Audit Report 09.30.2002
CITY OF OKEECHOBEE, FLORIDA
Financial Statements
Year Ended September 30, 2002
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CITY OF OKEECHOBEE, FLORIDA
Table of Contents
Year Ended September 30, 2002
Page
Introductory Section
Title Page
Table of Contents
2
3
City Officials
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
4
8
11
12
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
33
35
36
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 Auditing Standards
· Independent Auditor's Management Letter
39
41
2
CITY OF OKEECHOBEE, FLORIDA
City Officials
As of September 30, 2002
James E. Kirk
Mayor, Chairn1an
Noel A. Chandler
Robert Oliver
Dowling R. Watford, Jr.
D. Clayton Williams, Jr.
Council Members
John R. Cook
City Attorney
Bill L. Veach
City Administrator
Bonnie S. Thomas, CMC
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
3
HOYMAN, DOBSON & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
IU$%~.{m@iF4:-Kh~'>r':' 'i-'("
215 Bay tree Drive, Melbourne, Florida 32940, 321-255-0088. Fax 321-259-8648, www.hoyman.com
Charles W Hoyman, Jr
Barbaro J Oswalt
Thomas L. Ki rk
Karen E. Kirklond
Deborah A. Bradley
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bjerning
Independent Auditor's Report
Honorable Mayor and Members of the City Council
City of Okeechobee, 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, 2002, 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 financial
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, 2002.
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
financial position of the City of Okeechobee, Florida, as of September 30, 2002, and the results of its operations for
the year then ended in conformity with accounting principles generally accepted in the United States of America.
4
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. Americon 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
As noted in Note 4 to the financial statements, the City implemented GASB Statement No. 33 "Accounting and
Financial Reporting for Nonexchange Transactions."
In accordance with Government Auditidg Standards, we have also issued our report dated February 5, 2003 on
our consideration of the City of Okeechobee, Florida's internal control over financial 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 combining and individual fund financial statements, listed in the table of contents, are presented
for purposes of additional analysis and are not a required part of the general purpose financial statements of the
City of Okeechobee, Florida and we express no opinion on these statements because they were audited by other
auditors as indicated in the first paragraph.
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February 5, 2003
5
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6
GENERAL PURPOSE FINANCIAL STATEMENTS
These basic financial statements provide a summary overview of the financial
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.
7
CITY OF OKEECHOBEE, FLORIDA
Combined Balance Sheet - All Fund Types and Account Groups and Discretely Presented Component Unit
September 30, 2002
PRIMARY
Fiduciary Fund
Governmental Fund Types Type
Law Industrial
Enforcement Development Pension
General Special Revenue Capital Project Trust
ASSETS AND OTHER DEBITS
Cash $ 5,192,397 $ 24,428 $ 133,842 $ 249,552
Investments 3,899,018
Receivables 156,682 29,621
Due from other governments 369,307 50,000
Interfund receivable 20
Inventory 6,810
Prepaids 3,164
Fixed assets
Amount available in debt service reserve
Amount to be provided for retirement of general
long-term debt
Total assets and other debits $ 5,725,216 $ 24,428 $ 183,842 $ 4,181,355
LIABILITIES, FUND EQUITY AND OTHER CREDITS
Liabilities
Accounts payable $ 209,756 $ $ $ 7,474
Accrued expenses 36,441
Interfund payable 20
Matured bonds and interest coupons 2,012
Deferred revenue 35,771
Long-term debt
Total liabilities 283,980 20 7,474
Fund equity and other credits
Investment in general fixed assets
Fund balances:
Reserved for encumbrances 104,485
Reserved for inventory 6,810
Reserved for debt service 77,139
Reserved for public facilities 568,684
Reserved for law enforcement 24,428
Reserved for industrial park development 183,822
Reserved for pension benefits 4,173,881
Unreserved, undesignated 4,684,118
Total fund equity and other credits 5,441,236 24,428 183,822 4,173,881
Total liabilities, fund equity and other credits $ 5,725,216 $ 24,428 $ 183,842 $ 4,181,355
The accompanying notes are an integral part of this financial statement. 8
GOVERNMENT
COMPONENT Totals Reporting
Account Groups Totals UNIT Entity
General
General General Long- (Memorandum Employees' (Memorandum
Fixed Assets Term Debt Only) Pension Trust Only)
$ $ $ 5,600,219 $ 134,475 $ 5,734,694
3,899,018 2,855,971 6,754,989
186,303 17,198 203,501
419,307 419,307
20 20
6,810 6,810
3,164 3,572 6,736
3,723,435 3,723,435 3,723,435
77,139 77,139 77,139
1,162,943 1,162,943 1,162,943
$ 3,723,435 $ 1,240,082 $ 15,078,358 $ 3,011,216 $ 18,089,574
$ $ $ 217,230 $ 5,495 $ 222,725
36,441 36,441
20 20
2.012 2,012
35,771 35,771
1,240,082 1,240,082 1,240,082
1,240,082 1,531,556 5,495 1,537,051
3,723,435 3,723,435 3,723,435
104,485 104,485
6,810 6,810
77,139 77,139
568,684 568,684
24,428 24,428
183,822 183,822
4,173,881 3,005,721 7,179,602
4,684,118 4,684,118
3,723,435 13,546,802 3,005,721 16,552,523
$ 3,723,435 $ 1,240,082 $ 15,078,358 $ 3,011,216 $ 18,089,574
9
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10
CITY OF OKEECHOBEE, FLORIDA
Combined Statement of Revenues, Expenditures, and Changes in Fund Balances-
All Governmental Fund Types
Year Ended September 30, 2002
Law Industrial Totals
Enforcement Development (Memorandum
General Special Revenue Capital Project Only)
Revenues
Taxes $ 1,982,391 $ $ $ 1,982,391
Intergovernmental 1,981,597 300,000 2,281,597
Charges for services 265,193 265,193
Licenses and permits 117,826 117,826
Fines and forfeitures 39,681 7,600 47,281
Interest income 103,368 671 147 104,186
Miscellaneous 5,165 5,165
Total revenues 4,495,221 8,271 300,147 4,803,639
Expenditures
Current:
General government 778,432 778,432
Public safety 1,880,645 2,427 1,883,072
Transportation 495,220 495,220
Physical environment 223,727 113,075 336,802
Capital outlay 1,070,618 1,150 3,250 1,075,018
Debt service:
Principal 608,742 608,742
Interest 53,067 53,067
Total expenditures 5,110,451 3,577 116,325 5,230,353
Excess (deficiency) of revenues
over (under) expenditures (615,230) 4,694 183,822 (426,714)
Other financing sources
Capital lease proceeds 410,550 410,550
Note proceeds 106,630 106,630
Proceeds from sale of fixed assets 377,800 377,800
Total other financing sources 894,980 894,980
Excess of revenues and other
financing sources over expenditures 279,750 4,694 183,822 468,266
Fund balances, beginning of
year, restated (Note 4) 5,161,486 19,734 5,181 ,220
Fund balances, end of year $ 5,441,236 $ 24,428 $ 183,822 $ 5,649,486
The accompanying notes are an integral part of this financial statement.
11
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, 2002
General
Actual Variance
(on Budgetary Favorable
Budget Basis) (Unfavorable)
Revenues
Taxes $ 1,982,238 $ 1,982,391 $ 153
Intergovernmental 1,420,843 1,981,597 560,754
Charges for services 247,315 265,193 17,878
Licenses and permits 147,698 117,826 (29,872)
Fines and forfeitures 29,731 39,681 9,950
Interest income 201,300 103,368 (97,932)
Miscellaneous 7,623 5,165 (2,458)
Total revenues 4,036,748 4,495,221 458,473
Expenditures
Current:
General government 884,568 778,432 106,136
Public safety 1,965,561 1,880,645 84,916
Transportation 583,180 461,951 121,229
Physical environment 191,777 223,727 (31,950)
Capital outlay 1,031,704 859,350 172,354
Debt service:
Principal 201,299 608,742 (407,443 )
Interest 38,066 53,067 (15,001)
Total expenditures 4,896,155 4,865,914 30,241
Excess (deficiency) of revenues
over (under) expenditures (859,407) (370,693) 488,714
Other financing sources
Capital lease proceeds 410,550 410,550
Note proceeds 106,630 106,630
Proceeds from sale of fixed assets 5,000 377,800 372,800
Total other financing sources 5,000 894,980 889,980
Excess (deficiency) of revenues and other
financing sources over (under) expenditures (854,407) 524,287 1,378,694
Fund balances, beginning of year, restated (Note 4) 5,161,486 5,161,486
Fund balances, end of year $ 4,307,079 5,685,773 $ 1,378,694
Reconciliation of budgetary to GAAP basis:
Current year encumbrances 104,485
Prior year encumbrances (349,022)
$ 5,441,236
The accompanying notes are an integral part of this financial statement. 12
Law Enforcement Special Revenue
Actual Variance
(on Budgetary _ Favorable
\
Budget Basis) (Unfavorable)
Industrial Development Capital Project
Actual Variance
(on Budgetary Favorable
Budget Basis) (Unfavorable)
$
$
$
$ $ $
3,525,000 300,000 (3,225,000)
5,000
135
7,600
671
2,600
536
147
147
5,135
8,271
3,136
3,525,000
300,147
(3,224,853)
2,427 (2,427)
1,150
(1,150)
3,751,800
113,075
3,250
(113,075)
3,748,550
3,577
(3,577)
3,751,800
116,325
3,635,4 75
5,135
4,694
(441)
(226,800)
183,822
410,622
226,800 (226,800)
226,800 (226,800)
5,135 4,694 (441) 183,822 183,822
19,734 19,734
$ 24,869 $ 24,428 $ (441) $ $ 183,822 $ 183,822
$ 24,428
$ 183,822
13
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, 2002
Totals (Memorandum Only)
Actual Variance
(on Budgetary Favorable
Budget Basis) (Unfavorable)
Revenues
Taxes $ 1,982,238 $ 1,982,391 $ 153
Intergovernmental 4,945,843 2,281,597 (2,664,246)
Charges for services 247,315 265,193 17,878
Licenses and permits 147,698 11 7,826 (29,872)
Fines and forfeitures 34,731 47,281 12,550
Interest income 201,435 104,186 (97,249)
Miscellaneous 7,623 5,165 (2,458)
Total revenues 7,566,883 4,803,639 (2,763,244)
Expenditures
Current:
General government 884,568 778,432 106,136
Public safety 1,965,561 1,883,072 82,489
Transportation 583,180 461,951 121,229
Physical environment 191,777 336,802 (145,025)
Capital outlay 4,783,504 863,750 3,919,754
Debt service:
Principal 201,299 608,742 (407,443 )
Interest 38,066 53,067 (15,001)
Total expenditures 8,647,955 4,985,816 3,662,139
Excess (deficiency) of revenues
over (under) expenditures (1,081,072) (182,177) 898,895
Other financing sources
Capital lease proceeds 410,550 410,550
Note proceeds 106,630 106,630
Proceeds from sale of fixed assets 231,800 377,800 146,000
Total other financing sources 231,800 894,980 663,180
Excess (deficiency) of revenues and other
financing sources over (under) expenditures (849,272) 712,803 1,562,075
Fund balances, beginning of year, restated (Note 4) 5,181,220 5,181,220
Fund balances, end of year $ 4,331,948 $ 5,894,023 $ 1,562,075
Reconciliation of budgetary to GAAP basis:
Current year encumbrances 104,485
Prior year encumbrances (349,022)
Prior year encumbrances $ 5,649,486
14
CITY OF OKEECHOBEE, FLORIDA
Combined Statement of Changes in Plan Net Assets
Fiduciary Fund Type - Pension Trust Funds and Discretely Presented Component Unit
Year Ended September 30, 2002
Totals
PRIMARY COMPONENT Reporting
GOVERNMENT UNIT Entity
General
Pension Employees' (Memorandum
Trust Pension Trust Only)
Additions
Contributions
State $ 152,646 $ $ 152,646
Employer 9,802 97,041 106,843
Employee 50,101 119,657 169,758
Total contributions 212,549 216,698 429,247
Investment income
Net depreciation in fair value of investments (458,060) (328,956) (787,016)
Interest and dividends 137,605 100,287 237,892
(320,455) (228,669) (549,124)
Less investment expense (36,359) (24,229) (60,588)
Net investment income (356,814) (252,898) (609,712)
Total additions (144,265) (36,200) (180,465)
Deductions
Benefits paid to participants 111,242 102,389 213,631
Refunds on termination 12,567 22,409 34,976
Administrative expenses 15,402 15,835 31,237
Total deductions 139,211 140,633 279,844
Net decrease (283,476) (176,833) (460,309)
Net assets held in trust for
pension benefits, beginning of year 4,457,357 3,182,554 7,639,911
Net assets held in trust for
pension benefits, end of year $ 4,173,881 $ 3,005,721 $ 7,179,602
The accompanying notes are an integral part of this financial statement.
15
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16
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
NOTE CONTENTS PAGE
1. SUMMARY OF SIGNIFICANT 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 ACCOUNTABILITY
A. Budgetary Compliance 22
B. Excess of Expenditures Over Appropriations 22
3. DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS
A. Deposits and Investments 23
B. Receivables 25
C. Property Taxes 25
D. Changes in General Fixed Assets 25
E. Capital Leases 26
F. Long-Term Debt 26
G. Defeased Debt 27
H. Retirement Commitments 27
4. RESTATEMENT OF FUND EQUITY 29
5. RISK MANAGEMENT 29
6. SUBSEQUENT EVENTS 30
7. LITIGATION 30
17
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
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
employees 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 financial resources.
The funds of the City are classified into two categories: governmental and fiduciary.
18
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
B. BASIS OF PRESENTATION - FUND ACCOUNTING (CONTINUED)
Governmental Fund Types
General Fund - The general fund is the City's primary operating fund. It accounts for all financial resources ofthe
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 finance
particular functions or activities of the government.
Capital Projects Fund - A capital projects fund is used to account for major capital acquisitions and projects,
separate from normal operations.
Fiduciary Fund Type
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 financial 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.
19
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
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.
20
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
E. ASSETS, LIABILITIES, AND FOND 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. treasury 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 financial 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, 2002
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 financed from expendable financial 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
definition 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 financial analysis. Data in these columns does not present financial 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 - STEWARDSIDP, COMPLIANCE, AND ACCOUNTABILITY
A. BUDGETARY COMPLIANCE
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.
B. EXCESS OF EXPENDITURES OVER APPROPRIATIONS
Expenditures exceeded appropriations in the Law Enforcement Special Revenue Fund. This overexpenditure. was
funded by available fund equity in the Law Enforcement Special Revenue Fund.
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-
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
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
$2,068,164 and the bank balance was $2,111,892. The carrying amount and bank balance of the discretely
presented component unit's deposits was $76,925. 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.
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.
23
Notes to Financial Statements
CITY OF OKEECHOBEE, FLORIDA
September 30, 2002
11II
11II
11II
Iii
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NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
A. DEPOSITS AND INVESTMENTS (CONTINUED)
As of September 30, 2002, the fair value and category of credit risk of the City's investments are as follows:
Primary Government
Investments:
Government and agency
securities
Corporate bonds
Corporate stocks
Investments not subject to
categorization:
Investments with State
Board of Administration
Money market funds
Total Investments
1
Categories of Credit Risk
2
$
$
$
$
Discretely Presented Component Unit
Investments:
Government and agency
securities
Corporate bonds
Corporate stocks
Investments not subject to
categorization:
Money market funds
Total Investments
1
Categories of Credit Risk
2
3
$
1,612,315
353,414
1,933,289
3,899,018
Fair
Value
$
1,612,315
353,414
1,933,289
3,899,018
$
3
$
1,166,548
280,564
1,408,859
2,855,971
$
$
3,465,437
66,618
7,431,073
$
$
$
Fair
Value
$
1,166,548
280,564
1,408,859
2,855,971
$
$
57,550
2,913,521
$
$
--
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24
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
B. RECEIVABLES
Receivables as of September 30, 2002 are as follows:
Total Primary
General Fund Pension Trust Government
FranchiselUtility taxes $ 137,855 $ $ 137,855
Garbage 11,208 11,208
Contributions 9,202 9,202
Other 7,619 7,619
Interest 20,419 20,419
Receivables, net $ 156,682 $ 29,621 $ 186,303
C. PROPERTY TAXES
Component
Unit
$
17,198
$ 17,198
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 6.6899 mills.
D. CHANGES IN GENERAL FIXED ASSETS
A summary of changes in general fixed assets follows:
Balance
Oct. 1,2001
Balance
Sept. 30,
2002
Additions Deletions
$ 3,250 $
40,141
581,576 (538,284)
$ 624,967 $ (538,284)
Land and improvements
Buildings
Equipment and furniture
$
855,358
1,210,929
1,570,465
3,636,752
$
858,608
1,251,070
1,613,757
3,723,435
$
$
25
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
E. CAPITAL LEASES
In fiscal year 2001, the City purchased vehicles under a master lease agreement it had with a financial institution.
The lease called for nineteen quarterly payments of $15,000 with the balance to be paid in March 2006. In fiscal
year 2002, 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 4.29% interest, with nineteen quarterly payments of $15,000 and the balance due in
October 2006. 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$410,550.
The following is a schedule of future minimum lease payments under this capital lease:
Year ending September 30,
2003
2004
2005
2006
2007
Total minimum lease payments
Less amount representing interest
Present value of net minimum lease payments
$ 60,000
60,000
60,000
60,000
185,062
425,062
(51,143)
$ 373,919
Capital lease payments for fiscal year 2002 totaled $422,443, including the early payoff of the fiscal year 2001
lease.
F. LONG-TERM DEBT
Notes payable as of September 30, 2002 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
$
461,605
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
96,887
4.75% note to a bank, payment of $29,899, including interest, due annually
through March 8, 2006, unsecured
106,630
$
665,122
26
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
F. LONG-TERM DEBT (CONTINUED)
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
2003 $ 177,433 $ 34,641 $ 24,834 $ 32,376 $ 269,284
2004 186,843 36,556 26,003 19,862 269,264
2005 97,329 25,690 27,250 6,630 156,899
2006 28,543 1,356 29,899
$ 461,605 $ 96,887 106,630 $ 60,224 $ 725,346
A summary of changes in long-term debt for the year ended September 30, 2002 is as follows:
Balance Balance
Oct. 1,2001 Addition Reductions Sept. 30, 2002
Notes payable $ 759,742 $ 106,630 $ (201,250) $ 665,122
Capital leases payable 370,861 410,550 (407,492) 373,919
Compensated absences 129,722 71 ,319 201,041
Total $ 1,260,325 $ 588,499 $ (608,742) $ 1,240,082
G. DEFEASED DEBT
The Water and Sewer Improvement Revenue Bonds, Series 1992A were defeased on September 28, 1995 upon the
transfer of the water and sewer system to the Okeechobee Utility Authority. Monies were deposited in an
irrevocable trust to provide for all future debt service payments on these bonds. Accordingly, trust assets and
liabilities for the defeased bonds are not included in the City's financial statements. On September 30, 2002,
$4,330,000 of bonds outstanding are considered defeased.
H. RETIREMENT COMMITMENTS
Pension Plans - Primary Government
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 financial reports that include financial statements and required supplementary information.
27
CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30,2002
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
H. RETIREMENT COMMITMENTS'tCONTlNUED)
Those reports are available from the City of Okeechobee, 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 15.54% and 5.98% of annual covered payroll for the Police Officers' and Firefighters' plans, respectively.
=
=
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 $97,839 and $54,807, 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, 2001 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.
-=-
=
Three-year trend information
Annual Percentage Net
Year Pension OfAPC Pension
Ending Cost (APC) Contributed Obligation
9/30/00 $ 93,469 95 % $ (396,334)
9/30/01 74,693 122 (413,027)
9/30/02 115,163 93 (406,629)
9/30/00 $ 17,412 348 % $ (282,120)
9/30/01 15,194 360 (321,567)
9/30/02 21,681 256 (355,293)
Municipal Police Officers'
Municipal Firefighters'
28
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CITY OF OKEECHOBEE, FLORIDA
Notes to Financial Statements
September 30, 2002
NOTE 3 - DETAIL NOTES - ALL FUNDS AND ACCOUNT GROUPS (CONTINUED)
H. RETIREMENT COMMITMENTS (CONTINUED)
Pension Plan - Discretely Presented Component Unit
Plan Description - The City contributes to the City of Okeechobee and Okeechobee Utility Authority Employees'
Retirement System (the System), a cost-sharing multiple employer defined benefit pension plan administered by
the System's Board of Trustees. 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 raIe is 4.83 % of covered payroll. The City's
contributions for the years ended September 30, 2002, 2001,and 2000 were $31,324, $25,156, and $16,817,
respectively, and were equal to the required contributions for each year.
NOTE 4 - RESTATEMENT OF FUND EQUITY
GASB Statement No. 33 "Accounting and Financial Reporting for Nonexchange Transactions" was effective for the
fiscal year ended September 30,2001. The Statement imposes new standards for the timing of revenue recognition
for nonexchange transactions, such as franchise fees and shared revenues. As a result of implementing GASB
Statement No. 33, the General Fund's beginning fund balance was restated as follows:
Beginning fund balance, as previously reported
Adjustment
Beginning fund balance, as restated
General Fund
$ 5,015,015
146,471
$ 5,161,486
NOTE 5 - 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 multip~e 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.
29
r
CITY OF OKEECHOBEE, FLORIDA
!!
~
Notes to Financial Statements
September 30, 2002
NOTE 6 - SUBSEQUENT EVENTS
-
In November, the City entered into a n~w vehicle lease with a financial institution and purchased vehicles for
$431,640 from a relative of one of the Council members. The City sold its current vehicles and paid off the
related lease commitment.
NOTE 7 - LITIGATION
The City is a party to various lawsuits and a workman's compensation claim. The outcome of these lawsuits and
claim are uncertain at this time and the financial effect is also indeterminable at this time.
-
30
COMBINING AND INDIVIDUAL FUND STATEMENTS
These financial 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.
31
.'
.,
THIS PAGE IS INTENTIONALLY LEFT BLANK.
32 -
CITY OF OKEECHOBEE, FLORIDA
Schedule of Expenditures - Budget and Actual (Budgetary Basis)
General Fund
Year Ended September 30, 2002
Variance
Favorable
Budget Actual (Unfavorable)
General Government
Legislative:
Personnel services 48,157 49,451 (1,294)
Operating expenses 48,500 40,510 7,990
96,657 89,961 6,696
Executive - City Administrator:
Personnel services 95,521 95,870 (349)
Operating expenses 23,550 9,663 13,887
Capital outlay 2,600 1,845 755
121,671 107,378 14,293
Executive - City Clerk:
Personnel services 93,058 91,696 1,362
Operating expenses 21,525 13,698 7,827
Capital outlay 13,000 7,310 5,690
127,583 112,704 14,879
Financial and administrative:
Personnel services 107,214 107,529 (315)
Operating expenses 62,260 64,351 (2,091 )
Capital outlay 1,000 1,000
170,474 171,880 (l,406)
General Services:
Personnel services 66,033 55,664 10,369
Operating expenses 253,750 178,040 75,710
Capital outlay 500 500
320,283 233,704 86,579
Judicial:
Operating expenses 65,000 71,960 (6,960)
Vehicle Program:
Capital outlay 442,346 (442,346)
Total General Government 90 I ,668 1,229,933 (328,265)
The accompanying notes are an integral part of this financial statement.
33
~
~
CITY OF OKEECHOBEE, FLORIDA
Schedule of Expenditures - Budget and Actual (Budgetary Basis)
General Fund
Year Ended September 30, 2002
Variance
Favorable
Public Safety Budget Actual (Unfavorable)
Law enforcement:
Personnel services 956,266 956,770 (504)
Operating expenses 223,408 143,474 79,934
Capital outlay 7,000 2,500 4,500
1,186,674 1,102,744 83,930
Fire control:
Personnel services 681,679 683,912 (2,233)
Operating expenses 104,208 96,489 7,719
Capital outlay 616,400 112,686 503,714
1,402,287 893,087 509,200
Total Public Safety 2,588,961 1,995,831 593,130
Transportation
Road and street facilities:
Personnel services
Operating expenses
Capital outlay
Total Transportation
295,380
287,800
391,204
974,384
315,848
146,103
292,663
754,614
(20,468)
141,697
98,541
219,770
Physical Environment
Garbage/solid waste services:
Operating expenses 191,777 223,727 (31,950)
-
-
Debt Service
Principal 201,299 608,742 (407,443)
Interest 38,066 53,067 (15,001)
Total Debt Service 239,365 661,809 (422,444)
Total expenditures 4,896,155 4,865,914 30,241
34
CITY OF OKEECHOBEE, FLORIDA
Combining Balance Sheet
Fiduciary Fund Type - Pension Trust Funds
Year Ended September 30, 2002
Municipal
Police Municipal
Officers' Firefighters' Totals
ASSETS
Cash $ 186,004 $ 63,548 $ 249,552
Investments 2,732,109 1,166,909 3,899,018
Receivables 23,463 6,158 29,621
Prepaids 3,164 3,164
Total assets $ 2,944,740 $ 1,236,615 $ 4,181,355
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable $ 5,249 $ 2,225 $ 7,474
Fund Balances
Reserved for pension benefits 2,939,491 1,234,390 4,173,881
Total liabilities and fund balances $ 2,944,740 $ 1,236,615 $ 4,181,355
The accompanying notes are an integral part of this financial statement.
35
CITY OF OKEECHOBEE, FLORIDA
Combining Statement of Changes in Plan Net Assets
Fiduciary Fund Type - Pension Trust Funds
Year Ended September 30, 2002
~
=-
Municipal
Police
Officers'
Additions
Contributions
State
Employer
Employee
Total contributions
Investment income
Net depreciation in fair value of investments
Interest and dividends
$
97,839 $
9,202
33,480
140,521
(322,784)
97,918
(224,866)
(23,760)
(248,626)
Less investment expense
Net investment income
Total additions
(108,105)
Deductions
Benefits paid to participants
Refunds on tern1ination
Administrative expenses
Total deductions
111,242
12,567
6,925
130,734
Net decrease
(238,839)
Net assets held in trust for
pension benefits, beginning of year
3,178,330
Net assets held in trust for
pension benefits, end of year
$ 2,939,491
The accompanying notes are an integral part of this financial statement.
Municipal
Firefighters'
54,807 $
600
16,621
72,028
(135,276)
39,687
(95,589)
(12,599)
(108,188)
(36,160)
8,477
8,477
(44,637)
1,279,027
$ 1,234,390
Totals
152,646
9,802
50,101
212,549
(458,060)
137,605
(320,455)
(36,359)
(356,814)
(144,265)
111,242
12,567
15,402
139,211
(283,4 76)
4,457,357
$ 4,173,881
36
-=--
ADDITIONAL ELEMENTS REQUIRED BY GOVERNMENT AUDITING STANDARDS AND THE
RULES OF THE AUDITOR GENERAL
37
THIS P AGE INTENTIONALLY LEFT BLANK.
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38
HOYMAN, DOBSON & COMPANY, P.A.
CERTIFIED PUBLIC ACCOUNTANTS
~1i ilt'illf'WI'M%M:;F#'W-M%t<:-W,:>"'t'-hi;'
215 Bay tree Drive, Melbourne, Florida 32940, 321-255-0088, Fax 32/-259-8648, wwwhoymancom
Charles W Hayman, Jr
Barbara J. Oswalt
Thomas L. Kirk
Karen E. Kirkland
Deborah A. Bradley
DIRECTOR EMERITUS
Roger W Dobson
Eugene K. Bjerning
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 Auditing Standards
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 30,2002, and have issued our report thereon dated February 5, 2003. 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 financial statement amounts. However, providing an opinion on compliance with those provisions
was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance 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 5,2003.
Internal Control Over Financial Reporting
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
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:
. Americon Institute of Certified Public Accountants. Florida Institute of Certified Public Accountants. SEC Practice Section of the AI. C PA . CPAmerico International
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Honorable Mayor and Members of the City Council .-
City ofOkeechobee, 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, it was decided to address the issue as
part of the implementation of GASB Statement No. 34, by hiring an outside consultant.
::.
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 proceed with its plan to hire a consultant to rectify the issues
related to its fixed asset records.
Management's Response: At the recommendation of our auditor, we are soliciting and will be contracting with a
consultant for assistance in compliance with GASB 34. Compliance with this rule will correct our fixed assets
finding.
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 5, 2003.
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.
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Hoyman, D;b~;&'tompany, P.A.
February 5, 2003
40
..:~.,=~;;. HOYMAN, DOBSON & COMPANY, PA
",.",., .. ......' " ',w"', CERTIFIED PUBLIC ACCOUNTANTS
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215 Boy tree Drive, Melbourne, Florida 32940, 321-255-0088, Fax 327-259-8648, wwwhoyman.com
Independent Auditor's
Management Letter
Charles W Hoyman, Jr
Barbara J Oswolt
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, 2002, and have issued our report thereon dated February 5, 2003, 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 5, 2003, 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 10.554(1)(g) La.) require that we address in the management letter, ifnot 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 10.554(l)(g)Lb.) 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, 2001 is as follows:
Internal Control Over Financial Reportin2
Fixed Assets
Status
Repeated/revised
Management Letter
L General Ledger - Year-End Reconciliations
2. Accounts Receivable - Garbage
3. Capital Outlay and Operating Expense Classifications
4. Travel Reimbursement
5. Blank Check Stock
6. Segregation of Duties
Status
Corrected
Corrected
Repeated/revised
Repeated/revised
Corrected
Corrected
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Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Two
As required by the Rules of the Auditor General (Section 10.554(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 detern1ined that the City of Okeechobee, Florida complied with Section 218.415,
Florida Statutes.
~
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: (I)
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. Law Enforcement Special Revenue Fund Expenditures
Finding: 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 a
newspaper subscription. This is contrary to Ordinance No. 758, which 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".
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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. 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.
Management's Response: The Finance Department will follow the Auditor's recommendation and closely
monitor the expenditures of the Law Enforcement Special Revenue Fund. The Finance Office will also send
a memo to the Law Enforcement Department advising them to monitor the expenditures of the Law
Enforcement Special Revenue Fund as they are being processed, since they adhere to the requirement of
Ordinance No. 758 for expenditures. The General Fund will reimburse the Law Enforcement Special
Revenue Fund for the items identified as normal expenditures.
2. Purchase Orders and Expenditure Recognition
Finding: We noted several City purchase orders and vendors' invoices were dated after year end even though
the services or goods were received prior to September 30, 2002. According to City staff, this was done due
to the fact that the expenditure was unexpected or not budgeted in the current fiscal year. Therefore, the
preparation of the purchase order was delayed until the new fiscal year, when the funds could be budgeted,
and the vendor would not send an invoice until the new fiscal year. Staff mistakenly believed that the
purchase order and invoice date determined when the expenditure should be recognized, rather than the date
that the expenditure occurred. In addition, we noted that the City does not require employees receiving goods
and services to document the date that the item was received, which also makes it difficult for accounting
staff to record the expenditure in the proper accounting period.
-
42
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Three
Recommendation: We recommend purchase orders, if required, be prepared before goods and services are
ordered or received and vendors be notified to invoice promptly. In addition, we recommend the City
implement procedures to require receiving departments to sign and date the packing slip, invoice, or other
appropriate document, to vel'ify the.,item was received and the date of receipt.
Management's Response: The Finance Office will notifY the Department Heads that if a Purchase Order is
required, it must be prepared before the goods or services are ordered and to notifY the vendors to invoice
accordingly. As recommended, the Departments are already using a date stamp to validate when the item was
received.
3. Bid Procedures
Finding: City Code allows notification of bids to be either mailed directly to potential bidders and/or
advertised. We noted that when the notification was mailed rather than advertised, the bid file did not
document that this was the procedure used, nor did it identify when the notification was mailed nor the
recipients of the notification.
Recommendation: We recommend that in cases where bid requests are mailed directly to potential bidders
that the information noted above be included in the bid files, in order to document that bid procedures were
followed.
Management's Response: A memo is in the process, along with a copy of the Auditor's findings, which
will be sent to the Department that processes the bids. All efforts will be applied to enter the information
indicating if the bid was mailed or advertised and entered into the bid file, as recommended by our Auditor.
4. Capital Outlay and Operating Expense Classifications
Finding: 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.
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 that any purchase
under $750 should not be expended to capital outlay. The Finance Office will check Departmental purchases
as they are processed through accounts payable to verify that this procedure is being followed. A policy will
be established to adequately describe what constitutes capital outlay.
43
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~
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Four
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5. Travel Reimbursement
Finding: We noted expenditut:es charged to City credit cards and travel expense reports were not always
\
supported by receipts. In addition, we noted that travel expense reports were not always approved by the
supervISOr.
Recommendation: We recommend that the City implement a policy that requires the timely submission of all
receipts and that employees be held responsible for all charges not adequately supported. In addition, travel
expense reports should not be processed until the proper approval is obtained.
Management's Response: The Finance Office is in the process of notifying all City Departments to once
again inform them that when traveling expenses are incurred on behalf of the City, a voucher must be
supported with the receipts that are properly approved. These documents must be submitted to the Finance
Office in a timely manner. If the requirements are not met the employee that incurred the expense will be
held responsible for all charges not adequately supported and approved.
The Rules of the Auditor General (Section 1O.554(1)(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 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 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 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, 2002, 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, 2002
As required by the Rules of the Auditor General (Sections 1O.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.
44
Honorable Mayor and Members of the City Council
City of Okeechobee, Florida
Page Five
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.
\
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February 5, 2003
45
~'" HOYMAN, DOBSON & COMPANY P. A
''''' CERTIFIED PUBLIC ACCOUNTANTS ,..
II li\\lII_iW4it0!00-JI""""
215 Bay tree Drive, Melbourne, Florida 32940 321-255-0088 Fax 321-259-8648 h
, , , www.oyman.com
Charles W Hoyman, Jr
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
The City of Okeechobee, Florida
We have audited the general purpose financial statements of the City of Okeechobee, Florida for the year
ended September 30, 2002, and have issued our report thereon dated February 5, 2003. Professional
standards require that we provide you with the following information related to our audit.
Our Responsibility under Generally 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 general purpose 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 general purpose 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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. Amerrcon Institute of Certified Public Accountants. Florida Institute of Certified Public Accountants. SEC Practice Sectl'on of the A.I.C.PA
. CPAmerico 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 general purpose 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 general purpose financial statements and because of the possibility that future
events affecting them may differ significantly from those expected. The general purpose financial
statements do not include any significant accounting estimates.
Significant Audit Adjustments
For purposes of this letter, professional standards define a significant audit adjustment as a proposed
correction of the general purpose 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 of Okeechobee'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 general purpose financial statements or the auditor's 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 general purpose 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.
However, these discussions occurred in the normal course of our professional relationship and our
responses were not a condition to our retention.
Honorable Mayor and Members of City Council
The City of Okeechobee, Florida
Page Three
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 Board of Supervisors 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 & Con~pa~: f(A.
February 5, 2003