Audit Report 09.30.2014chy of Okeechobee
"Gateway to South Florida"
City Of Okeechobee, Florida
FINANCIAL STATEMENTS
For Year Ended September 30, 2014
CRIcARR
RIGGS &
INGRAM
CPAs and Advisors
CRIcpa.com 1 blog.cricpa.com
City of Okeechobee, Florida
Table of Contents
For the year ended September 30, 2014
Introductory Section
Title Page
Table of Contents
City Officials
Financial Section
Independent Auditors' Report
Management's Discussion and Analysis
Basic Financial Statements
Government -wide Financial Statements
• Statement of Net Position - Governmental Activities
• Statement of Activities - Governmental Activities
1
2
3
5
9
19
20
Fund Financial Statements
Governmental Funds
• Balance Sheet 21
• Statement of Revenues, Expenditures and Changes in Fund Balances 22
• Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund
Balances of Governmental Funds to the Statement of Activities 23
Fiduciary Funds (Component Units that are Fiduciary in Nature)
• Statement of Fiduciary Net Position - Pension Trust Funds 24
• Statement of Changes in Fiduciary Net Position - Pension Trust Funds 25
Notes to Financial Statements 27
Required Supplementary Information Other Than Management's Discussion and
Analysis
• Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and
Actual - General Fund 51
• Required Pension Supplementary Information - Schedule of Funding Progress 52
• Required Other Postemployment Benefits Supplementary Information - Schedule
of Funding Progress 53
• Notes to Required Supplementary Information 54
Reports on Internal Control and Compliance Matters
• Independent Auditors' Report on Internal Control Over Financial Reporting and on 55
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards
• Independent Auditors' Management Letter 57
• Independent Accountants' Report on Compliance with Local Government 59
Investment Policies
• Affidavit of Impact Fee Compliance 61
City of Okeechobee, Florida
City Officials
For the year ended September 30, 2014
James E. Kirk
Mayor, Chairman
Devin R Maxwell
Dowling R. Watford, Jr.
Clayton Williams
Mike O'Connor
Council Members
John R. Cook
City Attorney
Brian Whitehall
City Administrator
Lane Gamiotea
City Clerk
India Riedel
Finance Director
Herbert Smith
Chief of Fire
Denny Davis
Chief of Police
David Allen
Director of Public Works
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CRI
CARR
RIGGS &
INGRAM
CPAs and Advisors
INDEPENDENT AUDITORS' REPORT
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Report on the Financial Statements
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259 -8648 (fax)
www.cricpa.com
We have audited the accompanying financial statements of the governmental activities, each major
fund and the aggregate remaining fund information of the City of Okeechobee, Florida, as of and for
the year ended September 30, 2014, and the related notes to the financial statements, which
collectively comprise the City of Okeechobee, Florida's basic financial statements as listed in the
table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We did
not audit the financial statements of the Police Officers' and Firefighters' Pension Trust Funds and
the City of Okeechobee and Okeechobee Utilities Authority Employees' Retirement System, which
represent 100% of the assets, net position and additions of the pension trust fiduciary funds. Those
financial statements were audited by other auditors whose reports thereon have been furnished to
us, and our opinion, insofar as it relates to the Police Officers' and Firefighters' Pension Trust Funds
and the City of Okeechobee and Okeechobee Utilities Authority Employees' Retirement System is
based on the reports of the other auditors. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express
no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, based on our audit and the reports of other auditors, the financial statements
referred to above present fairly, in all material respects, the respective financial position of the
governmental activities, each major fund and the aggregate remaining fund information of the City
of Okeechobee, Florida, as of September 30, 2014, and the respective changes in financial position
thereof for the year then ended in conformity with accounting principles generally accepted in the
United States of America.
Change in Accounting Principle
As discussed in Note 1 E. to the financial statements, the City implemented the provisions of GASB
Statement 65, Items Previously Reported as Assets and Liabilities. Our opinions are not modified
with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis (pages 9 through 16), the budgetary comparison information
(page 51), and the pension and other postemployment benefits information (pages 52 through 54)
be presented to supplement the basic financial statements. Such information, although not a part
of the basic financial statements, is required by the Governmental Accounting Standards Board who
considers it to be an essential part of financial reporting for placing the basic financial statements in
an appropriate operational, economic or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of management
about the methods of preparing the information and comparing the information for consistency
with management's responses to our inquiries, the basic financial statements and other knowledge
we obtained during our audit of the basic financial statements. We do not express an opinion or
provide any assurance on the information because the limited procedures do not provide us with
sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Okeechobee, Florida's basic financial statements. The introductory
section is presented for purposes of additional analysis and is not a required part of the financial
statements.
The introductory section has not been subjected to the auditing procedures applied in the audit of
the basic financial statements, and accordingly, we do not express an opinion or provide any
assurance on it.
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Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 26,
2015 on our consideration of the City of Okeechobee, Florida's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements and other matters. The purpose of that report is to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards
in considering the City of Okeechobee, Florida's internal control over financial reporting and
compliance.
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Melbourne, Florida
May 26, 2015
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City of Okeechobee, Florida
Management's Discussion and Analysis
Our discussion and analysis of the City of Okeechobee, Florida's (the City's) financial performance
provides an overview of the City's financial activities for the year ended September 30, 2014.
Please read it in conjunction with the City's basic financial statements, which immediately follow
this discussion.
FINANCIAL HIGHLIGHTS
The following are highlights of financial activity for the year ended September 30, 2014:
• The City's total assets exceeded its liabilities at September 30, 2014 by $18,764,230.
• The City's total revenues were $6,121,830 for the year ended September 30, 2014,
compared to total expenses of $6,328,282, which resulted in a $206,452 decrease in
net position.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the City's basic financial
statements. The basic financial statements are comprised of three components: 1) government -
wide financial statements, 2) fund financial statements and 3) notes to basic financial statements.
A. Government -Wide Financial Statements
The government -wide financial statements, which consist of the following two statements, are
designed to provide readers with a broad overview of the City's finances, in a manner similar to a
private sector business.
The statement of net position presents information on all of the City's assets and liabilities, with the
difference between the two reported as net position. Over time, increases or decreases in net
position may serve as a useful indicator of whether the financial position of the City is improving or
deteriorating.
The statement of activities presents information showing how the City's net position changed
during the year. All changes in net position are reported as soon as the underlying event giving rise
to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses
are reported in this statement for some items that will only result in cash flows in future fiscal
periods.
The government -wide financial statements can be found on pages 19 and 20 of this report.
B. Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have
been segregated for specific activities or objectives. The City's funds can be divided into two fund
types: governmental funds and fiduciary funds.
City of Okeechobee, Florida
Management's Discussion and Analysis
B. Fund Financial Statements (Continued)
Governmental funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government -wide financial statements. However, unlike
the government -wide financial statements, governmental fund financial statements focus on near -
term inflows and outflows of spendable resources, as well as balances of spendable resources
available at the end of the year. Such information may be useful in evaluating a government's near -
term financing requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government -wide financial statements. By
doing so, readers may better understand the long -term impact of the City's near -term financing
decisions. Both the governmental fund balance sheet and the statement of revenues, expenditures
and changes in fund balances provide reconciliations to facilitate this comparison between
governmental funds and governmental activities.
The basic governmental fund financial statements can be found on pages 21 through 23 of this
report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties
outside the government. Fiduciary funds are not reflected in the government -wide financial
statements because the resources of those funds are not available to support the City's own
progra ms.
The basic fiduciary fund financial statements can be found on pages 24 and 25 of this report.
C. Notes to Basic Financial Statements
The notes provide additional information that is essential for a full understanding of the data
provided in the government -wide and fund financial statements. The notes to basic financial
statements can be found on pages 27 through 47 of this report.
City of Okeechobee, Florida
Management's Discussion and Analysis
GOVERNMENT -WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of financial position. The
following table reflects the condensed government -wide statement of net position.
City of Okeechobee
Statement of Net Position
2014 2013:
Current and other assets $ 12,409,848 $ 12,643,327
Capital assets 7,940,985 7,670,339
Total assets 20,350,833 20,313,666
Current liabilities 355,696 * 320,408
Noncurrent liabilities 1,184,820 980,919
Total liabilities 1,540,516 1,301,327
Deferred inflows 46,087 * 41,657
Net position:
Net investment in capital assets 7,940,985 7,670,339
Restricted 750,171 860,740
Unrestricted 10,073,074 10,439,603
Total net position $ 18,764,230 $ 18,970,682
Governmental Activities
Total net position decreased by $206,452 primarily as a result of a $37,167 increase in total assets,
and a $243,619 increase of total liabilities and deferred inflows. The increase in total assets was
primarily due to a $270,646 increase in capital assets offset by a $233,479 decrease in current and
other assets. The increase in total liabilities was due to a $203,901 increase of noncurrent liabilities
due mainly to increases in the net OPEB obligation. The net change in current and noncurrent
liabilities was $239,189 as current liabilities increased by $35,288 related to the timing of payables.
*Reclassed to be consistent with 2014 presentation.
City of Okeechobee, Florida
Management's Discussion and Analysis
The following table shows condensed revenue and expense data:
City of Okeechobee, Florida
Statement of Activities
2014 2013
REVENUES:
Program revenues:
Charges for services $ 586,335 $ 609,205
Operating grants and contributions 742,240 729,829
Capital grants and contributions 474,276 565,863
General revenues:
Property taxes 1,771,380 1,786,371
Public utility taxes 775,701 776,493
Franchise fees 515,186 476,697
Shared revenues 1,194,111 1,121,364
Investment income and other 62,601 43,651
Total revenues 6,121,830 6,109,473
EXPENSES:
General government 1,188,276 1,107,412
Public safety 3,450,010 3,302,097
Transportation 656,722 632,237
Physical environment 1,021,989 1,447,161
Economic development 11,285 -
Total expenses 6,328,282 6,488,907
Change in net position
Net position, beginning
Net position, ending
(206,452) (379,434)
18,970,682 19,350,116
$ 18,764,230 $ 18,970,682
The City experienced an increase of less than 1% in total revenues — a $12,357 increase to $6.12
million. The increase is primarily due to a $114,403 increase in general revenues and is offset by a
$91,587 decrease in capital grants funded by the Small Cities Community Development Block Grant
Program. A decrease in the assessed taxable values was the contributory factor in the reduction of
property tax revenue of $14,991. Franchise Fee revenues increased $38,489 based on higher
consumer paid utilities. The Shared Revenue for the State of Florida (SRS) increased approximately
$72,747. The $18,950 increase in investment income is due primarily to an increase in the value of
the State Board Account investment accounts. Total expenses decreased $160,625 due primarily to
the reduction and the end of the rehabilitation grant and the economic grant and was offset by
higher public safety costs, transportation costs, economic development costs and general services.
City of Okeechobee, Florida
Management's Discussion and Analysis
FUND FINANCIAL ANALYSIS
As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with
finance - related legal requirements.
Governmental funds. The focus of the City's governmental funds is to provide information on
near -term inflows, outflows and balances of spendable resources. Such information is useful in
assessing the City's financing requirements. In particular, unassigned fund balance may serve as
a useful measure of a government's net resources available for spending at the end of the fiscal
year.
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund
balances of $11,432,851, a decrease of $253,348 in comparison with the prior year. Approximately
79.6% of this total amount $9,102,069, constitutes unassigned fund balance, which is available for
spending at the government's discretion. Assigned fund balances include $1,110,541 for subsequent
year's expenditures, $373,162 for future capital projects and $63,514 for future qualified impact fee
expenditures. Public Facilities fund balance of $745,060 plus law enforcement $5,111 are restricted
funds based on their specific stipulated purpose. The remainder of fund balance is non - spendable
inventory of $32,764.
The general fund is the chief operating fund of the City. At the end of the current fiscal year,
assigned and unassigned fund balance of the general fund was $10,673,115 while total fund
balance was $11,450,939. As a measure of the general fund's liquidity, it may be useful to compare
both assigned and unassigned fund balance and total fund balance to total fund expenditures. The
total assigned and unassigned fund balance and total fund balance represent approximately 177%
and 190% respectively of total general fund expenditures.
The community development and appropriations grant capital project funds, both major funds, had
no fund balance. Revenues from grants were used in the construction of infrastructure and other
improvements in the City.
The FDOT grant capital project fund, a major fund, recorded a year -end fund balance deficit of
$86,713. Additional information on the fund equity can be found in Note 1.D. on pages 33 and 34 of
this report. Revenues from the FDOT grant were used in the construction of infrastructure and
other improvements to roadways, rights -of -way and medians in the City.
General Fund Budgetary Highlights
The amount appropriated for expenditures in the original 13/14 budget decreased from $6,788,857
to $6,155,152 in the final 13/14 budget, a decrease of $633,705. The decrease in general
government expenses, fire and police public safety expenses, physical environment expenses and
transportation expenses largely contributed to the overall decrease in expenditures.
City of Okeechobee, Florida
Management's Discussion and Analysis
CAPITAL ASSETS AND LONG -TERM LIABILITIES
Capital assets. The City's investment in capital assets as of September 30, 2014, amounted to
$7,940,985 (net of accumulated depreciation). This investment in capital assets includes land,
buildings, improvements, equipment and construction in progress. During the year, the City's net
capital asset balance increased $270,646.
The City's major additions of $1,092,390 to capital assets during the current fiscal year included the
following:
• Replacement computers for (4)- Police Department, and (1) tablet for
administration use
• Replacement windows of Police Department and Chamber buildings
• Renovations related to upgrading the City Hall kitchen
• Replaced 13 police vehicles including equipment
• Replacement bunker gear for firefighters
• Various equipment for Public Works and the Fire Department
• Replacement trucks within the Public Works Department
• Mobile vehicle radio for Public Works
• 12 trash receptacles
• Various infrastructure improvements including the SR70 roadway improvement,
Taylor Creek Canal (stormwater retrofit) and sidewalk improvements
• Construction in progress — Highway 441/SR70 crosswalks
These additions were offset by depreciation expense of $542,457, and disposals with a net book
value of $279,287, which largely relates to the sale of 13 police vehicles.
City of Okeechobee, Florida
Management's Discussion and Analysis
City's Capital Assets
(net of depreciation)
Land
Construction in progress
Buildings
Improvements other than
buildings
Equipment
Total
2014 2013
$ 1,378,744 $ 1,378,744
72,114 -
1,145,751 1,158,562
4,285,758 4,023,525
1,058,618 1,109,508
$ 7,940,985 $ 7,670,339
Additional information on the City's capital assets can be found in Note 4.C. on page 38 of this
report.
Long -term Liabilities
City's Outstanding Debt
Long -term Liabilities
Net OPEB obligation
Compensated absences
Total
2014 2013
$ 811,717 $ 628,643
373,103 352,276
$ 1,184,820 $ 980,919
The City's long -term liabilities increased by $203,901 during the current fiscal year. The largest
contributing factor is the additional liability for the OPEB liability of $183,074. This is the fourth year
of implementation of GASB 45, which caused the increase in Net OPEB liability.
Additional information on the City's long -term debt can be found in Note 4.E. on page 39 of this
report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The City Council adopted a millage rate 7.7432 for budget year 2015. The adopted millage rate is
less than 1% of the roll -back rate. A $10,495 increase in budgeted ad valorem revenue for the new
year is due to new construction added to this years assessed tax rolls.
Revenues for the fiscal year 2015 adopted budget for all funds of the City total approximately
$6,030,625, a decrease from the prior year budget of approximately $20,400. These revenues
include the General, Public Facility, Capital Projects and Special Law Enforcement fund revenues.
The change in revenue is based mostly on the expected decrease in grant funds provided for
economic development.
City of Okeechobee, Florida
Management's Discussion and Analysis
Expenditures for the fiscal year 2015 adopted budget for all funds of the City total approximately
$8,001,540, an increase of less than 2 %, $195,463 from the prior year budget. The increase in
expenditures is based mostly on the increase in grant expenditures .
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the City of Okeechobee's finances
for all those with an interest. Questions concerning any of the information provided in this report
or requests for additional information should be addressed to the City of Okeechobee, 55 S.E. Third
Avenue, Okeechobee, Florida 34974.
BASIC FINANCIAL STATEMENTS
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City of Okeechobee, Florida
Statement of Net Position - Governmental Activities
September 30, 2014
ASSETS
Cash and cash equivalents $ 11,283,562
Accounts receivable 100,506
Due from other governments 417,802
Inventory 32,764
Overfunded pension costs 575,214
Capital assets:
Nondepreciable
Land 1,378,744
Construction in progress 72,114
Depreciable, net of accumulated depreciation
Buildings 1,145,751
Improvements other than buildings 4,285,758
Equipment 1,058,618
Total assets 20,350,833
LIABILITIES
Accounts payable 166,228
Accrued expenses 189,468
Noncurrent liabilities:
Due within one year 155,500
Due in more than one year 1,029,320
Total liabilities 1,540,516
DEFERRED INFLOWS OF RESOURCES
Deferred revenue - business tax revenue
Total deferred inflows of resources
46,087
46,087
NET POSITION
Net investment in capital assets 7,940,985
Restricted for:
Law enforcement 5,111
Public facilities 745,060
Unrestricted 10,073,074
Total net position $ 18,764,230
The accompanying notes are an integral part of these financial statements.
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Year ended September 30, 2014
Functions /Programs
City of Okeechobee, Florida
Statement of Activities - Governmental Activities
Program Revenues
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions
Net (Expense)
Revenue and
Changes in
Net Position
General government
Public safety
Transportation
Physical environment
Economic environment
Total governmental
activities
$ 1,188,276
3,450,010
656,722
1,021,989
11,285
$ 548,093
18,626
19,616
$ 120,874
1,886
619,480
$ 248,500
225,776
$ 6,328,282 $ 586,335 $ 742,240 $ 474,276
$ (270,809)
(3,429,498)
(17,626)
(796,213)
(11,285)
(4,525,431)
General revenues:
Property taxes
Public utility taxes
Franchise fees
Shared revenues not restricted to specific programs
Unrestricted investment earnings
Miscellaneous
Total general revenues
Change in net position
Net position, beginning
Net position, ending
1,771,380
775,701
515,186
1,194,111
6,844
55,757
4,318,979
(206,452)
18,970,682
$ 18,764,230
The accompanying notes are an integral part of these financial statements.
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September 30, 2014
ASSETS
Cash and cash equivalents
Accounts receivable
Due from other funds
Due from other governments
Inventory
Total assets
General
City of Okeechobee, Florida
Balance Sheet - Governmental Funds
Community
Development
Capital Project
Appropriations
Grant
Capital Project
FDOT
Grant Nonmajor
Capital Project Funds
Total
Governmental
Funds
$ 11,046,122
100,506
504,028
169,302
32,764
$ 11,852,722
$ 150,528
$ 150,528
248,500
$ 248,500
$ 18,287 $ 68,625 $ 11,283,562
100,506
504,028
417,802
32,764
$ 18,287 $ 68,625 $ 12,338,662
LIABILITIES, DEFERRED INFLOWS AND FUND
Liabilities
Accounts payable
Accrued expenses
Due to other funds
Total liabilities
Deferred inflows of resources:
Deferred revenue - business tax revenue
Fund balances:
Nonspendable for:
Inventory
Restricted for:
Public facilities
Law enforcement
Assigned for:
Subsequent year's expenditures
Future capital projects
Impact fees
Unassigned
Total fund balances (deficit)
Total liabilities, deferred inflows of
resources and fund balances
BALANCES
$ 166,228 $
189,468
355,696
150,528
150,528
248,500 105,000
248,500 105,000
46,087
32,764
745,060
1,110,541
373,162
9,189,412
11,450,939
$ 11,852,722 $ 150,528
$ 248,500
5,111
63,514
(86,713)
(86,713) 68,625
$ 18,287 $ 68,625
Amounts reported for governmental activities in the statement
of net position are different because:
Negative net pension obligation resulting from overfunding of
the police officers' and firefighters' pension plans.
Capital assets used in governmental activities are not financial
resources and, therefore, are not reported in the funds.
Long -term liabilities, including the net OPEB obligation
and compensated absences are not due and payable in the
current period and, therefore, are not reported in the funds.
Net position of governmental activities
$ 166,228
189,468
504,028
859,724
46,087
32,764
745,060
5,111
1,110,541
373,162
63,514
9,102,699
11,432,851
575,214
7,940,985
(1,184,820)
$ 18,764,230
The accompanying notes are an integral part of these financial statements.
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City of Okeechobee, Florida
Statement of Revenues, Expenditures and Changes in Fund Balances -
Governmental Funds
Year ended September 30, 2014
Community Appropriations FDOT
Development Grant Grant
General Capital Project Capital Project Capital Project
Nonmajor
Funds
Total
Governmental
Funds
Revenues
Taxes
Intergovernmental
Charges for services
Permits and fees
Fines and forfeitures
Miscellaneous
Total revenues
$ 2,493,500 $
2,091,319
398,759
579,075
19,493
55,682
5,637,828 225,776
225,776
248,500
248,500
2,750
57
2,807
$ 2,493,500
2,565,595
398,759
579,075
22,243
55,739
6,114,911
Expenditures
Current:
General government
Public safety
Transportation
Physical environment
Capital outlay
Total expenditures
Deficiency of revenues
under expenditures
1,072,242
3,124,312
1,000,849 -
204,786 17,913
629,491 211,865
6,031,680 229,778
(393,852) (4,002)
Other financing sources (uses)
Transfers in
Transfers out
Proceeds from sale of capital assets
Total other financing sources (uses)
Net change in fund balances
Fund balances, beginning of year
Fund balances (deficit), end of year
57
(28,785)
260,604
231,876
(161,976)
11,612,915
$11,450,939
(4,002)
4,002
11,285 104,213
248,500
259,785 104,213
(11,285) (104,213)
11,285 17,500
11,285 17,500
(86,713)
$ $ (86,713)
1,072,242
873 3,125,185
1,000,849
338,197
2,534 1,092,390
3,407 6,628,863
(600) (513,952)
28,842
(57) (28,842)
260,604
(57) 260,604
(657) (253,348)
69,282 11,686,199
$ 68,625 $ 11,432,851
The accompanying notes are an integral part of these financial statements.
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City of Okeechobee, Florida
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund
Balances of Governmental Funds to the Statement of Activities
Year ended September 30, 2014
Net change in fund balances - total governmental funds
Amounts reported for governmental activities in the statement of activities
are different because:
Governmental funds report capital outlays as expenditures. However, in
the statement of activities, the cost of those assets is allocated over
their estimated useful lives as depreciation expense. This is the
amount by which capital outlay exceeded depreciation in the current
period.
In the statement of activities, only the gain (loss) on the sale of capital assets is
reported. However, in the governmental funds, the proceeds from the sale
increase financial resources. Thus, the change in net position differs from the
change in fund balance by the net book value of the disposed capital assets.
The net effect of overfunded pension contributions that are reported as
expenditures in the fund financial statements and are recorded
as a net pension asset on the statement of net position.
Other postemployment benefit obligation reported in the statement of activities
does not require the use of current financial resources; therefore, is not
reported as an expenditure in governmental funds.
Compensated absences are reported in the statement of activities when earned.
As they do not require the use of current financial resources, they are not
reported as expenditures on governmental funds until they have matured.
This is the amount of compensated absences reported in the statement of
activities in the prior year that has matured in the current year.
$ (253,348)
549,933
(279,287)
(19,849)
(183,074)
(20,827)
Change in net position of governmental activities $ (206,452)
The accompanying notes are an integral part of these financial statements.
- 23 -
September 30, 2014
City of Okeechobee, Florida
Statement of Fiduciary Net Position - Pension Trust Funds
Pension
Trust Funds
ASSETS
Cash equivalents
Investments:
Mutual funds
Common equity securities
Receivables
Accrued interest and dividends
Total assets
$ 463,780
13,714,063
6,770,251
167,322
11,916
21,127,332
LIABILITIES
Accounts payable
Total liabilities
15,317
15,317
NET POSITION
Held in trust for pension benefits $ 21,112,015
The accompanying notes are an integral part of these financial statements.
- 24 -
City of Okeechobee, Florida
Statement of Changes in Fiduciary Net Position - Pension Trust Funds
.W Year ended September 30, 2014
Pension
Trust Funds
ADDITIONS
Contributions:
State
City
Employees
Total contributions
Investment earnings:
Net appreciation in the
fair value of investments
Interest and dividends
Total investment earnings
Less investment expenses
Net investment earnings
$ 120,874
661,675
243,732
1,026,281
1,675,028
416,062
2,091,090
(111,153)
1,979,937
Total additions 3,006,218
DEDUCTIONS
Benefits paid to participants 579,755
Refunds on termination 58,072
DROP payment 57,353
Administrative expenses 51,069
Total deductions 746,249
Change in net position 2,259,969
Net position held in trust for pension
benefits, beginning of year 18,852,046
Net position held in trust for pension
benefits, end of year $ 21,112,015
The accompanying notes are an integral part of these financial statements.
- 25 -
THIS PAGE IS INTENTIONALLY LEFT BLANK.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. REPORTING ENTITY
The City of Okeechobee (the "City") 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: general government, public safety, transportation
and physical environment.
These financial statements present the primary government and its component units. Blended
component units, although legally separate entities, are, in substance, part of the government's
operations and so data from these units are combined with data of the primary government.
Discretely presented component units are entities that are legally separate from the City, but whose
relationship with the City are such that the exclusion would cause the City's financial statements to be
misleading or incomplete. The City has no discretely presented component units.
The City reports the following blended component units:
Municipal Firefighters' Pension Trust Fund — The fund is under the supervision of a five member local
independent Board of Trustees who are selected for office under the provisions of Florida Statutes,
Chapter 175. The Board of Trustees cannot amend the provisions of the plan without the approval of
the City Council. This plan covers all full -time firefighters of the City. The City funds the plan according
to any contribution deficit as determined by actuarial valuation for the plan beyond the contributions
by employees and the State Insurance Premium Tax Contribution. It is accounted for in the Pension
Trust funds.
Municipal Police Officers' Pension Trust Fund — The fund is under the supervision of a five member
local independent Board of Trustees who are selected for office under the provisions of Florida
Statutes, Chapter 185. The Board of Trustees cannot amend the provisions of the plan without the
approval of the City Council. This plan covers all full -time sworn officers of the City. The City funds the
plan according to any contribution deficit as determined by actuarial valuation for the plan beyond the
contributions by employees and the State Insurance Premium Tax Contribution. It is accounted for in
the Pension Trust funds.
The City of Okeechobee and Okeechobee Utility Authority Employees' Retirement System — The fund
is under the supervision of a five member local independent Board of Trustees. The Board of Trustees
cannot amend the provisions of the plan without the approval of the City Council. This plan benefits
the City general employees and the Okeechobee Utility Authority employees. The City and the Utility
Authority fund the plan. The fund was presented as a discretely presented component unit in the
2013 basic financial statements. It is accounted for in the Pension Trust funds in 2014 as the City does
have fiduciary responsibility.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
B. GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
The government -wide financial statements (i.e., the statement of net position and the statement of
changes in net position) report information on all of the nonfiduciary activities of the primary
government. Governmental activities are those which normally are supported by taxes and
intergovernmental revenues. Likewise the primary government is reported separately from certain
legally separate component units for which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given
function are offset by program revenues. Direct expenses are those that are clearly identifiable with
a specific function. Program revenues include 1) charges to customers or applicants who purchase,
use or directly benefit from goods, services or privileges provided by a given function or segment
and 2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function. Taxes and other items not properly included among program
revenues are reported instead as general revenues.
The government -wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the fiduciary fund financial
statements. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues
in the year for which they are levied. Grants and similar items are recognized as revenue as soon as
all eligibility requirements imposed by the provider have been met.
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough thereafter to pay liabilities of the
current period. For this purpose, the government considers revenues to be available if they are
collected within 60 days of the end of the current fiscal period. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and
judgments, are recorded only when payment is due.
Property taxes, franchise taxes, licenses, charges for services and interest associated with the
current fiscal period are all considered to be susceptible to accrual and so have been recognized
as revenues of the current fiscal period. All other revenue items are considered to be measurable
and available only when cash is received by the government.
The City reports the following major governmental funds:
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION
(Continued)
The general fund is the City's primary operating fund. It accounts for all financial resources of
the general government, except those required to be accounted for in another fund.
The community development capital project fund accounts for the financial resources related
to the construction of infrastructure and other improvements in the City.
The appropriations grant capital project fund accounts for the financial resources related to
the construction of infrastructure and other improvements in the City provided by specific
grants and matching funds.
The FDOT grant capital project fund accounts for the financial resources related to the
construction of infrastructure and other improvements to roadways, right -of -way of roads
and /or medians of roads in the City.
The City reports the following nonmajor governmental funds:
The impact fees capital project fund accounts for the City's collection and expenditure of
impact fees, which are restricted to be spent on capital projects related to law enforcement,
fire protection and transportation.
The law enforcement special revenue fund accounts for the assets that are restricted to fund
certain expenditures of the City's police department.
Additionally, the City reports the following fund types:
The pension trust fund account is used to account for assets held by the City in a fiduciary
capacity for the general employees', police officers' and firefighters' pension plans. The funds
are operated by carrying out specific terms of statutes, ordinances and other governing
regulations.
The effect of interfund activity has been eliminated from the government -wide financial
statements.
Amounts reported as program revenues include 1) charges to customers or applicants for goods,
services or privileges provided, 2) operating grants and contributions and 3) capital grants and
contributions. Internally dedicated resources are reported as general revenues rather than as pro-
gram revenues. Likewise, general revenues include all taxes.
Expenses for compensated absences are allocated based on the assigned function of the related
employee.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
restricted resources first, then unrestricted resources as they are needed.
- 29 -
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY
1. Cash and investments
The investment of municipal funds is authorized by local ordinance and Florida Statutes, which allow
the City to invest in the Local Government Surplus Funds Trust Fund or any intergovernmental
investment pool authorized pursuant to the Florida Interlocal Cooperation Act, SEC registered money
market funds with the highest credit quality rating, interest - bearing time deposits or savings accounts
in qualified public depositories, direct obligations of the U.S. Treasury, commercial paper with certain
ratings, pre- refunded municipal obligations, banker's acceptances maturing within one year,
investment agreements, direct and general long -term and short -term obligations of any state with
proper credit rating and full faith and credit pledge, municipal obligations with proper credit rating
and repurchase agreements with maturities of 30 days or Tess with organizations with certain
stipulations and requirements.
The City invests certain surplus funds in an external investment pool, the Local Government Surplus
Funds Trust Fund (the "State Pool "). The State Pool is administered by the Florida State Board of
Administration ( "SBA "), who provides regulatory oversight. On September 30, 2008, the SBA reported
that the State Pool was exposed to potential risks due to indirect exposure in the sub -prime mortgage
financial market. Consequently, the SBA placed some restriction on how participants could access
portions of their surplus funds and ultimately restructured the State Pool into two separate pools
( "Florida PRIME" (formerly "LPIG ") and "Fund B "). In fiscal year 2014 the SBA distributed the principal
Fund B balances in full to each Fund B participant, and the weighted average life of the fund's assets is
effectively zero and is considered closed.
The Florida PRIME has adopted operating procedures consistent with the requirements for a 2a7 -like
fund. The City's investment in the Florida PRIME is reported at amortized cost. The fair value of the
City's position in the pool is equal to the value of pooled shares.
The City pools the investments of its governmental funds. Investment earnings of the pool are
allocated to the participating funds at the end of each month based on the ratio of each participant
funds' investment to the total pooled investment.
Cash and cash equivalents include cash deposits, cash funds held in broker accounts and investments
held in the Local Government Surplus Funds Trust Fund (Florida PRIME).
Within the firefighters', police officers' and general employees' pension trust funds, plan assets are
managed by Bowen, Hanes and Company. The plans follow the investment guidelines as established
within the ordinance. The pension trust funds are allowed to invest in the State Pool; obligations of
the U.S. Government or agencies thereof; banking institutions within the state and other such
institutions within the guidelines of the state statutes which are insured by the Federal Deposit
Insurance Corporation; investments agreements; direct and general long -term obligations of any state
with proper credit rating and full faith and credit pledge; municipal obligations with proper credit
rating; annuity and life insurance contracts; bonds issued by the State of Israel; and stocks, bonds, and
- 30 -
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued)
1. Cash and investments (continued)
commingled funds administered by National or State banks or evidences of indebtedness issued or
guaranteed by a corporation organized under the laws of the United States, provided that the
corporation is listed on a nationally recognized exchange and holds proper credit ratings as set forth
by a major credit rating service. These equity investments are not to exceed 60% of the assets of the
pension trust funds on a cost basis. Temporary investment funds held by the custodian in a money
market fund are classified as cash equivalents within the investment account.
Pension trust fund investments are reported at fair value. Short -term investments are reported at
cost, which approximates fair value. Securities traded on a national or international exchange are
valued at the last reported sales price. Shares of mutual funds, including proprietary funds and
common and collective funds, are valued at quoted market prices, which represent the net asset
value of shares held by the pension trust fund at year end. Interest is recognized when earned.
Gains and losses from the sale or exchange of investments are recognized on the transaction date.
The difference between the excess of fair value over cost represents unrealized gains.
2. Receivables and payables
All trade and property tax receivables are considered to be fully collectible.
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. Tax collections by the Okeechobee County tax collector begin in
November of each year with a due date of March 31 of the following year. All property taxes
remaining unpaid at May 30 are subject to a tax certificate sale.
The City is permitted by State law to levy taxes up to 10 mills on assessed valuation. During a
Special Session in June, 2007, the Florida Legislature adopted HB1B which limits municipal property
tax rates beginning in the 2008 fiscal year. This legislation established reductions in the millage rate
based on a calculated growth in per capita taxes between the 2002 and 2007 fiscal years. The
Legislature did authorize local governments to use the rolled back millage rate if approved by a
super majority vote of the governing body. The Okeechobee City Council levy for the fiscal year
ended September 30, 2014 was 7.7432 mills, which is 5.84% less than the rolled back rate.
The City Council determines the millage rates and adopts a tax levy by resolution prior to September
30 to fund the next ensuing fiscal year's budget. The assessment of all properties and collection of
municipal taxes are provided by the County's Property Appraiser and Tax Collector. The ad valorem
tax calendar is as follows:
Lien date
Levy date
Due date
Delinquent date
- January 1
- Prior to September 30
- November 1
- April 1
All property taxes remaining unpaid at May 30 are subject to a tax certificate sale by the Tax Collector.
- 31 -
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued)
3. Inventory
Inventories are valued at cost which approximates market, using the first -in /first -out (FIFO) method.
The costs of inventories are recorded as expenditures when used (consumption method).
4. Capital assets
Capital assets, which include: property, plant, equipment and infrastructure assets (e.g., roads,
bridges, sidewalks and similar items), are reported in the government -wide financial statements.
Capital assets are defined by the government as assets with an initial, individual cost of more than
$500 and an estimated useful life in excess of one year. Such assets are recorded at historical cost
or estimated historical cost if purchased or constructed. Donated capital assets are recorded at
estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend assets' lives are not capitalized. Major outlays for capital assets and improvements are
capitalized as projects are constructed.
Property, plant and equipment are depreciated using the straight -line method over the following esti-
mated useful lives:
Assets Years
Buildings 25 -60
Building improvements 12 -20
Vehicles 10
Equipment 5 -15
5. Compensated absences
It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay
benefits. All sick and vacation pay is accrued when incurred in the government -wide financial
statements. A liability for these amounts is reported in governmental funds only if they have
matured, for example, as a result of employee resignations and retirements.
6. Deferred inflows of resources
Resources received before time requirements were met, which were previously reported as
unearned revenue liabilities in the governmental funds, are now classified as deferred inflows of
resources due to the implementation of GASB Statement No. 65.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued)
7. Long -term obligations
In the government -wide financial statements, Tong -term debt and other long -term obligations are
reported as liabilities in the statement of net position.
In the governmental fund financial statements, the face amount of debt issued is reported as other
financing sources.
8. Fund equity
The governmental fund financial statements present fund balances based on classifications that
comprise a hierarchy that is based primarily on the extent to which the City is bound to honor
constraints on the specific purposes for which amounts in the respective governmental funds can be
spent. The classifications used in the governmental fund financial statements are as follows:
Nonspendable Fund Balance — Amounts that are (a) not in spendable form or (b) legally or
contractually required to be maintained intact. "Not in spendable form" includes items that are not
expected to be converted to cash (such as inventories and prepaid amounts) and items such as long-
term amounts of loans and notes receivables, as well as property acquired for resale. The corpus (or
principal) of a permanent fund is an example of an amount that is legally or contractually required to
be maintained intact.
Restricted Fund Balance — Amounts that can be spent only for specific purposes stipulated by (a)
external resource providers such as creditors (by debt covenants), grantors, contributors or laws or
regulations of other governments; or (b) imposed by law through constitutional provisions or
enabling legislation.
Committed Fund Balance — Amounts that can be used only for the specific purposes determined by a
formal action (resolution) of the Council, the Council's highest level of decision making authority.
Commitments may be changed or lifted only by the council taking the same formal action (resolution)
that imposed the constraint originally. The City had no committed fund balance at year end.
Assigned Fund Balance — Includes spendable fund balance amounts established by the City
Administrator or the Council that are intended to be used for specific purposes that are neither
considered restricted or committed.
Unassigned Fund Balance — Unassigned fund balance is the residual classification for the general
fund. This classification represents fund balance that has not been assigned to other funds and that
has not been restricted, committed or assigned to specific purposes within the general fund.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. ASSETS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION OR EQUITY (Continued)
8. Fund equity (continued)
Unassigned fund balance may also include negative balances for any governmental fund if
expenditures exceed amounts restricted, committed or assigned for those specific purposes.
The City would typically use restricted fund balances first, followed by committed resources and
then assigned resources, as appropriate opportunities arise, but reserves the right to selectively
spend unassigned resources first to defer the use of these other classified funds.
Fund Deficit — The FOOT grant capital project fund had a deficit of $86,713 at September 30, 2014.
This deficit is due to expenditures exceeding revenues. The City intends to cover this deficit in 2015
with future years' anticipated reimbursement funds from the Florida Department of Transportation
through the Florida Highway Beautification Council (FHBC) Grant.
E. ACCOUNTING CHANGES
The City has implemented GASB Statement No. 65, "Items Previously Reported as Assets and
Liabilities", which amends or supersedes the accounting and financial reporting guidance for certain
items previously required to be reported as assets or liabilities. The Statement requires
governments to either properly classify certain items that were previously reported as assets or
liabilities as deferred outflows of resources or deferred inflows of resources, or recognize certain
items that were previously reported as assets and liabilities as outflows of resources (expenses) or
inflows of resources (revenues).
Implementation requires the City to analyze items previously reported as "deferred." The City
reclassified unavailable revenues in governmental funds and resources received before time
requirements were met to deferred revenues in the deferred inflows of resources category.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 2: RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE
SHEET AND THE GOVERNMENT -WIDE STATEMENT OF NET POSITION
The governmental fund balance sheet includes a reconciliation between fund balance -total
governmental funds and net position - governmental activities as reported in the government -wide
statement of net position. One element of that reconciliation states that "long -term liabilities,
including the net OPEB obligation and compensated absences, are not due and payable in the current
period and, therefore, are not reported in the funds." The details of this $(1,184,820) difference are as
follows:
Net OPEB obligation
Compensated absences
Net adjustment to reduce fund balance - total governmental funds to
arrive at net position - governmental activities
$ (811,717)
(373,103)
$ (1,184,820)
B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND STATEMENT
OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES AND THE GOVERNMENT -WIDE
STATEMENT OF ACTIVITIES
The governmental fund statement of revenues, expenditures and changes in fund balances includes
a reconciliation between net changes in fund balances - total governmental funds and changes in
net position of governmental activities as reported in the government -wide statement of activities.
One element of that reconciliation explains that "governmental funds report capital outlays as
expenditures. However, in the statement of activities, the cost of those assets is allocated over
their estimated useful lives as depreciation expense." The details of this $549,933 difference are as
follows:
Capital outlay
Depreciation expense
Net adjustment to increase net changes in fund balances - total
governmental funds to arrive at changes in net position of governmental
activities
$ 1,092,390
(542,457)
$ 549,933
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 3: STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. BUDGETARY INFORMATION
As permitted by GASB Statement No. 34, Basic Financial Statements and Management Discussion
and Analysis for State and Local Governments, the City has elected to disclose all budgetary
information in the notes to the required supplementary information.
NOTE 4: DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
At September 30, 2014, the City's carrying amount of deposits was $11,283,188 and the bank
balance was $11,365,732. In addition, the City maintained $324 of petty cash. As of September 30,
2014, $250,000 of the City's bank balances are covered by federal depository insurance (FDIC).
Monies invested in amounts greater than the insurance coverage are secured by the qualified
public depositories pledging securities with the State Treasurer in such amounts required by the
Florida Security for Public Depositories Act. In the event of a default or insolvency of a qualified
public depositor, the State Treasurer will implement procedures for payment of losses according to
the validated claims of the City pursuant to Section 280.08, Florida Statutes.
At September 30, 2014, the City had the following investments:
Investment type
Fair Value
Investment Maturities (in years)
Less than l 1 - 5
More
6 - 10 than 10 Rating Agency
Primary government:
SBA (Florida Prime)
$ 50 $
Pension trust funds:
Money market fund
Mutual funds
Common equity securities - domestic
Common equity securities- foreign
$ 463,780
13,714,063
6,567,536
202,715
$ 20,948,094
$
463,780
6,567,536
202,715
$ 7,234,031
$
$ - $
13,714,063
$
$ 13,714,063 $
Credit risk
AAAm S &P
Not rated
BBB - AA
Not rated
Not rated
Fixed income securities have inherent financial risks, including credit risk and interest rate risk. Credit
risk for fixed income securities is the risk that the issuer will not fulfill its obligations. The City's
investment policy and the investment policies for the firefighters', police officers' and general
employees' pension trust funds limit investments to securities with specific ranking criteria.
- 36 -
S &P
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
A. DEPOSITS AND INVESTMENTS (Continued)
Interest rate risk
Interest rate risk exists when there is a possibility that changes in interest rates could adversely affect
an investment's fair value. In accordance with Florida Statute 218.415(6), the City's policy is to
match investment maturities with known cash needs and anticipated cash flow requirements. The
City's pension trust funds do not address interest rate risk.
Concentration of credit risk
Concentration of credit risk is an increased risk of loss that occurs as more investments are
acquired from one issuer (i.e. lack of diversification). The City's investment policy and the
investment policies for the firefighters', police officers' and general employees' pension trust funds
do not specifically address concentration of credit risk.
Foreign currency risk
The City's firefighters', police officers' and general employees' pension trust funds contain
investments in foreign corporate bonds; however, all of the investments are denominated in U.S.
dollars and are not exposed to foreign currency risk.
B. RECEIVABLES
Receivables as of September 30, 2014 are as follows:
Municipal Municipal
Police Officers' Firefighters' General
General Pension Pension Employees
Fund Trust Trust Pension Trust
Franchise /Utility taxes $ 99,847 $ $ $
Contributions - 65,194 28,119 74,009
Other 659 -
Receivables, net $ 100,506 $ 65,194 $ 28,119 $ 74,009
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
C. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2014 was as follows:
Beginning
Balance
Ending
Increases Decreases Balance
Governmental activities:
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, not being depreciated
$ 1,378,744 $ - $
72,114
1,378,744 72,114
$1,378,744
72,114
1,450,858
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Equipment
Total capital assets, being depreciated
1,919,585
6,332,055
2,592,696
10,844,336
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Equipment
Total accumulated depreciation
(761,023)
(2,308,530)
(1,483,188)
(4,552,741)
49,882
547,785
422,609
1,020,276
(62,693)
(285,552)
(194,212)
(542,457)
- 1,969,467
- 6,879,840
(359,607) 2,655,698
(359,607) 11,505,005
(823,716)
(2,594,082)
80,320 (1,597,080)
80,320 (5,014,878)
Total capital assets, being depreciated, net
6,291,595 477,819
(279,287) 6,490,127
Governmental activities capital assets, net
$ 7,670,339 $ 549,933 $
(279,287) $ 7,940,985
The current year increase in capital assets does not include any donated capital assets.
Depreciation expense was charged to functions /programs of the government as follows:
Governmental activities:
General government
Public safety
Physical environment
Total depreciation expense - governmental activities
$ 58,806
160,310
323,341
$ 542,457
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
D. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund loans of $504,028 for short term operating purposes resulted in a due to the General
fund from the Community Development Capital Project fund of $150,528, Appropriations Grant
Capital Project fund of $248,500, and the FDOT Grant Capital Project fund of $105,000. All amounts
are expected to be repaid within one year.
During the year ended September 30, 2014, the Impact Fee Capital Project fund (a nonmajor fund)
transferred $57 to the General fund. The transfer represented administrative fees that were earned
from collecting impact fees for the County, School Board and the City, and was transferred for the
purpose of removing all balances and activity unrelated to the collection and expenditure of impact
fees.
During the year ended September 30, 2014, the General fund transferred $11,285 to the
Appropriations Grant Capital Project fund and $17,500 to the FDOT Grant Capital Project fund for a
total of $28,785. The transfers represented engineering costs for the respective partially grant
funded capital projects.
E. CHANGES IN LONG -TERM LIABILITIES
Long -term liability activity for the year ended September 30, 2014, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
Net OPEB obligation $ 628,643 $ 183,074 $ - $ 811,717 $ -
Compensated absences 352,276 150,279 (129,452) 373,103 155,500
Long -term liabilities $ 980,919 $ 333,353 $ (129,452) $ 1,184,820 $ 155,500
For the governmental activities, compensated absences are generally liquidated by the general fund.
NOTE 5: OTHER INFORMATION
A. RISK MANAGEMENT
The City is exposed to various risks of loss, including, but not limited to theft, damage or destruction of
its buildings, equipment, records and monetary assets, and liability for personal injury, property
damage and consequences of employee and public official actions. The City participates in a non -
assessable public risk pool to cover significant loss exposure and purchases commercial insurance for
third party pollution liability coverage. The pool maintains a Toss reserve and purchases specific
excess insurance, aggregate excess insurance and multiple loss coverage from commercial carriers
and underwriters.
- 39 -
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS
Plan Descriptions — The City contributes to two single - employer defined benefit pension plans: City of
Okeechobee Municipal Police Officers' Pension Trust Fund and City of Okeechobee Municipal
Firefighters' Pension Trust Fund (the Plans). The Plans provide retirement, disability and death
benefits to plan members and their beneficiaries. Chapters 185 and 175 of the Florida Statutes
establish the minimum benefits and the minimum standards for the operation and funding of the
Police Officers' and the Firefighters' Municipal Pension Trust Funds, respectively. Per City Ordinances
Nos. 750 and 749, sole responsibility for administering the Plans is vested in the Board of Trustees of
each plan. The Boards cannot amend the provisions of the plans without the approval of the City. The
Plans issue publicly available financial reports that include financial statements and required
supplementary information. The reports are available from the City of Okeechobee, Florida, 55 S.E.
Third Avenue, Okeechobee, Florida 34974.
Funding Policies — The contribution requirements of plan members and the City are established and
may be amended by City ordinance. Plan members are required to contribute 5% of their annual
covered salary for the Police Officers' and Firefighters' Municipal Trust Funds. The City is required to
contribute an amount equal to the difference in each year between the total aggregate member
contributions for the year, plus state contributions for such year, and the normal cost for the year, as
shown by the most recent actuarial valuation of the plan; the current contribution rate as a
percentage of covered payroll is 21.97% for the Police Officers' plan and 15.69% for the Firefighters'
plan.
The City recognized as revenues and expenditures on- behalf payments relating to pension
contributions for its public safety employees that the State of Florida paid to the Police Officers' and
Firefighters' Plans in the amounts of $67,639 and $53,235, respectively. These contributions are
funded by an excise tax upon certain casualty insurance companies on their gross receipts of
premiums from policy holders.
Annual Pension Cost — The annual required pension contributions for the Plans were determined as
part of the October 1, 2014 actuarial valuations using the aggregate actuarial cost method. The
aggregate actuarial cost method does not identify or separately amortize unfunded actuarial liabilities.
The actuarial assumptions included (a) 7% investment rate of return (net of administrative expenses)
for both the Police Officers' Trust and Firefighters' Trust and (b) projected salary and cost -of- living
increases of 6% and 7% for the Police Officers' Trust and Firefighters' Trust, respectively. Assumption
(b) included an inflation component of 2.75% for the Police Officers' Trust and Firefighters' Trust. The
actuarial value of assets was determined using a method which recognizes actual investment return in
excess of the assumed return evenly over a four year period.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
Trend information for each of the City's defined benefit plans:
Annual Percentage
Year Pension Cost Of APC
Ended (APC) Contributed
Net
Pension
Obligation
(Asset)
Municipal Police Officers'
Municipal Firefighters'
9/30/12 $ 220,605 95%
9/30/13 249,342 95%
9/30/14 280,303 96%
9/30/12
9/30/13
9/30/14
$ 103,865
110,519
122,212
$ (274,642)
(263, 654)
(251, 200)
94% $ (338,013)
94% (331,409)
94% (324,014)
Funding Status and Funding Progress— The funded status of the Plans as of October 1, 2014, the most
recent actuarial valuation date, is shown below:
Actuarial
Accrued Liability Overfunded
Actuarial Value (AAL) —Entry Age (Assets in excess Funded Ratio Covered
of Assets (a) * (b) of) AAL (b) (a) (a) /(b) Payroll (c)
Police Officers':
$ 7,075,831 $ 6,930,931 $ (144,900) 102.1% $ 911,189
UAALasa %of
Covered Payroll
(b- a) /(c)
-15.9%
Firefighters':
$ 3,062,097 $ 3,006,957 $ (55,140) 101.8% $ 523,119 -10.5%
* For purposes of this schedule, the AAL for the Plan is determined using the entry age actuarial cost
method. Note that the ARC for the Plan is calculated using the aggregate actuarial cost method.
The schedule of funding progress presented as required supplementary information (RSI) immediately
following the notes to the financial statements, presents multi -year trend information about whether
the actuarial value of plan assets is increasing or decreasing over time relative to the AAL for benefits.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
The City of Okeechobee and Okeechobee Utility Authority Employees' Retirement System
Plan Description - The City contributes to the City of Okeechobee and Okeechobee Utility Authority
Employees' Retirement System (the "System "), a cost - sharing multiple employer defined benefit
pension plan administered by the System's Board of Trustees. Substantially all of the City's general
employees and the employees of the Okeechobee Utility Authority participate in this public
employee retirement system. The System was established by City Ordinance No. 655, as amended
and restated by City Ordinance No. 686. The System provides retirement, disability and death
benefits to plan members and their beneficiaries. The Board of Trustees is authorized by City
Ordinance No. 686 to establish and amend all plan provisions. The System issues a publicly available
financial report that includes financial statements and required supplementary information. That
report is available from the City of Okeechobee, Florida, 55 S.E. Third Avenue, Okeechobee, Florida
34974.
Funding Policy - The contribution requirements of the plan members and the City are established and
may be amended by City ordinance. Plan members are required to contribute 6% of their covered
annual salary. The City is required to contribute at an actuarially determined rate; the current rate is
12.10% of covered payroll. The City's contributions for the years ended September 30, 2014, 2013 and
2012 were $379,407 $361,172 and $359,298, respectively and were equal to the required
contributions for each year.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
Pension trust funds fiduciary net position activity as of September 30, 2014 was as follows:
Police General
Firefighters' Officers' Employees' Total Pension
Pension Pension Pension Trust Funds
ASSETS
Cash equivalents $ 69,744 $ 145,118 $ 248,918 $ 463,780
Investments:
Mutual funds 2,197,448 5,167,789 6,348,826 13,714,063
Common equity securities 959,249 2,329,340 3,481,662 6,770,251
Receivables 28,119 65,194 74,009 167,322
Accrued interest and dividends 1,717 4,242 5,957 11,916
Total assets 3,256,277 7,711,683 10,159,372 21,127,332
LIABILITIES
Accounts payable
Total liabilities
3,018 5,021
3,018 5,021
7,278 15,317
7,278 15,317
NET POSITION
Held in trust for pension benefits $ 3,253,259 $ 7,706,662 $ 10,152,094 $ 21,112,015
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS - DEFINED BENEFIT PLANS (Continued)
Pension trust funds increase in fiduciary net position activity as of September 30, 2014 was as
follows:
Firefighters'
Pension
Police
Officers'
Pension
General
Employees' Total Pension
Pension Trust Funds
ADDITIONS
Contributions
State
City
Employees
Total contributions
$
53,235 $
82,058
23,854
159,147
67,639 $
200,210
43,135
310,984
- $ 120,874
379,407 661,675
176,743 243,732
556,150 1,026,281
Investment earnings:
Net appreciation in the fair value
of investments
Interest and dividends
Total investment earnings
Less investment expenses
Net investment earnings
Total additions
281,981 587,391 805,656
64,467 150,509 201,086
346,448 737,900 1,006,742
(27,822) (37,211) (46,120)
318,626 700,689 960,622
477,773 1,011,673 1,516,772
1,675,028
416,062
2,091,090
(111,153)
1,979,937
3,006,218
DEDUCTIONS
Benefits paid to participants
Refunds on termination
DROP payment
Administrative expenses
Total deductions
Change in net position
Net position held in trust for
pension benefits, beginning of year
Net position held in trust for
pension benefits, end of year
85,100 201,398
26,954
57,353
16,157 18,098
158,610 246,450
319,163 765,223
293,257 579,755
31,118 58,072
57,353
16,814 51,069
341,189 746,249
1,175,583 2,259,969
2,934,096 6,941,439 8,976,511 18,852,046
$ 3,253,259 $ 7,706,662 $ 10,152,094 $ 21,112,015
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION
Plan description. The City of Okeechobee, Florida administers a single - employer defined benefit
healthcare plan (the "Plan ") that provides medical insurance to its employees and their eligible
dependents. Pursuant to Section 112.0801 Florida Statutes, the City is required to provide eligible
retirees (as defined in the City's pension plans) the opportunity to participate in this Plan at the same
cost that is applicable to active employees. Benefit provisions for the Plan were established by City
Council on January 7, 1991 and may only be amended by City Council. The City has not established a
trust or agency fund for the Plan. The City does not issue stand -alone financial statements for this
Plan. All financial information related to the Plan is accounted for in the City's basic financial
statements.
Employees and their dependents may elect to remain in the Plan upon retirement up to age 65. After
age 65 the City's insurance coverage becomes secondary to the retiree's Medicare insurance. The Plan
has 2 retirees receiving benefits and has a total of 68 active participants and dependents.
Funding policy. The City is funding the plan on a pay -as- you -go basis. Employees and their dependents
are required to pay 100% of the insurance premiums charged by the carrier. There is an implied
subsidy in the insurance premiums for these employees because the premium charged for retirees is
the same as the premium charged for active employees, who are younger than retirees on average.
For the year ended September 30, 2014, the City's contribution is $34,935, which represents an
estimate of the implied subsidy described above. Contributions of plan members totaled
approximately $22,382 for the year ended September 30, 2014.
Annual OPEB cost and net OPEB obligation. The City's annual OPEB cost (expense) is calculated based
on the annual required contribution (ARC) of the employer, an amount determined using the
Alternative Measurement Method, permitted by GASB Statement No. 45 for employers in plans with
fewer than 100 total plan members. The ARC represents a level of funding that, if paid on an ongoing
basis, is projected to cover normal cost each year and to amortize any unfunded actuarial accrued
liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the
components of the City's annual OPEB cost for the year ended September 30, 2014, the amount
actually contributed to the Plan, and changes in the City's net OPEB obligation to the Plan:
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (Continued)
Annual required contribution
Interest on net OPEB obligation
Adjustment to annual required contribution
Annual OPEB cost (expense)
Contributions made
Increase in net OPEB obligation
Net OPEB obligation — beginning of year
Net OPEB obligation — end of year
$ 219,521
18,859
(20,371)
218,009
(34,935)
183,074
628,643
$ 811,717
The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the
net OPEB obligation for the fiscal year ending September 30, 2014 was as follows:
Year Annual OPEB
Ending Cost
9/30/2014 $ 218,009
9/30/2013 211,120
9/30/2012 164,841
Percentage of Annual
OPEB Cost Contributed
16%
18%
6%
Net OPEB
Obligation
811,717
628,643
456,060
Funded status and funding progress. Because the Plan has fewer than 200 members, the City is
required to obtain an actuarial valuation at least every three years. The most recent actuarial
valuation was performed as of September 30, 2013. Accordingly, the City will be required to obtain a
subsequent actuarial valuation within three years of that date. As of September 30, 2013, the actuarial
accrued liability for benefits was $1,255,666, all of which was unfunded. The covered payroll (annual
payroll of active employees covered by the Plan) was $2,345,956, and the ratio of unfunded actuarial
accrued liability (UAAL) to the covered payroll was 54 %.
The projection of future benefit payments for an ongoing plan involves estimates of the value of
reported amounts and assumptions about the probability of occurrence of events far into the future.
Examples include assumptions about future employment, future interest rates, mortality, medical cost
inflation, Medicare coverage and changes in marital status. Amounts determined regarding the
funded status of the Plan and the annual required contributions of the employer are subject to
continuous revision as actual results are compared to past expectations and new estimates about the
future are formulated.
The schedule of funding progress presented as required supplementary information following the
notes to the financial statements, will present multiyear trend information that shows whether the
actuarial value of Plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities for benefits. Because fiscal year 2010 was the year of implementation of GASB Statement No
45 and the City elected to apply the statement prospectively, only two actuarial valuations are
presented in the schedule at this time. In future years, required trend data will be presented.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (Continued)
Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the
substantive plan (the plan as understood by the employer and the Plan members) and include the
types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit
costs between the employer and Plan members to that point. The methods and assumptions used
include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued
liabilities and the actuarial value of assets, consistent with the long -term perspective of the
calculations.
In the September 30, 2013 valuation, the entry age normal cost method was used. The assumptions
included a discount rate of 3.0 %, a general inflation rate of 2.8 %, and an annual healthcare cost trend
rate of 10% initially, increased to an ultimate rate of 20% after nine years. The unfunded actuarial
accrued liability is being amortized as a level percentage of projected payrolls on a closed basis over a
period of 30 years. As authorized by GASB Statement No. 45, the Alternative Measurement Method
with its simplifications of certain assumptions was employed in measuring actuarial accrued liabilities
and the ARC.
D. CONCENTRATION — COLLECTIVE BARGAINING UNIT
Members of the City's fire department are covered by a collective bargaining agreement. The
agreement with the employees covered by the International Association of Firefighters (IAFF)
extended through September 30, 2009 and has not been renewed as of the date of our report.
NOTE 6: FUTURE ACCOUNTING PRONOUNCEMENTS
The Governmental Accounting Standards Board has issued statements that will become effective
in 2015. The statements address:
• Accounting and financial reporting for pensions;
• Mergers, acquisitions and transfers of operations
The City is currently evaluating the effects that these statements will have on its 2015 financial
statements.
NOTE 7: SUBSEQUENT EVENT
During November 2014, the City awarded the annual police vehicle purchase bid to an unrelated
vendor for 12 police vehicles in the amount of approximately $263,000.
THIS PAGE IS INTENTIONALLY LEFT BLANK.
- 48 -
1
1
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
THIS PAGE IS INTENTIONALLY LEFT BLANK.
- 50 -
1
City of Okeechobee, Florida
Schedule of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual - General Fund
Year ended September 30, 2014
Original
Budget
Final
Budget
Actual Variance with
(on Budgetary Final Budget
Basis) Positive (Negative)
Revenues
Taxes
Intergovernmental
Charges for services
Permits and fees
Fines and forfeitures
Investment earnings
Miscellaneous
Total revenues
Expenditures
Current:
General government:
Legislative
Executive
City clerk
Financial services
Legal council
General services
Total general government
Public safety:
Fire
Police
Total public safety
Transportation
Physical environment
Capital outlay
Total expenditures
Deficiency of revenues under
expenditures
Other financing sources (uses)
Operating transfers in
Operating transfers out
Sale of capital assets
Net other financing sources (uses)
Deficiency of revenues and other
financing sources under
expenditures and other financing uses
Fund balances, beginning of year
Fund balances, end of year
$ 2,342,468
1,916,634
402,130
495,156
21,500
7,100
3,000
5,187,988
$ 2,467,416
1,975,863
394,083
557,739
14,867
6,984
4,226
5,421,178
$ 2,493,500
2,091,319
398,759
579,075
19,493
55,682
5,637,828
$ 26,084
115,456
4,676
21,336
4,626
(6,984)
51,456
216,650
137,627 112,059 111,229
179,816 172,037 169,827
200,355 188,550 184,874
251,123 236,962 229,550
72,253 71,975 70,031
327,111 325,244 321,327
1,168,285 1,106,827 1,086,838
830
2,210
3,676
7,412
1,944
3,917
19,989
1,370,181 1,306,642 1,275,385
2,007,082 1,887,279 1,856,427
3,377,263 3,193,921 3,131,812
1,075,459 1,015,757 993,049
675,500 434,218 428,497
492,350 404,429 387,200
6,788,857 6,155,152 6,027,396
(1,600,869) (733,974) (389,568)
31,257
30,852
62,109
22,708
5,721
17,229
127,756
344,406
500 55 57
(28,785)
257,400 260,940 260,604
257,900 260,995 231,876
2
(28,785)
(336)
(29,119)
(1,342,969)
11,612,915
$10,269,946
(472,979)
11,612,915
$11,139,936
Reconciliation of budgetary
to GAAP basis
Current year encumbrances
Prior year encumbrances
Fund balance on GAAP basis
(157,692) 315,287
11,612,915 -
11,455,223 $ 315,287
15,329
(19,613)
$ 11,450,939
The accompanying notes to required supplementary information are an integral part of this schedule
- 51 -
Police Officers' Pension Plan
Actuarial Actuarial
Valuation Value of
Date Assets (a)
2014 $ 7,075,831
2013 6,534,588
2012 6,044,391
2011 5,712,560
2010 5,666,207
2009 5,424,146
City of Okeechobee, Florida
Required Pension Supplementary Information —
Schedule of Funding Progress
Last Six Fiscal Years
Actuarial
Accrued
Liability
AAL*
Entry Age (b)
Unfunded
(Assets in
excess of) AAL
(UAAL)
(b -a)
Funded
Ratio Covered
(a /b) Payroll (c)
UAAL as a %
of Covered
Payroll
((b -a) /c)
Firefighters' Pension Plan
Actuarial
Valuation
Date
2014
2013
2012
2011
2010
2009
Actuarial
Value of
Assets (a)
$ 6,930,931
6,631,287
6,187,990
5,886,480
5,546,001
5,201,828
Actuarial
Accrued
Liability
AAL*
Entry Age (b)
$
(144,900)
96,699
143,599
173,920
(120,206)
(222,318)
Overfunded
(Assets in
excess of) AAL
(b -a)
102.1%
98.5%
97.7%
97.0%
102.2%
104.3%
$ 911,189
928,602
928,285
936,580
959,376
1,001,123
Funded
Ratio Covered
(a /b) Payroll (c)
- 15.9%
10.4%
15.5%
18.6%
-12.5%
- 22.2%
UAAL as a %
of Covered
Payroll
((b -a) /c)
$ 3,062,097
2,795,908
2,595,508
2,428,618
2,416,595
2,330,746
$ 3,006,957
2,749,620
2,556,559
2,318,524
2,215,619
2,104, 641
$ (55,140)
(46,288)
(38,949)
(110,094)
(200,976)
(226,105)
101.8% $ 523,119
101.7% 473,939
101.5% 429,008
104.7% 457,776
109.1% 461,752
110.7% 459,952
- 10.5%
-9.8%
-9.1%
-24.0%
- 43.5%
-49.2%
*The annual required contribution (ARC) is calculated using the aggregate actuarial cost method.
Information in this schedule is calculated using the entry age actuarial cost method as a surrogate for
the funding progress of the Plan.
The accompanying notes to required supplementary information are an integral part of this schedule
- 52 -
City of Okeechobee, Florida
Required Other Postemployment Benefits Supplementary Information -
Schedule of Funding Progress
UAAL
Actuarial Unfunded a % of
Actuarial Actuarial Accrued AAL Funded Covered
Valuation Value of Liability (UAAL) Ratio Covered Payroll
Date Assets (a) AAL (b) (b -a) (a /b) Payroll (c) ((b -a) /c)
9/30/2013 $ - $ 1,255,666 $ 1,255,666 0.0% $ 2,345,956 53.5%
8/1/2010 $ - $ 776,235 $ 776,235 0.0% $ 2,515,729 30.9%
Note: Because fiscal year 2010 was the first year of implementation of GASB Statement
No. 45 and the City elected to apply the statement prospectively, only two
actuarial valuations are presented in the schedule at this time. In future years,
required trend data will be presented.
The accompanying notes to required supplementary information are an integral part of this schedule
- 53 -
City of Okeechobee, Florida
Notes to Required Supplementary Information
A. BUDGETARY INFORMATION
Annual budgets are adopted on a basis consistent with U.S. generally accepted accounting
principles for all governmental funds. All annual appropriations lapse at fiscal year -end.
The City Administrator may make transfers of appropriations within a department as long as the
total budget of the department is not increased. Transfers of appropriations between departments
require the approval of the council. The legal level of budgetary control (i.e., the level at which
expenditures may not legally exceed appropriations) is the department level. The council made
certain supplemental budgetary appropriations during the year.
Encumbrances accounting is employed in governmental funds. Encumbrances (e.g., purchase orders,
contracts) outstanding at year end are reported as restricted or assigned fund balances and do not
constitute expenditures or liabilities because the commitments will be re- appropriated and honored
during the subsequent year.
B. ADDITIONAL ACTUARIAL INFORMATION
The information presented in the required supplementary schedules was determined as part of the
actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation
follows:
Police
Firefighters' Officers'
Pension Plan Pension Plan
Actuarial valuation date 10/01/14 10/01/14
Actuarial cost method Entry age Entry age
Amortization method N/A N/A
Remaining amortization period N/A N/A
Asset valuation method Four year smoothed Four year smoothed
Market Market
Actuarial assumptions:
Investment rate of return 7.0% 7.0%
Salary increases 7.0 %, including 6.0 %, including
inflation inflation
Inflation 2.75% 2.75%
Retirement age 100% when first 100% when first
eligible for normal eligible for normal
retirement or DROP retirement or DROP
entry entry
CRI
ACRICARR RIGGS &
INGRAM
CPAs and Advisors
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259 -8648 (fax)
www.cricpa.com
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, each major fund and the aggregate remaining fund information of the City of
Okeechobee, Florida, as of and for the year ended September 30, 2014, and the related notes to
the financial statements, which collectively comprise the City of Okeechobee, Florida's basic
financial statements, and have issued our report thereon dated May 26, 2015. Other auditors
audited the financial statements of the Police Officers' and Firefighters' Pension Trust Funds and
the City of Okeechobee and Okeechobee Utilities Authority Employees' Retirement System, as
described in our report on the City of Okeechobee, Florida's financial statements. This report does
not include the results of the other auditors' testing of internal control over financial reporting or
compliance and other matters that are reported on separately by those auditors.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the City of
Okeechobee, Florida's internal control over financial reporting (internal control) to determine the
audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions
on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of
the City of Okeechobee, Florida's internal control. Accordingly, we do not express an opinion on the
effectiveness of the City of Okeechobee, Florida's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency,
or combination of deficiencies, in internal control, such that there is a reasonable possibility that a
material misstatement of the entity's financial statements will not be prevented, or detected and
corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies,
in internal control that is less severe than a material weakness, yet important enough to merit
attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of
this section and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies, and therefore material weaknesses or significant
deficiencies may exist that were not identified. Given these limitations, during our audit we did not
identify any deficiencies in internal control that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
- 55 -
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Okeechobee, Florida's financial
statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could
have a direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the result of that testing, and not to provide an opinion on the effectiveness of the
entity's internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the entity's internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
(1,0A. X 'Ape, • /LC
Melbourne, Florida
May 26, 2015
CRI
CARR
RIGGS &
INGRAM
CPAs and Advisors
INDEPENDENT AUDITORS' MANAGEMENT LETTER
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259 -8648 (fax)
www.cricpa.com
The Honorable Mayor and Members of the City Council
of the City of Okeechobee, Florida
Report on the Financial Statements
We have audited the financial statements of the City of Okeechobee, Florida as of and for the fiscal
year ended September 30, 2014, and have issued our report thereon dated May 26, 2015.
Auditors' Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Other Reports
We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and
on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in
Accordance with Government Auditing Standards and Independent Accountants' Report on an
examination conducted in accordance with AICPA Professional Standards, Section 601, regarding
compliance requirements in accordance with Chapter 10.550, Rules of the Florida Auditor General.
Disclosures in those reports, which are dated May 26, 2015, should be considered in conjunction
with this management letter.
Prior Audit Findings
Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not
corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report. There were no findings and recommendations made in the
preceding annual financial audit report.
Official Title and Legal Authority
Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal
authority for the primary government and each component unit of the reporting entity be disclosed
in this management letter, unless disclosed in the notes to the financial statements. The legal
authority of the City of Okeechobee, Florida and its component units are disclosed in the footnotes.
Financial Condition
Section 10.554(1)(i)5.a., Rules of the Auditor General, requires that we report the results of our
determination as to whether or not the City of Okeechobee, Florida has met one or more of the
- 57 -
conditions described in Section 218.503(1), Florida Statutes, and identification of the specific
condition(s) met. In connection with our audit, we determined that the City of Okeechobee, Florida
did not meet any of the conditions described in Section 218.503(1), Florida Statutes.
Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied
financial condition assessment procedures. It is management's responsibility to monitor City of
Okeechobee, Florida's financial condition, and our financial condition assessment was based in part
on representations made by management and the review of financial information provided by
same.
Annual Financial Report
Section 10.554(1)(i)5.b., Rules of the Auditor General, requires that we report the results of our
determination as to whether the annual financial report for the City of Okeechobee, Florida for the
fiscal year ended September 30, 2014, filed with the Florida Department of Financial Services
pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit
report for the fiscal year ended September 30, 2014. In connection with our audit, we determined
that these two reports were in agreement.
Other Matters
Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management
letter any recommendations to improve financial management. In connection with our audit, we
did not have any such recommendations.
Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with
provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have
occurred, that have an effect on the financial statements that is less than material but which
warrants the attention of those charged with governance. In connection with our audit, we did not
have any such findings.
Purpose of this Letter
Our management letter is intended solely for the information and use of the Legislative Auditing
Committee, members of the Florida Senate and the Florida House of Representatives, the Florida
Auditor General, Federal and other granting agencies, the members of the City Council, and applicable
management, and is not intended to be and should not be used by anyone other than these specified
parties.
Melbourne, Florida
May 26, 2015
CRI
CARR
RIGGS &
INGRAM
CPAs and Advisors
INDEPENDENT ACCOUNTANTS' REPORT ON COMPLIANCE WITH LOCAL GOVERNMENT
INVESTMENT POLICIES
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259 -8648 (fax)
www.cricpa.com
The Honorable Mayor and Members of the City Council
Of the City of Okeechobee, Florida
We have examined the City of Okeechobee's compliance with the requirements of Section 218.415,
Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2014.
Management is responsible for the City of Okeechobee's compliance with those requirements. Our
responsibility is to express an opinion on the City of Okeechobee's compliance based on our
examination.
Our examination was conducted in accordance with attestation standards established by the
American Institute of Certified Public Accountants and, accordingly, included examining, on a test
basis, evidence about the City of Okeechobee's compliance with those requirements and performing
such other procedures as we considered necessary in the circumstances. We believe that our
examination provides a reasonable basis for our opinion. Our examination does not provide a legal
determination on the City of Okeechobee's compliance with specified requirements.
In our opinion, the City of Okeechobee complied, in all material respects, with the aforementioned
requirements for the year ended September 30, 2014.
This report is intended solely for the information and use of management and the State of Florida
Auditor General and is not intended to be and should not be used by anyone other than these
specified parties.
Melbourne, Florida
May 26, 2015
THIS PAGE IS INTENTIONALLY LEFT BLANK.
City of Okeechobee
AFFIDAVIT OF IMPACT FEE COMPLIANCE
The City of Okeechobee, Florida has complied with Section 163.31801 of Florida Statute
regarding accounting and reporting of impact fee collections and expenditures for Fiscal
Year 2014.
Brian hi all
City Administrator
Sworn to and subscribed before me this (0 of flardh, 2015.
I hereby state dJrl Qfl USOAttilat t personally know to me or provided
as personal identification hereby signed the above document.
Notary Public signature
AP°
Ara —mss, /
`ndia Riedel
Finance Director
Print, Type of Stamp, Name of Notary Public
Sworn to and subscribed before me this
I hereby state '140- Ri C d e
of TaC r(k\ 2015.
personally know to me or provided
as personal identification hereby signed the above document.
otary Public signature
Print, Type of Stamp, Name of Nctary ' ublic
55 S.E. Third Avenue • Okeechobee, Florida 34974 -2903 • (863) 763 -3372 • Fax: (863) 763 -1686
-61-
CRI
Prucu-4 x(13 J 14
CARR
RIGGS &
INGRAM
CPAs and Advisors
Required Communications
1 C R I CRICARR
IA RIGGS &
INGRAM
CPAs and Advisors
May 26, 2015
Honorable Mayor and City Council
City of Okeechobee, Florida
55 S.E. Third Avenue
Okeechobee, FL 34974
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
(321) 255-0088
(321) 259 -8648 (fax)
www.cricpa.com
We are pleased to present the results of our audit of the financial statements of the City of
Okeechobee, Florida (the "City ") for the year ended September 30, 2014.
This report to the Honorable Mayor and City Council summarizes our audit, the report issued and
various analyses and observations related to the City's accounting and reporting. The document
also contains the communications required by our professional standards.
Our audit was designed, primarily, to express an opinion on the City's basic financial statements for
the year ended September 30, 2014. We considered the City's current and emerging needs, along
with an assessment of risks that could materially affect the financial statements, and aligned our
audit procedures accordingly. We conducted the audit with the objectivity and independence that
the City expects. We received the full support and assistance of City personnel.
At Carr, Riggs & Ingram, LLC (CRI), we are continually evaluating the quality of our professionals'
work in order to deliver audit services of the highest quality that will meet or exceed your
expectations. We encourage you to provide any feedback you believe is appropriate to ensure that
we do not overlook a single detail as it relates to the quality of our services.
This report is intended solely for the information and use of the Honorable Mayor, City Council and
management of the City and should not be used by anyone other than these specified parties.
We appreciate this opportunity to work with you. If you have any questions or comments, please
contact me at 321.255.0088 or dgoode @cricpa.com.
Very truly yours,
Deborah A. Goode, CPA
Carr, Riggs & Ingram, LLC
Required Communications
As discussed with management during our planning process, our audit plan represented an
approach responsive to the assessment of risk for the City. Specifically, we planned and performed
our audit to:
• Perform an audit, as requested by the Honorable Mayor and City Council, in accordance
with auditing standards generally accepted in the United States of America, in order to
express an opinion on the City's financial statements for the year ended September 30,
2014;
• Communicate directly with the Honorable Mayor and City Council and management
regarding the results of our procedures;
• Address with the Honorable Mayor, City Council and management any accounting and
financial reporting issues;
• Anticipate and respond to concerns of the Honorable Mayor, City Council and management;
and
• Other audit - related projects as they arise and upon request.
Required Communications
We have audited the financial statements of the City for the year ended September 30, 2014, and
have issued our report thereon dated May 26, 2015. Professional standards require that we
provide you with the following information related to our audit:
MATTER TO BE COMMUNICATED
AUDITOR'S RESPONSE
Auditor's responsibility under Generally
Accepted Auditing Standards, Government
Auditing Standards and Chapter 10.550, Rules
of the Florida Auditor General
As stated in our engagement letter dated
September 23, 2013, our responsibility, as
described by professional standards, is to express
an opinion about whether the financial
statements prepared by management with your
oversight are fairly presented, in all material
respects, in conformity with accounting principles
generally accepted in the United States of America
(GAAP). Our audit of the financial statements does
not relieve you or management of your
responsibilities.
As part of our audit, we considered the internal
control of the City. Such considerations were
solely for the purpose of determining our audit
procedures and not to provide any assurance
concerning such internal control.
Client's responsibility
Management, with oversight from those charged
with governance, is responsible for establishing
and maintaining internal controls, including
monitoring ongoing activities; for the selection
and application of accounting principles; and for
the fair presentation in the financial statements of
financial position, results of operations, and cash
flows in conformity with the applicable
framework. Management is responsible for the
design and implementation of programs and
controls to prevent and detect fraud.
Planned scope and timing of the audit
Our initial audit plan was not significantly altered
during our fieldwork.
Management judgments and accounting
estimates
The process used by management in forming
particularly sensitive accounting estimates and the
basis for the auditor's conclusion regarding the
reasonableness of those estimates.
Please see the following section titled "Accounting
Policies, Judgments and Sensitive Estimates and
CRI Comments on Quality."
Potential effect on the financial statements
of any significant risks and exposures
Major risks and exposures facing the Plan and how
they are disclosed.
No such risks or exposures were noted.
- 3 -
Required Communications
MATTER TO BE COMMUNICATED
AUDITOR'S RESPONSE
Significant accounting policies, including
critical accounting policies and alternative
treatments within generally accepted
accounting principles and the auditor's
judgment about the quality of accounting
principles
• The initial selection of and changes in
significant accounting policies or their
application; methods used to account for
significant unusual transactions; and effect
of significant policies in controversial or
emerging areas for which there is a lack of
authoritative guidance or consensus.
• Alternative treatments within GAAP for
accounting policies and practices related to
material items, including recognition,
measurement, presentation and disclosure
alternatives, that have been discussed with
client management during the current audit
period, the ramifications of the use of such
alternative disclosures and treatments.
Management is responsible for the selection and
use of appropriate accounting policies. The
significant accounting policies used by the City are
described in Note 1 to the financial statements.
We noted no transactions entered into by the
governmental unit during the year for which there
is a lack of authoritative guidance or consensus.
All significant transactions have been recognized
in the financial statements in the proper period.
Significant difficulties encountered in the
audit
Any significant difficulties, for example,
unreasonable logistical constraints or lack of
cooperation by management.
None.
Disagreements with management
Disagreements, whether or not subsequently
resolved, about matters significant to the financial
statements or auditor's report. This does not include
those that came about based on incomplete facts or
preliminary information.
None.
Other findings or issues
Matters significant to oversight of the financial
reporting practices by those charged with
governance. For example, an entity's failure to
obtain the necessary type of audit, such as one under
Government Auditing Standards, in addition to
GAAS.
None.
- 4 -
Required Communications
MATTER TO BE COMMUNICATED
AUDITOR'S RESPONSE
Matters arising from the audit that were
discussed with, or the subject of
correspondence with, management
Business conditions that might affect risk or
discussions regarding accounting practices or
application of auditing standards.
None.
Corrected and uncorrected misstatements
All significant audit adjustments arising from the
audit, whether or not recorded by the Plan, that could
individually or in the aggregate have a significant
effect on the financial statements. We should also
inform the Committee about uncorrected
misstatements aggregated by us during the current
engagement and pertaining to the latest period
presented, that were determined by management to
be immaterial, both individually and in the aggregate,
to the financial statements taken as a whole. Any
internal control deficiencies that could have
prevented the misstatements.
There were no adjustments, either corrected or
uncorrected, as a result of our audit procedures.
Major issues discussed with management
prior to retention
Any major accounting, auditing or reporting issues
discussed with management in connection with our
initial or recurring retention.
We generally discuss a variety of matters,
including the application of accounting principles
and auditing standards, with management each
year prior to retention as the governmental unit's
auditors. However, these discussions occurred in
the normal course of our professional relationship
and our responses were not a condition to our
retention.
Consultations with other accountants
When management has consulted with other
accountants about significant accounting or auditing
matters.
In some cases, management may decide to
consult with other accountants about auditing and
accounting matters, similar to obtaining a "second
opinion" on certain situations. If a consultation
involves application of an accounting principle to
the governmental unit's financial statements or a
determination of the type of auditors' opinion
that may be expressed on those statements, our
professional standards require the consulting
accountant to check with us to determine that the
consultant has all the relevant facts. To our
knowledge, there were no such consultations with
other accountants.
Written representations
A description of the written representations the
auditor requested (or a copy of the representation
letter).
See "Management Representation Letter" section.
- 5 -
Required Communications
MATTER TO BE COMMUNICATED
Internal control deficiencies
Any significant deficiencies or material weaknesses
in the design or operation of internal control that
came to the auditor's attention during the audit.
AUDITOR'S RESPONSE
None.
Fraud and illegal acts
We are unaware of any fraud or illegal acts
Fraud involving senior management, the Plan
involving management or causing material
Administrator or those responsible for internal
controls, or causing a material misstatement of the
financial statements, where the auditor determines
there is evidence that such fraud may exist. Any
illegal acts coming to the auditor's attention involving
senior management and any other illegal acts, unless
clearly inconsequential.
misstatement of the financial statements.
Other information in documents containing
Our responsibility related to documents (including
audited financial statements
annual reports, websites, etc.) containing the
The external auditor's responsibility for information in
financial statements is to read the other
a document containing audited financial statements,
information to consider whether:
as well as any procedures performed and the results.
• Such information is materially inconsistent
with the financial statements; and
• We believe such information represents a
material misstatement of fact.
We applied certain limited procedures to
management's discussion and analysis and the
required supplementary information ( "RSI ") as
listed in the table of contents of the financial
statements that supplements the basic financial
statements. Our procedures consisted of inquiries
of management regarding the methods of
preparing the information and comparing the
information for consistency with management's
responses to our inquires, the basic financial
statements and other knowledge we obtained
during our audit of the basic financial statements.
We did not audit the RSI and do not express an
opinion or provide any assurance on the RSI.
Accounting Policies, Judgments and Sensitive Estimates & CRI Comments on
Quality
We are required to communicate our judgments about the quality, not just the acceptability, of the
City's accounting principles as applied in its financial reporting. We are also required to
communicate critical accounting policies and sensitive accounting estimates. Management may
wish to monitor throughout the year the process used to compute and record these accounting
estimates. The table below summarizes our communications regarding these matters.
AREA
ACCOUNTING
POLICY
CRITICAL
POLICY?
JUDGMENTS &
SENSITIVE
ESTIMATE
COMMENTS ON QUALITY
OF ACCOUNTING POLICY
& APPLICATION
Other Post -
Employment
Benefits
Based on the audit
procedures we
performed with
respect to the City's
OPEB Plan, we
noted that it
appears the City
accounts for its
OPEB liability and
related costs in
accordance with all
applicable
standards and
guidelines of GASB.
The City follows the
provisions of
Section P50:
Postemployment
Benefits Other Than
Pensions —
Employer Reporting,
of the GASB
Codification when
reporting its OPEB
liability and related
costs.
X
Management's
estimate of the
other
postemployment
benefit liability is
based on
healthcare costs
and employment
assumptions
developed by
management. A
third party actuary
utilized these
assumptions to
calculate the year-
end liability.
We evaluated the key
factors and assumptions
in determining they are
reasonable in relation to
the financial statements
taken as a whole.
Accounting Policies, Judgments and Sensitive Estimates & CRI Comments on
Quality
AREA ACCOUNTING POLICY
Depreciation
of Capital
Assets
Based on the audit
procedures we
performed with
respect to the City's
capital assets, we
noted that the City
estimates the useful
lives of capital assets
in accordance with all
applicable standards
and guidelines of
GASB.
The City follows the
provisions of Section
1400: Reporting
Capital Assets, of the
GASB Codification
when reporting
depreciation of its
capital assets.
CRITICAL JUDGMENTS &
POLICY? SENSITIVE ESTIMATE
X
Management's estimate
of the useful lives of
capital assets is based
on the historical lives of
similar assets and
market prices.
COMMENTS ON
QUALITY OF
ACCOUNTING POLICY &
APPLICATION
We evaluated the key
factors and assumptions
used to develop the
estimated useful lives in
determining that they
are reasonable in
relation to the financial
statements taken as a
whole.
Certain financial statement disclosures are particularly sensitive because of their significance to
financial statement users. The most sensitive disclosures affecting the financial statements were:
The disclosure of pension trust funds in Note 5.B. to the financial statements due to
the reported performance of plan assets.
The disclosure of Post - Employment Benefit Obligations in Note 5.C. to the financial
statements since this represents a future liability to the City.
Management Representation Letter
May 26, 2015
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
This representation letter is provided in connection with your audit of the financial statements of
the City of Okeechobee, Florida, which comprise the respective financial position of the
governmental activities, each major fund and the aggregate remaining fund information as of
September 30, 2014 and the respective changes in financial position and the related notes to the
financial statements, for the purpose of expressing opinions as to whether the financial statements
are presented fairly, in all material respects, in accordance with accounting principles generally
accepted in the United States of America (U.S. GAAP).
Certain representations in this letter are described as being limited to matters that are material.
Items are considered material, regardless of size, if they involve an omission or misstatement of
accounting information that, in light of surrounding circumstances, makes it probable that the
judgment of a reasonable person relying on the information would be changed or influenced by the
omission or misstatement. An omission or misstatement that is monetarily small in amount could
be considered material as a result of qualitative factors.
We confirm, to the best of our knowledge and belief, as of May 26, 2015, the following
representations made to you during your audit.
Financial Statements
1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter
dated September 23, 2013, including our responsibility for the preparation and fair
presentation of the financial statements and for preparation of the supplementary
information in accordance with the applicable criteria.
2) The financial statements referred to above are fairly presented in conformity with U.S. GAAP
and include all properly classified funds and other financial information of the primary
government and all component units required by generally accepted accounting principles to
be included in the financial reporting entity.
3) We acknowledge our responsibility for the design, implementation, and maintenance of
internal control relevant to the preparation and fair presentation of financial statements that
are free from material misstatement, whether due to fraud or error.
4) We acknowledge our responsibility for the design, implementation, and maintenance of
internal control to prevent and detect fraud.
5) Significant assumptions we used in making accounting estimates are reasonable.
6) All events subsequent to the date of the financial statements and for which U.S. GAAP
requires adjustment or disclosure have been adjusted or disclosed. No events, including
instances of noncompliance, have occurred subsequent to the balance sheet date and
through the date of this letter that would require adjustment to or disclosure in the
aforementioned financial statements.
Management Representation Letter
7) The effects of all known actual or possible litigation, claims, and assessments have been
accounted for and disclosed in accordance with U.S. GAAP. There have been no such issues.
Information Provided
8) We have provided you with:
a) Access to all information, of which we are aware, that is relevant to the preparation and
fair presentation of the financial statements, such as records, documentation, and other
matters and all audit or relevant monitoring reports, if any, received from funding
sources.
b) Additional information that you have requested from us for the purpose of the audit.
c) Unrestricted access to persons within the entity from whom you determined it
necessary to obtain audit evidence.
d) Minutes of the meetings of City Council or summaries of actions of recent meetings for
which minutes have not yet been prepared.
9) All material transactions have been recorded in the accounting records and are reflected in
the financial statements.
10) We have disclosed to you the results of our assessment of the risk that the financial
statements may be materially misstated as a result of fraud.
11) We have no knowledge of any fraud or suspected fraud that affects the entity and involves:
a) Management,
b) Employees who have significant roles in internal control, or
c) Others where the fraud could have a material effect on the financial statements.
12) We have no knowledge of any allegations of fraud or suspected fraud affecting the entity's
financial statements communicated by employees, former employees, regulators, or others.
13) We have no knowledge of instances of noncompliance or suspected noncompliance with
provisions of laws, regulations, contracts, or grant agreements, or abuse, whose effects
should be considered when preparing financial statements.
14) There are no actual or possible litigation, claims, and assessments whose effects should be
considered when preparing the financial statements.
Government — specific
15) We have made available to you all financial records and related data and all audit or relevant
monitoring reports, if any, received from funding sources.
16) There have been no communications from regulatory agencies concerning noncompliance
with, or deficiencies in, financial reporting practices.
17) We have identified to you any previous audits, attestation engagements, and other studies
related to the audit objectives and whether related recommendations have been
implemented.
18) The City has no plans or intentions that may materially affect the carrying value or
classification of assets, liabilities, or equity.
- 10 -
Management Representation Letter
19) We are responsible for compliance with the laws, regulations, and provisions of contracts and
grant agreements applicable to us, including tax or debt limits and debt contracts; and we
have identified and disclosed to you all laws, regulations and provisions of contracts and grant
agreements that we believe have a direct and material effect on the determination of
financial statement amounts or other financial data significant to the audit objectives,
including legal and contractual provisions for reporting specific activities in separate funds.
20) There are no violations or possible violations of budget ordinances, laws and regulations
(including those pertaining to adopting, approving and amending budgets), provisions of
contracts and grant agreements, tax or debt limits, and any related debt covenants whose
effects should be considered for disclosure in the financial statements, or as a basis for
recording a loss contingency, or for reporting on noncompliance.
21) There are no—
a) Related party relationships and transactions, including revenues, expenditures/
expenses, loans, transfers, leasing arrangements, and guarantees, and amounts
receivable from or payable to related parties of which we are aware.
b) Guarantees, whether written or oral, under which the City is contingently liable.
c) Joint ventures with an equity interest in which the City is a participant.
22) As part of your audit, you assisted with preparation of the financial statements and related
notes. We have designated an individual with suitable skill, knowledge, or experience to
oversee your services and have assumed all management responsibilities. We have reviewed,
approved, and accepted responsibility for those financial statements and related notes.
23) The City has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral.
24) The City has complied with all aspects of contractual agreements that would have a material
effect on the financial statements in the event of noncompliance.
25) We have followed all applicable laws and regulations in adopting, approving and amending
budgets.
26) The financial statements include and properly disclose all component units and other related
organizations.
27) The financial statements properly classify all funds and activities.
28) All funds that meet the quantitative criteria in GASB Statements No. 34 and 37 for
presentation as major are identified and presented as such and all other funds that are
presented as major are particularly important to financial statement users.
29) Components of net position (net investment in capital assets; restricted; and unrestricted)
and equity amounts are properly classified and, if applicable, approved.
30) Provisions for uncollectible receivables have been properly identified and recorded.
31) Expenses have been appropriately classified in or allocated to functions and programs in the
statement of activities, and allocations have been made on a reasonable basis.
Management Representation Letter
32) Revenues are appropriately classified in the statement of activities within program revenues,
general revenues, contributions to term or permanent endowments, or contributions to
permanent fund principal.
33) Interfund, internal, and intra- entity activity and balances have been appropriately classified
and reported.
34) Deposits and investment securities and derivative instruments are properly classified as to risk
and are properly disclosed.
35) Receivables recorded in the financial statements represent valid claims against debtors for
transactions arising on or before the balance sheet date and have been reduced to their
estimated net realizable value.
36) The City is in compliance with Florida Statute 218.415, local government investment policies,
in all respects.
37) Capital assets, including infrastructure and intangible assets, are properly capitalized,
reported, and, if applicable, depreciated.
38) Capital assets have been evaluated for impairment as a result of significant and unexpected
decline in service utility. Impairment loss and insurance recoveries have been properly
recorded.
39) Provision has been made to reduce excess or obsolete inventories to their estimated net
realizable value.
40) We believe that the actuarial assumptions and methods used to measure pension and OPEB
liabilities and costs for financial accounting purposes are appropriate in the circumstances.
41) We have appropriately disclosed the City's policy regarding whether to first apply restricted or
unrestricted resources when an expense is incurred for purposes for which both restricted
and unrestricted net position is available and have determined that net position is properly
recognized under the policy.
42) We acknowledge our responsibility for the required supplementary information (RSI). The RSI
is measured and presented within prescribed guidelines and the methods of measurement
and presentation have not changed from those used in the prior period. We have disclosed to
you any significant assumptions and interpretations underlying the measurement and
presentation of the RSI.
43) We have not completed the process of evaluating the impact that will result from adopting
Governmental Accounting Standards Board (GASB) Statements No. 68 through 71, as
discussed in Note 6. The City is therefore unable to disclose the impact that adopting these
GASB Statements will have on its financial position and the results of its operations when the
Statements are adopted.
44) With respect to the introductory section ( "supplementary information "):
a) We acknowledge our responsibility for presenting the supplementary information in
accordance with accounting principles generally accepted in the United States of
America, and we believe the supplementary information, including its form and content,
is fairly presented in accordance with accounting principles generally accepted in the
United States of America. The methods of measurement and presentation of the
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Signed:
Title: City drn'inistrator
Management Representation Letter
supplementary information have not changed from those used in the prior period, and
we have disclosed to you any significant assumptions or interpretations underlying the
measurement and presentation of the supplementary information.
Title: Finance Director