DEBT $ 1,299,956
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE F - LONG -TERM DEBT (CONTINUED)
PROPRIETARY FUND LONG -TERM DEBT:
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
$127,289
$ 4,872,711
The 1987 Water and Sewer Revenue Bonds, are collateralized by a pledge of
the net revenues of the water and sewer system, public service taxes, franchise
revenues and state revenue sharing funds.
The annual changes in general long -term debt accrued vacation and medical
leave benefits as of September 30, 1988 are as follows:
OCTOBER 1, 1987
$ 59,607
INCREASE SEPTEMBER 30, 1988
$ 4,619 $ 64,246
The 1987 Water and Sewer Revenue and Refunding Bond ordinance requires,
among other things, deposits on a monthly basis of amounts necessary to provide
for semi annual interest and annual principal requirements. The sinking and
reserve funds on deposit at September 30, 1988 are as follows:
MAXIMUM RESERVE
Sinking Fund
Reserve Fund
Remaining in construction fund account
September 30, 1988
1987
REVENUE
BONDS
$123,386
438,988
13,991
$576,365
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE F - LONG -TERM DEBT (CONTINUED)
A summary of changes in all long -term debt for the year ended September 30,
1988 is as follows:
Balance at
September 30, 1987
Additions
Payments
Less unamortized
bond discount
GENERAL LONG -TERM DEBT
GENERAL
OBLIGATION NOTES
BONDS PAYABLE TOTAL
260,000 $ 28,165
- 0- 1,064,956
25,000 28,165
235,000 1,064,956
- 0-
-0-
$ 288,165
1,064,956
53,165
1,299,956
-0-
PROPRIETARY
FUND
WATER
AND SEWER
REVENUE
BONDS
1987
SERIES
$5,000,000
-0-
-0-
5,000,000
127,289
TOTAL
LONG -TERM
DEBT
$5,288,165
1,064,956
53,165
6,299,956
127,289
Balance at
September 30, 1988 $ 235,000 $1.064,956 $1,299,956 $4,872,711 $6,172,667
Annual principal
requirements for
the next five years
are as follows:
Year ending -
1989
1990
1991
1992
1993
Thereafter
$ 25,000 $ -0- $ 25,000
25,000 88,763 113,763
25,000 96,068 121,068
30,000 103,974 133,974
30,000 112,532 142,532
100,000 663,619 763,619
$ 235,000 $1,064,956 $1,299.956
$ 60,000
60,000
65,000
70,000
75,000
4,670,000
$5,000,00Q
$ 85,000
173,763
186,068
203,974
217,532
5,433,619
$6,299,956
IMO
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE F - LONG -TERM DEBT (CONTINUED)
The annual requirements to amortize all debt outstanding as of September 30,
1988, including interest payments totalling $8,432,667 are as follows:
PROPRIETARY
FUND
WATER
AND SEWER
REVENUE
GENERAL LONG -TERM DEBT BONDS
GENERAL TOTAL
OBLIGATION NOTES 1987 LONG -TERM
BONDS PAYABLE TOTAL SERIES DEBT
Year ending -
1989 $ 41,050 $ -0- $ 41,050 $ 436,009 $ 477,059
1990 39,363 195,753 235,116 432,934 668,050
1991 37,675 195,753 233,428 434,571 667,999
1992 40,956 195,753 236,709 435,771 672,480
1993 38,894 195,753 234,647 436,509 671,156
Thereafter 113,962 1,174,518 1,288,480 10,287,399 11,575,879
$ 311,900 $1.957,530 $2,269,430 $12,463,193, $14,732,623
NOTE G - PRIOR YEAR DEFEASANCE OF DEBT
In 1987, the City defeased the 1983 Series A Water and Sewer Revenue Bonds
by depositing sufficient funds in an irrevocable trust to provide for all future
debt service payments on the old bonds. Accordingly, the trust account assets
and the liability for the defeased bonds are not included in the City's financial
statements. At September 30, 1988, $925,000 of bonds outstanding are considered
defeased.
NOTE H - INTERFUND RECEIVABLES AND PAYABLES
The following is a summary of amounts due from and due to other funds:
DUE FROM DUE TO
OTHER FUNDS OTHER FUNDS
General Fund $ 52,672 $ 27,353
Debt Service Fund -0- 46,525
Proprietary Fund 27,971 6,765
TOTAL ALL FUNDS $ 80,643 $ 80,643
-21-
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE I - CONTRIBUTED CAPITAL
The source and additions to contributed capital
SOURCE
Connection fees
Developers
Federal grant
Local Public Works Grant
Federal Revenue Sharing Funds
General Fund
Okeechobee Beach Water Association
Environmental Protection Agency Grant
a" NOTE J - PENSION PLANS
are as follows:
BALANCE BALANCE
OCTOBER 1, 1987 ADDITIONS SEPTEMBER 30, 1988
$ 421,758 $ -0-
338,761 -0-
747,310 -0-
417,740 -0-
619,572 -0-
100,000 -0-
275,000 -0-
1 ,572,061 327,010
$4,492,202 $ 327,010
$ 421,758
338,761
747,310
417,740
619,572
100,000
275,000
$1,899,071
$4,819,212
The City has three pension plans, under a single employer public employee
retirement system; covering substantially all the City's regular employees. Total
pension expense for the year was $49,053. It is the City's policy to fund pension
expense as determined by actuarial valuation which provides for the accumulation of
assets gradually over time so that sufficient assets will be available to pay benefits
when due. The significant actuarial assumptions used to compute the actually
determined contribution requirement are the same as those used to compute the pension
benefit obligation. Mandatory employee contributions to the plans are at the rate of
5% of earnings. Accumulated employee contributions at September 30, 1988 are as
follows:
General
Police
Fire
$279,067
94,421
31,974
TOTAL $405,462
All regular employees working over 20 hours per week are eligible on the date of
employment following attainment of age 18; but have not attained age of 56 (age 51 for
fire and police). Participation is mandatory. Normal retirement is provided for at
age 65 (60 for fire and police) and 5 years of service (10 years for fire and police).
The benefit is calculated at 1.6% (2% for fire and police) of average monthly earnings
times years of continuous service with the City. Benefits are payable by monthly
annuity for 10 years certain and life thereafter with other options available.
MIN
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE J - PENSION PLANS (CONTINUED)
Early retirement is provided for at age 60 (age 55 for fire and police) and 10
years of participation. Death and disability benefits are also available through the
plans.
Upon termination of employment with less than 5 years of service (10 years for
fire and police) the plan refunds accumulated employee contributions.
After 5 years service (10 years for fire and police) the pension benefit is
accrued to date of termination and payable at normal retirement age of employee
contributions are left in the fund.
The actuarial determined pension contribution for 1988, which consisted entirely
of normal cost, was as follows:
Policy $ 2,040
Fire 9,540
General 22,255
TOTAL $33,835
The actual City and employees contribution by fund for the year ended September
30, 1988 was as follows:
CITY EMPLOYEES
General Fund $ 24,297 $41,795
Proprietary Fund 24,756 20,033
$ 49,053
The plans covering the City's fire fighters 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 $18,381 and $51,543, respectively, during the
year ended September 30, 1988.
For the years ended September 30, 1987, the pension benefit obligation, net
assets available for benefits expressed as percentages of the pension benefit
obligation, was as follows:
1987
POLICE FIRE GENERAL
Pension benefit obligation (2) $204,378 $ 85.005 $564,460
Net assets available for benefits (1) $495,312 $180,259 $716.949
Percentage funded - (1) : (2)
242 212% 127%
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE J - PENSION PLANS (CONTINUED)
As the valuation for the year ended September 30, 1987 was the first year using
the valuation method described herein, ten -year trend information is not available.
The amount shown below as the "pension benefit obligation" is a standardized
disclosure measure of the present value of pension benefits, adjusted for the effects
of projected salary increases and step -rate benefits, estimated to be payable in the
future as a result of employee service to date.
The assets in excess of pension benefit obligation at October 1, 1988 (the most
recent valuation date) is as follows:
Pension benefit obligation:
Retirees and beneficiaries currently
® receiving benefits and terminated
employees entitled to benefits but
not yet receiving them
Current employees:
Accumulated employee contributions
including allocated investment income
Employer - financed vested
Employer - financed nonvested
Total pension benefit obligation (2)
Net assets available for benefits (at
cost which approximates market)
Assets in excess of pension
benefit obligation
Percentage funded - (1) : (2)
POLICE FIRE GENERAL
$ -0- $ 6,682 $ 18,765
94,421
101,272
52,173
247,866
31,974 279,067
-0- 328,559
50,318 30,657
88,874 657,048
(1) 594,801 218,434 849,780
$346,935 $129.460 $192.712
240% 245% 129%
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.
-24-
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
NOTE J - PENSION PLANS (CONTINUED)
Salary increases - 6% for police and general; 7% for
fire fighters, until the assumed retirement age.
Funding method - Frozen entry age actuarial cost method.
NOTE K - HOSPICE GRANT
The City applied for and received Community Services Block Grants totalling
$7,847. 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 $3,828 applicable to the prior year grant and $1,687 of the
current grant has not been received or disbursed as of September 30, 1988.
NOTE L - ENVIRONMENTAL PROTECTION AGENCY GRANTS
As of September 30, 1988, the City has been awarded grants totalling $1,641,529
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, grant funds totalling $327,010 were received.
NOTE M - SUBSEQUENT EVENT
The City is involved in a lawsuit with M & M Contracting, Inc. and Taddie
Underground Utilities Company, Inc. (contractor) regarding the improper installation
of the seven lines for the City's wastewater collection system. The contractor filed
an arbitration claim against the City for the City's refusal to pay the balance due
under the construction contract.
In January 1989, an arbitration panel issued an award of $1,561,678 in favor of
the contractor. The City has filed a motion in Circuit Court to vacate the award.
•111 The ultimate outcome of this litigation cannot presently be determined. Accordingly,
no provision for any liability that may result upon adjudication has been made in the
accompanying combined financial statements.
TAXES
Ad valorem taxes
Franchise fees
Utility service taxes
Public service taxes
GENERAL FUND
SCHEDULE OF REVENUE - BUDGET AND ACTUAL
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
VARIANCE
FAVORABLE
BUDGET ACTUAL (UNFAVORABLE)
$ 424,085 $ 446,293 $ 22,208
245,662 234,877 (10,785)
280,878 258,229 (22,649)
2,500 4,362 1,862
953,125 943,761 (9,364)
INTERGOVERNMENTAL
State shared revenue
Cigarette tax 98,000 97,012 (988)
Revenue sharing 174,240 161,346 (12,894)
Mobile home licenses 2,190 2,263 73
One -half cent sales tax 125,024 153,164 28,140
Alcoholic beverage licenses 600 1,774 1,174
Gasoline tax refund 1,800 2,335 535
Local option gasoline tax 200,000 273,823 73,823
Firefighters supplement 1,239 1,318 79
603,093 693,035 89,942
Shared revenue from other local units:
County occupational licenses 2,500 4,736 2,236
City share of 5 and 6 cent gas tax 99,300 130,146 30,846
101,800 134,882 33,082
704,893 827,917 123,024
CHARGES FOR SERVICES
Sanitation fees 106,000 138,238 32,238
Miscellaneous 610 631 21
106,610 138,869 32,259
LICENSES AND PERMITS
Occupational licenses 28,400 38,367 9,967
GENERAL FUND
SCHEDULE OF REVENUE - BUDGET AND ACTUAL (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
FINES AND FORFEITURES
Court fines
Police education
Code enforcement fines
Miscellaneous
INTEREST INCOME
MISCELLANEOUS
Comprehensive Planning Grant
Hospice Grant
Other
Sale of assets
Rents and royalties
Refunds of prior year expenditures
TOTAL REVENUE
BUDGET
$ 39,200
500
-0-
225
39,925
29,425
9,700
-0-
500
500
3,355
-0-
14,055
$1,876,433
VARIANCE
FAVORABLE
ACTUAL (UNFAVORABLE)
$ 63,904
789
1 ,686
1,423
67,802
27,314
6,397
9,988
1,873
100
3,300
5,639
27,297
14±414
$ 24,704
289
1,686
1,198
27,877
(2,111)
(2,303)
9,988
1 ,373
(400)
(55)
5,639
13,242
$ 194,8,94
GENERAL FUND
SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
ENCUMBRANCES ACTUAL ON VARIANCE
PRIOR BUDGETARY FAVORABLE
BUDGET ACTUAL YEAR 1988 BASIS (UNFAVORABLE)
,.,, PUBLIC SAFETY
Low enforcement:
Personal services $ 503,133 $ 495,117 $ -0- $ -0- $ 495,117 $ 8,016
Operating expenses 82,650 88,771 77 -0- 88,694 (6,044)
Copital outlay 51,450 13,506 -0- 38,319 51,825 (375)
637,233 597,394 77 38,319 635,636 1,597
Fire control:
Personal services 208,808 205,485 -0- -0- 205,485 3,323
Operating expenses 49,650 53,532 1,184 515 52,863 (3,213)
Capital outlay 12,250 1,221 333 11,948 12,836 (586)
270,708 260,238 1,517 12,463 271,184 (476)
907,941 857,632 1,594 50,782 906,820 1,121
GENERAL GOVERNMENT
Legislative:
Personal services 26,548 28,081 -0- -0- 28,081 (1,533)
Operating expenses 30,000 20,634 50 -0- 20,584 9,416
56,548 48,715 50 -0- 48,665 7,883
Executive:
Personal services 57,181 56,615 -0- -0- 56,615 566
Operating expenses 10,150 2,950 -0- -0- 2,950 7,200
Capital outlay 4,500 3,100 -0- 1,325 4,425 75
71,831 62,665 -0- 1,325 63,990 7,841
Financial and administrative:
Personal services 104,016 105,665 -0- -0- 105,665 (1,649)
Operating expenses 33,600 27,490 236 189 27,443 6,157
Capital outlay 9,789 10,444 -0- 3,185 13,629 (3,840)
Allocation of administrative chorges (47,776) (47,776) -0- -0- (47,776) -0-
99,629 95,823 236 3,374 98,961 668
General services:
Personal services 67,166 45,537 -0- -C- 45,537 21,629
Operating expenses 87,500 91,333 -0- -0- 91,333 (3,833)
Capital outlay 6,000 3,747 -0- 2,291 6,038 (38)
160,666 140,617 -0- 2,291 142,908 17,758
Judicial:
Personal services 8,100 7,800 -0- -0- 7,800 300
Operating expenses 10,000 24,491 50 -0- 24,441 (14,441)
18,100 32,291 50 -0- 32,241 (14,141)
406,774 308,111 336 6,990 386,765 20,009
GENERAL FUND
SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL (CONTINUED)
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
ENCUMBRANCES ACTUAL ON VARIANCE
PRIOR BUDGETARY FAVORABLE
BUDGET ACTUAL YEAR 1988 BASIS (UNFAVORABLE)
.. TRANSPORTATION
Rood and street facilities:
Personal services $ 198,381 $ 193,613 $ -0- $ -0- $ 193,613 $ 4,768
Operating expenses 127,200 120,832 1,919 3,477 122,390 4,810
.,. Capital outlay 1,076,000 1,224,655 -0- 54,080 1,278,735 (202,735)
1,401,581 1,539,100 1,919 57,557 1,594,738 (193.157)
i PHYSICAL ENVIRONMENT
Garbage /solid waste control services
Operating expenses 106,000 126,161 -0- -0- 126,161 (20,161)
m.
HEALTH AND HUMAN SERVICES
Operating expenses 25,000 34,988 -0- -0- 34,988 (9,988)
DEBT SERVICE
Principal 125,000 28,165 -0- -0- 28,165 96,835
Interest 86,997 35,383 -0- -0- 35,383 51,614
Other debt costs 19,500 8,183 -0- -0- 8,183 11,317
231,497 71,731 -0- -0- 71,731 159,766
TOTAL EXPENDITURES $3,078,793 $3.009.723 $3 849 $115.329 $3.121,203 $(42,410)
DEBT SERVICE FUND
STATEMENT OF REVENUE AND EXPENDITURES - BUDGET AND ACTUAL
REVENUE
Ad valorem taxes
Interest income
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
TOTAL REVENUE
VARIANCE
FAVORABLE
BUDGET ACTUAL (UNFAVORABLE)
$ 30,656 $ 32,153
9,000 3,057
39,656 35,210
$ 1,497
(5,943)
(4,446)
EXPENDITURES
Bond principal retirements 25,000 25,000 -0-
Bond interest expense 17,738 17,738 -0-
Professional fees 500 500 -0-
TOTAL EXPENDITURES 43,238 43,238 -0-
EXCESS OF EXPENDITURES OVER REVENUE $ (3,582) $ (8,028) $ (4,446)
PENSION TRUST FUNDS
COMBINING BALANCE SHEETS
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
POLICE GENERAL
OFFICERS' FIREMEN'S EMPLOYEES'
RETIREMENT RETIREMENT RETIREMENT
FUND FUND FUND
TOTAL
ASSETS
Cash $586,000 $213,000 $826,000
$1,625,000
Investments in
money market accounts
at cost which
approximates market 8,801 5,434 23,780 38,015
Accrued interest receivable 3,978 1,446 5,608 11,032
$598,779 $219,880 $855,388 $1,674,047
FUND BALANCES
Reserved for employees'
retirement
$598,779
$219,880 $855,388 $1,674,047
PENSION TRUST FUNDS
COMBINING STATEMENTS OF REVENUE, EXPENSES
AND CHANGES IN FUND BALANCES
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
POLICE GENERAL
OFFICERS' FIREMEN'S EMPLOYEES'
RETIREMENT RETIREMENT RETIREMENT
FUND FUND FUND
TOTAL
OPERATING REVENUE
State tax on insurance
premiums $ 51,543 $ 18,381 $ -0- $ 69,924
Employer's contributions -0- 421 48,632 49,053
Employees' contributions 14,335 7,808 39,685 61,828
Interest income 38,814 14,075 57,098 109,987
TOTAL REVENUE 104,692 40,685 145,415 290,792
OPERATING EXPENSES
Employees' contribution
refunds and interest 26 505 4,533 5,064
Contractual services 1,199 559 2,443 4,201
TOTAL EXPENSES 1,225 1,064 6,976 9,265
EXCESS OF REVENUE OVER EXPENSES 103,467 39,621 138,439 281,527
FUND BALANCES
Beginning of year
End of year
495,312 180,259 716,949
$598,779 $219,880 $855,388
1 ,392,520
$1,674,047
PENSION TRUST FUNDS
COMBINING STATEMENTS OF CHANGES IN FINANCIAL POSITION
SOURCES OF WORKING CAPITAL
Net income
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
POLICE GENERAL
OFFICERS' FIREMEN'S EMPLOYEES'
RETIREMENT RETIREMENT RETIREMENT
FUND FUND FUND
TOTAL
$103,467 $ 19.621 $138.439 $ 281,527
ELEMENTS OF INCREASE IN
WORKING CAPITAL
Cash $586,000 $213,000 $826,000 $1,625,000
Investments (438,568) (159,950) (693,169) (1,291,687)
Accrued interest receivable 3,978 1,446 5,608 11,032
Due from State of Florida (47,943) (14,875) -0- (62,818)
INCREASE IN WORKING CAPITAL $103,467
$ 39.621 $138,439 $ 281,527
SUMMARY OF INSURANCE COVERAGE - UNAUDITED
CITY OF OKEECHOBEE, FLORIDA
September 30, 1988
DESCRIPTION
COMMERCIAL PACKAGE
Buildings and contents (90% coinsurance -
$500 deductible)
LAW ENFORCEMENT LIABILITY
Bodily injury, personal injury, property
damage ($5,000 deductible)
WORKERS COMPENSATION AND EMPLOYER'S LIABILITY
,r VEHICULAR EQUIPMENT
Bodily injury and property damage
Collision ($250 deductible)
Comprehensive ($250 deductible)
SCHEDULED PROPERTY FLOATER ($250 DEDUCTIBLE)
PUBLIC OFFICIALS BONDS
City clerk
Other employees
PUBLIC OFFICIAL LIABILITY ($1,000 DEDUCTIBLE)
COVERAGE
$3,139,110
1,000,000
500,000
1,000,000
ACV
ACV
519,346
20,000
20,000
1,000,000
SCHEDULE OF ASSESSED VALUES, TAX LEVIES AND RATES - UNAUDITED
CITY OF OKEECHOBEE, FLORIDA
1979 -1988
YEAR
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
ASSESSED VALUES
REAL PERSONAL
PROPERTY PROPERTY
$90,523,355
85,234,122
70,533,985
59,835,384
57,820,098
54,725,644
57,589,660
57,036,510
51,225,720
34,756,690
$17,276,363
15,026,483
14,573,190
14,042,767
13,060,620
12,102,101
10,664,660
10,475,123
9,725,167
8,787,664
TOTAL
$107,799,718
100,260,605
85,107,175
73,878,151
70,880,718
66,827,745
68,254,320
67,511,633
60,950,887
43,544,354
TAX LEVIES AND APPLICABLE RATES
HOMESTEAD
EXEMPTION
$22,969,436
21,793,353
20,715,053
19,504,959
19,007,098
17,665,060
14,162,210
14,061,980
5,173,430
5,034,700
LEVIES RATES
DEBT GENERAL
YEAR SERVICE GOVERNMENT
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
$39,231
18,308
15,873
14,008
13,483
12,674
8,668
8,574
36,386
40,248
$447,369
416,082
361,791
314,056
307,480
261,497
291 ,007
286,924
335,209
179,780
DEBT GENERAL
SERVICE GOVERNMENT
MILLS MILLS
.300
.150
. 150
.150
.150
. 150
.127
.127
.58
.83
4.150
4.150
4.251
4.251
4.338
3.913
4.250
4.250
5.500
4.137
SCHEDULE OF CERTAIN REVENUE - UNAUDITED
CITY OF OKEECHOBEE, FLORIDA
1979 -1988
GENERAL FUND
STATE
REVENUE
SHARING OCCUPATIONAL UTILITY
YEAR (NOTE) LICENSES TAXES
1988 $411,522 $38,367 $258,229
1987 409,809 44,888 219,661
1986 398,901 41,498 207,756
1985 349,607 38,484 196,168
1984 346,742 42,119 133,768
1983 329,260 40,138 118,812
1982 251,194 32,175 114,551
1981 257,325 22,228 108,286
1980 243,055 20,084 100,857
1979 251,212 20,551 93,107
PROPRIETARY FUND
FINES AND FRANCHISE
FORFEITURES FEE PERMITS INTEREST
$67,802
49,071
29,731
28,092
22,764
20,493
23,031
13,813
19,827
18,125
WATER
AND SEWER IMPACT DELINQUENT
YEAR CHARGES FEES CHARGES MISCELLANEOUS
1988 $1,632,157 $ 90,640 $25,588
1987 1,386,432 111,964 31,119
1986 1,341,837 260,382 30,417
1985 1,130,500 212,012 20,671
1984 971,227 29,012 14,146
1983 842,440 26,775 17,372
1982 810,720 -0- 12,228
1981 652,264 -0- 9,580
1980 615,426 -0- 9,280
1979 561,693 -0- 9,140
$50,823
31,401
21,141
8,583
9,663
11,219
22,324
6,647
6,732
5,557
$234,877 $ -0- $27,314
214,036 -0- 21,618
206,335 -0- 30,978
208,614 16,268 31,791
185,428 25,508 34,363
152,921 14,836 25,091
154,823 10,493 64,132
137,759 23,459 69,536
110,587 12,995 61,733
93,232 10,856 76,173
INTEREST ON
INVESTMENTS
$ 71,998
62,864
103,288
233,511
110,367
52,912
73,181
70,738
53,657
33,288
CONNECTION
CHARGES
(IN AID OF HYDRANT
CONSTRUCTION) RENTAL
$ 37,679 $ 9,960
40,078 9,480
44,888 9,360
110,181 7,320
20,112 7,320
25,163 27,000
13,400 27,000
24,525 27,000
15,650 23,280
23,460 22,440
NOTE - INCLUDES ADDITIONAL TWO -CENT CIGARETTE TAX AND ONE -HALF CENT SALES TAX
AIN
4.iii4S4/r/fk4Vng--
CERTIFIED PUBLIC ACCOUNTANTS ICH
2222 Colonial Road
Suite 200
Ft. Pierce, FL 34950
Telephone (407) 461-8833
FAX # (407) 461 -8872
February 23, 1989
The Honorable Mayor and
Members of the City Council
City of Okeechobee, Florida
Other Offices:
OHIO
Youngstown (Boardman)
Youngstown
Warren
Salem
Alliance
PENNSYLVANIA
New Castle
Sharon
Meadville
FLORIDA
Stuart
Naples
Port St. Lucie
Combined Independent Auditors' Report on Internal Accounting
and Administrative Controls at the Combined Financial Statement
Level and the Federal Financial Assistance Program Level
We have audited the combined financial statements of the City of Okeechobee,
Florida for the year ended September 30, 1988 and have issued our report thereon
dated February 23, 1989. Our audit report was qualified because the City has not
maintained adequate detailed fixed asset records in support of the recorded costs
of the water and sewer utility plant in service or the amounts included in the
general fixed asset group of accounts. As part of our audit, we made a study and
evaluation of the system of internal accounting control and the applicable
internal control systems used in administering the Federal financial assistance
programs of the City of Okeechobee, Florida 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 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.
The management of the City of Okeechobee, Florida is responsible for
establishing and maintaining internal control systems, including those 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 are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from unauthorized
use or disposition and with respect to the Federal financial assistance programs,
that resource use is consistent with laws, regulations and policies; resources
are safeguarded against waste, loss and misuse; transactions are executed in
accordance with management's authorization and reliable data are obtained and
maintained to permit the preparation of financial statements in accordance with
generally accepted accounting principles and the preparation of Federal reports
in accordance with Federal requirements. Because of inherent limitations in any
system of internal accounting and administrative controls used in administering
-37-
MEMBER AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS DIVISION OF CPA FIRMS -SEC AND PRIVATE COMPANIES PRACTICE SECTIONS
City Council
February 23, 1989
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.
For the purpose of this report, we have classified the significant internal
accounting and administrative controls used in administering the Federal
financial assistance program in the following categories:
Cycles of activity:
a. Revenue /receipts
b. Purchases /disbursements
Administrative controls:
General requirements:
a. Political activity
b. Davis -Bacon Act
c. Civil rights
d. Federal financial reports
Specific requirements:
a. Types of costs allowed or unallowed
b. Matching level of effort
c. Reporting requirements
d. Special tests and provisions
Our study included all of the applicable control categories listed above.
During the year ended September 30, 1988, the City of Okeechobee, Florida
expended all of its Federal financial assistance under a major Federal financial
assistance program. With respect to internal control systems used in
administering the major Federal financial assistance program, 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.
Our study and evaluation described in the preceding paragraph was more
limited than would be necessary to express an opinion on the system of internal
accounting control of the City of Okeechobee, Florida. Accordingly, we do not
express an opinion on the system of internal accounting control taken as a whole
or on the internal control systems used in administering the major Federal
financial assistance program of the City of Okeechobee, Florida or on any of the
control categories identified above.
-38-
City Council
February 23, 1989
However, our study and evaluation and our audit disclosed the following
condition that we believe result in more than a relatively low risk that errors
or irregularities in amounts that would be material in relation to the combined
�. financial statements or to a Federal financial assistance program may occur and
not be detected within a timely period. The City has not maintained adequate
detailed fixed asset records in support of the recorded costs of the water and
sewer utility plant in service or the amounts included in the general fixed asset
group of accounts and we were unable to obtain sufficient supporting
documentation to form an opinion with respect to (a) the stated costs of property
items acquired in years prior to October 1, 1981 and (b) the accumulated
depreciation applicable to the water and sewer utility plant in service or the
depreciation expense for the year then ended.
dig
This condition was considered in determining the nature, timing, and extent
of the audit tests to be applied in (1) our audit of the 1988 combined financial
statements and (2) our audit and review of the City's compliance with those laws
and regulations for which we believe noncompliance could have a material effect
on the allowability of program expenditures for the major Federal financial
assistance program.
This report is intended solely for the use of management and the U.S.
Environmental Protection Agency and should not be used for any other purpose.
This restriction is not intended to limit the distribution of this report, which
upon acceptance by the City of Okeechobee, Florida, is a matter of public record.
4:(to4
Certified Public Accountants
CERTIFIED PUBLIC ACCOUNTANTS
2222 Colonial Road
Suite 200
Ft. Pierce, FL 34950
Telephone (407) 461 -8833
FAX # (407) 461 -8872
February 23, 1989
The Honorable Mayor and
Members of the City Council
City of Okeechobee, Florida
Combined Independent Auditors' Report on
Compliance at the Combined Financial Statement
Level and the Federal Financial Assistance Program Level
Other Offices:
OHIO
Youngstown (Boardman)
Youngstown
Warren
Salem
Alliance
PENNSYLVANIA
New Castle
Sharon
Meadville
FLORIDA
Stuart
Naples
Port St. Lucie
We have audited the combined financial statements of the City of Okeechobee,
Florida for the year ended September 30, 1988 and have issued our report thereon
dated February 23, 1989. Our audit report was qualified because the City has not
maintained adequate detailed fixed asset records in support of the recorded costs
of the water and sewer utility plant in service or the amounts included in the
general fixed asset group of accounts. Our audit was made in 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 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 audit
referred to above, we selected and tested transactions and records that included,
but were not limited to, transactions and records relating to the major Federal
financial assistance program. The purpose of our testing of transactions and
records was to obtain reasonable assurance that the City of Okeechobee, Florida
had, in all material respects, administered its major Federal financial
assistance program in compliance with those laws and regulations for which we
believe noncompliance could have a material effect on the a.11owability of program
expenditures or on the City's combined financial statements. Such laws and
regulations include those pertaining to Federal financial reports and claims for
advances and reimbursements.
In our opinion, for the year ended September 30, 1988 the City of
Okeechobee, Florida administered its major Federal financial assistance program
in compliance, in all material respects, with those laws and regulations for
which we believe noncompliance could have a material effect on the allowability
of program expenditures.
l 4- A v4.
Certified Public Accountants
—40—
MEMBER AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS DIVISION OF CPA FIRMS -SEC AND PRIVATE COMPANIES PRACTICE SECTIONS
2222 Colonial Road
Suite 200
Ft. Pierce, FL 34950
�. Telephone (407) 461.8833
OMNI
MIN
FAX # (407) 461 -8872
7-i-ilt5Pat,47<t:/ng-
CERTIFIED PUBLIC ACCOUNTANTS
February 23, 1989
The Honorable Mayor and
Members of the City Council
City of Okeechobee, Florida
Independent Auditors' Report on
Schedule of Federal Financial Assistance
Other Offices:
OHIO
Youngstown (Boardman)
Youngstown
Warren
Salem
Alliance
PENNSYLVANIA
New Castle
Sharon
Meadville
FLORIDA
Stuart
Naples
Port St. Lucie
We have audited the combined financial statements of the City of Okeechobee,
Florida for the year ended September 30, 1988 and have issued our report thereon
dated February 23, 1989. Our audit report was qualified because the City has not
maintained adequate detailed fixed asset records in support of the recorded costs
of the water and sewer utility plant in service or the amounts included in the
general fixed asset group of accounts. Our audit of such combined 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 audit was made for the purpose of forming an opinion on the combined
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 combined financial statements. The information in that
schedule has been subjected to the auditing procedures applied in the audit of
the combined financial statements and, in our opinion, is fairly stated in all
material respects in relation to the combined financial statements taken as a
whole.
Certified Public Accountants
MEMBER AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS DIVISION OF CPA FIRMS -SEC AND PRIVATE COMPANIES PRACTICE SECTIONS
FEDERAL GRANTOR/
PROGRAM TITLE
SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE
CITY OF OKEECHOBEE, FLORIDA
Year ended September 30, 1988
OCTOBER SEPTEMBER
1, 1987 30, 1988
FEDERAL AWARD BEGINNING ENDING
CFDA NO. AMOUNT BALANCE RECEIPTS DISBURSEMENTS BALANCE
U.S. ENVIRONMENTAL
PROTECTION AGENCY
Water Management
Division 66.418 $1,641,529 $ -0- $146,211 $146,211* $ -0-
66.418 297,428 -0- 180,799 180,799* -0-
-0- 327,010 327,010 -0-
U.S. DEPARTMENT
OF HEALTH AND
HUMAN SERVICES
Community Services
Block Grant 13.665 7,847 -0- 9,988 ** 9,988 ** -0-
TOTAL FEDERAL ASSISTANCE $ -0- $336,998 $336,998 $ -0-
* Disbursements include expenditures from prior year which were reimbursed by
grantors during the current fiscal year.
* *Includes receipts and disbursements of $3,828 on prior year contract; amount
�" remaining on current contract is $1,687.
2222 Colonial Road
Suite 200
Ft. Pierce, FL 34950
Telephone (407) 461 -8833
FAX # (407) 461 -8872
The Honorable Mayor and
Members of City Council
City of Okeechobee, Florida
/CERTIFIED PUBLIC ACCOUNTANTS 11:14
Other Offices:
OHIO
Youngstown (Boardman)
Youngstown
Warren
Salem
Alliance
PENNSYLVANIA
New Castle
Sharon
February 23, 1989 Meadville
FLORIDA
Stuart
Naples
Port St. Lucie
We have audited the financial statements of the City for the year ended
September 30, 1988 and have issued our report thereon dated February 23, 1989.
As part of our audit, we made a study and evaluation of the City's system of
internal accounting control to the extent we considered necessary to evaluate the
system as required by generally accepted auditing standards. Our study and
evaluation made for the limited purpose described in Exhibit III would not
necessarily disclose all material weaknesses in the system. Accordingly, we do
not express an opinion on the system of internal accounting control of the City
'r taken as a whole. However, our study and evaluation disclosed a condition, which
is discussed in Exhibit I, that we believe results in more than a relatively low
risk that errors or irregularities in amounts that would be material in relation
to the financial statements of the City may occur and not be detected within a
timely period.
MIN
The other matters presented in Exhibit II are also brought to your attention
and we recommend that you consider corrective action.
We would like to take this opportunity to acknowledge the courtesy and
assistance extended to us by the personnel of the City during the course of our
audit.
/(/
Certified Public Accountants
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MEMBER AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS DIVISION OF CPA FIRMS -SEC AND PRIVATE COMPANIES PRACTICE SECTIONS
EXHIBIT I
ESTABLISHMENT OF FIXED ASSETS CONTROLS
The City has not maintained adequate detailed fixed asset records in support
of the recorded costs of the water and sewer utility 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 costs of property items acquired in years prior to October 1, 1981
and (b) the accumulated depreciation applicable to the water and sewer utility
plant in service at September 30, 1988 or the depreciation expense 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 asset accounting.
By maintaining fixed asset 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.
Information 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 used 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 asset records when none existed before can be a difficult
and time consuming task. One approach is to:
1. 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" areas.
EXHIBIT I
ESTABLISHMENT OF FIXED ASSETS CONTROLS (CONTINUED)
2. Plan and perform a complete inventory of all fixed assets.
In creating the inventory records, obtain as much of the
information to be included in the individual assets records
as possible, e.g., asset description, location, vendor or
manufacturer and acquisition date. Fixed asset
identification tags should be affixed at the time the
physical inventory is taken.
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," sets
forth the basis for valuing fixed assets of a governmental
unit: "Such assets should be recorded at historical costs,
or estimated historical cost, if the original cost is not
available, or in the case of gifts or contributions, at the
fair market value at the time received."
Several procedures can be used to determine the valuation.
Reference to the historical records, such as
vendors' invoices, contracts, purchase orders,
capital expenditure authorizations, cancelled
checks, gift acknowledgements or other documents on
hand.
Correspondence with vendors, donors, etc.
Use of an asset valuation reasonably reflective of
historical value, provided it is reliable, if
historical or fair market value is not available.
Historical cost as reasonably estimated by
employees for small items of relatively low value,
e.g., tools, office furniture and equipment.
Reliance on independent outside appraisals for
assets which cannot be valued by one of the above
methods or some other reasonable method. It is
important to emphasize, however, that the appraisal
should be based upon estimated historical cost, not
on replacement cost or some other basis.
Evaluation of fixed assets in the above manner will
enable the City to establish reasonably accurate
initial fixed asset values.
EXHIBIT I
ESTABLISHMENT OF FIXED ASSETS CONTROLS (CONTINUED)
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.
Verification that any asset traded in for a new asset 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.
EXHIBIT II
OTHER MATTERS
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
1988, this reconciliation was not performed. After June 1987, there were no
detail listings of customer accounts receivable generated to make this
reconciliation possible. Accounts receivable detail listings should be available
for each month.
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 comment was also
noted in the prior year's letter.
CURRENT INFORMATION
Bank accounts should be reconciled to the genral ledger accounts and monthly
financial reports generated before the end of the next month. Current financial
information is necessary to make timely management decisions and to provide data
for future planning. This recommendation was also noted in the prior year's
- 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 and collections and payroll
information for posting to the general ledger accounts. The City should consider
having the software modified to fully integrate the 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.
In the current year, the City began utilizing the services of an outside
data processing firm for compilation of financial information. Timely reports
were not available for management to properly track financial condition. In
addition, the financial reports received contained numerous account
classification errors. We recommend the City require that timely financial
reports are issued and that upon receipt, the reports are reviewed for errors
with necessary corrective action taken.
DELINQUENT ACCOUNTS
The City should establish guidelines for review and collection of past due
accounts for garbage collection, and the water and sewer billings. These
accounts should be reviewed by the Director of Public Utilities on a regular
basis and appropriate action taken as neccessary.
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OTHER MATTERS (CONTINUED)
VACATION ACCRUAL
EXHIBIT II
.. During 1988, various employees' vacation accrual exceeded the maximum
allowed for carryover. The City should encourage all employees to use their
vacation time annually with arrangements made to have their work performed by
�. someone else during their absence. Internal control is strengthened because
employees do not maintain continuous control over their particular area of
responsibility. Also, this policy encourages the desirable practice of cross -
training of duties. This point was also noted in the prior year's letter.
CASH AND INVESTMENTS
The pension trust funds certificate of deposit at September 30, 1988 was not
maintained in a state qualified institution and was in excess of the federal
insurance limits for coverage without additional pledged security. Proper
research should be performed prior to deposit of City funds to insure that funds
are maintained in a properly secured account.
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.
DEPARTMENT OF BANKING AND FINANCE
The City has filed the annual financial report with the Department of
Banking and Finance. The report filed is in material agreement with the audited
financial statements for the same period.
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 meetings to further discuss progress and to resolve problems
that arise.
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EXHIBIT III
INTERNAL CONTROL
As part of an audit 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 was 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 any 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.