Audit Report 09.30.2003
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CITY OF OKEECHOBEE, FLORIDA
Financial Statements
Year Ended September 30, 2003
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CITY OF OKEECHOBEE, FLORIDA
Table of Contents
Year Ended September 30, 2003
Introductory Section
Title Page
Table of Contents
City Officials
P~e
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2
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Financial Section
Independent Auditor's Report
General Purpose Financial Statements
· Combined Balance Sheet - All Fund Types and Account Groups and
Discretely Presented Component Unit
· Combined Statement of Revenues, Expenditures, and Changes
in Fund Balances - All Governmental Fund Types
· Combined Statement of Revenues, Expenditures, and Changes
in Fund Balances - Budget and Actual (Budgetary Basis) - All Governmental
Fund Types
· Combined Statement of Changes in Plan Net Assets - Fiduciary Fund Type-
Pension Trust Funds and Discretely Presented Component Unit
· Notes to Financial Statements
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8
11
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15
17
Combining and Individual Fund Financial Statements
Governmental Fund Type - General Fund
· Schedule of Expenditures - Budget and Actual (Budgetary Basis)
Fiduciary Fund Type - Pension Trust Funds
· Combining Balance Sheet
· Combining Statement of Changes in Plan Net Assets
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35
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Additional Elements Required By Government Auditin2 Standards
and the Rules of the Auditor General
· Independent Auditor's Report on Compliance and on Internal Control Over
Financial Reporting Based on an Audit of Financial Statements
Performed in Accordance with Government Auditin2 Standards
· Independent Auditor's Management Letter
39
41
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CITY OF OKEECHOBEE, FLORIDA
City Officials
As of September 30, 2003
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 Parker
Account Supervisor
Lois Keith Tomey II
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
llli~JttA@tifig1,tJ:>,i,:'h};,"~
275 Baytree 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
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bierning
Independent Auditor's Report
Honorable Mayor and Members of the City Council
City ofOkeechobee, Florida
We have audited the accompanying general purpose financial statements of the City of Okeechobee, Florida, as
of and for the year ended September 30, 2003, as listed in the table of contents. These general purpose financial
statements are the responsibility of the City of Okeechobee, Florida's management. Our responsibility is to
express an opinion on these general purpose financial statements based on our audit. We did not audit the
financial statements of the fiduciary fund type and the discretely presented component unit. Those [mancial
statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for the fiduciary fund type and the discretely presented component unit, is based
on the reports of the other auditors.
Except as discussed in the following paragraph, we conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the general purpose financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall general purpose financial statement presentation. We believe that our audit and the reports of other
auditors provide a reasonable basis for our opinion.
Because of the inadequacy of the accounting records for the years prior to October 1, 1999, we were unable to
form an opinion regarding the amounts at which real property general fixed assets are recorded in the
accompanying Combined Balance Sheet - All Fund Types and Account Groups and Discretely Presented
Component Unit at September 30,2003.
In our opinion, based on our audit and the reports of other auditors, except for the effects of such adjustments, if any,
as might have been determined to be necessary in the Combined Balance Sheet - All Fund Types and Account
Groups and Discretely Presented Component Unit had records concerning general fixed assets been adequate, the
general purpose financial statements referred to in the first paragraph present fairly, in all material respects, the
[mancial position of the City ofOkeechobee, Florida, as of September 30,2003, and the results of its operations for
the year then ended in conformity with accounting principles generally accepted in the United States of America.
" "'ihlHT<j>?~>''!:::V:::!FiWb1:i,f:;r~,.tH
. American Institute of Certified Public Accountants' Florida Institute of Certified Public Accountants' SEC Practice Section of the AJ C fA . CPAmerica International
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Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Two
In accordance with Government Auditing: Standards. we have also issued our report dated February 25,2004 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 grants. 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.
Our audit was performed for the purpose of forming an opinion on the general purpose financial statements taken
as a whole. The general fund budget to actual schedule of expenditures and the combining and individual
fiduciary fund fmancial statements, listed in the table of contents, are presented for purposes of additional
analysis and are not a required part of the general purpose fmancial statements of the City of Okeechobee,
Florida. The general fund budget to actual schedule information has been subjected to the auditing procedures
applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material
respects in relation to the general purpose financial statements taken as a whole. We express no opinion on the
fiduciary fund fmancial statements because they were audited by other auditors as indicated in the first
paragraph.
#~/~1tb~llA- ,
Hoyman, Dobson & Company, P.A.
February 25,2004
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GENERAL PURPOSE FINANCIAL STATEMENTS
These basic financial statements provide a summary overview of the fmancial
position of all funds and account groups and discretely presented component unit
as well as the operating results of all funds. They also serve as an introduction to
the more detailed statements that are in the following subsections.
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CITY OF OKEECHOBEE, FLORIDA
Combined Balance Sheet - All Fund Types and Account Groups and Discretely Presented Component Unit
September 30, 2003
PRIMARY
Fiduciary Fund
Governmental Fund Types Type
Law Industrial
Enforcement Development Pension
General Special Revenue Capital Project Trust
ASSETS AND OTHER DEBITS
Cash and cash equivalents $ 4,884,261 $ 20,769 $ 86,670 $ 4,834,594
Receivables 130,827 23,821
Due from other governments 374,148 1,200
Interfund receivable 50,176
Inventory 9,386
Fixed assets
Amount available in debt service reserve
Amount to be provided for retirement of general
long-tenn debt
Total assets and other debits $ 5,448,798 $ 21,969 $ 86,670 $ 4,858,415
LIABILITIES, FUND EQUITY AND OTHER CREDITS
Liabilities
Accounts payable $ 146,064 $ $ 73,049 $ 12,692
Accrued expenses 39,961
Interfund payable 50,176
Matured bonds and interest coupons 2,012
Deferred revenue 35,771
Long-tenn debt
Total liabilities 223,808 123,225 12,692
Fund equity and other credits
Investment in general fixed assets
Fund balances:
Reserved for encumbrances 35,305 22,994
Reserved for inventory 9,386
Reserved for debt service 38,905
Reserved for public facilities 531,970
Reserved for law enforcement 21,969
Reserved for pension benefits 4,845,723
Unreserved, undesignated 4,609,424 (59,549)
Total fund equity and other credits 5,224,990 21,969 (36,555) 4,845,723
Total liabilities, fund equity and other credits $ 5,448,798 $ 21,969 $ 86,670 $ 4,858,415
The accompanying notes are an integral part of this fmancial statement.
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I GOVERNMENT
COMPONENT Totals Reporting
Account Groups Totals UNIT Entity
I General
General General Long- (Memorandum Employees' (Memorandum
Fixed Assets Term Debt Only) Pension Trust Only)
I $ $ $ 9,826,294 $ 3,504,296 $ 13,330,590
154,648 55,260 209,908
I 375,348 375,348
50,176 50,176
9,386 9,386
I 4,232,116 4,232,116 4,232,116
38,905 38,905 38,905
I 996,139 996,139 996,139
$ 4,232,116 $ 1,035,044 $ 15,683,012 $ 3,559,556 $ 19,242,568
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$ $ $ 231,805 $ 7,977 $ 239,782
I 39,961 39,961
50,176 50,176
I 2,012 2,012
35,771 35,771
1,035,044 1,035,044 1,035,044
I 1,035,044 1,394,769 7,977 1,402,746
4,232,116 4,232,116 4,232,116
I 58,299 58,299
9,386 9,386
I 38,905 38,905
531,970 531,970
21,969 21,969
I 4,845,723 3,551,579 8,397,302
4,549,875 4,549,875
I 4,232,116 14,288,243 3,551,579 17,839,822
$ 4,232,116 $ 1,035,044 $ 15,683,012 $ 3,559,556 $ 19,242,568
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I CITY OF OKEECHOBEE, FLORIDA
I Combined Statement of Revenues, Expenditures, and Changes in Fund Balances _
All Governmental Fund Types
Year Ended September 30, 2003
I Law Industrial Totals
Enforcement Development (Memorandum
I General Special Revenue Capital Project Only)
Revenues
Taxes $ 2,107,123 $ $ $ 2,107,123
I Intergovernmental 1,819,526 29,724 1,849,250
Charges for services 300,162 300,162
Licenses and permits 113,424 113,424
I Fines and forfeitures 46,281 7,400 53,681
Interest incorne 81,791 325 239 82,355
Miscellaneous 12,263 20 12,283
I Total revenues 4,480,570 7,725 29,983 4,518,278
Expenditures
Current:
I General government 842,799 842,799
Public safety 2,106,985 7,451 2,114,436
I Transportation 563,067 563,067
Physical environment 230,850 31,478 262,328
Capital outlay 1,091,985 2,733 218,882 1,313,600
I Debt service:
Principal 647,967 647,967
Interest 51,269 51,269
I Total expenditures 5,534,922 10,184 250,360 5,795,466
Deficiency of revenues
under expenditures (1,054,352) (2,459) (220,377) (1,277,188)
I Other financing sources
Capital lease proceeds 431,640 431,640
I Proceeds from sale of fixed assets 406,466 406,466
Total other financing sources 838,106 838,106
Deficiency of revenues and other
I financing sources under expenditures (216,246) (2,459) (220,377) (439,082)
I Fund balances, beginning of year 5,441,236 24,428 183,822 5,649,486
Fund balances, end of year $ 5,224,990 $ 21,969 $ (36,555) $ 5,210,404
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The accompanying notes are an integral part of this financial staternent. 11
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CITY OF OKEECHOBEE, FLORIDA
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances -
Budget and Actual (Budgetary Basis) - All Governmental Fund Types
Year Ended September 30, 2003
General
Actual Variance
(on Budgetary Favorable
Budget Basis) (Unfavorable)
Revenues
Taxes $ 2,071,629 $ 2,107,123 $ 35,494
Intergovernmental 1,639,573 1,819,526 179,953
Charges for services 247,915 300,162 52,247
Licenses and permits 122,292 113,424 (8,868)
Fines and forfeitures 29,242 46,281 17,039
Interest income 110,350 81,791 (28,559)
Miscellaneous 4,358 12,263 7,905
Total revenues 4,225,359 4,480,570 255,211
Expenditures
Current:
General government 919,863 837,299 82,564
Public safety 2,089,031 2,106,985 (17,954)
Transportation 607,848 560,192 47,656
Physical environment 192,000 230,850 (38,850)
Capital outlay 1,332,864 1,031,180 301,684
Debt service:
Principal 644,120 647,967 (3,847)
Interest 45,770 51,269 (5,499)
Total expenditures 5,831,496 5,465,742 365,754
Excess (deficiency) of revenues
over (under) expenditures (1,606,137) (985,172) 620,965
Other financing sources
Capital lease proceeds 462,000 431,640 (30,360)
Proceeds from sale of fixed assets 392,676 406,466 13,790
Total other financing sources 854,676 838,106 (16,570)
Excess (deficiency) of revenues and other
financing sources over (under) expenditures (751,461) (147,066) 604,395
Fund balances, beginning of year 5,441,236 5,441,236
Fund balances, end of year $ 4,689,775 5,294,170 $ 604,395
Reconciliation of budgetary to GAAP basis:
Current year encumbrances 35,305
Prior year encumbrances (104,485)
$ 5,224,990
The accompanying notes are an integral part of this financial statement.
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CITY OF OKEECHOBEE, FLORIDA
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances-
Budget and Actual (Budgetary Basis) - All Governmental Fund Types (continued)
Year Ended September 30, 2003
Totals (Memorandum Only)
Actual Variance
(on Budgetary Favorable
Budget Basis) (Unfavorable)
Revenues
Taxes $ 2,071,629 $ 2,107,123 $ 35,494
Intergovernmental 4,864,573 1,849,250 (3,015,323)
Charges for services 247,915 300,162 52,247
Licenses and permits 122,292 113,424 (8,868)
Fines and forfeitures 35,242 53,681 18,439
Interest income 110,650 82,355 (28,295)
Miscellaneous 4,358 12,283 7,925
Total revenues 7,456,659 4,518,278 (2,938,381 )
Expenditures
Current:
General government 919,863 837,299 82,564
Public safety 2,089,631 2,114,436 (24,805)
Transportation 607,848 560,192 47,656
Physical environment 192,000 262,328 (70,328)
Capital outlay 4,786,664 1,275,789 3,510,875
Debt service:
Principal 644,120 647,967 (3,847)
Interest 45,770 51,269 (5,499)
Total expenditures 9,285,896 5,749,280 3,536,616
Excess (deficiency) of revenues
over (under) expenditures (1,829,237) (1,231,002) 598,235
Other financing sources
Capital lease proceeds 462,000 431,640 (30,360)
Proceeds from sale of fIxed assets 619,476 406,466 (213,010)
Total other financing sources 1,081,476 838,106 (243,370)
Excess (deficiency) of revenues and other
financing sources over (under) expenditures (747,761) (392,896) 354,865
Fund balances, beginning of year 5,465,664 5,649,486
Fund balances, end of year $ 4,717,903 $ 5,256,590 $ 354,865
Reconciliation of budgetary to GAAP basis:
Current year encumbrances 58,299
Prior year encumbrances (104,485)
$ 5,210,404
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I CITY OF OKEECHOBEE, FLORIDA
I Combined Statement of Changes in Plan Net Assets
Fiduciary Fund Type - Pension Trust Funds and Discretely Presented Component Unit
I Year Ended September 30, 2003
Totals
I PRIMARY COMPONENT Reporting
GOVERNMENT UNIT Entity
General
I Pension Employees' (Memorandum
Trust Pension Trust Only)
I Additions
Contributions
State $ 157,750 $ $ 157,750
I Employer 76,642 179,846 256,488
Employee 54,449 127,503 181,952
Total contributions 288,841 307,349 596,190
I Investment income
Net appreciation in fair value of investments 448,623 328,957 777,580
Interest and dividends 133,325 96,195 229,520
I 581,948 425,152 1,007,100
Less investment expense (32,204 ) (23,703) (55,907)
Net investment income 549,744 401,449 951,193
I Total additions 838,585 708,798 1,547,383
I Deductions
Benefits paid to participants 111 ,288 131,699 242,987
Refunds on termination 28,234 15,995 44,229
I Administrative expenses 27,221 15,246 42,467
Total deductions 166,743 162,940 329,683
I Net increase 671,842 545,858 1,217,700
I Net assets held in trust for
pension benefits, beginning of year 4,173,881 3,005,721 7,179,602
I Net assets held in trust for
pension benefits, end of year $ 4,845,723 $ 3,551,579 $ 8,397,302
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The accompanying notes are an integral part of this financial statement. 15
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE CONTENTS PAGE
1. SUMMARY OF SIGNDlCANT ACCOUNTING POLICIES
A. Reporting Entity 18
B. Basis of Presentation-Fund Accounting 18
C. Basis of Accounting 19
D. Budgetary Data 20
E. Assets, Liabilities, and Fund Equity 20
F. Memorandum Only Total Columns 22
2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABn..ITY
A. Budgetary Compliance 22
B. Excess of Budgeted Expenditures Over Revenues 22
C. Excess of Expenditures Over Revenues 22
3. DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS
A. Deposits and Investments 23
B. Receivables 24
C. Property Taxes 25
D. Changes in General Fixed Assets 25
E. Capital Leases 25
F. Long-Term Debt 26
G. Retirement Commitments 27
4. RISK MANAGEMENT 28
5. SUBSEQUENT EVENTS 29
6. LmGATION 29
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The City ofOkeechobee (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.
The accounting policies of the City conform to generally accepted accounting principles as applicable to
governmental units. The following is a summary of the more significant accounting policies.
A. REPORTING ENTITY
As required by generally accepted accounting principles, these financial statements present the primary
government and its component units. Blended component units, although legally separate entities, are, in
substance, part of the government's operations and so data from these units are combined with data of the
primary government. Discretely presented component units are entities that are legally separate from the City,
but whose relationship with the City are such that the exclusion would cause the City's financial statements to be
misleading or incomplete. The financial data of these entities are reported in a separate column in the combined
financial statements.
Blended Component Units
City of Okeechobee Municipal Police Officers' Pension Trust Fund and City of Okeechobee Municipal
Firefighters' Pension Trust Fund - The City's public safety employees participate in one of two public safety
employee retirement systems. Each single employer plan functions for the benefit of the City's public safety
employees and is governed by a Board of Trustees. The Police Officers' and Firefighters' Pension Trust Funds
were established by City Ordinances Nos. 657 and 656, respectively, as amended and restated by City Ordinances
Nos. 749 and 750, respectively.
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.
B. BASIS OF PRESENTATION - FUND ACCOUNTING
The accounts of the City are organized and operated on the basis of funds and account groups. A fund is a separate
accounting entity with a self-balancing set of accounts. An account group is a financial reporting device designed to
provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly
affect net expendable available [mandai resources.
The funds of the City are classified into two categories: governmental and fiduciary.
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICmS (CONTINUED)
B. BASIS OF PRESENTATION - FUND ACCOUNTING (CONTINUED)
Governmental Fund Tvoes
General Fund - The general fund is the City's primary operating fund. It accounts for all fmancial resources of the
general government, except those required to be accounted for in another fund.
Special Revenue Fund - A special revenue fund is used to account for revenues that are legally restricted to fmance
particular functions or activities of the government.
Capital Project Fund - A capital project fund is used to account for major capital acquisitions and projects,
separate from normal operations.
Fiduciarv Fund TVDe
Pension Trust Funds - The pension trust funds account for the assets held in trust for employee pension benefits.
The discretely presented component unit is accounted for as a fiduciary fund.
Account Groups
The following is a description of the City's account groups:
General Fixed Assets Account Group - This account group represents a summary of the property and equipment
of the City other than infrastructure. Capital outlay in a governmental fund is recorded as an expenditure of that
fund at the time of purchase and is subsequently recorded, at cost, for control purposes in this account group.
General Long-Term Debt Account Group - Long-term liabilities expected to be financed from the General Fund
are accounted for in this account group.
The accounting and financial reporting applied to a fund is determined by its measurement purpose.
Governmental funds are accounted for using a current fmancial resources measurement focus. Only current
assets and current liabilities are included on the balance sheet. All pension trust funds are accounted for on a
flow of economic resources measurement focus. All assets and all liabilities associated with the operation of
these funds are included on the balance sheet.
C. BASIS OF ACCOUNTING
Basis of accounting refers to the point at which revenues and expenditures or expenses are recognized in the
accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements
made, regardless of the measurement focus applied.
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
C. BASIS OF ACCOUNTING (CONTINUED)
1. Modified Accrual
Governmental funds are accounted for using the modified accrual basis of accounting. Revenues are recognized as
soon as they become 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. The City considers
revenues to be available if they are collected within sixty days of the end of the current fiscal period. Property tax
revenue is recognized in the fiscal year for which the taxes have been levied, provided the availability criteria have
been met.
Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability
is incurred. An exception to this general rule is principal and interest on general long-term debt which is recognized
when due.
2. Accrual
All pension trust funds (including the discretely presented component unit) are accounted for using the accrual basis
of accounting. Revenues are recognized when they are earned and expenses are recognized when incurred. Plan
member contributions are recognized in the period in which the contributions are due. Employer contributions are
recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and
refunds are recognized when due and payable in accordance with the terms of the plan.
D. BUDGETARY DATA
The City Council adopts an annual budget ordinance for all governmental funds prior to September 30 for the next
ensuing fiscal year. The budget is prepared on a modified accrual basis except encumbrances are presented as
expenditures. Unencumbered appropriations lapse at fiscal year end.
Budgetary control is legally maintained at the department level. Budget transfer authority is provided to the City
Administrator within departments. Revisions to budgeted totals of any department require approval of the City
Council.
E. ASSETS, LIABILITIES, AND FUND EQUITY
1. Cash
The City's cash includes cash on hand, demand and time deposits, money market funds, and State Board of
Administration (SBA) accounts.
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. ASSETS, LIABILITIES, AND FUND EQUITY (CONTINUED)
Investment of public funds with the State Board of Administration is governed by Section 218.407, Florida Statutes.
These investments consist primarily of Federal agency obligations, repurchase agreements, bankers' acceptances,
U.S. treaswy bills, bonds and notes, commercial paper, and certificates of deposit. The SBA has adopted operating
procedures consistent with Regulation 2a-7. The pool is regulated by the State and the fair value of the position in
the pool is the same as the share value of the pool share.
2. Investments
Pension trust fund investments (including the discretely presented component unit) are reported at fair value. Short-
term investments are reported at cost, which approximates market value. Securities traded on a national exchange
are valued at the last reported sales price.
3. Fixed Assets
Fixed assets used in governmental funds are accounted for at historical cost, if purchased, and at fair market value at
date of gift, if donated, in the General Fixed Assets Account Group, rather than in the governmental funds. Public
domain general fIxed assets consisting of certain improvements including roads, bridges, curbs and gutters, streets
and sidewalks, drainage systems and lighting systems are not capitalized as general fIXed assets. No depreciation
has been provided for assets accounted for in the General Fixed Assets Account Group.
4. Compensated Absences
It is the government's policy to permit employees to accumulate earned but unused vacation and sick pay benefits.
Vacation pay that is expected to be liquidated with expendable available fmancial resources is reported as an
expenditure of the General Fund. Amounts not expected to be liquidated with expendable available financial
resources and vested sick pay are reported in the General Long-Term Debt Account Group.
Full-time employees accrue paid vacation ranging from 6 days after 6 months of continuous service, up to 20
days after 15 years of service. Unused vacation will be paid upon termination of employment. Sick leave for
employees is accumulated at the rate of 12 days per year. Payment for unused sick leave upon termination of
employment may be made for employees with 10 years or more of continuous service at a rate of 50% of the
unused sick leave balance.
5. Deferred Revenue
Deferred revenue includes amounts collected before the revenue recognition criteria are met and receivables
which, under the modified accrual basis of accounting, are measurable but not yet available. The City's deferred
revenue consists primarily of occupational license fees.
21
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2003
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. ASSETS, LIABILITIES, AND FUND EQUITY (CONTINUED)
6. Long-Term Obligations
Long-term debt is recognized as a liability of a governmental fund when due. For other long-term obligations, only
that portion expected to be fmanced from expendable fmancial resources is reported as a fund liability of a
governmental fund. The remaining portion of such obligations is reported in the General Long-term Debt Account
Group.
7. Fund Equity - Reserves
Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific
use. All of the available assets of the fiduciary funds and the discretely presented component unit are reserved by
defmition for the purpose for which the funds were created.
F. MEMORANDUM ONLY TOTAL COLUMNS
Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are presented
only to facilitate fmancial analysis. Data in these columns does not present fmancial position or results of operations
in conformity with generally accepted accounting principles. Such data is not comparable to a consolidation.
Interfund eliminations have not been made in the aggregation of this data.
NOTE 2 - STEWARDSlllP, COMPLIANCE, AND ACCOUNTABILITY
~ BUDGETARYCOMP~CE
The City's budgetary data and actual data are presented on the modified accrual basis for the governmental funds
except that encumbrances are included as expenditures of the current period for the budget to actual comparison.
The City amended the general fund budget to include $468,000 for fire station improvements.
B. EXCESS OF BUDGETED EXPENDITURES OVER REVENUES
The City's budgeted expenditures exceeded revenues in the General Fund; however, this is pursuant to the legally
adopted budget to expend available fund equity (cash caryforward) and does not constitute a deficit.
C. EXCESS OF EXPENDITURES OVER REVENUES
Actual expenditures exceeded revenues in the General Fund pursuant to the legally adopted budget to expend
available fund equity.
Expenditures exceeded revenues in the Law Enforcement Special Revenue and the Industrial Development Capital
Project Funds. The over expenditure in the Law Enforcement Special Revenue Fund was covered by the existing
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE 2 - STEWARDSmp, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED)
D. EXCESS OF EXPENDITURES OVER REVENUES (CONTINUED)
fund balance. The over expenditure in the Industrial Development Capital Project Fund created a deficit of $36,555
which the City expects to be covered by grant funds to be received in fiscal year 2004.
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS
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
$1,759,061 and the bank balance was $1,871,274. The carrying amount and bank balance of the discretely presented
component unit's deposits was $73,051. 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.
The Primary Government's 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.
23
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
SepteDlber30,2003
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
A. DEPOSITS AND INVESTMENTS (CONTINUED)
The Primary Government's and Discretely Presented Component Unit's investments are categorized to give an
indication of the level of risk assumed at year end. Those investments assigned a credit risk under Category 1
include investments that are insured or registered, or securities that are held by the entity or its agent in the
entity's name. Category 2 includes uninsured and unregistered investments with the securities being held by the
counterparty's trust department or agent in the entity's name. Category 3 includes uninsured and unregistered
investments with the securities being held by the counterparty, or by its trust .department or agent but not in the
entity's name
As of September 30, 2003, the City has no investments in categories 1,2, or 3 of credit risk. The City's investments
are not subject to categorization.
PriInarv Government
Investments not subject to categorization:
Investments with State
Board of Administration
Money market funds
Total Primary Government
$
3,303,129
4,764,104
8,067,233
Discretelv Presented Component Unit
Investments not subject to categorization:
Money market funds
Total Investments
$
3,431,245
11,498,478
B. RECEIVABLES
Receivables as of September 30, 2003 are as follows:
Pension Total Primary Component
General Fund Trust Government Unit
Franchise/Utility taxes $ 115,999 $ $ 115,999 $
Garbage 1,538 1,538
Contributions 22,439 22,439 54,230
Other 13,290 13,290
Interest 1,382 1,382 1,030
Receivables, net $ 130,827 $ 23,821 $ 154,648 $ 55,260
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE 3 - DETAa NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
C. PROPERTY TAXES
The City's property tax is levied annually on the real and personal property located in the City on January 1st of
the prior year. Tax collections by the Okeechobee County tax collector begin in November of each year with a
due date of March 31 of the following year. All property taxes remaining unpaid at May 30 are subject to a tax
certificate sale.
The City 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 City is permitted by state law to levy taxes up to 10 mills of assessed valuation for the General Fund. The tax
rate for the fiscal year was 7.1899 mills
D. CHANGES IN GENERAL FIXED ASSETS
A summary of changes in general fIXed assets follows:
Balance
Oct. 1,2002
Additions
Deletions
Balance
Sept. 30, 2003
Land and improvements $ 858,608 $
Buildings 1,251,070
Equipment and furniture 1,613,757 521,444
Construction in Progress 429,582
$ 3,723,435 $ 951,026
$
$
858,608
1,251,070
1,692,856
429,582
4,232,116
(442,345)
(442,345)
$
$
E. CAPITAL LEASES
In fiscal year 2002, the City purchased vehicles under a master lease agreement it had with a fmancial institution.
The lease called for nineteen quarterly payments of $15,000 with the balance to be paid in October 2006. In fiscal
year 2003, the City sold the vehicles and paid off the balance of the lease.
The City entered into a new lease/purchase agreement for the purchase of City vehicles during the current year. The
lease is for fifty seven months at 3.59% interest, with twelve quarterly payments of $15,000, eight quarterly
payments of $37,347 and the balance due in November 2007. This lease is accounted for in the General Long Term
Debt Account Group and the vehicles have been recorded in the General Fixed Asset Account Group in the amount
of$431,640.
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
E. CAPITAL LEASES (CONTINUED)
The following is a schedule of future minimum lease payments under this capital lease:
Year ending September 30,
2004
2005
2006
2007
2008
Total minimum lease payments
Less amount representing interest
Present value of net minimum lease payments
$ 60,000
60,000
127,041
149,388
37,347
433,776
(39,069)
$ 394,707
Capital lease payments for fiscal year 2003 totaled $410,852, including the early payoff of the fiscal year 2002 lease.
F. LONG-TERM DEBT
Notes payable as of September 30, 2003 are as follows:
5.25% gas tax revenue note to a bank, payment 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 final payment due October 2004 of $27,171;
collateralized by annually budgeted non-ad valorem revenues
$ 283,969
62,242
4.75% note to a bank, payment of $29,899, including interest, due annually
through March 8, 2006, unsecured
81,796
$
428,007
Notes payable debt service requirements to maturity, including interest, are as follows:
Year ending Gas Tax 5.527% 4.75%
September 30, Revenue Bank Note Bank Note Interest Total
2004 $ 186,843 $ 36,550 $ 26,003 $ 19,862 $ 269,258
2005 97,126 25,692 27,250 6,630 156,698
2006 28,543 1,356 29,899
$ 283,969 $ 62,242 81,796 $ 27,848 $ 455,855
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
F. LONG-TERM DEBT (CONTINUED)
A summary of changes in long-term debt for the year ended September 30, 2003 is as follows:
Balance Balance
Oct. 1, 2002 Addition Reductions Sept. 30, 2003
Notes payable $ 665,122 $ $ (237,115) $ 428,007
Capital leases payable 373,919 431,640 (410,852) 394,707
Compensated absences 201,041 11,289 212,330
Total $ 1,240,082 $ 442,929 $ (647,967) $ 1,035,044
G. RETIREMENT COMMITMENTS
Pension Plans - Primary Government
Plan Descriptions - The City contributes to two single-employer defmed 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.
Funding Policy - 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 10.70% 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.
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 $104,303 and $53,447, 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, 2003 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
27
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2003
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
G. RETIREMENT COMMITMENTS (CONTINUED)
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.
Three-year trend information
Annual Percentage Net
Year Pension OfAPC Pension
Ending Cost (APe) Contributed Obligation
Municipal Police Officers' 9/30/01 $ 74,693 122 % $ (413,027)
9/30/02 115,163 93 (406,629)
9/30/03 189,862 91 (388,171)
Municipal Firefighters' 9/30/01 $ 15,194 360 % $ (321,567)
9/30/02 21,681 256 (355,293)
9/30/03 46,507 116 (362,833)
Pension Plan - Discretely 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 financial report that includes financial statements and
required supplementary information. That report is available from the City of Okeechobee, Florida, 55 S.E. Third
Avenue, Okeechobee, Florida 34974.
Funding Policy - The contribution requirements of the plan members and the City are established and may be
amended by City ordinance. Plan members are required to contribute 6% of their covered annual salary. The City is
required to contribute at an actuarially determined rate; the current rate is 9.24 % of covered payroll. The City's
contributions for the years ended September 30, 2003, 2002, and 2001 were $56,715, $31,324, and $25,156,
respectively, and were equal to the required contributions for each year.
NOTE 4 - 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
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I CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
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September 30, 2003
NOTE 4 - RISK MANAGEMENT (CONTINUED)
pool maintains a loss reserve and purchases specific excess insurance, aggregate excess insurance, and multiple
loss coverage from commercial carriers and underwriters.
If losses in anyone fiscal year extinguish all available funds provided by the pool, then the members are
individually responsible for the claims. Settlement amounts have not exceeded coverage for the current year or
the three prior years.
NOTE 5 - SUBSEQUENT EVENTS
In November, the City entered into a new vehicle lease with a financial institution and purchased vehicles for
$431,756 from a relative of one of the Council members. The City sold its current vehicles and paid off the
related lease commitment.
In April and May 2004, the City awarded construction and engineering contracts totaling $3,370,957 related to
construction of the Commerce Center and roadway improvements.
NOTE 6 - LITIGATION
The City is a party to various lawsuits and a workman's compensation claim. The workman's compensation claim
includes uncertainties as to the payment of deductible amounts and the procurement of reinsurance for the existing
claim. The outcome of these lawsuits and claim are uncertain at this time and the financial effect is also
indeterminable at this time.
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COMBINING AND INDIVIDUAL FUND STATEMENTS
These fmancial statements provide a more detailed view of the "General Purpose
Financial Statements" presented in the preceding subsection.
Combining statements are presented when there is more than one fund of a given
fund type.
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I CITY OF OKEECHOBEE, FLORIDA
I Schedule of Expenditures - Budget and Actual (Budgetary Basis)
General Fund
I Year Ended September 30,2003
Variance
Favorable
I Budget Actual (Unfavorable)
General Government
Legislative:
I Personnel services 50,569 52,021 (1,452)
Operating expenses 49,000 43,985 5,015
99,569 96,006 3,563
I Executive - City Administrator:
Personnel services 100,044 103,187 (3,143)
I Operating expenses 22,745 14,498 8,247
Capital outlay 2,500 1,600 900
125,289 119,285 6,004
I Executive - City Clerk:
Personnel services 107,762 109,553 (1,791)
Operating expenses 30,645 25,487 5,158
I Capital outlay 1,000 668 332
139,407 135,708 3,699
Financial and administrative:
I Personnel services 112,358 110,220 2,138
Operating expenses 57,345 44,394 12,951
Capital outlay 1,000 1,400 (400)
I 170,703 156,014 14,689
General Services:
Personnel services 48,050 49,030 (980)
I Operating expenses 240,845 189,265 51,580
Capital outlay 1,000 1,000
I 289,895 238,295 51,600
Judicial:
Operating expenses 100,500 95,659 4,841
I Vehic1e Program:
Capital outlay 492,000 482,604 9,396
I Total General Government 1,417,363 1,323,571 93,792
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The accompanying notes are an integral part of this financial statement. 33
I
CITY OF OKEECHOBEE, FLORIDA
Schedule of Expenditures - Budget and Actual (Budgetary Basis) (continued)
General Fund
Year Ended September 30, 2003
Variance
Favorable
Public Safety Budget Actual (Unfavorable )
Law enforcement:
Personnel services 1,034,557 1,111,506 (76,949)
Operating expenses 176,074 158,113 17,961
Capital outlay 7,260 6,383 877
1,217,891 1,276,002 (58,111)
Fire control:
Personnel services 758,500 746,774 11,726
Operating expenses 119,900 90,592 29,308
Capital outlay 507,000 491,282 15,718
1,385,400 1,328,648 56,752
Total Public Safety 2,603,291 2,604,650 (1,359)
Transportation
Road and street facilities:
Personnel services 371,048 380,035 (8,987)
Operating expenses 236,800 180,157 56,643
Capital outlay 321,104 47,243 273,861
Total Transportation 928,952 607,435 321,517
Physical Environment
Garbage/solid waste services:
Operating expenses 192,000 230,850 (38,850)
Debt Service
Principal 644,120 647,967 (3,847)
Interest 45,770 51,269 (5,499)
Total Debt Service 689,890 699,236 (9,346)
Total expenditures 5,831,496 5,465,742 365,754
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CITY OF OKEECHOBEE, FLORIDA
Combining Balance Sheet
Fiduciary Fund Type - Pension Trust Funds
Year Ended September 30,2003
ASSETS
Cash and cash equivalents
Receivables
Total assets
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable
Fund Balances
Reserved for pension benefits
Total liabilities and fund balances
Municipal
Police
Officers'
$ 3,391,889
21,796
$ 3,413,685
$ 8,760
3,404,925
$ 3,413,685
The accompanying notes are an integral part of this fmancial statement.
Municipal
Firefighters'
$ 1,442,705
2,025
$ 1,444,730
$ 3,932
1,440,798
$ 1,444,730
Totals
$ 4,834,594
23,821
$ 4,858,415
$ 12,692
4,845,723
$ 4,858,415
35
CITY OF OKEECHOBEE, FLORIDA
Combining Statement of Changes in Plan Net Assets
Fiduciary Fund Type - Pension Trust Funds
Year Ended September 30, 2003
Municipal
Police Municipal
Officers' Firefighters' Totals
Additions
Contributions
State $ 104,303 $ 53,447 $ 157,750
Employer 76,042 600 76,642
Employee 35,764 18,685 54,449
Total contributions 216,109 72,732 288,841
Investment income
Net appreciation in fair value of investments 317,593 131,030 448,623
Interest and dividends 93,430 39,895 133,325
411 ,023 170,925 581,948
Less investment expense (22,597) (9,607) (32,204)
Net investment income 388,426 161,318 549,744
Total additions 604,535 234,050 838,585
Deductions
Benefits paid to participants 111,288 111,288
Refunds on termination 10,719 17,515 28,234
Administrative expenses 17,094 10,127 27,221
Total deductions 139,101 27,642 166,743
Net increase 465,434 206,408 671,842
Net assets held in trust for
pension benefits, beginning of year 2,939,491 1,234,390 4,173,881
Net assets held in trust for
pension benefits, end of year $ 3,404,925 $ 1,440,798 $ 4,845,723
The accompanying notes are an integral part of this financial statement.
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ADDmONAL ELEMENTS REQUIRED BY GOVERNMENT AUDITING STANDARDS AND THE
RULES OF THE AUDITOR GENERAL
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HOYMAN, DOBSON & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
~l~:IiJ:!#H#!0;5'
275 Bay tree Drive, Melbourne, Florida 32940, 327-255-0088, Fax 327-259-8648, wwwhoyman.com
Independent Auditor's Report on Compliance and on Internal Control Over
Financial Reporting Based on an Audit of Financial Statements Performed
in Accordance with Government Auditin2 Standards
Charles W Hoymon, J[
Barbaro 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 general purpose financial statements of the City of Okeechobee, Florida, as of and for the year
ended September 30,2003, and have issued our report thereon dated February 25,2004. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards applicable
to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United
States. 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.
Compliance
As part of obtaining reasonable assurance about whether the City of Okeechobee, Florida's general purpose
financial statements are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts and grants, 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.
However, we noted an immaterial instance of noncompliance that we have reported to management of the City of
Okeechobee, Florida, in a separate letter dated February 25, 2004.
futernal Control Over Financial Reporting
In planning and performing our audit, we considered the City of Okeechobee, Florida's internal control over
financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the
general purpose financial statements and not to provide assurance on the internal control over financial reporting.
However, we noted a certain matter involving the internal control over financial reporting and its operation that we
consider 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 financial reporting that, in our
judgment, could adversely affect the City ofOkeechobee, Florida's ability to record, process, summarize, and report
financial data consistent with the assertions of management in the general purpose financial statements. A
description of the reportable condition follows:
39
~.."'-r:5A;;:bJ~>iht\W;~!$W4.<~111lIT l
. 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
Fixed Assets
Condition: We noted that the City does not have detailed fixed asset records to support the recorded cost of its real
property.
Cause: The lack of detailed real property records is an ongoing issue. Although the City passed a Resolution to
update its records based upon insurance valuations and property tax records, City employee's encountered
difficulties in implementing the Resolution. With the auditor's concurrence, the city addressed the issue as part of
the implementation of GASB Statement No. 34, by hiring an outside consultant. The City's records have not been
adjusted to incorporate the results of the consultant's report as of September 30, 2003.
Effect: Without adequate records and procedures for updating those records, the City cannot support the recorded
value of its general fixed assets and will continue to receive qualified opinions.
Recommendation: We recommend that the City adjust the accounting records to reflect the results of the
consultant's report.
Management's Response: The City hired an outside consultant for implementation of GASB 34. The City's
records will be adjusted to incorporate the results of the report for September 30,2004 property records.
A material weakness is a 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 misstatements in amounts that would be material in
relation to the general purpose financial 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 financial reporting would not necessarily disclose all matters in the internal control that might be
reportable conditions and, accordingly, would not disclose all reportable conditions that are also considered to be
material weaknesses. However, we believe that the reportable condition described above is not a material weakness.
We also noted other matters involving the internal control over financial reporting that we have reported to
management of the City ofOkeechobee, Florida, in a separate letter dated February 25,2004.
This report is intended solely for the information and use of the City of Okeechobee, Florida and management, City
Council, federal and state awarding agencies and the Office of the Auditor General and is not intended to be and
should not be used by anyone other than these specified parties.
~1. JJ,6,... t ~ , fl.
Hoyman, Dobson & Compat\Y, P.A.
February 25, 2004
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HOYMAN, DOBSON & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
U~WJ~~A\%;f,+;)~i?Tih'/;';
275 Bay tree Drive, Melbourne, Florida 32940, 327-255-0088, Fax 327-259-8648, WvVW.hoyman.com
Independent Auditor's
Management Letter
Charles W Hoyman, J[
Barbara j. Oswalt
Thomas L. Kirk
Karen E. Kirkland
Deborah A. Bradley
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bjerning
Honorable Mayor and Members of City Council
City of Okeechobee, Florida.
We have audited the general purpose financial statements of the City of Okeechobee, Florida, as of and for the
fiscal year ended September 30, 2003, and have issued our report thereon dated February 25, 2004, which was
qualified due to a lack of adequate fixed asset records.
We conducted our audit in accordance with United States generally accepted auditing standards and the standards
applicable to financial audits contained in Government Auditing Standards. issued by the Comptroller General of
the United States. We have also issued our Independent Auditor's Report on Compliance and Internal Control
Over Financial Reporting. Disclosures in that report, dated February 25, 2004, 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 1O.554(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, whether or not inaccuracies, shortages, defalcations, fraud,
and/or violations of laws, rules, regulations, and contractual provisions reported in the preceding annual financial
audit report have been corrected. There were no inaccuracies, irregularities, shortages, defalcations, and/or
violations of laws, rules, regulations, and contractual provisions disclosed in the preceding annual report.
The Rules of the Auditor General (Section 1O.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 whether or not
recommendations made in the preceding annual financial audit report have been followed. The status of the audit
findings for the year ended September 30, 2002 is as follows:
Internal Control Over Financial Reportin2
Fixed Assets
Status
Repeated/revised
Mana2ement Letter
1. Law Enforcement Special Revenue Fund Expenditures
2. Purchase Orders and Expenditure Recognition
3. Bid Procedures
4. Capital Outlay and Operating Expense Classifications
5. Travel Reimbursement
Status
Repeated/revised as #2
Corrected
Corrected
Repeated as #3
Corrected
'-" ' " " ~~iJ!;SI:'~!lii(!!'il!\!lll Jill
41
. 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
As required by the Rules of the Auditor General (Section 1O.554(1)(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.
The Rules of the Auditor General (Section 10.554(1)(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: (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. Our audit disclosed the following matters required to be disclosed:
Current Year Findings and Recommendations
1. Receiving Reports
Condition: We noted that accounting staff were sometimes unable to determine whether items ordered had
been received.
Cause: Employees receiving goods and services do not consistently acknowledge receipt of purchases and
document the date that the item was received.
Recommendation: We recommend the City implement procedures to require receiving departments to sign
and date the packing slip, invoice, or other appropriate document, to verify the item was received and the date
of receipt in order to provide adequate information for payment and correct recording of purchases.
Management's Response: Procedures have been implemented, therefore the Finance Department will train
and encourage each City Department to follow the procedures for documenting the receipt of supplies.
2. Law Enforcement Special Revenue Fund Expenditures
Condition: We noted that the administrative fees that were deposited into the Law Enforcement Special
Revenue Fund were used for items that appear to be operating expenses such as office supplies and carpeting
and that expenditures exceeded appropriations.
Criteria: Ordinance No. 758, states that the proceeds from any administrative fees".. .may be used for any
legitimate law enforcement purposes by the police department, except such may not be used to meet normal
operating expenses of the law enforcement agency". Expenditures are not permitted to exceed appropriations
under Florida Statutes.
Recommendation: We recommend that the City closely monitor the charges to the Law Enforcement Special
Revenue Fund to ensure that the charges are in compliance with the permitted use requirements of the
Ordinance and to ensure that expenditures do not exceed appropriations. In addition, we recommend the City
transfer funds from the General Fund to reimburse the Law Enforcement Special Revenue Fund for items
identified as normal operating expenses and to remedy the expenditures exceeding appropriations.
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Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Three
Management's Response: The Finance Department has informed the Law Enforcement Department that the
expenses of the Law Enforcement Special Fund should be made in accordance with Ord. No. 758. We will
prioritize this issue.
3. Capital Outlay and Ooerating Expense Classifications
Condition: We noted that the City's capital outlay line items were often charged with small dollar items and
with items that did not appear to meet the definition of capital outlay. In addition, we noted that capital
outlay items were sometimes charged to operating expenditure line items.
Cause: The City's $750 threshold for defining capital outlay is not consistently followed. Some departments
were not aware of the definition of capital outlay.
Recommendation: We recommend that the City establish a policy that adequately describes what items
constitute capital outlay and that capital outlay items under $750 be charged to a supply account. In addition,
we recommend the accounting department review all purchase orders and charges and verify that the
appropriate line item has been charged.
Management's Response: A memo has been sent to all City Departments instructing them to follow the
policy procedure that the equipment line item should not have charges less than $750. The Finance
Department will closely monitor this item.
The Rules of the Auditor General (Section 10.554(1)(g)5.) also require that the name or official title and legal
authority for the prirnary government and each component unit of the reporting entity be disclosed in the
management letter, unless disclosed in the notes to the financial statements. The City of Okeechobee, Florida
was originally incorporated in 1915 and its present charter was adopted under Chapter 8318 of Special Acts of
1919. The City of Okeechobee, Florida includes the following component units: City of Okeechobee, Florida
and Okeechobee Utility Authority General Employees' Pension Trust Fund - established under the City of
Okeechobee, Florida Ordinance 655, as amended by City Ordinance 686; City of Okeechobee, Florida Municipal
Police Officers' Pension Trust Fund - established under City Ordinance 657, as amended by Ordinance 750; City
of Okeechobee, Florida Municipal Firefighters' Pension Trust Fund - established under City Ordinance 656, as
amended by Ordinance 749.
As required by the Rules of the Auditor General (Section 1O.554(1)(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 is not in a state of financial emergency as a
consequence of the 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, 2003, 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 30,2003.
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Honorable Mayor and Members of the City Council
City ofOkeechobee, Florida
Page Four
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
financial information provided by same.
This management letter is intended solely for the information of the City of Okeechobee, Florida and
management, 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.
=:D~t~!tJ--("
February 25,2004
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