Audit Report 09.30.2016City Of Okeechobee, Florida
FINANCIAL STATEMENTS
For Year Ended September 30, 2016
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, 2016
Introductory Section
Title Page 1
Table of Contents 2
City Officials 4
Financial Section
Independent Auditors' Report 5
Management's Discussion and Analysis 9
Basic Financial Statements
Government -wide Financial Statements
• Statement of Net Position - Governmental Activities 19
• Statement of Activities - Governmental Activities 20
Fund Financial Statements
Governmental Funds
• Balance Sheet 21
• Statement of Revenues, Expenditures and Changes in Fund Balances —
Governmental Funds 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 57
• Required Pension Supplementary Information — Schedule of Changes in Net Pension
Liability and Related Ratios — Last Three Fiscal Years 58
• Required Pension Supplementary Information — Schedule of Investment Returns —
Last Three Years 61
• Required Pension Supplementary Information — Schedule of Proportionate Share of
the Net Pension Liability General Employees — Last Three Fiscal Years 62
• Required Pension Supplementary Information — Schedule of Contributions General
Employees — Last Three Fiscal Years 63
• Required Other Postemployment Benefits Supplementary Information - Schedule
of Funding Progress 64
• Notes to Required Supplementary Information 65
City of Okeechobee, Florida
Table of Contents
For the year ended September 30, 2016
Reports on Internal Control and Compliance Matters
• 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 67
• Independent Auditors' Management Letter 69
• Independent Accountants' Report on Compliance with Local Government Investment
Policies
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City of Okeechobee, Florida
City Officials
For the year ended September 30, 2016
James E. Kirk
Mayor, Chairman
Gary Ritter
Noel A. Chandler
Dowling R. Watford, Jr.
Mike O'Connor
Council Members
John R. Cook
City Attorney
Marcos Montes De Oca
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
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
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, 2016, 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.
Auditor's 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.
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, 2016, 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.
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 57 and page 65), and the pension and other postemployment benefits information (pages 58
through 64 and page 66) 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June 15,
2017 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.
Melbourne, Florida
June 15, 2017
THIS PAGE IS INTENTIONALLY LEFT BLANK.
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, 2016.
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, 2016:
• The City's total assets exceeded its liabilities at September 30, 2016 by $18,531,230.
• The City's total revenues were $6,256,191 for the year ended September 30, 2016,
compared to total expenses of $6,765,017, which resulted in a $508,826 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 Tong -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 22 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
programs.
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 53 of this report.
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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
2016 2015
Current and other assets $ 12,237,358 $ 12,949,325
Capital assets 7,885,166 7,766,652
Total assets 20,122,524 20,715,977
Deferred outflows 1,314,534 391,077
Current liabilities 390,514 274,525
Noncurrent liabilities 2,059,487 1,459,335
Total liabilities 2,450,001 1,733,860
Deferred inflows 455,827 333,138
Net position:
Net investment in capital assets 7,885,166 7,766,652
Restricted 711,139 728,588
Unrestricted 9,934,925 10,544,816
Total net position $ 18,531,230 $ 19,040,056
Governmental Activities
Total net position decreased by $508,826 primarily as a result of a $593,453 decrease in total
assets, increase in deferred outflows of $923,457, a $716,141 increase of total liabilities, and an
increase in deferred inflows of $122,689. The decrease in total assets was primarily due to a
$711,967 decrease in current and other assets, which was primarily due to the reduction of the net
pension asset by $634,330. This was offset by a $118,514 increase in capital assets. The increase in
total liabilities was due to a $600,152 increase of noncurrent liabilities due mainly to increases in
the net OPEB obligation of $368,911 and an increase in pension liability of $211,490. The net
change in current and noncurrent liabilities was $716,141 as current liabilities increased by
$115,989 related to timing of payables and non - current liabilities increased by $600,152 resulting
from an increase in the compensated absences, net pension liability and OPEB obligation.
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
2016
2015
REVENUES:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Property taxes
Public utility taxes
Franchise fees
Shared revenues
Investment income and other
$ 709,589
662,766
304,742
Total revenues
1,887,967
794,308
532,036
1,330,468
34,315
6,256,191
EXPENSES:
General government
Public safety
Transportation
Physical environment
Economic development
Culture and recreation
Total expenses
Change in net position
1,353,464
3,643,759
844,397
907,791
9,000
6,606
6,765,017
(508,826)
$ 703,069
723,727
180,343
1,783,988
773,012
527,604
1,281,187
504,625
6,477,555
1,159,475
3,050,938
619,398
930,228
4,500
35,665
5,800,204
677,351
Net position, beginning October 1,
Prior period adjustment for GASB 68
19,040,056
18,764,230
(401,525)
Net position, ending $ 18,531,230 $ 19,040,056
The City experienced a decrease of 3.4% in total revenues — a $221,364 decrease to $6.25 million.
The decrease is primarily due to a $291,322 decrease in general revenues and is offset by a $63,438
increase in capital and operating grants. An increase in the assessed taxable values and increased
mileage rate of .25 were the contributory factors in the increase of property tax revenue of
$103,979. Utility Tax revenues increased $21,296 based on higher consumer paid utilities. The
Shared Revenue for the State of Florida (SRS) increased $49,281. The $470,310 decrease in
investment income and other income is due primarily to the previous year receipted funds from a
litigation settlement. The City experienced an increase of 16.6% in total expenses — a $964,813
increase to $6.76 million. The increase is primarily due to a $592,821 increase in expenses for
public safety. The $224,999 increase in transportation expense also was a large contributor to the
overall expenditures for the year. The combined increase in expenses and decrease in revenues
resulted in a decrease in net position of $508,826.
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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 $11,804,455 a decrease of $188,369 in comparison with the prior year. Approximately
80% of this total amount $8,903,808, constitutes unassigned fund balance, which is available for
spending at the government's discretion. Assigned fund balances include $1,845,217 for subsequent
year's expenditures, $316,020 for future capital projects. Public Facilities fund balance of $701,158
plus law enforcement $9,981 are restricted funds based on their specific stipulated purpose. The
remainder of fund balance is non - spendable inventory of $28,271.
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 $11,068,943 while total fund
balance was $11,798,372. 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 171%
and 182% respectively of total general fund expenditures.
Revenues from grants were used in the construction of infrastructure and other improvements in
the City.
General Fund Budgetary Highlights
The amount appropriated for expenditures in the original 15/16 budget decreased from $7,556,659
to $6,956,846 in the final 15/16 budget, a decrease of $599,813. The decrease in general
government expenses, fire and police public safety expenses, physical environment expenses,
transportation expenses and capital outlay 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, 2016, amounted to
$7,885,166, (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 $118,514.
The City's major additions of $943,257 to capital assets during the current fiscal year included the
following:
• Replacement computers for (1) Administration; (3)- Police Department, (1) Fire
Department, and (1) Public Works
• Cameras (4) purchased for Police Department
• Replaced (12) police vehicles including equipment and (1) additional vehicle for
Administration
• Equipment for Police Department including (1) Radar with remote and (1) Laser
speed gun
• Carpet and baseboard replacement within the Police Department
• Communication system for Police Department and dispatch connectivity
• M7 Air -pack systems (2) and SCBA bottles (6) for the Fire Department
• (1) Thermal Imaging camera kit and (1) Spoke machine
• (1) Tractor loader with attachments for Public Works
• Various infrastructure improvements including the roadways and sidewalk
improvements
• Storm water retrofit (canal improvements) and drainage projects completed
These additions were offset by depreciation expense of $551,687, and disposals with a net book
value of $273,056, which largely relates to the sale of 12 police vehicles.
City of Okeechobee, Florida
Management's Discussion and Analysis
City's Capital Assets
(net of depreciation)
2016 2015
Land $ 1,378,744 $ 1,378,744
Construction in progress 31,021 1,248
Buildings 1,030,889 1,085,782
Improvements other than buildings 4,440,900 4,261,558
Equipment 1,003,612 1,039,320
Total $ 7,885,166 $ 7,766,652
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
Net pension liability
Total
2016 2015
1,375,989 $ 1,007,078
451,939 432,188
231,559 20,669
2,059,487 $ 1,459,335
The City's long -term liabilities increased by $600,152 during the current fiscal year. The largest
contributing factor is the additional liability for the OPEB obligation of $368,911. This is the sixth
year of implementation of GASB 45, which caused the increase in Net OPEB liability. The net
pension liability increase was significant with an increase of $210,890. This is the second year of
implementation of GASB 68.
Additional information on the City's long -term debt can be found in Note 4.F. on page 39 of this
report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The City Council adopted a millage rate 7.9932 for budget year 2017. The adopted millage rate is
more than 2.11% of the roll -back rate. A $48,205 increase in budgeted ad valorem revenue is
largely due to the increase in current taxable values and new construction added to this years
assessed tax rolls.
Revenues for the fiscal year 2017 adopted budget for all funds of the City total approximately
$6,379,923, a decrease from the prior year original budget of approximately $145,677. 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 specific projects.
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City of Okeechobee, Florida
Management's Discussion and Analysis
Expenditures for the fiscal year 2017 adopted budget for all funds of the City total approximately
$8,921,783, an increase of 1.7% or $147,876 from the prior year original budget. The increase in
expenditures is based mostly on the increase in capital 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
THIS PAGE IS INTENTIONALLY LEFT BLANK.
September 30, 2016
City of Okeechobee, Florida
Statement of Net Position - Governmental Activities
ASSETS
Cash and cash equivalents $ 11,608,449
Accounts receivable 115,222
Due from other governments 485,416
Inventory 28,271
Capital assets:
Nondepreciable
Land 1,378,744
Construction in progress 31,021
Depreciable, net of accumulated depreciation
Buildings 1,030,889
Improvements other than buildings 4,440,900
Equipment 1,003,612
Total assets 20,122,524
DEFERRED OUTFLOWS OF RESOURCES
Deferred outflow - pensions 1,314,534
Total deferred outflows of resources 1,314,534
LIABILITIES
Accounts payable 299,828
Accrued expenses 90,686
Noncurrent liabilities:
Due within one year - compensated absences 20,220
Due in more than one year
Compensated absences 431,719
Net pension liability 231,559
OPEB obligation 1,375,989
Total liabilities 2,450,001
DEFERRED INFLOWS OF RESOURCES
Deferred inflow - business tax revenue 42,389
Deferred inflow - pensions 413,438
Total deferred inflows of resources 455,827
NET POSITION
Net investment in capital assets 7,885,166
Restricted for:
Law enforcement 9,981
Public facilities 701,158
Unrestricted 9,934,925
Total net position $ 18,531,230
The accompanying notes are an integral part of these financial statements.
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Year ended September 30, 2016
City of Okeechobee, Florida
Statement of Activities - Governmental Activities
Functions /Programs
Expenses
Program Revenues
Operating Capital
Charges for Grants and Grants and
Services Contributions Contributions
Net (Expense)
Revenue and
Changes in
Net Position
General government
Public safety
Transportation
Physical environment
Economic environment
Culture & recreation
Total governmental
activities
$ 1,353,464
3,643,759
844,397
907,791
9,000
6,606
$ 621,250
33,388
54,951
$ - $ 300,000
1,791 3,494
660,975
1,248
$ (432,214)
(3,605,086)
(128,471)
(906,543)
(9,000)
(6,606)
$ 6,765,017 $ 709,589 $ 662,766 $ 304,742
(5,087,920)
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 of year
Net position, end of year
1,887,967
794,308
532,036
1,330,468
3,503
30,812
4,579,094
(508,826)
19,040,056
$ 18,531,230
The accompanying notes are an integral part of these financial statements.
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September 30, 2016
ASSETS
Cash and cash equivalents
Accounts receivable
Due from other funds
Due from other governments
Inventory
Total assets
City of Okeechobee, Florida
Balance Sheet - Governmental Funds
Appropriations
Grant
General Capital Project
Nonmajor
Funds
Total
Governmental
Funds
$ 11,564,078
115,222
336,033
185,416
28,271
$ 12,229,020
$ $ 44,371 $ 11,608,449
115,222
336,033
300,000 485,416
28,271
$ 300,000 $ 44,371 $ 12,573,391
LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES
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
Unassigned
Total fund balances
Total liabilities, deferred inflows of
resources and fund balances
$ 297,573 $
90,686
388,259
300,000
300,000
$ 2,255 $
36,033
38,288
42,389
299,828
90,686
336,033
726,547
42,389
28,271
701,158
1,845,217
316,020
8,907,706
11,798,372
28,271
701,158
9,981 9,981
1,845,217
316,020
(3,898) 8,903,808
6,083 11,804,455
$ 12,229,020 $ 300,000 $ 44,371
Amounts reported for governmental activities in the statement of net
position are different because:
Net pension liability resulting from underfunding of the police officers'
and firefighters' pension plan. (91,790)
Deferred outflows of resources related to pension are not
recognized in the governmental funds; however, they are recorded
in the statement of net position under full accrual accounting. 1,314,534
Deferred inflows of resources related to pensions are not recognized in
governmental funds; however, they are recorded in the statement
of net position under full accrual accounting. (413,438)
Capital assets used in governmental activities are not financial resources
and, therefore, are not reported in the funds. 7,885,166
Long -term liabilities, including the net OPEB obligation, net pension
liability 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
(1,967,697)
$ 18,531,230
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, 2016
General
Appropriations Total
Grant Nonmajor Governmental
Capital Project Funds Funds
Revenues
Taxes
Intergovernmental
Charges for services
Permits and fees
Contributions and donations
Fines and forfeitures
Investment earnings
Miscellaneous
Total revenues
$ 2,653,485
2,254,311
442,215
652,246
5,997
34,534
3,503
24,815
6,071,106 300,000
$ - $
300,000
$ 2,653,485
2,554,311
442,215
652,246
5,997
4,192 38,726
- 3,503
24,815
4,192 6,375,298
Expenditures
Current:
General government
Public safety
Transportation
Physical environment
Recreation
Capital outlay
Total expenditures
Deficit of revenues
under expenditures
1,168,946
3,368,506
1,065,204
217,890
6,606
638,515
6,465,667
(394,561)
9,000
300,000
309,000
- 1,168,946
1,157 3,369,663
- 1,065,204
33,843 260,733
6,606
938,515
35,000 6,809,667
(9,000) (30,808) (434,369)
Other financing sources (uses)
Transfers in
Transfers out
Proceeds from sale of capital assets
Total other financing sources
Net change in fund balances
Fund balances, beginning of year
Fund balances, end of year
(38,965)
246,000
207,035
(187,526)
11,985,898
$ 11,798,372 $
9,000 29,965 38,965
- (38,965)
- 246,000
9,000 29,965 246,000
(843) (188,369)
6,926 11,992,824
$ 6,083 $ 11,804,455
The accompanying notes are an integral part of these financial statements.
- 22 -
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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, 2016
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.
$ (188,369)
386,828
Donation of capital assets increase net assets in the statement of activities but are
not reported in the governmental funds because they are not financial resource 4,742
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.
Cash pension contributions reported in the funds were less than the calculated
pension expense on the statement of activities and therefore decrease 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.
(273,056)
(50,309)
(368,911)
(19,751)
Change in net position of governmental activities $ (508,826)
The accompanying notes are an integral part of these financial statements.
- 23 -
City of Okeechobee, Florida
Statement of Changes in Fiduciary Net Position - Pension Trust Funds
September 30, 2016
Pension
Trust Funds
ASSETS
Cash equivalents
Investments:
Mutual funds
Common equity securities
Receivables
Accrued interest and dividends
Due from other plans
Total assets
$ 397,114
15,424,894
6,864,459
238,746
6,848
5,884
22,937,945
LIABILITIES
Accounts payable
Total liabilities
74,495
74,495
NET POSITION
Held in trust for pension benefits $ 22,863,450
The accompanying notes are an integral part of these financial statements.
- 24 -
UN
City of Okeechobee, Florida
Statement of Changes in Fiduciary Net Position - Pension Trust Funds
Year ended September 30, 2016
Pension
Trust Funds
ADDITIONS
Contributions:
State $ 123,849
City 695,165
Employees 253,544
Total contributions 1,072,558
Investment earnings:
Net appreciation in the
fair value of investments
Interest and dividends
Total investment earnings
Less investment expenses
Net investment earnings
ON
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Total additions
DEDUCTIONS
Benefits paid to participants
Refunds on termination
DROP payments
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
1,199,071
584,780
1,783,851
(108,281)
1,675,570
2,748,128
649,666
43,270
252,832
126,457
1,072,225
1,675,903
21,187,547
$ 22,863,450
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 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 an 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 an 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. It is accounted for in the Pension Trust funds in 2016 as the City does have
fiduciary responsibility.
\�a
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.
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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 City reports the following major governmental funds:
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 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 City reports the following nonmajor governmental 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 community development capital project fund accounts for the assets, liabilities, revenues
and expenditures related to the construction of infrastructure and other improvements in the
City not including grant funds that are instead included in the appropriations grant capital
project fund.
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 less 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.
The Florida PRIME has adopted operating procedures consistent with the requirements for an
investment pool under GASB 79 to be reported at amortized cost. The fair value of the City's position in
the pool is equal to the value of pooled shares. The funds can with withdrawn at any time, and there
are no unfunded commitments.
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
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.
- 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)
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, 2016 was 7.9932 mills, which is 0.04% more 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
3. Inventory
- January 1
- Prior to September 30
- November 1
- April 1
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).
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)
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 and outflows of resources
The deferred outflows and inflows related to pensions are an aggregate of items related to
pensions as calculated in accordance with GASB Statement No. 68, Accounting and Financial
Reporting for Pensions. Total deferred inflows of resources related to pensions were $413,438, and
total deferred outflows were $1,314,534 for the year ended September 30, 2016. Note 5 -B includes
a complete discussion of retirement commitments.
Resources received before time requirements have been met, for example business tax revenues,
are classified as deferred inflows of resources.
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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, long -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.
E. CHANGE IN ACCOUNTING PRINCIPLE
In February 2015, the Governmental Accounting Standards Board (GASB) issued Statement No. 72
Fair Value Measurement and Application, which provides guidance for determining a fair value
measurement for financial purposes and applying fair value to certain investments and disclosures
related to all fair value measurements. This Statement is effective for annual reporting periods
beginning after June 15, 2015. The City has implemented the disclosure requirements of this
Statement for the year ended September 30, 2016. See Note 4 -A.
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 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 $(1,967,697) difference are as
follows:
Net OPEB obligation
Compensated absences
Net pension liability
Net adjustment to reduce fund balance - total governmental funds to
arrive at net position - governmental activities
$ (1,375,989)
(451,939)
(139,769)
$ (1,967,697)
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 2: RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS (Continued)
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 $391,570 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
$ 938,515
(551,687)
$ 386,828
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, 2016, the City's carrying amount of deposits was $11,608,073 and the bank
balance was $11,810,179. In addition, the City maintained $324 of petty cash. As of September 30,
2016, $250,000 of the City's bank balances is 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.
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
A. DEPOSITS AND INVESTMENTS (Continued)
Fair Value
GASB 72, Fair Value Measurements, establishes a framework for measuring fair value. That framework
provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair
value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs
(Level 3 measurements).
The three levels of the fair value hierarchy under GASB 72 are described as follows:
Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or
liabilities in active markets that the plan has the ability to access.
Level 2: Inputs to the valuation methodology include
• quoted prices for similar assets or liabilities in active markets;
• quoted prices for identical or similar assets or liabilities in inactive markets;
• inputs other than quoted prices that are observable for the asset or liability;
• inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable
for substantially the full term of the asset or liability.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value
measurement.
The asset or liability's fair value measurement level within the fair value hierarchy is based on the
lowest level of any input that is significant to the fair value measurement. Valuation techniques used
need to maximize the use of observable inputs and minimize the use of unobservable inputs.
The following is a description of the valuation methodologies used for assets measured at fair value.
There have been no changes in the methodologies used at September 30, 2016.
Level 1 investments noted in the following table are valued at quoted market prices.
Level 2 investments noted in the following table are valued at quoted prices for similar liabilities in
active markets.
The money market fund and SBA are valued at amortized cost. They can be redeemed daily, and have
no unfunded commitments.
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City of Okeechobee, Florida
Notes to Financial Statements
NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
A. DEPOSITS AND INVESTMENTS (Continued)
At September 30, 2016, the City had the following investments and effective duration presented in
terms of years and levels:
Investment type
Investment Maturities (in years)
Fair Value Less than 1 1 - 5
M ore
6 - 10 than 10 Rating gency Level
Primary government:
SBA (Florida Prime) $ 52 $ 52 $ - $ - $ - AAAm S &P
Pension trust funds:
Money market fund $ 397,114 $ 397,114 $ - $ - $ Not rated -
Mutual funds- equities 6,513,983 6,513,983 - - - Not rated - L1
.r Mutual funds- fixed income 8,910,911 - 8,910,911 BBB - AA S &P L2
Common equity securities 6,864,459 6,864,459 - - Not rated - L1
$ 22,686,467 $13,775,556 $ - $ 8,910,911 $ -
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Credit risk
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.
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.
- 37 -
NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
B. RECEIVABLES
Receivables as of September 30, 2016 are as follows:
General
Fund
Municipal
Police Officers'
Pension
Trust
City of Okeechobee, Florida
Notes to Financial Statements
Municipal
Firefighters'
Pension
Trust
General
Employees
Pension Trust
Franchise /Utility taxes $ 99,739
Contributions
Other 15,483
Receivables, net $ 115,222
117,355
117,355
$ 29,888
$ 29,888
$ 91,503
$ 91,503
C. CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2016 was as follows:
Beginning
Balance
Increases
Decreases Ending Balanc
1
1
1
1
1
1
1
1
1
Governmental activities:
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, not being depreciated
$1,378,744 $
1,248
1,379,992
Capital assets, being depreciated:
Buildings
Improvements other than buildings
Equipment
Total capital assets, being depreciated
1,972,752
7,123,161
2,771,792
11,867,705
$ - $ 1,378,744
31,021 (1,248) 31,021
31,021 (1,248) * 1,409,765
8,505
456,480
447,251
912,236 **
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Equipment
Total accumulated depreciation
(886,970)
(2,861,603)
(1,732,472)
(5,481,045)
(63,398)
(277,138)
(211,151)
(551,687)
Total capital assets, being depreciated, net
6,386,660
360,549
Governmental activities capital assets, net
$ 7,766,652
$ 391,570
* Construction in progress was disposed of and not placed in service.
** Includes $4,742 of donated assets.
- 38 -
1,981,257
7,579,641'
(304,782) 2,914,261
(304,782) 12,475,159
(950,368)
(3,138,741)1
32,974 (1,910,649)
32,974 (5,999,758)'
(271,808) 6,475,401
$ (273,056) $ 7,885,1661
1
1
IIMIIMINIIIMIMII
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 4: DETAILED NOTES ON ALL FUNDS (Continued)
D. CAPITAL ASSETS (Continued)
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
$ 76,059
168,210
307,418
$ 551,687
E. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund loans of $336,033 for short term operating purposes resulted in a due to the General fund
from the Appropriations Grant Capital Project fund of $300,000 and from the nonmajor Community
Development Capital Project fund of $36,033. All amounts are expected to be repaid within one
year.
During the year ended September 30, 2016, the General fund transferred $9,000 to the
Appropriations Grant Capital Project fund, $20 to the nonmajor FDOT Grant Capital Project fund,
and $29,945 to the nonmajor Community Development Capital Project fund for a total of $38,965.
The transfers represented engineering costs for the respective partially grant funded capital
projects.
F. CHANGES IN LONG -TERM LIABILITIES
Long -term liability activity for the year ended September 30, 2016, was as follows:
Governmental activities:
Compensated absences
Net OPEB obligation
Net pension liability
Long -term liabilities
Beginning
Balance
Ending Due Within
Additions Reductions Balance One Year
$ 432,188 $ 222,772 $ (203,021) $ 451,939 $ 20,220
1,007,078 385,151 (16,240) 1,375,989 -
20,069 623,040 (411,550) 231,559 -
$ 1,459,335 $ 1,230,963 $ (630,811) $ 2,059,487 $ 20,220
For the governmental activities, compensated absences are generally liquidated by the general fund.
City of Okeechobee, Florida
Notes to Financial Statements
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 loss reserve and purchases specific
excess insurance, aggregate excess insurance and multiple loss coverage from commercial carriers
and underwriters.
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.
At September 30, 2016, the Police Officers' plan included 12 retirees or beneficiaries either receiving
or entitled to receive benefits, including 1 disability retiree and 2 survivor beneficiaries. The Police
Officers' plan also includes no terminated members with vested benefits, and has 3 DROP participants.
There are 16 active current employees of which 11 are vested and 5 are non - vested.
At September 30, 2016, the Firefighters' plan included 4 retirees receiving or entitled to receive
benefits, including 1 beneficiary receiving benefits. The Plan also included 1 terminated vested
members entitled to receive benefits. There are 12 active current employees of which 4 are vested
and 8 are non - vested.
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 16.62% for the Police Officers' plan and 17.57% for the Firefighters'
plan.
ir.
•
•
•
IMO
•
•
•
•
•
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
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 $73,960 and $49,889, respectively. These contributions are
funded by an excise tax upon certain casualty insurance companies on their gross receipts of
premiums from policy holders.
The City and employees contributions for the year ended September 30, 2016, are as follows:
Police Officers'
Firefighters'
City
$ 149,981 $
$ 92,919 $
Employees
43,958
26,442
Plan Investment Policies and Allocation of Plan Investments - Florida statutes and the plan investment
policy authorize the Trustees to invest funds in various investments. The general investment objective
of the fund is to preserve the purchasing power of the fund's assets and earn a reasonable rate of
return (after inflation) over the long term while minimizing, to the extent reasonable, the short term
volatility of returns. Best estimates of arithmetic real rates of return for each major asset class
included in the pension plan's target asset allocation as of September 30, 2016, and the current target
and actual allocation of these investments at market, per the performance analysis report, is as
follows as of September 30, 2016:
I nvestments
Domestic Equity
International Equity
Fixed Income
Cash Equivalents
Total
Police Officers
Actual
Percent
44.9%
14.6%
39.4%
1.1%
100.00%
Target
Percent
45.0%
15.0%
40.0%
0.0%
100.00%
Investments
Domestic Equity
International Equity
Fixed Income
Cash Equivalents
Total
Firefighters
Actual
Percent
43.8%
14.7%
39.5%
2.0%
100.00%
Target
Percent
45.0%
15.0%
40.0%
0.0%
100.0%
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
Money - Weighted Rate of Return - For the year ended September 30, 2016, the annual money -
weighted rate of return on the Police Officers' pension plan investments was (7.59 %) and on the
Firefighters' pension plan investments was (6.83 %). The money - weighted rate of return expresses
investment performance, net of plan investment expenses, as adjusted for the changing amounts
actually invested on a monthly basis.
Net Pension Liability —The City's net pension liability was measured as of September 30, 2015, and the
total pension liability used to calculate net pension liability was determined by an actuarial valuation
as of September 30, 2016 for the Police Officers' and Firefighters pension plan.
Total Pension Liability
Service cost
Interest
Difference between actual & expected experience
Assumption changes
Benefit payments
Refunds
Net change in total pension liability
Total pension liability - beginning
Total pension liability - ending (a)
Police Officers'
$ 247,353
506,147
(219,850)
94,065
(203,855)
(321)
423,539
7,334,873
$ 7,758,412
Firefighters'
$ 144,773
213,154
(19, 771)
49,797
(96,939)
291,014
2,991,119
$ 3,282,133
Plan Fiduciary Net Position
Contributions - employer (from City)
Contributions - employer (from State)
Contributions - members
Net investment income
Benefit payments
Refunds
Administrative expense
Other
Net change in plan fiduciary net position
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b)
Police Officers'
$ 192,581
70,807
47,740
(95,964)
(203,855)
(321)
(30,198)
3,886
(15,324)
7,706,664
7,691,340
Firefighters'
$ 92,863
52,662
26,324
(44,021)
(96,939)
(27,132)
Net pension liability (asset) - Ending (a) - (b)
$ 67,072 $
3,757
3,253,658
3,257,415
24,718
Plan fiduciary net position as a percentage
or Total Pension Liability
99.14%
99.25%
MIIMINIIIIIIIIIIMMI
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
For the year ending September 30, 2016, the City recognized a pension expense of $253,175 for the
Police Officers' Plan and $164,953 for the Firefighters' Plan. On September 30, 2016 the Sponsor
reported deferred outflows of resources and deferred inflow of resources related to pensions from
the following sources:
Police Officers'
Deferred Deferred
Outflow of Inflow of
Resources Resources
Difference between expected and actual experience $ - $ 180,371
Change in assumptions 76,962 -
Net difference between projected and actual earnings on
pension plan investments 510,602 123,730
Contributions subsequent to the measurement date 147,312 -
Total $ 734,876 $ 304,101
Firefighters'
Deferred Deferred
Outflow of Inflow of
Resources Resources
Difference between expected and actual experience $ - $ 17,885
Change in assumptions 43,649
Net difference between projected and actual earnings on
pension plan investments 218,759 67,975
Contributions subsequent to the measurement date 97,709
Total $ 360,117 $ 85,860
Deferred outflows of $245,021 resulting from City contributions subsequent to the measurement date
will be recognized as a reduction of the net pension liability in the fiscal year end September 30, 2016.
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
pension will be recognized in pension expense as follows:
Police Officers'
Year ended September 30:
2017 $ 63,392
2018 63,392
2019 63,394
2020 104,720
2021 (11,435)
Total $ 283,463
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
Firefighters'
Year ended September 30:
2017 $ 35,646
2018 35,646
2019 35,645
2020 58,303
2021 3,614
Thereafter 7,694
Total $ 176,548
Expected Long -Term Rate of Return - The long -term expected rate of return on pension investments
was determined using a building -block method in which best estimate ranges of future real rates of
return (expected returns, net of pension plan investment expenses and inflation) are developed for
each major asset class. These ranges are combined to produce the long -term expected rate of return
by weighting the expected future real rates of return by the target asset allocation percentage and by
adding expected inflation (2.5 %). Best estimates of arithmetic real rates of return for each major asset
class included in the pension plan's target asset allocation as of September 30, 2016 are summarized
as follows:
Police Officers'
Percent Long -Term
Investments - Target Rate of Return*
Domestic Equity 45.0% 7.5%
International Equity 15.0% 8.5%
Fixed Income 40.0% 2.5%
Cash Equivalents 0.0% 0.0%
Total 100.00%
*Net of long -term inflation assumptions 2.5%
Firefighters'
Percent Long -Term
Investments Target Rate of Return*
Domestic Equity 45.0% 7.5%
International Equity 15.0% 8.5%
Fixed Income 40.0% 2.5%
Cash Equivalents 0.0% 0.0%
Total 100.00%
*Net of long -term inflation assumptions 2.5%
INN
r
NOTE 5: OTHER INFORMATION (Continued)
City of Okeechobee, Florida
Notes to Financial Statements
.1/ B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
r.
Discount Rate - The projection of cash flows used to determine the discount rate assumed that plan
member contributions will be made at the current contribution rate and that sponsor contributions
will be made at rates equal to the difference between actuarially determined contribution rates and
the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected
to be available to make all projected future benefit payments of current plan members. Therefore, the
long -term expected rate of return on pension plan investments was applied to all periods of projected
benefit payments to determine the total pension liability.
Sensitivity of the Net Pension Liability to Changes in Discount Rate - The following presents the pension
liability of the City, calculated using the discount rate of 7 %, as well as what the City's net pension
liability would be if it were calculated using a discount rate that is 1% lower (6 %) or 1% higher (8 %)
than the current rate:
Police Officers
1% Decrease
6.00%
Sponsor's net pension liability (asset) $ 1,005,029 $
Firefighters
Current Discount 1% Increase
7.00% 8.00%
67,072 $ (711,898)
1% Decrease
6.00%
Sponsor's net pension liability (asset) $ 462,996 $
Current Discount 1% Increase
7.00% 8.00%
24,718 $ (339,935)
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.
At September 30, 2016, the Plan included 30 retirees and /or beneficiaries currently receiving benefits
plus 1 disability retiree and 6 terminated employees entitled to benefits but not yet receiving them,
and 2 DROP participants. There are 75 active current employees (City — 25, OUA — 50) in the Plan, of
which 44 are vested and 31 are non - vested.
- 45 -
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
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
5.39% of covered payroll. The City elected to fund the plan based on the initially calculated higher rate
of 12.75 %. The City's contributions for the years ended September 30, 2016 and 2015 were $116,529
and $105,633, respectively and were equal to the required contributions for each year.
For the year ending September 30, 2016, the City reported a liability of $139,769 for its proportionate
share of the Pension Plan's net pension liability. The net pension liability was measured as of
September 30, 2015, and the total pension liability used to calculate the net pension liability was
determined by an actuarial valuation as of October 1, 2014. The City's proportionate share of the net
pension liability was based on the City's December 2, 2015 portion of the employer's total required
contribution. At September 30, 2016 the City's proportionate share was 12 %.
Money - Weighted Rate of Return - The annual money - weighted rate of return on plan investments
(calculated as the internal rate of return on plan investments, net of plan investment expense) was
(7.78 %) for the year ended September 30, 2016. The money- weighted rate of return expresses
investment performance, net of plan investment expenses, as adjusted for the changing amounts
actually invested on a monthly basis.
For the year ending September 30, 2016 the City recognized a pension expense of $53,240 for the
General Employees' Retirement Plan. On September 30, 2016, the Sponsor reported deferred
outflows of resources and deferred inflow of resources related to pensions from the following
sources:
General
Deferred Deferred
Outflow of I nflow of
Resources Resources
Difference between expected and actual experience $ 3,680 $
Change in assumptions 20,048
Net difference between projected and actual earnings on
pension plan investments 79,284
Contributions subsequent to the measurement date 116,529
Total $ 219,541 $
23
23,454
23,477
MIN
NOTE 5: OTHER INFORMATION (Continued)
City of Okeechobee, Florida
Notes to Financial Statements
.r. B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
MO
MO
MO
MO
Deferred outflows of $116,529 resulting from City contributions subsequent to the measurement date
will be recognized as a reduction of the net pension liability in the fiscal year ended September 30,
2016. Amounts reported as deferred outflows of resources and deferred inflows of resources related
to pension will be recognized in pension expense as follows:
General
Year ended September 30:
2017 $ 15,826
2018 15,826
2019 15,826
2020 23,644
2021 3,824
Thereafter 4,589
Total $ 79,535
Plan Investment Policies and Allocation of Plan Investments - Florida statutes and the plan
investment policy authorize the Trustees to invest funds in various investments. The general
investment objective of the fund is to preserve the purchasing power of the fund's assets and earn
a reasonable rate of return (after inflation) over the long term while minimizing, to the extent
reasonable, the short term volatility of returns.
The long term expected rate of return on pension plan investments was determined using a
building -block method in which best estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expenses and inflation) are developed for each
major asset class. These ranges are combined to produce the long term expected rate of return by
weighting the expected future real rates of return by the target asset allocation percentage and by
adding expected inflation. Best estimates of arithmetic real rates of return for each major asset
class included in the pension plan's target asset allocation and actual allocation as of September 30,
2016 are summarized in the following table:
Percent Percent Long -Term
Investments Actual Target Rate of Return*
Domestic Equity 49.8% 50.0% 7.5%
International Equity 9.6% 10.0% 8.5%
Fixed Income 39.5% 40.0% 2.5%
Cash Equivalents 1.1% 0.0% 0.0%
Total 100.00% 100.00% 5.6%
*Net of Tong -term inflation assumptions 2.5%
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
B. RETIREMENT COMMITMENTS — DEFINED BENEFIT PLANS (Continued)
Discount Rate - The discount rate used to measure the total pension liability was 7.00 %. The
Pension Plan's fiduciary net position was projected to be available to make all projected future
benefit payments of the current plan members. Therefore, the long -term expected rate of return
on pension plan investments was applied to all periods of projected benefit payments to determine
the total pension liability.
Sensitivity of the City's Proportionate Share of the Net Pension Liability to Changes in Discount Rate
— The following represents the City's proportionate share of the net pension liability calculated
using the discount rate of 7.00% as well as what the City's proportionate share of the net pension
liability would be if it was calculated using a discount rate that is one percentage point lower
(6.00 %) or one percentage point higher (8.00 %) than the current rate:
1% Decrease
6.00%
Rate Assumption
7.00%
1% Increase
8.00%
City's proportionate share of
the net pension liability (asset)
$ 324,002 $ 139,769 $ (15,654)
Actuarial Assumptions — The total pension liability was determined by an actuarial valuation as of
October 1, 2014 using the following actuarial assumptions applied to all measurement periods.
Fire
Police General
Actuarial Cost Method
Inflation
Salary Increases
Investment Rate of Return
Retirement Age
Mortality
Entry Age Normal
2.75%
7.00%
7.00%
100% when first eligible
for Normal Retirement
or DROP entry
RP -2000 Combined
Healthy Participant
Mortality Table for
males and females with
mortality improvement
projected to all future
years after 2000 using
scale AA.
Entry Age Normal
2.75%
6.00%
7.00%
Entry Age Normal
2.75%
6.00%
7.00%
100% when first eligible 100% when first eligible
for Normal Retirement or for Normal Retirement
DROP entry or DROP entry
RP -2000 Combined RP -2000 Combined
Healthy Participant Healthy Participant
Mortality Table for males Mortality Table for
and females with males and females with
mortality improvement
projected to all future
years after 2000 using
scale AA.
mortality improvement
projected to all future
years after 2000 using
scale AA.
N IP
MO
MO
WI
IMP
■r
NO
S W
N O
SP
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, 2016 was as follows:
Firefighters'
Pension
Police
Officers'
Pension
General
Employees'
Pension
Total Pension
Trust Funds
ASSETS
Cash equivalents
Investments:
Mutual funds
Common equity securities
Receivables
Accrued interest and dividends
Due from other plans
Total assets
$ 68,282 $ 90,342 $
2,462,395
990,500
29,888
975
3,552,040
5,525,161
2,316,057
117,355
2,315
8,051,230
238,490 $
7,437,338
3,557,902
91,503
3,558
5,884
11,334,675
397,114
15,424,894
6,864,459
238,746
6,848
5,884
22,937,945
LIABILITIES
Accounts payable
Total liabilities
15,582
15,501
43,412
74,495
15,582
15,501
43,412
74,495
NET POSITION
Held in trust for pension benefits $ 3,536,458 $ 8,035,729 $ 11,291,263 $ 22,863,450
- 49 -
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
follows:
net position
Firefighters'
Pension
activity as of September
Police
Officers'
Pension
30, 2016 was as
General
Employees' Total Pension
Pension Trust Funds
ADDITIONS
Contributions
State
City
Employees
Total contributions
$ 49,889 $ 73,960 $
92,919 149,981
26,442 43,958
169,250 267,899
452,265
183,144
635,409
$ 123,849
695,165
253,544
1,072,558
Investment earnings:
Net appreciation in the fair value
of investments
Interest and dividends
Total investment earnings
Less investment expenses
Net investment earnings
Total additions
181,913
90,171
272,084
(26,478)
245,606
414,856
429,524
212,746
642,270
(36,031)
606,239
874,138
587,634
281,863
869,497
(45,772)
823,725
1,459,134
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
102,590
33,221
135,811
279,045
3,257,413
215,862
25,003
252,832
36,050
529,747
344,391
7,691,338
331,214
18,267
57,186
406,667
1,052,467
10,238,796
$ 3,536,458
$ 8,035,729
$ 11,291,263
1,199,071
584,780
1,783,851
(108,281)
1,675,570
2,748,128
649,666
43,270
252,832
126,457
1,072,225
1,675,903
21,187,547
$ 22,863,450
OP
le
OW
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 59 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, 2016, the City's contribution is $16,240 which represents an
estimate of the implied subsidy described above. Contributions of plan members totaled
approximately $6,507 for the year ended September 30, 2016.
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, 2016, the amount
actually contributed to the Plan, and changes in the City's net OPEB obligation to the Plan:
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
$ 386,510
38,964
(40,323)
385,151
(16,240)
368,911
1,007,078
$ 1,375,989
City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (Continued)
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, 2016 was as follows:
Year Annual OPEB Percentage of Annual Net OPEB
Ending Cost OPEB Cost Contributed Obligation
9/30/2016 $ 385,151 4% $ 1,375,989
9/30/2015 225,128 13% 1,007,078
9/30/2014 218,009 16% 811,717
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, 2016. Accordingly, the City will be required to obtain a
subsequent actuarial valuation within three years of that date. As of September 30, 2016, the actuarial
accrued liability for benefits was $757,717, all of which was unfunded. The covered payroll (annual
payroll of active employees covered by the Plan) was $2,639,843, and the ratio of unfunded actuarial
accrued liability (UAAL) to the covered payroll was 29 %.
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.
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.
IMP
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City of Okeechobee, Florida
Notes to Financial Statements
NOTE 5: OTHER INFORMATION (Continued)
C. POSTEMPLOYMENT BENEFITS OTHER THAN PENSION (Continued)
In the September 30, 2016 valuation, the entry age normal cost method was used. The assumptions
included a discount rate of 3 %, a general inflation rate of 2.8 %, and an annual healthcare cost trend
rate of 0 %. 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
ON
SO
ON
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MI
✓
2017. The statements address:
• Certain pension issues;
• Other postemployment benefit (OPEB) plans;
• Tax abatement disclosures; and
• Blending certain component units.
The City is currently evaluating the effects that these statements will have on its 2017 financial
statements.
NOTE 7: SUBSEQUENT EVENTS
As of October 1, 2016, the Okeechobee Utility Authority Employees' Retirement System will be split
out from the Pension Trust funds and will no longer be accounted for by the City in the Pension
Trust funds.
In December 2016, the City purchased a Pierce Saver Pumper Engine Fire Truck for $412,507.
In January 2017, the City entered into a grant agreement with Florida Department of Environmental
.. Protection Agreement for a Water Quality Improvement Project for $183,630.
In January 2017, The City entered into an agreement with the South Florida Water Management
District for $175,000.
In May 2017, the City entered into an agreement with Seminole Design Build for the Centennial
as Park Storm Water Improvements for $547,318.
- 53 -
THIS PAGE IS INTENTIONALLY LEFT BLANK.
REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
THIS PAGE IS INTENTIONALLY LEFT BLANK.
City of Okeechobee, Florida
Schedule of Revenues, Expenditures and Changes in Fund Balances -
Budget and Actual - General Fund
Year ended September 30, 2016
Actual Variance with
Original Final (on Budgetary Final Budget
Budget Budget Basis) Positive (Negative)
Revenues
Taxes $ 2,532,154 $ 2,645,995 $ 2,653,485 $ 7,490
Intergovernmental 2,048,726 2,211,845 2,254,311 42,466
Charges for services 418,532 440,272 442,215 1,943
Permits and fees 546,650 648,869 652,246 3,377
Fines and forfeitures 14,300 25,357 34,534 9,177
Investment earnings 6,550 3,497 3,503 6
Miscellaneous 14,350 11,382 24,815 13,433
Contributions and donations - - 5,997 5,997
Total revenues 5,581,262 5,987,217 6,071,106 83,889
Expenditures
Current:
General government:
Legislative 130,284 141,471 121,248 20,223
Executive 181,003 182,639 179,763 2,876
City clerk 222,937 216,765 211,501 5,264
Financial services 268,723 284,738 276,709 8,029
Legal council 88,197 61,411 50,610 10,801
General services 378,974 336,696 328,694 8,002
Total general government 1,270,118 1,223,720 1,168,525 55,195
Public safety:
Fire 1,463,483 1,400,851 1,385,107 15,744
Police 2,197,633 2,007,802 1,986,776 21,026
Total public safety 3,661,116 3,408,653 3,371,883 36,770
Transportation 1,177,475 1,077,156 1,065,204 11,952
Physical environment 704,800 649,035 483,544 165,491
Capital outlay 743,150 598,282 533,668 64,614
Total expenditures 7,556,659 6,956,846 6,622,824 334,022
Deficiency of revenues under
expenditures (1,975,397) (969,629) (551,718) 417,911
Other financing sources (uses)
Operating transfers out - - (38,965) (38,965)
Sale of capital assets 237,600 246,000 246,000 -
Net other financing sources (uses) 237,600 246,000 207,035 (3.8,965)
Excess (deficiency) of revenues and other
financing sources over (under)
expenditures and other financing
sources (uses) (1,737,797) (723,629) (344,683) 378,946
Fund balances, beginning of year 11,985,898 11,985,898 11,985,898 -
Fund balances, end of year
$10,248,101 $11,262,269 11,641,215 $ 378,946
Reconciliation of budgetary
to GAAP basis
Current year encumbrances 173,117
Prior year encumbrances (15,960)
Fund balance on GAAP basis $11,798,372
The accompanying notes to required supplementary information are an integral part of this schedule
- 57 -
City of Okeechobee, Florida
Required Pension Supplementary Information —
Schedule of Changes in Net Pension Liability and Related Ratios —
Last Three Fiscal Years
Police Officers'
2016 2015 2014
Total Pension Liability
Service cost
Interest
Difference between actual & expected experience
Assumption changes
Benefit payments
Refunds
Net change in total pension liability
Total pension liability - beginning
Total pension liability - ending (a)
$ 264,445 $ 247,353 $ 251,499
543,946 506,147 479,146
126,875 (219,850) (784)
94,065
(468,694) (203,855) (201,397)
(25,003) (321) (26,953)
441,569 423,539 501,511
7,758,412 7,334,873 6,833,362
8,199,981 7,758,412 7,334,873
Plan Fiduciary Net Position
Contributions - employer (from City)
Contributions - employer (from State)
Contributions - members
Net investment income
Benefit payments
Refunds
Administrative expense
Other
Net change in plan fiduciary net position
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b)
147,312 192,581 200,210
73,960 70,807 67,639
45,554 47,740 43,135
607,763 (95,964) 694,790
(468,694) (203,855) (201,397)
(25,003) (321) (26,953)
(32,120) (30,198) (18,097)
(6) 3,886
348,766 (15,324) 759,327
7,691,340 7,706,664 6,947,337
8,040,106 7,691,340 7,706,664
Net pension liability (asset) - Ending (a) - (b) $ 159,875 $ 67,072 $ (371,791)
Plan fiduciary net position as a percentage
or Total Pension Liability
Covered employee payroll
Net pension liability as a percentage
of covered employee payroll
98.05% 99.14% 105.07%
$ 970,646 $ 911,189 $ 862,700
16.47% 7.36% - 43.10%
Note: This schedule is presented to illustrate the requirement to show information for 10
years. However, until a full 10 -year trend is complied, the City presents information for those
years for which information is available.
The accompanying notes to required supplementary information are an integral part of this schedule
- 58 -
City of Okeechobee, Florida
Required Pension Supplementary Information -
Schedule of Changes in Net Pension Liability and Related Ratios -
Last Three Fiscal Years (continued)
Firefighters'
2016
2015 2014
Total Pension Liability
Service cost $ 156,107
Interest 235,684
Difference between actual & expected experience 56,393
Assumption changes
Benefit payments
Other
Net change in total pension liability
Total pension liability - beginning
Total pension liability - ending (a)
(102,590)
3,256
348,850
3,282,133
3,630,983
$ 144,773 $ 130,539
213,154 196,106
(19,771) (741)
49,797 -
(96,939)
291,014 183,844
2,991,119 2,807,275
3,282,133 2,991,119
(142,060)
Plan Fiduciary Net Position
Contributions - employer (from City)
Contributions - employer (from State)
Contributions - members
Net investment income
Benefit payments
Administrative expense
Other
97,709 92,863 82,058
49,889 52,662 53,235
27,433 26,324 23,854
246,381 (44,021) 318,708
(102,590) (96,939) (142,060)
(31,639) (27,132) (16,233)
(1,766) - -
Net change in plan fiduciary net position
Plan fiduciary net position - beginning
Plan fiduciary net position - ending (b)
285,417 3,757 319,562
3,257,415 3,253,658 2,934,096
3,542,832 3,257,415 3,253,658
Net pension liability (asset) - Ending (a) - (b)
$ 88,151 $ 24,718 $ (262,539)
Plan fiduciary net position as a percentage
or Total Pension Liability
Covered employee payroll
Net pension liability as a percentage
of covered employee payroll
97.57% 99.25% 108.78%
$ 563,285 $ 523,119 $ 477,080
15.65% 4.73% - 55.03%
Note: This schedule is presented to illustrate the requirement to show information for 10
years. However, until a full 10 -year trend is complied, the City presents information for those
years for which information is available.
The accompanying notes to required supplementary information are an integral part of this schedule
- 59 -
City of Okeechobee, Florida
Required Pension Supplementary Information —
Schedule of Changes in Net Position Liability and Related Ratio —
Last Three Fiscal Years (continued)
Police Officers
9/30/2016 9/30/2015 9/30/2014
Actuarially determined contributions $ 219,093 $ 263,240 $ 267,849
Contributions in relation to the actuarially
determined contributions 221,272 263,388 267,849
Contribution deficiency (excess) $ (2,179) $ (148) $
Covered payroll
Contributions as a percentage of covered
employee payroll
$ 970,646 $ 911,189 $ 862,700
22.80%
28.91% 31.05%
Firefighters
9/30/2016 9/30/2015 9/30/2014
Actuarially determined contributions $ 143,632 $ 138,914 $ 122,212
Contributions in relation to the actuarially
determined contributions 147,598 145,525 135,293
Contribution deficiency (excess) $ (3,966) $ (6,611) $ (13,081)
Covered payroll
Contributions as a percentage of covered
employee payroll
$ 563,285 $ 523,119 $ 477,080
26.20%
27.82% 28.36%
Note: This schedule is presented to illustrate the requirement to show information for 10
years. However, until a full 10 -year trend is complied, the City presents information for those
years for which information is available.
The accompanying notes to required supplementary information are an integral part of this schedule
- 60 -
City of Okeechobee, Florida
Required Pension Supplementary Information — Schedule of Investment
Returns — Last Three Fiscal Years
Police Officers
9/30/2016 9/30/2015 9/30/2014
Annual money- weighted rate of return
net of investment expense 7.59%
Fire Fighters
- 1.65% 9.96%
9/30/2016 9/30/2015 9/30/2014
Annual money - weighted rate of return
net of investment expense
6.83%
- 2.19% 10.43%
Note: This schedule is presented to illustrate the requirement to show information for 10 years.
However, until a full 10 -year trend is complied, the City presents information for those years for
which information is available.
The accompanying notes to required supplementary information are an integral part of this schedule
- 61 -
City of Okeechobee, Florida
Required Pension Supplementary Information — Schedule of Proportionate
Share of the Net Pension Liability
General Employees — Last Three Fiscal Years
2016 2015 2014
City's proportion of the net pension liability
City's proportion share of the net pension liability
City's covered - employee payroll
City's proportionate share of the net pension liability
as a percentage of its covered - employee payroll
Plan fiduciary net position as a percentage of the total
pension liability
12.03% 12.03% 11.00%
$ 51,228 $ 139,769 $ 20,069
$ 911,233 $822,133 $812,766
5.62%
17.00% 2.47%
96.37% 89.81% 98.23%
The accompanying notes to required supplementary information are an integral part of this schedule
- 62 -
City of Okeechobee, Florida
Required Pension Supplementary Information — Schedule of Contributions
General Employees - Last Three Fiscal Years
2016 2015 2014
Contractually required contribution $ 48,881 $ 41,442 $ 44,690
Contributions in relation to the contractually required contribution 116,529 106,136 104,684
Contribution deficiency (excess) $ (67,648) $ (64,694) $ (59,994)
City's covered - employee payroll
Contributions as a percentage of covered - employee payroll
$ 911,233 $822,133 $812,766
12.79% 12.91% 12.88%
The accompanying notes to required supplementary information are an integral part of this schedule
- 63 -
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)
9/30/2016 $ - $ 757,717 $ 757,717 0.0% $ 2,639,843 28.7%
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%
OW
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A. BUDGETARY INFORMATION
City of Okeechobee, Florida
Notes to Required Supplementary 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.
- 65 -
City of Okeechobee, Florida
Notes to Required Supplementary Information
B. ADDITIONAL ACTUARIAL INFORMATION
Valuation Date: 10/01/2014
Notes: Actuarially determined contribution rates are calculated as of October 1 which is two years
prior to the end of the fiscal year in which contributions are reported.
Methods and Assumptions Used to Determine Contributions Rates:
Actuarial Cost
Method:
Amortization
Method:
Remaining
Amortization
Period:
Asset Valuation
Method:
Salary Increases:
Investment Rate
of Return:
Retirement Age:
Mortality:
Notes:
Police Officers' Pension
Plan
Firefighters Pension
Plan
General Pension Plan
Aggregate
N/A
N/A
4 -year smoothed
market
6.00 %, including
inflation
7.00%
100% when first eligible
for Normal Retirement
or DROP entry
RP -2000 Combined
Healthy Participant
Mortality Table for
males and females with
mortality improvement
projected to all future
years after 2000 using
Scale AA.
See Discussion ot
Valuation Results on
Page 1 of the October
2014 Actuarial
Valuation Report issued
April 4, 2016 by Gabriel
Roeder Smith &
Comnanv.
Aggregate
N/A
N/A
4 -year smoothed
market
7.00 %, including
inflation
7.00%
100% when first eligible
for Normal Retirement
or DROP entry.
RP -2000 Combined
Healthy Participant
Mortality Table for
males and females with
mortality improvement
projected to all future
years after 2000 using
Scale AA.
See Discussion ot
Valuation Results on
Page 1 of the October
2014 Actuarial
Valuation Report issued
April 8, 2016 by Gabriel
Roeder Smith &
Comnanv.
Aggregate
N/A
N/A
4 -year smoothed
market
6.00 %, including
inflation
7.00%
100% when first eligible
for Normal Retirement
or DROP entry
RP -2000 Combined
Healthy Participant
Mortality Table for
males and females with
mortality improvement
projected to all future
years after 2000 using
Scale AA.
See Discussion ot
Valuation Results on
Page 1 of the October
2014 Actuarial
Valuation Report issued
April 26, 2016 by
Gabriel Roeder Smith &
Comnanv_
CRI
CARR
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, 2016, 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 June 15, 2017. 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, Horida'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. 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.
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.
Rztr,"
Melbourne, Florida
June 15, 2017
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, 2016, and have issued our report thereon dated June 15, 2017.
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 and Chapter 10.550, Rules of the
Auditor General.
Other Reports
We have issued our Independent Auditor's 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 our Independent Accountants' Report on
Compliance with Local Government Investment Policies. Disclosures in those reports, which are
dated June 15, 2017, 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. Corrective action has been taken to address the finding
made in the preceding annual financial audit as noted below:
Prior Year Internal Control Findings
IC 2015 -01 Revenue recognition Corrected
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. and 10.556(7), Rules of the Auditor General, require that we apply
appropriate procedures and report the results of our determination as to whether or not the City of
Okeechobee, Florida has met one or more of the 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 the 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. and 10.556(7), Rules of the Auditor General, require that we apply
appropriate procedures and 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, 2016,
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, 2016. 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
June 15, 2017
NIP
ON
OM
rr
CRI
CARR
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 ACCOUNTANTS' REPORT ON COMPLIANCE WITH LOCAL GOVERNMENT
INVESTMENT POLICIES
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, 2016.
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, 2016.
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
June 15, 2017
A`�
CRI
CARR
RIGGS &
INGRAM
CPAs and Advisors
Required Communications
1
1—
CRI
CARR
RIGGS &
INGRAM
CPAs and Advisors
June 15, 2017
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, 2016.
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, 2016. 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,
As4,.z >gat_
Deborah A. Goode, CPA
Partner
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,
2016;
• 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, 2016, and
have issued our report thereon dated June 15, 2017. 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
Client's responsibility
Planned scope and timing of the audit
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.
As stated in our engagement letter dated August
31, 2016, 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) and Chapter
10.550 Rules of the Florida Auditor General. 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 and compliance with laws and
regulations. Such considerations were solely for
the purpose of determining our audit procedures
and not to provide any assurance concerning such
internal control and compliance with laws and
regulations.
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 and results of operations in
conformity with the applicable framework.
Management is responsible for the design and
implementation of programs and controls to
prevent and detect fraud.
Our initial audit plan was not significantly altered
during our fieldwork.
Please see the following section titled "Accounting
Policies, Judgments and Sensitive Estimates and
CRI Comments on Quality."
Required Communications
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.
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.
During the fiscal year 2016, the City adopted GASB
Statement No. 72, Fair Value Measurement and
Application. The new standard addresses
accounting and financial reporting issues related
to fair value measurements.
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.
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.
During the course of our audit, we accumulate
differences between amounts recorded by the
City and amounts that we believe are required to
be recorded under GAAP and GASB reporting
guidelines. Those adjustments are either recorded
(corrected) by the City or passed (uncorrected).
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.
None.
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 "Draft Management Representation Letter"
section.
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.
None.
- 5 -
Required Communications
MATTER TO BE COMMUNICATED
AUDITOR'S RESPONSE
Fraud and illegal acts
Fraud involving senior management, the Plan
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.
We are unaware of any fraud or illegal acts
involving management or causing material
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 inquiries, 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 JUDGMENTS &
POLICY? SENSITIVE ESTIMATE
COMMENTS ON QUALITY
OF ACCOUNTING POLICY
& APPLICATION
Investments
Except as noted below, the
City reports their
investments at fair value.
Money market investments
and certain interest - earning
investment contracts with a
remaining maturity of one -
year or less at the date of
purchase may be reported
at amortized cost.
The City follows the
provisions of Section 150:
Investments, of the GASB
Codification when reporting
investments.
X
The City relies on
investment valuation
information from the
City's investment
manager (investment
consultant) and from
information from
investment pool sponsors
based on financial market
information.
The City's policies are in
accordance with all
applicable accounting
guidelines and GASB.
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.
X
Management's estimate
of the useful lives of
capital assets is based
on the historical lives of
similar assets and
market prices.
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.
Accounting Policies, Judgments and Sensitive Estimates & CRI Comments on
Quality
AREA
ACCOUNTING POLICY
CRITICAL JUDGMENTS &
POLICY? 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.
Pension
Trust Funds
Based on the audit
procedures we performed
with respect to the City's
pension funds, we noted
that the City uses an
actuary to determine the
pension obligation in
accordance with all
applicable standards and
guidelines of GASB.
The City follows the
provisions of Section 1500:
Reporting Liabilities, of the
GASB Codification when
reporting pension
liabilities.
X
The estimate of current
pension expense and
future net pension
obligation are based on
actuarially determined
factors. The actuary
estimates certain future
conditions in their
conclusions. These
estimates include factors
such as market
performance and life
expectancy. Actual
results may differ from
projections.
The City is following the
requirements of GASB 68
and has noted in
footnote 5 -B that the
liability of the City may
vary.
8
Accounting Policies, Judgments and Sensitive Estimates & CRI Comments on
Quality
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.
The disclosure of the fair market value of investments required under GASB 72 in
Note 4 -A, since this new standard contains additional footnote information.
June 15, 2017
Carr, Riggs & Ingram, LLC
215 Baytree Drive
Melbourne, Florida 32940
Draft Management Representation Letter
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, 2016 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 June 15, 2017, 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 August 31, 2016, 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) Related party relationships and transactions, including revenues, expenditures /expenses, loans,
transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to
related parties have been appropriately accounted for and disclosed in accordance with U.S.
GAAP.
ti
Draft Management Representation Letter
7) Adjustments or disclosures have been made for all events, including instances of noncompliance,
subsequent to the date of the financial statements that would require adjustments to or
disclosure in the finance statements.
8) The effects of all known actual or possible litigation, claims, and assessments have been
accounted for and disclosed in accordance with U.S. GAAP.
Information Provided
9) 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.
10) All material transactions have been recorded in the accounting records and are reflected in
the financial statements.
11) 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.
12) 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.
13) 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.
14) 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.
15) We have disclosed to you all know actual or possible litigation, claims, and assessments
whose effects should be considered when preparing the financial statements.
Government — specific
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.
Draft Management Representation Letter
18) The City has no plans or intentions that may materially affect the carrying value or
classification of assets, liabilities, or equity.
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) 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.
22) 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.
23) 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.
24) The financial statements include and properly disclose all component units and other related
organizations.
25) The financial statements properly classify all funds and activities in accordance with GASB
Statement No. 34.
26) 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.
27) Components of net position (net investment in capital assets; restricted; and unrestricted)
and equity amounts are properly classified and, if applicable, approved.
28) Provisions for uncollectible receivables have been properly identified and recorded.
29) 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.
30) 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.
31) Interfund, internal, and intra- entity activity and balances have been appropriately classified
and reported.
32) Deposits and investment securities and derivative instruments are properly classified as to risk
and are properly disclosed.
- 12 -
Draft Management Representation Letter
33) 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.
34) The City is in compliance with Florida Statute 218.415, local government investment policies,
in all respects.
35) Capital assets, including infrastructure and intangible assets, are properly capitalized,
reported, and, if applicable, depreciated.
36) 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.
37) Provision has been made to reduce excess or obsolete inventories to their estimated net
realizable value.
38) 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.
39) 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.
40) 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.
41) 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
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.
Signed: Signed:
Title: City Administrator Title: Finance Director