Audit Report 09.30.2004
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CITY OF OKEECHOBEE, FLORIDA
Financial Statements
Year Ended September 30, 2004
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CITY OF OKEECHOBEE, FLORIDA
Table of Contents
As of September 30, 2004
Introductory Section
Title Page
Table of Contents
City Officials
Financial Section
Independent Auditors'
+ Report
Management's Discussion and Analysis
Basic Financial Statements
Government-wide Financial Statements
· Statement of Net Assets
· Statement of Activities
Fund Financial Statements
Governmental Funds
· Balance Sheet
· Statement of Revenues, Expenditures, and Changes in Fund Balances
· Reconciliation of the Statement of Revenues, Expenditures and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
Fiduciary Funds (Component Units that are Fiduciary in Nature)
· Statement of Fiduciary Net Assets
· Statement of Changes in Fiduciary Net Assets
Notes to Financial Statements
Required Supplementary Information Other Than Management's Discussion and Analysis
· Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
· Notes to Required Supplementary Information
Single Audit Section
· 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
· Independent Auditors' Report on Compliance With Requirements Applicable to Each
Major Program and on Internal Control over Compliance in
Accordance With OMB Circular A-B3
· Schedule of Findings and Questioned Costs
· Schedule of Expenditures of Federal Awards
· Independent Auditors' Management Letter
Page
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2
3
5
7
15
16
18
20
22
23
24
25
42
43
47
49
51
53
55
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CITY OF OKEECHOBEE, FLORIDA
City Officials
As of September 30, 2004
James E. Kirk
Mayor, Chairman
Noel A. Chandler
Roscoe Lowry Markham
Dowling R. Watford, Jr.
D. Clayton Williams, Jr.
Council Members
John R. Cook
City Attorney
Bill L. Veach
City Administrator
Lane Gamiotea
City Clerk
Lola Park
Account Supervisor
Herbert Smith
Chief of Fire
Denny Davis
Chief of Police
Donnie Robertson
Director of Public Works
Oscar Bermudez
Engineer
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HOYMAN, DOBSON & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
_:1'!lll1l0>, .'
275 Bay tree Drive, Melbourne, Florida 32940, 327-255-0088, Fax 327-259-8648, WvVW.hoyman.com
Charles W Hoyman, J[
Barbara j. Oswalt
Thomas L. Kirk
Karen E. Kirkland
Deborah A. Bradley
DtRECTOR EMERITUS
Roger W Dobson
Eugene K. Bjerning
Independent Auditors' Report
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
We have audited the accompanying fmancial 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
30,2004, which collectively comprise the City's basic fmancial statements as listed in the table of contents. These
fmancial statements are the responsibility of the City of Okeechobee, Florida's management. Our responsibility is to
express opinions on these fmancial statements based on our audit. We did not audit the fmancial statements of the
fiduciary fund type and the discretely presented component unit. Those financial statements were audited by
other auditors whose reports have been furnished to us, and this report, insofar as it relates to the fiduciary fund
type and the discretely presented component unit 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 fmancial 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 fmancial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall fmancial statement presentation. We believe that our audit provides a reasonable basis for our
opinions.
In our opinion, the fmancial statements referred to above present fairly, in all material respects, the respective
fmancial position of the governmental activities, each major fund, and the aggregate remaining fund information of
the City of Okeechobee, Florida, as of September 30, 2004, and the respective changes in fmancial position thereof
for the year then ended in conformity with accounting principles generally accepted in the United States of America.
As described in Note 1, the City has implemented a new fmancial reporting model, as required by the provisions of
GASB Statement No. 34, Basic Financial Statements Management's Discussion and Analysis for State and Local
Governments, as of October 1,2003.
In accordance with Government Auditing Standards, we have also issued our report dated July 18, 2005, on our
consideration of the City of Okeechobee, Florida's internal control over fmancial reporting and 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 fmancial reporting and
compliance and the results of that testing, not to provide an opinion on the internal control over fmancial reporting
or compliance. That report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be read in conjunction with this report in considering the results of our audit.
""''i'F.j%'~*T:tiIiE~41l>1*!t:JiImI] TIJU
J
. American Institute of Certified Public Accountants' Florida Institute of Certified Public Accountants' SEC Practice Section of the AJ C fA . CPAmerico International
,,<
City of Okeechobee, Florida
Page Two
The management's discussion and analysis, budgetary comparison information, and pension information on pages 7-
12 and 42-43 are not a required part of the basic fmancial statements but are supplementary information required by
accounting principles generally accepted in the United States of America. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding the methods of measurement and
presentation of the supplementary information. However, we did not audit the information and express no opinion
on it.
Our audit was conducted for the purpose of forming opinions on the fmancial statements that collectively comprise
the City of Okeechobee, Florida's basic fmancial statements. The accompanying schedule of expenditures of federal
awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget
Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the
basic fmancial statements of the City of Okeechobee, Florida. Such information has been subjected to the auditing
procedures applied in the audit of the fmancial statements and, in our opinion, is fairly stated, in all material
respects, in relation to the fmancial statements taken as a whole.
#~ ~ ~ ~I (ll1-~
Hoyman, Dobson & Company, P.A.
July 18, 2005
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2004
Our discussion and analysis of the City of Okeechobee, Florida's (the City) financial performance provides an
overview of the City's financial activities for the year ended September 30,2004. Please read it in conjunction
with the City's basic financial statements, which immediately follow this discussion. Because the City is
implementing new reporting standards for this fiscal year with significant changes in content and structure, much
of the information is not easily comparable to prior years. However, in future years, comparisons will be more
meaningful and will go further in explaining the City's fmancial position and results of operations.
FINANCIAL IDGHLIGHTS
The following are highlights of financial activity for the year ended September 30,2004:
· The City's total assets exceeded its liabilities at September 30,2004 by $10,313,847.
· The City's total revenues were $6,461,201 for the year ended September 30,2004, compared to
total expenses of $4,670,968, which resulted in a $1,790,233 increase in net assets.
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 fmancial statements are comprised of three components: 1) government-wide financial statements, 2) fund
fmancial 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 assets presents information on all the City's assets and liabilities, with the difference
between the two reported as net assets. Over time, increases or decreases in net assets 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 assets changed during the year. All
changes in net assets 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 fmancial statements can be found on pages 15 and 16 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 has only one fund type: governmental funds.
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2004
Fund Financial Statements (continued)
Governmental funds are used to account for essentially the same functions reported as governmental activities in
the government-wide financial statements. However, unlike the government-wide financial statements,
governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well
as balances of spendable resources available at the end of the year. Such information may be useful in evaluating
a government's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is
useful to compare the information presented for governmental funds with similar information presented for
governmental activities in the government-wide financial statements. By doing so, readers may better understand
the long-term impact of the City's near-term financing decisions. Both the governmental fund balance sheet and
the statement of revenues, expenditures and changes in fund balances provide reconciliations to facilitate this
comparison between governmental funds and governmental activities.
The governmental fund financial statements can be found on pages 18 through 22 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
25 through 40 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net assets may serve over time as a useful indicator of financial position. The following table
reflects the condensed government-wide statement of net assets as of September 30, 2004.
City of Okeechobee, Florida
Statement of Net Assets
Current and other assets
Capital assets
Total assets
Other liabilities
Noncurrent' liabilities
$ 7,224,616
4,880,398
12,105,014
1,032,065
759,102
1,791,167
4,313,792
812,545
5,187,510
$ 10,313,847
Total liabilities
Net assets:
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total net assets
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2004
Governmental Activities
Governmental activities increased the City's net assets by $ 1,790,233, as reflected in the table below:
City of Okeechobee, Florida
Statement of Activities
REVENUES:
Program revenues:
Charges for services
Operating grants and contributions
Capital grants and contributions
General revenues:
Property taxes
Public utility taxes
Franchise fees
Investment income and other
Total revenues
$ 530,981
649,861
1,421,137
1,486,859
686,022
354,733
1,331,608
6,461,201
931,622
2,518,871
551,445
634,203
34,827
4,670,968
1,790,233
8,523,614
$ 10,313,847
EXPENSES:
General government
Public safety
Transportation
Physical environment
Interest on long-term debt
Total expenses
Change in net assets
NET ASSETS, beginning
NET ASSETS, ending
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2004
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, unreserved 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
$5,438,766, an increase of $228,362 in comparison with the prior year. Approximately 65 percent of this total
amount, $3,536,947, constitutes unreserved fund balance, which is available for spending at the government's
discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it
has already been committed 1) for community development project expenditures of$I,817,158, and 2) for a variety
of other restricted purposes $84,661.
The general fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund
balance of the general fund was $5,449,849, while total fund balance was $5,520,052. As a measure of the
general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total
fund expenditures. Both unreserved fund balance and total fund balance represent approximately 100% of total
general fund expenditures.
The Industrial Development Capital Project fund has a fund balance deficit of $(88,788). The net decrease in
fund balance during the current year in the Industrial Development Capital Project fund was $(52,233). The
funds were expended for development costs related to the Commerce Center project. The project is being funded
on a reimbursement basis with federal and state grant funds. The grants do not allow for the cost of the grant
administrator consultant fees, the engineering inspection fees, or for certain costs that were incurred before the
grant was in place. The City may be required to absorb these costs.
The Downtown Redevelopment Capital Project fund is a newly created fund and has a fund balance deficit of
$(6,956) as of September 30, 2004. This downtown redevelopment project is also being funded on a
reimbursement basis with federal and state grant funds. Just as the grants funding the Commerce Center, these
grants do not allow for reimbursement of the cost of the grant administrator consultant fees, the engineering
inspection fees, and certain costs that were incurred before the grant was in place. The City will absorb the costs
of the downtown redevelopment not funded by the grants.
General Fund Budgetary Highlights
There was no change to the amount appropriated for expenditures of $5,583,040. The amounts expended in the
categories of general government, public safety, transportation and debt service exceeded the budgeted amount
by a total of $41,977 which was offset by expenditures of $108,979 less than the budgeted amounts for physical
environment and capital outlay resulting in net expenditures of $67,002 less than budgeted. The expenditures in
excess of appropriation were mostly due to additional personnel costs as a result of the 2004 hurricanes.
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30,2004
CAPITAL ASSETS AND LONG- TERM LIABILITIES
Capital assets. The City's investment in capital assets for its governmental funds as of September 30, 2004,
amounts to $4,880,398 (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 $1,298,813 from $3,581,585.
Major changes to capital assets during the current fiscal year included the following:
· Entered into a lease for twenty two police vehicles.
· Sold 20 used police vehicles.
· Construction of the sidewalks and park for downtown redevelopment began.
· Construction of the infrastructure for the Commerce Center began.
· Sold Commerce Center lots.
City's Capital Assets
(net of depreciation)
Land
Buildings
Improvements other than
building
Equipment
Construction in progress
Total
$
$
1,304,465
1,278,582
65,816
846,294
1,385,241
4,880,398
Additional information on the City's capital assets can be found in note 4.C. on page 36 of this report.
Long-term Liabilities.
City's Outstanding Debt
Long-term Liabilities
Note payable
Capital leases
Compensated absences
Total
$
$
178,809
387,796
192,497
759,102
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CITY OF OKEECHOBEE, FLORIDA
Management's Discussion and Analysis
September 30, 2004
The City's long-term liabilities decreased $275,272 (27 percent) during the current fiscal year. The decrease is
due to making the regularly scheduled payments without incurring new substantial debt. The only increases in
long-term liabilities are the addition of the new capital lease for the new police cars and additional liability for
compensated absences. These were offset by the sale of the old police cars and payoff of the amount owed on the
related lease and by the use and payout of compensation for leave.
Additional information on the City's long-term debt can be found in note 4.F. and G. on page 38 of this report.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGET
The City Council maintained the millage rate of 7.1899 for fiscal year 2005.
Revenues for the fiscal year 2005 adopted budget for all funds of the City total approximately $13,200,000 a
decrease of 5.7% from the prior year budget for all funds of approximately $14,000,000. The major changes
occur in the Debt Service Fund, Law Enforcement Special Fund, Industrial Development Fund and CDBG Grant
Fund.
Expenditures for the fiscal year 2005 adopted budget for all funds of the City total approximately $ 8,700,000, a
decrease of approximately 5.4% frorn the prior year budget for all funds of approximately $9,200,000. The
major changes occur in the Debt Service Fund, Law Enforcement Special Fund, Industrial Development Fund
and CDBG Grant Fund.
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 ofOkeechobee, 55 S.E. Third Avenue, Okeechobee, Florida 34974.
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BASIC FINANCIAL STATEMENTS
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I CITY OF OKEECHOBEE, FLORIDA
I Statement of Net Assets - Governmental Activities
September 30,2004
I ASSETS
Cash and cash equivalents $ 4,826,927
Accounts receivable 136,392
I Due from other governments 1,501,406
Inventories 21,081
I Overfunded pension costs 738,810
Capital assets:
Nondepreciable
I Land 1,304,465
Construction in progress 1,385,241
Depreciable, net of accumulated depreciation
I Buildings 1,278,582
Improvements other than buildings 65,816
Equipment 846,294
I Total assets 12,105,014
LIABILITIES
I Accounts payable 865,768
Retainage payable 104,571
I Accrued expenses 24,869
Deferred revenue 36,857
Noncurrent liabilities:
I Due within one year 250,820
Due in more than one year 508,282
T otalliabilities 1,791,167
I NET ASSETS
Invested in capital assets, net of related debt 4,313,792
I Restricted for:
Law enforcement 21,969
Debt service 48,937
I Public facilities 741,639
Unrestricted 5,187,510
I Total net assets $ 10,313,847
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I The accompanying notes are an integral part of this financial statement. 15
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CITY OF OKEECHOBEE, FLORIDA
Statement of Activities - Governmental Activities
Year Ended September 30, 2004
Program Revenues Net (Expense)
Operating Capital Revenue and
Charges for Grants and Grants and Changes in
Functions/Programs Expenses Services Contributions Contributions Net Assets
General government $ 931,622 $ 445,620 $ 152,300 $ $ (333,702)
Public safety 2,518,871 44,911 35,847 (2,438,113)
Transportation 551,445 40,450 461,714 1,421,137 1,371,856
Physical environment 634,203 (634,203)
Interest on long term debt 34,827 (34,827)
Total governmental
activities $4,670,968 $ 530,981 $ 649,861 $ 1,421,137 (2,068,989)
General revenues
Property taxes
Public utility taxes
Franchise fees
Shared revenues not restricted to specific programs
Unrestricted investment earnings
Miscellaneous
Gain on sale of capital assets
Total general revenues
Change in net assets
Net assets, beginning
Net assets, ending
1,486,859
686,022
354,733
1,122,288
72,626
25,633
111,061
3,859,222
1,790,233
8,523,614
$10,313,847
The accompanying notes are an integral part of this financial statement.
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CITY OF OKEECHOBEE, FLORIDA
Balance Sheet - Governmental Funds
September 30, 2004
Industrial Downtown
Development Redevelopment
General Capital Project Capital Project
ASSETS
Cash and cash equivalents $ 4,566,090 $ 246,379 $
Accounts receivable 136,392
Due from other governments 411,104 816,464 273,838
Due from other funds 619,069
Inventory 21,081
Total assets $ 5,753,736 $ 1,062,843 $ 273,838
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 156,983 $ 576,012 $ 132,773
Retainage payable 76,159 28,412
Accrued expenses 39,844
Due to other funds 499,460 119,609
Deferred revenue 36,857
Total liabilities 233,684 1,151,631 280,794
Fund balances:
Reserved for:
Encumbrances 49,122 1,759,912 57,246
Inventory 21,081
Law enforcement
Debt service 48,937
Public facilities 741,639
Unreserved, undesignated 4,659,273 (1,848,700) (64,202)
Total fund balances 5,520,052 (88,788) (6,956)
Total liabilities and fund balances $ 5,753,736 $ 1,062,843 $ 273,838
Amounts reported for governmental activities in the statement
of net assets are different because:
Negative net pension obligation resulting from overfunding of
the police officers'and firefighters' pension plans
Capital assets used in governmental activities are not
financial resources and therefore are not reported in the funds.
Long-term liabilities, including capital leases and notes payable
are not due and payable in the current period and therefore
are not reported in the funds.
Net assets of governmental activities
The accompanying notes are an integral part of this fmancial statement.
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Total
I Nonmajor Governmental
Fund Funds
I $ 14,458 $ 4,826,927
136,392
1,501,406
I 619,069
21,081
$ 14,458 $ 7,104,875
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I $ $ 865,768
104,571
I 39,844
619,069
36,857
I 1,666,109
I 1,866,280
21,081
14,458 14,458
I 3,536,947
14,458 5,438,766
$ 14,458
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738,810
I
4,880,398
I
(744,127)
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I $ 10,313,847
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CITY OF OKEECHOBEE, FLORIDA
Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds
Year Ended September 30, 2004
Industrial
Development
General Capital Project
Revenues
Taxes $ 2,324,853 $
Intergovernmental 2,023,360 1,116,464
Charges for services 286,247
Licenses and permits 143,872
Fines and forfeitures 50,311
Interest and other 72,430 39
Miscellaneous 25,633
Total revenues 4,926,706 1,116,503
Expenditures
Current:
General government 916,050 287
Public safety 2,339,672
Transportation 634,203
Physical environment 320,962 294,040
Capital outlay 569,332 1,050,828
Debt service:
Principal retired 687,175
Interest 34,827
Total expenditures 5,502,221 1,345,155
Deficiency of revenues under expenditures (575,515) (228,652)
Other financing sources (uses)
Capital lease proceeds 431,756
Proceeds from sale of capital assets 438,821 176,419
Total other financing sources 870,577 176,419
Net change in fund balances 295,062 (52,233)
Fund balances, beginning of year 5,224,990 (36,555)
Fund balances, end of year $ 5,520,052 $ (88,788)
The accompanying notes are an integral part of this financial statement.
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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, 2004
Net change in fund balances - total governmental funds
$ 228,362
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 outlays exceeded depreciation in the current
period.
1,802,992
The net effect of various miscellaneous transactions involving capital assets
(i.e. sales, trade ins, and donations) is to decrease net assets.
(504,179)
The net effect of overfunded pension contributions that are reported as
expenditures in the fund fmancial statements and are recorded
as a net pension asset on the statement of net assets.
(12,194)
The issuance of long-term debt (capital lease) provides current fmancial
resources to governmental funds, while the repayment of the principal
of long-term debt consumes the current fmancial resources of
governmental funds. Neither transaction, however, has any effect on
net assets. This amount is the net effect of these differences in the
treatment of long-term debt and related items.
255,419
Compensated absences 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.
19,833
Change in net assets of governmental activities
$ 1,790,233
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CITY OF OKEECHOBEE, FLORIDA
Statement of Fiduciary Net Assets - Pension Trust Funds
September 30,2004
Municipal
Police
Officers'
Assets
Cash and cash equivalents
Receivables
Total assets
$ 3,718,349
70,959
$ 3,789,308
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable
$ 16,453
Fund Balances
Reserved for pension benefits
3,772,855
Total liabilities and fund balances
$ 3,789,308
Municipal
Firefighters
$ 1,596,655
18,107
$ 1,614,762
$ 10,212
1,604,550
$1,614,762
The accompanying notes are an integral part of this financial statement.
Total
$ 5,315,004
89,066
$ 5,404,070
$ 26,665
5,377,405
$ 5,404,070
COMPONENT
UNIT
General
Employees'
Pension Trust
$ 3,890,542
128,905
$ 4,019,447
$ 48,822
3,970,625
$ 3,970,625
23
CITY OF OKEECHOBEE, FLORIDA
Statement of Changes in Fiduciary Net Assets - Pension Trust Funds
Year Ended September 30, 2004
COMPONENT
UNIT
Municipal General
Police Municipal Employees'
Officers' Firefighters Total Pension Trust
Additions
Contributions
State $ 118,288 $ 46,239 $ 164,527 $
City 88,574 600 89,174 217,708
Employees 40,698 20,499 61,197 140,964
Total contributions 247,560 67,338 314,898 358,672
Investment earnings:
Net increase in the
fair value of investments 307,974 132,687 440,661 302,360
Interest and dividends 878 389 1,267 1,072
308,852 133,076 441,928 303,432
Less investment expense (23,235) (10,048) (33,283) (24,455)
Net investment income 285,617 123,028 408,645 278,977
Total additions 533,177 190,366 723,543 637,649
Deductions
Benefits paid to participants 138,740 10,159 148,899 134,077
Refunds on termination 9,414 535 9,949 67,833
Administrative expenses 17,093 15,920 33,013 16,693
Total deductions 165,247 26,614 191,861 218,603
Change in net assets 367,930 163,752 531,682 419,046
Net assets held in trust for pension
benefits, beginning of year 3,404,925 1,440,798 4,845,723 3,551,579
Net assets held in trust for pension
benefits, end of year $ 3,772,855 $ 1,604,550 $ 5,377,405 $ 3,970,625
The accompanying notes are an integral part of this financial statement.
24
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2004
NOTE CONTENTS PAGE
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity 27
B. Government-wide and Fund Financial Statements 27
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation 28
D. Assets, Liabilities, and Net Assets or Equity 29
1. Cash and investments 29
2. Receivables and payables 30
3. Prepaid items 31
4. Capital assets 31
5. Compensated absences 31
6. Long-term obligations 31
7. Fund equity 32
8. Restatement of fund balance/net assets 32
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 assets 32
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 33
3. STEWARDSHIP. COMPLIANCE. AND ACCOUNTABILITY
A. Budgetary information 34
4. DETAILED NOTES ON ALL FUNDS
A. Deposits and investments 34
B. Receivables 36
C. Capital assets 36
D. Interfund receivables, payables, and transfers 37
E. Capital lease 37
F. Notes Payable 38
G. Changes in long-term liabilities 39
5. OTHERINFORMATION
A. Risk Management 39
B. Retirement Commitments - Defmed Benefit Plans 39
25
THIS PAGE IS INTENTIONALLY LEFT BLANK.
26
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
Septernber30,2004
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 fmancial 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. The City has no blended component units. 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 fmancial statements to be misleading or incomplete. The financial data of
these entities are reported in a separate column in the combined fmancial statements.
Discretely Presented Component Unit
City of Okeechobee and Okeechobee Utility Authority Employees' Retirement System - Substantially all of the
City's general employees and the employees of the Okeechobee Utility Authority participate in this cost sharing,
multiple employer public employee retirement system. The plan was established by City Ordinance No. 655, as
amended and restated by City Ordinance No. 686.
Complete financial statements for this component unit may be obtained from the City's administrative offices
located at:
55 S. E. Third Avenue
Okeechobee, Florida 34974
B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
In fiscal year 2004, the City changed accounting policies related to financial reporting by adopting Statement of
Governmental Accounting Standards (GASB Statement) No. 34, Basic Financial Statements and Management
Discussion and Analysis for State and Local Governments.
The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net
assets) 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 fmancially 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 reve-
nues 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.
27
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2004
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (CONTINUED)
Separate financial statements are provided for governmental funds and fiduciary funds, even though the latter are
excluded from the government-wide financial statements. Major individual governmental funds are reported as
separate columns in the fund fmancial statements.
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION
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.
Governmental fund financial statements are reported using the current financial resources measurement focus
and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues
to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures
generally are recorded when a liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded
only when payment is due.
Property taxes, franchise taxes, licenses, charges for services, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as revenues of the current
fiscal period. All other revenue items are considered to be measurable and available only when cash is
received by the government.
The government reports the following major governmental funds:
The general fund is the government'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 industrial development capital project fund accounts for the assets, liabilities, revenues and
expenditures related to the development of the Okeechobee Commerce Center.
The downtown redevelopment capital project fund accounts for the assets, liabilities, revenues and
expenditures related to the construction of infrastructure and other improvements to the downtown area of
Okeechobee.
28
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT
PRESENTATION (CONTINUED)
Additionally, the government reports the following fund types:
The municipal police officers' pension trust fund accounts for the assets, liabilities, revenues and expenses
of the pension plan of the City's municipal police officers. The activity of this fund is subject to mandatory
regulations, local ordinances and the policies of the governing board.
The municipal firefighters' pension trust fund accounts for the assets, liabilities, revenues and expenses of
the pension plan of the City's municipal firefighters. The activity of this fund is subject to mandatory
regulations, local ordinances and the policies of the governing board.
Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are
followed in the government-wide financial statements to the extent that those standards do not conflict with or
contradict guidance of the Governmental Accounting Standards Board.
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 program 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 government's policy to use
restricted resources first, then unrestricted resources as they are needed.
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY
1. Cash and investments
State statutes authorize the government 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, and direct obligations of the U. S. Treasury.
Investments in the Local Government Surplus Funds Trust Fund, a 2a-7 like pool, are carried at amortized cost,
which approximates fair value. A "2a-7 like pool" is an external investment pool that is not registered with the SEC
as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with
the SEC's Rule 2a-7 of the Investment Company Act of 1940, which comprises the rules governing money market
funds. Thus, the pool operates essentially as a money market fund. The fair value of the position in the pool is the
same as the share value of the pool share.
29
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED)
1. Cash and investments (continued)
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.
For purposes of the fiduciary funds, cash and cash equivalents include cash deposits and cash funds held in broker
accounts.
Within the pension trust fund, the City of Okeechobee Police Officers' and Firefighters' Retirement System is
authorized within certain limitations by its governing board to invest in time, savings, and money market deposits,
obligations of the U.S. government and government agencies, stocks, commingled funds administered by national or
state banks, mutual funds, bonds, and foreign securities. The City of Okeechobee General Employees' Retirement
System is authorized within certain limitations by its governing board to invest in certificates of deposit, repurchase
agreements, commercial paper, obligations of the U.S. government and government agencies, stocks, bonds, and
foreign securities.
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. Investments that do not have an established market are reported at estimated fair value. 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 1 st 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 for the General Fund. The tax
rate for the fiscal year was 7.1899 mills.
The City Council determines the millage rates and adopts a tax levy by resolution prior to September 30 to fund the
next ensuing fiscal year's budget. The assessment of all properties and collection of municipal taxes are provided by
the County's Property Appraiser and Tax Collector. The ad valorem tax calendar is as follows:
Lien date
Levy date
Due date
Delinquent date
January 1
Prior to September 30
November 1
April 1
30
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2004
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED)
2. Receivables and payables (continued)
All property taxes remaining unpaid at May 30 are subject to a tax certificate sale by the Tax Collector.
3. Prepaid items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid
items in both government-wide and fund fmancial statements.
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 $750 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 is depreciated using the straight line method over the following estimated useful
lives:
Assets
Years
25-60
12-20
10
5-15
Buildings
Building improvements
Vehicles
Equipment
5. Compensated absences
It is the government'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 fmancial 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. 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 assets.
31
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2004
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (CONTINUED)
6. Long-term obligations (continued)
In the governmental fund financial statements, the face amount of debt issued is reported as other financing
sources.
The City has no bond premiums, discounts, or issuance costs associated with its long-term obligations.
7. Fund equity
In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not
available for appropriation or are legally restricted by outside parties for use for a specific purpose. Reserves for
encumbrances represent amounts remaining on outstanding purchase orders and contracts that are not available for
appropriation. Reserves for inventory represent amounts paid from current resources for use in future years that are
not available for appropriation. Reserves for law enforcement, debt service, and public facilities represent amounts
that are legally restricted by outside parties for specific purposes.
8. Restatement of fund balance/net assets
With the implementation of GASB Statement No. 34, adjustments have been made to beginning net assets to
report the cumulative effect of these changes:
Add: Overfunded pension costs
Cost of capital assets
Less: Accumulated depreciation of capital assets
Long-term liabilities
$
751,004
4,565,261
(983,676)
(1,019,379)
3,313,210
5,210,404
8,523,614
Total adjustment
Net assets - beginning of the year, as previously reported
Net assets - beginning of the year, as restated
$
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 ASSETS
The governmental fund balance sheet includes a reconciliation between fund balance-total governmental funds
and net assets-governmental activities as reported in the government-wide statement of net assets. One element
of that reconciliation explains that "long-term liabilities, including bonds payable, if any, are not due and payable
in the current period and therefore are not reported in the funds". The details of this $744,127 difference are as
follows:
32
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2004
NOTE 2 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
(CONTINUED)
A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND
BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET ASSETS
(CONTINUED)
Notes payable
Capital leases payable
Compensated absences
Net adjustment to reduce fund balance - total governmental funds
to arrive at net assets-governmental activities
$
178,809
387,796
177,522
$
744,127
B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND
STATEMENT OF REVENUES, EXENDITURES, 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 assets 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 and reported as
depreciation expense". The details of this $1,802,992 difference are as follows:
Capital outlay $
Depreciation expense
2,031,035
(228,043)
Net adjustment to increase net changes in fund balances - total governmental
funds to arrive at changes in net assets of governmental activities $
1,802,992
Another element of that reconciliation states that "The net effect of various miscellaneous transactions involving
capital assets (i.e., sales, trade-ins, and donations) is to decrease net assets". The details of this $(504,179)
difference are as follows:
In the statement of activities, only the gain 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 assets differs from the
change in fund balance by the cost of the capital assets sold. $
(483,453)
The statement of activities reports losses arising from the disposal of capital
assets. However, these disposals do not appear in the governmental funds
because the assets are not financial resources.
(20,726)
Net adjustment to increase net changes in fund balances - total governmental
funds to arrive at changes in net assets of governmental activities
$ (504,179)
33
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2004
NOTE 2 - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
(CONTINUED)
B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND
STATEMENT OF REVENUES, EXENDITURES, AND CHANGES IN FUND BALANCES AND THE
GOVERNMENT-WIDE 'STATEMENT OF ACTIVITIES (CONTINUED)
Another element of that reconciliation states that "the issuance of long-term debt (e.g., bonds, leases) provides
current financial resources to governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on
net assets. The details of this $255,419 difference are as follows:
Debt issued or incurred:
Capital lease financing $
Principal repayments
Net adjustment to decrease net changes in fund balances - total
governmental funds to arrive at changes in net assets of governmental
activities $
(431,756)
687,175
255,419
NOTE 3 - STEW ARDSBIP, COMPLIANCE, AND ACCOUNTABILITY
A. BUDGETARY INFORMATION
With the implementation of GASB Statement No. 34, Basic Financial Statements and Management Discussion
and Analvsis for State and Local Governments, the City has elected to disclose all budgetary information in the
notes to the required supplementary information on page 42.
NOTE 4 - DETAILED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS
Banks and savings and loans must meet the criteria to be a qualified public depository as described in the Florida
Security for Public Deposits Act in accordance with Chapter 280, Florida Statutes before any investment of public
funds can be made with them. At year end, the carrying amount of the City's (primary Government) deposits was
$1,731,620 and the bank balance was $1,910,036. Monies invested in amounts greater than the FDIC insurance
coverage are secured by the banks pledging securities with the State Treasurer in the multiple financial institutions
collateral pool.
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.
34
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
Septernber30,2004
NOTE 4 - DETAll..ED NOTES ON ALL FUNDS
A. DEPOSITS AND INVESTMENTS (CONTINUED)
The Municipal Police Officers' and Firefighters' pension trust funds are authorized to invest in annuity and life
insurance contracts; insured time or savings accounts of banks, saving and loan associations, and credit unions;
obligations of the U.S Government or agencies thereof; bonds issued by the State of Israel; stocks, commingled
funds administered by national or state banks, mutual funds, bonds, or other evidences of indebtedness issued or
guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the
United States, or the District of Columbia; foreign securities up to 10% of the fund assets; and real estate, provided
the cost is no more than 10%.
The City of Okeechobee and the Okeechobee Utility Authority Employees' Retirement System (Discretely
Presented Component Unit) is authorized to invest in annuity and life insurance contracts; insured time or savings
accounts of banks or savings and loan associations; obligations of the U.S Government or agencies thereof; bonds
issued by the State of Israel; and bonds, stocks, commingled funds administered by national or state banks, or other
evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any
state or organized territory of the United States, or the District of Columbia, provided the security is traded on a
nationally recognized exchange and holds a rating in one of the three highest classifications.
Investments are categorized into these three categories of credit risk:
(1) Insured or registered, or securities held by the government or its agent in the government's name.
(2) Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the
government's name.
(3) Uninsured and unregistered, with securities held by the counterparty, or by its trust department or
agent, but not in the government's name.
At year end, the primary government's investment balances included in cash and cash equivalents are as follows:
Investments not subject to categorization:
State Board of Administration
$ 3,095,307
At year end, the Pension Trust Funds' investment balances were as follows:
Category 3:
Mutual funds
Money market funds
Total General Employee's Pension Trust Fund investments
$ 9,169,270
36,276
$ 9,205,546
35
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2004
NOTE 4 - DETAILED NOTES ON ALL FUNDS (CONTINUED)
B. RECEIVABLES
Receivables as of September 30, 2004 are as follows:
FranchiselUtility taxes
Garbage
Contributions
Other
Interest
Receivables, net
General Fund
$ 113,981
8,505
13,906
$ 136,392
C. CAPITAL ASSETS
Municipal Component Unit
Firefighters' General
Pension Employees
Trust Pension Trust
$ $
3,413 94,844
14,660 33,984
34 77
$ 18,107 $ 128,905
Municipal
Police Officers'
Pension
Trust
$
36,819
34,028
112
$ 70,959
Capital asset activity for the year ended September 30,2004 was as follows:
Governmental activities:
Capital assets, not being depreciated:
LMd $
Construction in progress
Total capital assets, not being depreciated
Capital assets, being depreciated:
Buildings
Improvements other thM buildings
Equipment
Total capital assets being depreciated
Less accumulated depreciation for:
Buildings
Improvements other thM buildings
Equipment
Total accumulated depreciation
Total capital assets, being depreciated, net
Governmental activities capital assets, net $
Beginning
BalMce
1,307,089
1,307,089
1,527,109
155,606
1,576,457
3,258,172
(236,413)
(79,417)
(667,846)
(983,676)
2,274,496
3,581,585
Increases
Decreases
Ending
BalMce
$ 1,304,465
1,385,241
2,689,706
1,564,655
155,606
1,622,912
3,343,173
(286,073)
(89,790)
(776,618)
(1,152,481 )
2,190,692
$ 4,880,398
With the implementation of GASB Statement No. 34, Basic Financial Statements and Management Discussion and
Analvsis for State and Local Governments. beginning balances and accumulated depreciation for governmental
activities has been restated as of October 1, 2003. The City has recorded capital additions under the line items
where they were originally budgeted.
$ 76,462
1,385,241
1,461,703
$ (79,086)
36
(79,086)
37,546
531,786
569,332
(484,331)
(484,331)
(49,660)
(10,373)
(168,010)
(228,043)
341,289
$ 1,802,992
59,238
59,238
(425,093)
$ (504,179)
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2004
NOTE 4 - DETAILED NOTES ON ALL FUNDS (CONTINUED)
C. 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
$ 17,269
174,126
36,648
$ 228,043
D. INTERFUND RECEIVABLES, P A YABLES, AND TRANSFERS
The composition of interfund balances as of September 30, 2004, is as follows:
Due to/from other funds:
Receivable Fund
General
General
Total
Payable Fund
Downtown Redevelopment
Industrial Development
Amount
$ 119,609
499,460
$ 619,069
The City began two capital projects that will be funded by federal and state grants on a reimbursement basis. The
City advanced funds from the General Fund to the Capital Project Funds for the payment of the project costs.
Once reimbursement is received under the grants the advances will be repaid.
E. CAPITAL LEASE
The government has entered into a lease agreement as lessee for fmancing the acquisition of certain vehicles for the
police, fIre and public works departments. This lease agreement qualifies as a capital lease for accounting purposes
and, therefore, has been recorded at the present value of its future minimum lease payments as of the inception date.
The assets acquired through the capital lease are as follows:
Asset:
Vehic1es
Less: Accumulated depreciation
Total
$
431,756
(21,588)
410,168
$
37
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2004
NOTE 4 - DETAILED NOTES ON ALL FUNDS (CONTINUED)
E. CAPITAL LEASE (CONTINUED)
Obligations of governmental activities under the capital lease at September 30, 2004, were as follows:
Year Ending Sept. 30, Principal Interest Total
2005 $ 54,967 $ 14,033 $ 69,000
2006 57,098 11,903 69,001
2007 110,216 9,207 119,423
2008 131,780 4,450 136,230
2009 33,735 322 34,057
Total $ 387,796 $ 39,915 $ 427,711
F. NOTES PAYABLE
Notes payable as of September 30,2004 are as follows:
5.25% gas tax revenue note to a bank, payments of $99,682, including interest,
due semi-annually through December 30, 2004; collateralized by and payable
from a pledge of the City's share of the local option gas tax, municipal tax on
motor fuels and motor fuel rebate
5.527% note to a bank, payment of $40,000, including interest, due annually
through October 1, 2003 with fmal payment due October 2004 of $27,171;
collateralized by annually budgeted non-ad valorem revenues
$
97,325
25,692
4.75% note to a bank, payments of $29,899, including interest, due annually
through March 8, 2006, unsecured
55,792
$
178,809
Annual debt service requirements to maturity for the notes are as follows:
Year Ending Sept. 30,
2005
2006
Total
Principal
$ 150,266
28,543
$ 178,809
Interest
$ 5,324
1,356
$ 6,680
Total
$ 155,590
29,899
$ 185,489
38
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2004
NOTE 4 - DETAILED NOTES ON ALL FUNDS (CONTINUED)
G. CHANGES IN LONG-TERM LIABD..ITIES
Long-term liability activity for the year ended September 30,2004, was as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
Notes payable $ 428,006 $ $ (249,197) $ 178,809 $ 150,266
Capital lease 394,018 431,756 (437,978) 387,796 54,967
Compensated absences 212,330 39,900 (59,733) 192,497 45,587
Long-term liabilities $ 1,034,354 $ 471,656 $ (746,908) $ 759,102 $ 250,820
For the governmental activities, compensated absences and capital leases are generally liquidated by the general
fund.
NOTE 5 - OTHER INFORMATION
A. RISK MANAGEMENT
The City is exposed to various risks of loss, including, but not limited to theft, damage or destruction of its
buildings, equipment, records, and monetary assets, and liability for personal injury, property damage, and
consequences of employee and public official actions. The City participates in a non-assessable public risk pool to
cover significant loss exposure and purchases commercial insurance for third party pollution liability coverage. The
pool maintains a 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 ofOkeechobee 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 fmancial reports that include fmancial statements and required supplementary information.
The reports are available from the City ofOkeechobee, Florida, 55 S.E. Third Avenue, Okeechobee, Florida 34974.
Fwuiing 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
rate is 12.17% for the Police Officers' plan. The City is not required to make a contribution for the year to the
Firefighters' plan since the member contributions plus the state contributions are in excess of the normal cost for the
year as shown by the most recent actuarial valuation of the plan.
39
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2004
NOTE 5 - OTHER INFORMATION
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 $118,288 and $46,239, respectively. These contributions are funded by an excise tax upon certain casualty
insurance companies on their gross receipts of premiums from policy holders.
Annual Pension Cost - The annual required pension contributions for the Plans were determined as part of the
October 1,2004 actuarial valuations using the aggregate actuarial cost method. The aggregate actuarial cost method
does not identify or separately amortize unfunded actuarial liabilities. The actuarial assumptions included (a) 7%
investment rate of return (net of administrative expenses) and (B) projected salary increases of 6% for the Police
Officer's Trust and 7% for the Firefighter's Trust. Both (a) and (b) included an inflation component of 4%. The
actuarial value of assets was determined using a method which recognizes actual investment return in excess of the
assumed return evenly over a four year period.
Trend information for each of the City's defined benefit plans:
Annual Percentage Net
Year Pension OfAPC Pension
Ending Cost (APe) Contributed Obligation
9/30/02 $ 115,163 93 % $ (406,629)
9/30/03 189,862 91 (388,171)
9/30/04 200,959 93 (375,035)
9/30/02 $ 21,681 256 % $ (355,293)
9/30/03 46,507 116 (362,833)
9/30/04 45,897 102 (363,775)
Municipal Police Officers'
Municipal Firefighters'
Pension Plan - Discretelv Presented Component Unit
Plan Description - The City contributes to the City ofOkeechobee 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. 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 fmancial report that includes fmancial statements and
required supplementary information. That report is available from the City of Okeechobee, Florida, 55 S.E. Third
Avenue, Okeechobee, Florida 34974.
Funding Policy _ The contribution requirements of the plan members and the City are established and may be
amended by City ordinance. Plan members are required to contribute 6% of their covered annual salary. The City is
required to contribute at an actuarially determined rate; the current rate is 9.8% of covered payroll. The City's
contributions for the years ended September 30, 2004, 2003, and 2002 were $65,511, $56,715, and $31,324,
respectively, and were equal to the required contributions for each year.
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REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
41
CITY OF OKEECHOBEE, FLORIDA
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual
General Fund
Year Ended September 30, 2004
Actual Variance with
Original Final (on Budgetary Final Budget
Budget Budget Basis) Positive (Negative)
Revenues
Taxes $ 2,262,460 $ 2,262,460 $ 2,324,853 $ 62,393
Intergovernmental 1,871,308 1,871,308 2,023,360 152,052
Charges for services 277 ,830 277,830 286,247 8,417
Licenses and permits 122,292 122,292 143,872 21,580
Fines and forfeitures 29,242 29,242 50,311 21,069
Interest 110,300 110,300 72,430 (37,870)
Miscellaneous 4,358 4,358 25,633 21,275
Total revenues 4,677,790 4,677,790 4,926,706 248,916
Expenditures
Current:
General government 916,371 916,371 922,557 (6,186)
Public safety 2,325,596 2,325,596 2,339,671 (14,075)
Transportation 634,192 634,192 637,382 (3,190)
Physical environment 445,885 445,885 359,248 86,637
Capital outlay 557,520 557,520 535,178 22,342
Debt service
Principal 663,953 663,953 687,175 (23,222)
Interest 39,523 39,523 34,827 4,696
Total expenditures 5,583,040 5,583,040 5,516,038 67,002
Deficiency of revenues
under expenditures (905,250) (905,250) (589,332) 315,918
Other financing sources (uses)
Capital lease proceeds 431,756 431,756
Sale of capital assets 5,000 5,000 438,821 433,821
Net other financing sources (uses) 5,000 5,000 870,577 865,577
Excess (deficiency) of revenues
and other financing sources over
(under) expenditures and other
financing sources (uses) (900,250) (900,250) 281,245 1,181,495
Fund balances, beginning of year 5,224,990 5,224,990 5,224,990
Fund balances, end of year $ 4,324,740 $ 4,324,740 5,506,235 $ 1,181,495
Reconciliation of budgetary
to GAAP basis
Current year encumbrances 49,122
Prior year encumbrances (35,305)
$ 5,520,052
The accompanying notes to required supplementary information are an integral part oftrus financial schedule. 42
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CITY OF OKEECHOBEE, FLORIDA
Notes to Required Supplementary Information
Septernber30,2004
A. BUDGETARY INFORMATION
Annual budgets are adopted on a basis consistent with U.S. generally accepted accounting principles for all
governmental funds. All annual appropriations lapse at fiscal year end.
The City manager 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 several 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 reservations of fund balances and do not constitute expenditures or liabilities
because the commitments will be reappropriated and honored during the subsequent year.
B. EXCESS OF BUDGET EXPENDnITffiES OVER REVENUES
For the year ended September 30,2004, budget expenditures exceeded revenues in the General fund. However,
this is pursuant to the legally adopted budget to expend available fund equity (cash carryforward) and does not
constitute a deficit.
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SINGLE AUDIT SECTION
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HOYMAN, DOBSON & COMPANY P.A.
CERTIFIED PUBLIC ACCOUNTANTS '
1 .. OOwSKffff2i8!k'Gli4FU;:- ":ii'
275 Bay tree Drive, Melbourne, Florida 32940, 327-255-0088, Fax 327-259-8648, WvVW.hoyman.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
Charles W Hoymon, J[
Barbara J. Oswalt
Thomas L. Kirk
Karen E. Kirkland
Deborah A. Bradley
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bierning
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
We have audited the fmancial statements of the governmental activities, each major fund, and the aggregate fund
information of the City of Okeechobee, Florida, as of and for the year ended September 30, 2004, which collectively
comprise the City's basic fmancial statements and have issued our report thereon dated July 18,2005. Our report on
the fmancial statements explained that the City implemented GASB Statement No. 34, Basic Financial Statements
and Management Discussion and Analysis for State and Local Governments, as of October 1, 2003. We
conducted our audit in accordance with auditing standards generally accepted in the United States of America and
the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. We did not audit the financial statements of the fiduciary fund type and the
discretely presented component unit. Those financial statements were audited by other auditors whose reports
have been furnished to us, and this report, insofar as it relates to the fiduciary fund type and the discretely
presented component unit, is based on the reports of the other auditors.
Internal Control Over Financial Reportin2
In planning and performing our audit, we considered the City of Okeechobee, Florida's internal control over
fmancial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the
fmancial statements and not to provide an opinion on the internal control over financial reporting. However, we
noted certain matters involving the internal control over fmancial reporting and its operation that we considered to
be a reportable condition. Reportable conditions involve matters coming to our attention relating to significant
deficiencies in the design or operation of the internal control over fmancial reporting that, in our judgment, could
adversely affect the City ofOkeechobee's ability to record, process, summarize, and report financial data consistent
with the assertions of management in the fmancial statements, a reportable condition is described in the
accompanying schedule of fmdings and questioned costs as item 04-1. In addition we noted an opportunity for
improving internal control that we have reported to management of the City of Okeechobee, Florida in a separate
letter dated July 18,2005.
A material weakness is a reportable condition in which the design or operation of one or more of the internal control
components does not reduce to a relatively low level of risk that misstatements caused by error or fraud in amounts
that would be material in relation to the fmancial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned functions. Our consideration of the
internal control over fmancial reporting would not necessarily disclose all matters in the internal control that might
be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also
considered to be material weaknesses. However, we believe that the reportable condition described above is a
material weakness.
. /}c'}, cr.5Jl('4*~T--'
"?/
. American Institute of Certified Public Accountants' Florida Institute of Certified Public Accountants' SEC Practice Section of the A I. C fA . CPAmerica International
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Two
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 fmancial 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 that are required to be reported under Government Auditing Standards.
~~/~~.1C~{t,4-.
Hoyman, Dobson & Company, P.A.
July 18, 2005
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HOYMAN, DOBSON & COMPANY P.A.
CERTIFIED PUBLIC ACCOUNTANTS '
b""_,,,"wJf[';<X:,:Tt;X!t5JLP";
275 Bay tree Drive, Melbourne, Florida 32940, 327-255-0088, Fax 327-259-8648, WvVW.hoyman.com
Charles W Hayman, Jr
Barbara J Oswalt
Thomas L. Kirk
Karen E. Kirkland
Deborah A. Bradley
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bierning
Independent Auditors' Report on Compliance with Requirements
Applicable to Each Major Program and on Internal Control Over
Compliance in Accordance with OMB Circular A-133
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Compliance
We have audited the compliance of the City of Okeechobee, Florida, with the types of compliance requirements
described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that
are applicable to each of its major federal programs for the year ended September 30, 2004. The City of
Okeechobee, Florida's major federal programs are identified in the summary of auditor's results section of the
accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations,
contracts and grants applicable to each of its major federal programs is the responsibility of the City of
Okeechobee, Florida's management. Our responsibility is to express an opinion on the City of Okeechobee,
Florida's compliance based on our audit.
We conducted our audit of compliance 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 OMB Circular A-133, Audits of States. Local
Governments. and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and
perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance
requirements referred to above that could have a direct and material effect on a major federal program occurred.
An audit includes examining, on a test basis, evidence about the City of Okeechobee, Florida's compliance with
those requirements and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal
determination of the City ofOkeechobee, Florida's compliance with those requirements.
In our opinion, the City of Okeechobee, Florida, complied, in all material respects, with the requirements referred
to above that are applicable to each of its major federal programs for the year ended September 30, 2004.
Internal Control Over Compliance
The management of the City of Okeechobee, Florida, is responsible for establishing and maintaining effective
internal control over compliance with the requirements of laws, regulations, contracts and grants applicable to
federal programs. In planning and performing our audit, we considered the City ofOkeechobee, Florida's internal
control over compliance with requirements that could have a direct and material effect on a major federal
program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance
and to test and report on the internal control over compliance in accordance with OMB Circular A-133.
49
\;1;;/;<i:WXn#E14t*JW!'i~ ~~
. American Institute of Certified Public Accountants' Florida Institute of Certified Public Accountants' SEC Practice Section of the A I. C PA . CPAmerica International
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Two
Our consideration of the internal control over compliance would not necessarily disclose all matters in the
internal control that might be material weaknesses. A material weakness is a reportable condition in which the
design or operation of one or more of the internal control components does not reduce to a relatively low level
the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants caused by
error fraud that would be material in relation to a major federal program being audited may occur and not be
detected within a timely period by employees in the normal course of performing their assigned functions. We
noted no matters involving the internal control over compliance and its operation that we consider to be material
weaknesses.
This report is intended solely for the information and use of the City Council, management, specific legislative or
regulatory bodies, federal awarding agencies and pass-through entities and is not intended to be and should not be
used by anyone other than these specified parties.
+#1. ~t 1 (1epc~!,." il/J.
Hoyman, r5obson & Company, p](
July 18, 2005
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CITY OF OKEECHOBEE, FLORIDA
Schedule of Findings and Questioned Costs
For the Year Ended September 30,2004
SECTION I - SUMMARY OF AUDITOR'S RESULTS
Financial Statements
Type of Auditor's report issued:
Internal control over fmancial reporting:
Unqualified
Material weakness(es) identified?
x
Reportable conditions(s) identified not considered
to be material weaknesses?
Noncompliance material to fmancial statements noted?
Federal Awards
Internal Control over major programs:
Material weakness( es) identified?
Reportable conditions(s) identified not considered
to be material weaknesses?
Type of auditor's report issued on compliance
for major programs:
Unqualified
Any audit fmdings disclosed that are required
to be reported in accordance with Circular A-133,
Section.510(a)?
x
yes
Identification of major programs:
CFDA Numberls)
11.300
14.228
yes
no
none reported
no
no
none reported
no
Name of Federal Pro2ram or Cluster
Public Works and Facilities Development Program
Florida Small Cities CDBG Program
Dollar threshold used to distinguish
between Type A and Type B programs:
$ 300,000
Auditee qualified as low-risk auditee?
yes
yes
x
no
51
yes
x
yes
x
yes
x
x
CITY OF OKEECHOBEE, FLORIDA
Schedule of Findings and Questioned Costs
For the Year Ended September 30,2004
SECTION n - FINANCIAL STATEMENT FINDINGS
04-1 RECONCILIA nON OF CONSULTANT PROVIDED INFORMA nON TO ACCOUNTING RECORDS
Criteria: It is the responsibility of the City of Okeechobee management to design a system of internal control
that provides reasonable assurance that transactions are properly recorded and accounted for to permit the
preparation of reliable financial statements and federal grant reports.
Condition: The City relied on an outside consultant to prepare all grant reports and grant requests for
reimbursement but there was no reconciliation of the reimbursement requests to the City's accounting records.
During the audit several amounts (including retainage payable) were identified that should have been recorded as
payable at September 30, 2004 along with the corresponding grant revenue/receivable.
Recommendation: The reports and reimbursement requests prepared by the consultant should be provided to
the City's accounting department to enable reconciliation of grant expenditures and reimbursements to the
general ledger accounts. A copy of the grant reimbursement request along with the reconciliation and detail
support for all expenditures related to the requests should be maintained in a project file.
Management's Response: The City's accounting department will be provided a copy of all reports and grant
reimbursement requests prepared by the consultant to enable the reconciliation of the expenditures of federal
grant funds to the general ledger accounts. The documents obtained from the consultant and the reconciliation
will be maintained in a detailed project file.
SECTION ill - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
04-2 FILING OF ANNUAL FINANCIAL AUDIT REPORT
Criteria: All local governments with an open or administratively closed Florida Small Cities Community
Development Block Grant (CDBG) contract, CFDA 14.228, are required to provide the Department of
Community Affairs with an annual financial audit if the local government has expended $500,000 or more in
federal funds. The audit report is due annually by April 30.
Condition: The City had an open CDBG contract for fiscal year 2004 and expended more than $500,000 in
federal funds but did not meet the deadline for the filing of the annual audit report with the Department of
Community Affairs by April 30, 2005. The delay in filing occurred because the actuary's report and the pension
auditor's report were not available until the end of April and in addition, the City and its auditors needed
additional time to implement GASB 34.
Recommendation: We recommend the City determine if the actuary's report and the pension auditor's report
can be provided at an earlier date or that an extension letter be requested from the granting agency.
Management's Response: The City will contact the actuary to determine if the report can be provided by
March. If this is not possible then the City will talk to the granting agency about an extension request.
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CITY OF OKEECHOBEE, FLORIDA
Schedule of Expenditures of Federal Awards
F or the Year Ended September 30, 2004
Federal Program CFDA Grant
Pass-Through Entity CSFA Contract
Federal Program / State Project No. No. Expenditures
U.S. Department of Commerce
Economic Development Administration
Direct Program
Public Works and Facilities Development Program 11.300 04-01-04895 $ 546,687
U.S. Department of Housing and Urban
Development
Indirect Program
Passed through
Florida Department of Community Affairs
Florida Small Cities CDBG Program 14.228 04DB-IQ-07-57-02-C 01 304,633
Department of Homeland Security
Indirect Program
Passed through
Florida Department of Community Affairs
Federal Emergency Management Agency
97.036
*
6,230
Total Expenditures of Federal Awards
$
857,550
Note A - Significant Accounting Policies:
The Schedule of Expenditures of Federal Awards is a summary of the City's federal award programs presented
on the modified-accrual basis of accounting in accordance with general accepted accounting principles.
* Contract number not available
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HOYMAN, DOBSON & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
f'f~'jtnim:'Yt,-Pt';;N!
275 Boy tree Drive, Melbourne, Florida 32940, 327-255-0088, Fox 327-259-8648, www.hoyman.com
Independent Auditors' Management Letter
Charles W Hayman, Jr
Barbara j. Oswalt
Thomas l. Kirk
Karen E. Ki rkland
Debarah A. Bradley
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bjerning
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
We have audited the financial statements of the City of Okeechobee, Florida as of and for the fiscal year ended
September 30, 2004, and have issued our report thereon dated July 18, 2005.
We conducted our audit in accordance with United States generally accepted auditing standards; the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States; and OMB Circular A-B3, Audits o/States, Local Governments, and Non-Profit Organizations.
We have issued our Independent Auditor's Report on Compliance and Internal Control over Financial Reporting
and on Compliance and Other Matters, Independent Auditor's Report on Compliance with Requirements
Applicable to each Major Federal Program, and Schedule of Findings and Questioned Costs. Disclosure in these
reports, which are dated July 18, 2005, should be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General. Those
rules (Section 10.5 54(l)(g) 1.a.) require that we address in the management letter, if not already addressed in the
auditor's reports on compliance and internal controls or schedule of fmdings and questioned costs, whether or not
inaccuracies, shortages, defalcations, fraud, and/or violations of laws, rules, regulations, and contractual
provisions reported in the preceding annual fmancial audit report have been corrected. There were no
inaccuracies, shortages, defalcations, fraud, and/or violations of laws, rules, regulations, and contractual
provisions reported in the preceding annual financial audit report.
The Rules of the Auditor General (Section 10.554(l)(g)1.b.) require that we address in the management letter, if
not already addressed in the auditor's reports on compliance and internal controls or schedule of fmdings and
questioned costs, whether or not recommendations made in the preceding annual financial audit report have been
followed. The status of the findings from the prior year management letter are as follows:
Internal Control Over Financial Reportin2
Fixed Assets
Status
Corrected
Mana2ement Letter
1. Receiving Reports
2. Law Enforcement Special Revenue Fund Expenditures
3. Capital Outlay and Operating Expense Classification
Status
Corrected
Corrected
Corrected
As required by the Rules of the Auditor General (Section 1O.554(l)(g)2.), the scope of our audit included a
review of the provisions of Section 218.415., Florida Statutes, regarding the investment of public funds. In
connection with our audit, we determined that the City of Okeechobee, Florida complied with Section 218.415,
Florida Statutes.
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. American Institute of Certified Public Accountants. Florida Institute of Certified Public Accountants. SEC Practice Section of the A I. C. PA . CPAmerica International
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Two
The Rules of the Auditor General (Section 10.554(l)(g)4.) require disclosure in the management letter of the
following matters if not already addressed in the auditor's reports on compliance and internal controls or schedule
of findings and questioned costs: (1) violations of laws, rules, regulations, and contractual provisions that have
occurred, or are likely to have occurred; (2) improper or illegal expenditures; (3) improper or inadequate
accounting procedures (e. g., the omission of required disclosures from the financial statements); (4) failures to
properly record financial transactions; and (5) other inaccuracies, shortages, defalcations, and instances of fraud
discovered by, or that come to the attention of, the auditor. We noted the following matters.
Records Maintenance and Report Filing:
Criteria: The City should maintain files to assist with filing required grant reports and have a system in place to
monitor filing requirements.
Condition: During the testing of the grant project files it was noted that all relevant grant information was not
included in a project file. The City relied on an outside consultant to provide guidance for grant transactions and
to provide the records necessary for accountability. The consultant's contract expires during fiscal year 2005 and
additional progress reports will still be required including those due in three to six years. The City does not have
a system in place to monitor due dates and to file grant reports in a timely manner.
Recommendation: We recommend the City update the project files and include a checklist in the front of each
project file listing all items and any report dates for the specific grant to insure that all requirements are met. In
addition the City should develop a system for monitoring the due dates of future reports and a system for
preparing the reports in a timely manner.
Management's Response: The auditors' recommendation will be followed. Project files will be updated with
checklists and due dates. Also, a system for monitoring and reporting on the future due dates in a timely manner
will be followed.
The Rules of the Auditor General (Section 10.554(l)(g)5.) also require that the name or official title and legal
authority for the primary government and each component unit of the reporting entity be disclosed in the
management letter, unless disclosed in the notes to the fmancial statements. This information is disclosed in the
notes to the financial statements.
As required by the Rules of the Auditor General (Section 10.554(l)(g)6.a.), the scope of our audit included a
review of the provisions of Section 218.503(1), Florida Statutes, regarding financial emergencies. In connection
with our audit, we determined that the City of Okeechobee, Florida has not met any of the financial emergency
conditions described in Section 218.503(1), Florida Statutes.
As required by the Rules of the Auditor General (Section 10.554(1)(g)6.b.), we determined that the annual
financial report for the City of Okeechobee, Florida for the fiscal year ended September 30, 2004, filed with the
Department of Financial Services pursuant to Section 218.32, Florida Statutes, is in agreement with the annual
financial audit report for the fiscal year ended September 30, 2004.
As required by the Rules of the Auditor General (Sections 10.554(g)(6)c. and 10.556), we applied financial
condition assessment procedures. It is management's responsibility to monitor the entity's financial condition, and
our financial condition assessment was based in part on representations made by management and the review of
fmancial information provided by same.
56
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Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Three
This report is intended solely for the information and use of the City Council, management, federal awarding
agencies and pass-through entities, and the State of Florida Office of the Auditor General and is not intended to be
and should not be used by anyone other than these specified parties.
~/AJ~1 (?~ fJl/-.
Hoyman, Dobson & Company, P.A.
July 18, 2005
57
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HOYMAN, DOBSON & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
275 Boy tree Drive, Melbourne, Florida 32940, 327-255-0088, Fox 327-259-8648, www.hoyman.com
Charles W Hoymon. Jr
Barbaro j. Oswall
Thomas l. Kirk
Karen E. Kirkland
Deborah A. Bradley
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bjerning
Honorable Mayor and Members of City Council
The City of Okeechobee, Florida
We have audited the financial statements of the City of Okeechobee, Florida for the year ended
September 30, 2004, and have issued our report thereon dated July 18, 2005. Professional standards
require that we provide you with the following information related to our audit.
Our Responsibility under Generallv Accepted Auditing Standards and Government Auditing Standards
As stated in our engagement letter dated August 29, 2001, our responsibility, as described by
professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance
about whether the financial statements are free of material misstatement. Because of the concept of
reasonable assurance and because we did not perform a detailed examination of all transactions, there is a
risk that material errors, fraud, or illegal acts, may exist and not be detected by us.
As part of our audit, we considered the internal control of the City of Okeechobee, Florida. Such
considerations were solely for the purpose of determining our audit procedures and not to provide any
assurance concerning such internal control.
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we performed tests of the City of Okeechobee, Florida's compliance with certain
provisions of laws, regulations, contracts, and grants. However, the objective of our tests was not to
provide an opinion on overall compliance with such provisions.
Significant Accounting Policies
Management has the responsibility for selection and use of appropriate accounting policies. In
accordance with the terms of our engagement letter, we will advise management about the
appropriateness of accounting policies and their application. The significant accounting policies used by
the City of Okeechobee, Florida are described in Note 1 to the financial statements. We noted no
transactions entered into by the City during the year that were both significant and unusual, and of which,
under professional standards, we are required to inform you, or transactions for which there is a lack of
authoritative guidance or consensus.
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. American Institute of Certified Public Accountants. Florida Institute of Certified Public Accountants. SEe Practice Section of the A. I. C PA. . CPAmerica International
Honorable Mayor and Members of City Council
The City of Okeechobee, Florida
Page Two
Accounting Estimates
Accounting estimates are an integral part of the basic financial statements prepared by management and
are based on management's knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their significance
to the financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimate affecting the financial statements is the
useful lives of capital assets.
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 they are reasonable in relation to the financial statements taken as a whole.
Significant Audit Adjustments
For purposes of this letter, professional standards define a significant audit adjustment as a proposed
correction of the financial statements that, in our judgment, may not have been detected except through
our auditing procedures. These adjustments may include those proposed by us but not recorded by the
City of Okeechobee, Florida that could potentially cause future financial statements to be materially
misstated, even though we have concluded that such adjustments are not material to the current financial
statements. We proposed no audit adjustments that could, in our judgment, either individually or in the
aggregate, have a significant effect on the City ofOkeechobee's reporting process.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter,
whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing
matter that could be significant to the financial statements or the auditors' report. We are pleased to
report that no such disagreements arose during the course of our audit.
Consultations with Other Independent Accountants
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 auditor's 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.
Issues Discussed Prior to Retention of Independent Auditors
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the City of Okeechobee, Florida's auditors.
, .
Honorable Mayor and Members of City Council
The City of Okeechobee, Florida
Page Three
However, these discussions occurred in the normal course of our professional relationship and our
responses were not a condition to our retention.
Difficulties Encountered in Performing; the Audit
We encountered no significant difficulties in dealing with management in performing our audit.
This information is intended solely for the use of the City Council and management of the City of
Okeechobee, Florida and should not be used for any other purpose.
Very truly yours,
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Hoyman, Dobson & Company, P.A.
July 18, 2005
366
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VIII. NEW BUSINESS CONTINUED.
D. Motion to approve a Temporary Street Closing for Southwest 4th
Avenue between North and South Park Streets on November 5,
2005 from 8 a.m. to 1 p.m., submitted by Reach Radio FM 90.5 for
a Family Fun Day and Walk - City Clerk (Exhibit 7).
E.; Motion to approve the .fQQ4/2005 Fiscal Year Audit Report -
Deborah A. Bradley, Audit Director: .
F. Consider approval of proposed Main Street Agreement - City
Attorney (Exhibit 8).
G.
Consider approval of Mural Guidelines presented by Main Street -
Maureen Burroughs (Exhibit 9).
SEPTEMBER 7. 2005. REGULAR MEETING. PAGE 11 OF 13
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New Business item D was withdrawn from the agenda.
New Business Item E was withdrawn from the agenda. This item was deferred until the September 20,2005 Regularly
scheduled City Council Meeting.
Council Members Watford and Markham expressed their appreciation for the work that Okeechobee Main Street has
accomplished and also, the efficiency and manner in which their requests are presented.
Council Member Watford moved to approve an agreement between the City and Okeechobee Main Street
regarding the Community Redevelopment Agency: seconded bv Council Member Chandler. Council Member
Williams noted for the record that she will be abstaining from voting due to her employment with OKMS.
VOTE
MARKHAM. YEA
WATFORD. YEA
WILLIAMS. ABSTAlNED*
MOTION CARRIED.
KIRK. YEA
CHANDLER. YEA
Ms. Bridgett Waldou, of the Design Committee for OKeechobee Main Street (OKMS), presented a packet for the
Murals and Visual Arts Program guidelines. She explained that this program is to enlighten our community of our
historical and cultural heritage. The Committee is in the process of picking a theme and locations for the projects, and
at this time there are four business owners waiting to proceed. The first mural is intended to be painted by our local
students under the supervision of a professional artist. Council Member Watford remarked it will be important to
encourage the business owners to follow the guidelines for this program to be successful, and that City Council should
have the final approval of the murals. Ms. Maureen Burroughs, President of OKMS, explained the reason for the
guidelines is to assure a program that is not less than standard. We want the City Council to see it and approve it,
but mainly for it to get done in a timely manner.
Council MemberWatford moved that we instruct Attome Cook to re are an Ordinance for the LPA r ardin
the Okeechobee Main Street Mural and Visual Arts Program Guidelines: seconded by Council Member
Markham.
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SEP1EMBER 20,2005- FINAL BuDGET HEAIUIlGAND REGulAR MEETING - PAGE 11 OF 14 3 7 9
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X. NEW BUSINESS.
A.
Motion to approve the 2003/2004 Fiscal Year Audit Report -
Deborah A. Bradley, Audit Director.
.
B.
Motion to reappoint Louise Chandler and Steve Padgett to the
Police Officers' Pension Board of Trustees, term beginning October
1,2005 and ending September 30,2007 - Bettye Taylor, Pension
Fund Secretary.
C.
Motion to ratify the appointment of Robert Peterson to the Police
Officers' Pension Board of Trustees, term beginning October 1,
2005 and ending September 30,2007 - Bettye Taylor, Pension
Fund Secretary.
D.
Motion to reappoint John Koepke to the Firefighters' Pension Board
of Trustees term beginning October 1, 2005 and ending September
30,2008 - Bill Douglas, Fire Pension Fund Secretary.
Ms Deborah Bradley of Hoyman, Dobson and Company, PA., presented and distributed copies of the results for the
2003/2004 Fiscal Year audit. Findings were of limited significance. Items of notation from last year's report were noted
to have been corrected. Those items being: Internal control over financial reporting of the fixed assets; law
enforcement special revenue fund expenditures; and capital outlay and operating expense classification. All areas are
being addressed appropriately. This year's report encompasses the new GASB 34 reporting procedures. Ms. Bradley
reported that the City is financially sound. One item noted are to implement better controls, and check lists for grant
files. Mayor Pro-Tern Watford thanked Ms. Bradley for her presentation. He remarked that it was good to see the fixed
assets finally completed after being on the manager's letter for several years. She also noted that should the Council
have any questions once they have had the opportunity to review the report closer, she would be available. No official
action was necessary for this item.
Council Member Williams moved to reappoint Louise Chandler and Steve Padgett to the Police Officers' Pension
Board of Trustees, term beginning October 1, 2005 and ending September 30, 2007; seconded by Council Member
Chandler. The Council noted their thanks and appreciation for these citizens to serve on this board.
VOTE
MARKHAM. YEA
WATFORD. YEA
WILLIAMS. YEA
MOTION CARRIED.
KIRK. ABsENT
CHANDLER. YEA
Council Member Chandler moved to ratify the appointment of Robert Peterson to the Police Officers' Pension Board
ofT ru stees , term beginning October 1 ,2005 and ending September 30,2007; seconded by Council Member Williams.
VOTE
MARKHAM. YEA
WATFORD. YEA
WILLIAMS. YEA
MOTION CARRIED.
KIRK. ABsENT
CHANDLER. YEA
Council Member Williams moved to reappoint John Koepke to the Firefighters' Pension Board of Trustees term
beginning October 1, 2005 and ending September 30, 2008; seconded by Council Member Chandler. The Council
noted their thanks and appreciation for his willingness to serve on this board.