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1984/1985 Fiscal Year I I I I I I I 'I I I I I I I I I I I ~ ~ CITY OF OKEECHOBEE, FLORIDA FINANCIAL STATEMENTS SEPTEMBER 30, 1985 (WITH AUDITORS' REPORT THEREON) I I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA FINANCIAL STATEMENTS SEPTEMBER 30, 1985 CITY COUNCIL Oakland Chapman Mayor, Chairman Andy Rub in Councilmember, Vice Chairman Richard R. Collins Councilmember Larry Mobley Chief of Police ADMINISTRATIVE Bonnie S. Thomas, CMC City Clerk Louis K. Tomey II Chief of Fire Department L. C. Fortner, Jr. Public UtiJ.:tties Pirector Edward W. Douglas Councilmember Oscar Thomas Councilmember Jerald Bryant City Attorney Milton Davis Adminstrative Assist. Charles Elders Director of Public Works I I I I I I I I I I I I I I I I I Management Letter I I CITY OF OKEECHOBEE, FLORIDA Table of Contents Page Auditors' Report 1-2 Combined Balance Sheet - All Fund types and Account Groups 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 - General and Special Revenue Fund Types Combined Statement of Revenues, Expenses, and Changes in Retained Earnings/Fund Balances - All Proprietary Fund Types and Pension Trust Funds Combined Statement of Changes in Financial Position _ All Proprietary Fund Types and Pension Trust Funds Notes to Combined Financial Statements 3-4 5 6 7 8 9 Supplementary Information to Financial Statements General Fund Schedule of Revenues (Budget and Actual) Schedule of Expenditures (Budget and Actual) Pension Trust Funds Combining Balance Sheet Combining Statement of Revenues, Expenses and Changes in Fund Balances Combining Statement of Changes in Financial Position Special Revenu~ Fuu4 .- _Federal Revenue Sharing Stct~::r.~nt oi. Rt:!venuesand- ',Expenditures O.tui'lg,et and Ac tual ) --.... D.e~;' b1?r~T1ce Fund -:r-,:S'baQ.ement, ,of Reveuues anc EX~7!ti~.ture9 {Budget and AC,t-ual) Water ana Sewer Entez;pr.ise Fund - Schedule of Changes in Rese~ve Accounts SCHEDULE 1 2 3 4 5 6 8 Statistical Information Summary of Insurance Coverage Schedule of Assessed Values, Tax Levies and Rates _ Last Ten Years Schedule of Certain Revenues and Utility Customers _ Last Ten Years 9 10 11 - I I I I I I I I I I I I I I I I I I I The Honorable Mayor and Members of the City Council City of Okeechobee, Florida We have examined the combined financial statements of the City of Okeechobee, Florida as of and for the year ended September 30, 1985, as listed in the accompanying table of contents. Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances, except as indicated in the following paragraph. The City has not maintained adequate detail records in support of the cost of the water and sewer utility plant in service (carrying value of $8,255,631 at September 30, 1985) and land and improvements, buildings and improvements, furnishings and equipment, and rolling stock included in the general fixed assets group of accounts (carrying value of $1,697,410 at September 30, 1985) and we were unable to obtain sufficient supporting documentation to form an opinion with respect to the stated cost of these items acquired in years prior to October 1, 1981 or the o~cu~~i~ted depreciation applicable to the water and sewer utility plant,in:~ service at September 30, 1985 or the provision for deprecHrt'ion for:~he__ year then ended. Accordingly, w~ are. t]nab~ e toexpr~ss, and we ..Q,o......not exprese an c.pinion on t.:hc;,_acC0~1t;;any'i>:1y firiallcial statements of the prop-r-ietary fund t.ype oud the ~el~~!:a_J. ~jx€d assets group of accounts. In our opinion, except that, as described in the preceding paragraph, we do not express an opinion on the proprietary fund type and general fixed assets group of accounts, the aforementioned combined financial statements present fairly the financial position of the City of Okeechobee, Florida, at September 30, 1985, and the results of its operations and the changes in financial position of its fiduciary pension trust fund types for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. I I I I I I I I I I I I I I I I I I I The Honorable Mayor and Members of the City Council City of Okeechobee Page 2 Our examination was made for the purpose of forming an opinion on the combined financial statements taken as a whole. The supplementary information included in Schedules 1 through 11, as listed in the accompanying table of contents, is presented for purposes of additional analysis and is not a required part of the combined financial statements. Such information except for Schedules 9 through 11 which we did not audit, has been subjected to the auditing procedures applied in the examination of the combined financial statements and, in our opinion, except for Schedules 9 through 11 on which we express no opinion, is fairly stated in all material respects in relation to the combined financial statements taken a whole. ~m~/~ DiBartolomJo, McBee & Sloan Certified Public Accountants December 4, 1985 - "" '..J ~. _ .~t~~-';':~:".."_..~"",~",_~!,~~}.. - ,"';...,......:: - -~_~.. .;.~. :_._1_',{, ", .. .. ",,-_~~,,".'\..~'~~7''' '.-~1!:-~~~~ ~...,....~ ......... -~~-- CITY OF OKEECHOBEE, FLORIDA COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS SEPTEMBER 30, 1985 ASSETS Governmental Fund Types Special Debt General Revenue Service Proprietary Fund Water and Sewer Cash Investments Receivables (less allowances for doubtful accounts) Taxes (Notes 2 and 3) Customer accounts, less allowances of $1,475 Due from other governmental agencies Accrued interest Due from other funds Inventories Restricted assets (Notes 7 and 8) Cash Investments Property, plant, and equipment, net (where applicable) of accumulated depreciation (Notes 4 and 5) Amount available in Debt Service Fund Amount to be provided for r~tirement of gen~ral h'~\9-te~ {4pJ:,t 8,255,631 -..... .-.--...-, 'roTAL ASSZ'fS $559 :19'0' ~"S!7 ,790 .$'5'5,878 $11,562,688 -... -. ,... .... - -.- - - - - -.- ...... - - - - - - - - - - - - - - - - -- -----,,-~ ------- ------- ----------- See accompanying notes to combined financial statements 3 Fiduciary Funds Employee Pension Trust Funds $974,30C -------- -------- Account General Fixed Assets 1,697,410 - ------- ...;.....- $1,697,41:] ------- -.....- ------... -- Groups General Long- Term Deb t 53,866 43~.:';20 ~ ," ""\-.. "'.. .~~ :-.... -' .;.. _ j t; ,. ------.....- -----~..._- Totals (Memorandum Only) $ 202,088 1,594,085 ," 73,915 127,552 59,756 2,151 174,025 1,291 22,385 2,657,573 9,953,041 53,866 438,520 $15,3 ().O ,.24 8 ~---_._------- --------_._- ---. LIABILITIES AND FUND EQUITY LIABILITIES Accounts payable Customer deposits Accrued liabilities Payable From Restricted Assets Accrued interest on bonds payable Current portion of bonds payable Accrued interest on Bond Anticipation Notes Payable Bond Anticipation Notes Payable (Note 4) Matured bonds and interest coupons Due to other funds Deferred revenues Long-term indebtedness (Note 5) -7"C::-!:.:.:::!-i..-~~i~~-y~: ::.f',;,,::;~~ :-::. :;,~~~~,... ~~~~:~~t~ -"}--~~.(~,:,~;.'t"~~ '.4::::. _\~;.~I FUND EQUITY Contributed capital (Note 6) Investment in general fixed assets Retained Earnings Reserved for - Revenue bond retirement (No~e 'i) Renewal and replacem-=:nt Unreserved Fund Balances Reserved for - Employees' retirement system Debt service (Note 5) Inventories Encumbrances Undesignated CITY OF OKEECHOBEE, FLORIDA COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS (CONTINUED) SEPTEMBER 30, 1985 Government Fund Types Spec ial Debt Revenue Service General $ 63,066 11,181 30,025 20,055 124,327 1,291 7,230 426,942 435,463 TOTAL LIABILITIES AND FUND EQUITY $559,790 -------.- -------- $ $ 2,012 2,012 .- 53,866 17,790 17,790 53,866 $17,790 Proprietary Fund Water and Sewer $ 77,692 155,993 19,543 30,337 26,000 154,903 2,212,900 144,000 3,497,269 6,318,637 3,272,947 -. 187,251 35.)000 ],.,748,853 5,244,051 $55,878 $11,562,688 ------- ------- ------- -------.--.-- ------- ----------- See accompanying notes to combined financial statements 4 Fiduciary Funds Employee Pension Trust Funds $ 974,306 974,306 ~:974,306 -------- -------- Account General Fixed Assets ~ Groups General Long- Term Debt Total's (Memorandum Only) $ $ $ 140,758 155,993 84,97'9 115,703 ," , 30,337 26,000 154,903 2,212,900 2,012 174,025 20,055 407,407 3,904,676 492,386 6,937,362 3,272,947 1,697,410 1,697,410 1,697,410 $1,697,410 - - - - - - - - -- - ---------- -:67 ~ 251 35..300 1 , -, 4 a, ib 3 974,306 53,866 1,291 7,230 447,732 8,422,886 $492,386 $15,360,248 -------- -------- ----------- _. -.- - - - - - - - - I I ~rl-'.;' . ~. .... . ;~.." ;.....:-'~~~:.~>>~\ ~<,;~ ~>~.,~~_~.;,:._;~,~ ;it~J~~~ CITY OF OKEECHOBEE, FLORIDA COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES YEAR ENDED SEPTEMBER 30, 1985 General REVENUES (Note 5) Taxes (Note 2) Intergovernmental (Note 3) Charges for services Licenses and permits Fines and forfeitures Interest income Miscellaneous $ 714,080 549,852 271,762 56,430 28,092 31,791 9,573 1,661,580 EXPENDITURES Public safety General government Transportation Physical environment Health and human services Parks and recreation Intragovernment service - public works Debt Service Principal retirement Interest cbarges Professional fees 828,015 211,522 304,916 255,229 22,238 6,497 25,289 Excess (deficiency) of revenues over expenditures 1,653,705 7,875 CTHERFINANCING SOURCES (USF,S) Operating transfers in Op('!r:aJ;...ihp"t.j,ansfers - out 7?~Oc.d -~/7 , 008 "" ~.. . ~_'_-'-':"'-'-- Excess (deficiency) of revenues and other financing sources over expenditures and other uses 84, 883 350,580 Fund balances, September 30, 1984 Fund balances, September 30, 1985 $ 435,463 ---------- ---------- See accompanying notes to combined financial statements 5 Special Revenue Debt Service $ $ 13,777 71,951 6,223 71,951 20,000 20,000 21,787 500 42,287 (22,287) 7',.951 .-_ ,(77,008) 77,008 (5,057) 22,847 $ 17,790 (22,287) 76,153 $ 53,866 -------- -------- -------- -------- 1 Totals (Memorandum Only) $ ~727,857 621,803 ,,. 271,762 'I 56,430 28,092 38,014 9,573 1,753,531 828,015 211,521 304,916 255,229 22,238 6,497 25,289 20,000 21,787 500 1,695,992 57,539 7'; , OC~l (77: 008) 57,539 449,580 $ 507,119 ---------- ---------- CITY OF OKEECHOBEE, FLORIDA COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL AND SPECIAL REVENUE FUND TYPES . . ":'<'~.,~.,: 7:~_: ;.~ REVENUES Taxes Intergovernmental Charges for services Licenses and permits Fines and forfeitures Interest income Miscellaneous . '~... ~ ~~. ".,-," ,~.l..:-;:~~t. -;: ..:. '~.;r::::~ ,:; -~,~~L.~~::~~<~~:lI-'.~,ti;'~~, ~~.~".~~ ~--:.~.:~ -,;~~_:;.~~ EXPENDITURES Public safety General government Transportation Physical environment Health and human services Parks and recreation Intragovernment service - public works Excess (deficiency) of revenues over expenditures OTHER FlNANCI~G SOrraCES (USES) O~eratin~ ~:r:ansfers in' ~ -0pel..~ting tr.ansf.er.s,..oU:~.. Excess (deficiency} of l.e"enues and other financing sources over expenditures and other uses Fund balances, September 30, 1984 Fund balances, September 30, 1985 Budget $ 683,320 505,850 238,450 52,538 19, 800 20,000 4,250 1,524,205 857,694 229,044 379,540 198,100 19,425 15,000 26,000 1,725,473 , (201,268) 7-2,000_. . .1.2,000 (129,268) 350,580 YEAR ENDED SEPTEMBER 30, 1985 General Fund Variance Favorable (unfavor- Actual able) $ 714,080 549,852 271,762 .56,430 28,092 31,791 9,573 1,661,580 828,015 211,521 304,916 255,229 22,238 6,497 25,289 1,653,705 7 , 875 77,008 77,00e 84,883 350,580 $ 30,760 44,002 33,312 3,895 8,292 11,791 5,323 137,375 29,679 17,523 74,624 (57,129) '(2,813) 8,503 1,381 71,768 209,143 5,00B --5.008 214,151 Special Revenue Variance Favorable (Unfavor- Budget Actual able) $ $ $ - ---------- ---------- -------- -------- . '.',:~:" See accompanying notes to combined financial statements 72,000 71,951 (49) 72,000 (49) 71,951 72,000 71,951 (49) (72. :JO.Q.~ C': ; ':OOS --122, o"oOT _("!.:L,J~~f~.; ~-S, 008) (5 ~ 008r (5,057) (5,057) 22,847 22,847 ---------- ---------- $ 221,312 $ 435,463 $214,151 $ 22,847 -------- -------- $(5,057) $ 244,159 $ 446,022 $201,863 ==:::===== $ 17,790 -------- -------- -------- -------- 6 Total (Memorandum Only) Variance Favorable (Unfavor- Budget Ac~ual able) $ 683,320 $ 577 ,850 238,450 52,535 19,800 20,000 4,250 1,596,205 857,694 229,044 379,540 198,100 19,425 15,000 26,670 1,725,473 (129,268) 72,000. (72,000) (129,268) 373,427 ========== '714,080 $ 621,803 271,762 56,430 28,092 31,791 9,573 1,733,531 833,279 211,849 306,555 255,229 22,238 6,497 25,289 1,660,936 30,160 43,953 33,312 3,895 8,292 11,791 5,323 137,326 29,679 17,523 74,624 (57,129) (2,813) 8,503 1,381 71,768 72,595 290,094 '-H1~7~, 008 (77,OOSt 72,595 373,427 ---------- ---------- 5,008 (5.~)08; 201,863 4~~~~.~_~~~.~~.~i<~i-~\~:~:;:t~~?-.;:i.:~;~:'~~J~~:~;~~.~~./i?fq,( iI ..:" , CITY OF OKEECHOBEE, FLORIDA COMBINED STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS/FUND BALANCES - ALL PROPRIETARY FUND TYPES AND EMPLOYEE PENSION TRUST FUNDS YEAR ENDED SEPTEMBER 30, 1985 Proprietary Fund Fiduciary Funds Employee Pension Trus t Funds Water and Sewer OPERATING REVENUES Charges for services Interest income Contributions Other operating income $1,371,278 $ 785 1,372,063 85,434 131,410 216,844 OPERATING EXPENSES Personal services Contractual services Depreciation Materials and operating supplies Utilities Rentals and leases Insurance Repairs and maintenance Administrative supplies and expense Contribution refunds Retirement benefits paid General Fund administative charge 423,107 26,600 140,665 200,956 107,295 590 17,398 73,866 20,669 25,016 19,292 44,308 55,715 1,066,861 OPERATING INCOME 305,202 172,536 NONOPEP.A'rI!~G INCOME (EXI?j';~SE) :rntereet. inccme luterest exp~nse Other fiscal charges Miscellaneous 233~511 (lS,860) (57,182} 23,798 818,267 486,469 172,536 801,770 $974,306 NET INCOME Retained earnings/fund balance, September 30, 1984 1,484,635 Retained earnings/fund balance, September 30, 1985 $1,971,104 ---------- ---------- -------- -------- See accompanying notes to combined financial statements 7 I Total (MeIOOrandum Only) $1,371,278 ," 85,434 131,410 785 1,588,907 423,107 26,600 140,665 200,956 107,295 590 17,398 73,866 20,669 25,016 19,292 55,715 1,111,169 -477,738 233,511 {lS, 860} (~'''.182) .,; I ~ ..,. 23:0 'i9~ 818,267 659,005 2,286,405 $2,945,410 ---------- ---------- j ~_~~~-?l~"'1r ~~~~~L~~;:~~~~1.'~';'""'l~.~~~...;A..~.,."')l''i-11'--:~!~~~~~1'~. ~r CITY OF OKEECHOBEE, FLORIDA COMBINED STATEMEm' OF CHANGES IN FINANCIAL POSITION - ALL PROPRIETARY FUND TYPES AND PENSION TRUST FUNDS YEAR ENDED SEPTEMBER 30, 1985 SOURCES OF WORKING CAPITAL Operations Net income Items not requiring working capital Depreciaition Amortization of bond discount Working capital provided by operations Proceeds from bond anticipation notes Proceeds from bond issue Contributed capital USES OF WORKING CAPITAL Retirement of revenue bonds Acquisition of property, plant, and equipment Increase in restricted assets Increase in current portion of bond anticipation notes payable Increase in current portion of bonds payable INCREASE (DECREASE) IN WORKING CAPITAL ELEMENTS OF NET INCREASE (DECREASE) IN WORKING CAPITAL Cash "Investments Accounts receivable Due from other funds Accounts payable Due to other funds Bond anticipation notes payable Bonds payable Customers' deposits Accrued liabilities INCREASE (DECREASE) IN WORKING CAPITAL ~ See accompanying notes to combined financial statements Proprietary Fund Fiduciary Funds Employee Pension Trus t Funds Water and Sewer $ 486,469 $172,536 140,665 1,385 628,519 2,212,900 2,212,900 1,184,026 6,238,345 172,536 172,536 16,000 4,836,972 2,371,364 2,212,900 10,000 9,447,236 ($3,208,891) $172,536 ------------ ------------ -------- -------- $ 80,230 (692,335 ) . '. 7,.139 530 (43,405) (144,000) (2,212,900) (10,000) (41,681) (152,469) ($3,208,891) $(35,770) 208,306 $172,536 ------------ ------------ -------- -------- 8 1 Totals (Memorandum Only) $';' 659,005 140,665 1,385 801,055 2,212,900 2,212,900 1,184,026 6,410,881 16,000 4,836,972 2,371,364 2,212,900 10,000 9,447,236 ($3,036,355) ------------ ------------ $ 44,460 (484, 029 ~ 7,13g 530 43,405 (144,000) (2,212,900) (10,000) (41,681) (152,469 ) ($3,036,355) ------------ ------------ I I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 1985 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Okeechobee was originally incorporated in 1915 and its present charter was adopted in 1919 under Chapter 8318 of Special Acts of 1919. The City operates under the council form of government and provides the following services as authorized by its charter: public safety, public works, and culture and recreation. It is the policy of the City of Okeechobee to conform its accounting policies to generally accepted accounting principles applicable to governmental units. The following is a summary of the more significant principles and practices used in the preparation of these financial statements. (a) BASIS OF PRESENTATION - FUND ACCOUNTING The accounts of the City are organized on the basis of funds or account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance/retained earnings, revenues, and expenditures/expenses. The various funds are summarized by type in the financial statements. The fOllowing fund types and account groups are used by the City: GOVERNMENTAL FUND TYPES I~Q'...crr.L.T11':;:G.t~::i. ..Fun:'1p "'~;.~. r.n9P:; through._;whicb.T.,m~... gcve:-.-:unenta;..;funcci c.~~r "'l..- !:be Cit.y ~:r~c:\;,~J,Ilq.:qc.~~=, T.);.l~'. acquis~,=-?on, u~c, ~~:: n!li ~r::c:")sQ; .."..,th~.'='$.G1:.ty' s expendable financial res(..~;rce..; ~nd",...:"therelated liabilities (except those accouni...:6 fo::: in proprietary funds) are accounted for through governmental funds. The measurement focus is upon determination of changes in financial position, rather than upon net income determination. The fOllowing are the City's governmental fund types: GENERAL FUND The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. 9 I I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 NOTE 1 - S~RY OF SIGNIFICANT ACCOUNTS POLICIES (CONTINUED) SPECIAL REVENUE FUND Special Revenue Fund is used to account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or major capital projects) that are legally restricted to expenditures for specified purposes. DEBT SERVICE FUNDS Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. PROPRIETARY FUND TYPE A Proprietary Fund is used to account for the City's ongoing organizations and activities which are similar to those often found in the private sector. The measurement focus is upon determination of net income. The fOllowing is the City's proprietary fund type: ENTERPRI SE FUND Th"" t::\t1""'..i:pri~e Fund'c~c'i.s used to account for ":.~G.t'at:it"':'~B (a) thatarefhance.:; and opeT~t:ed :i 11 ~ iil2:nner simi,lar ..to . .~.,p~~BI tot:: bu,f-'. in;3~f;. .;:o1'll"~rl.n:'3';:~ ...; where...tne~ :.~ntent of the goVe.i:nillg body i& thRt the costs (expenses, including depreciQLi~~l of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges: or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control accountability, or other purposes. .;',::l;f;r' 10 I I I I' I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FIDUCIARY FUND TYPE Fiduciary Funds are used to account for assets held by the City in a trustee capacity for individuals and/or other funds. TRUST FUND Trust Funds include pension trust funds and pension trust funds are accounted for and reported as proprietary funds since capital maintenance is critical. The accrual basis of accounting is used by proprietary funds and pension and nonexpendable trust funds. (b) BASI S OF ACCOUNTING Proprietary Funds and Pension Trust Funds are accounted for on the accrual basis. Revenues are recognized when earned and expenses are recognized when they are incurred. Unbilled water and sewer utility service revenues ($26,075 at September 30, 1985) are recorded at year end. 11 I I I I I I I I I I I I I I"'" I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 NOTE 1 - SUMMARY SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) BUDGETARY DATA The City enacts an annual budget, by ordinance, after conducting the required public hearings. The budget adopted is on a basis consistent with the accounting principles followed by the City. (d) ENCUMBRANCES Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of funds are recorded in order to reserve that portion of the applicable appropriation, is employed in the governmental funds. Open encumbrances are reported as reservations of fund balances since the commitments will be honored through Subsequent years' budget appropriations. Encumbrances do not constitute expenditures or liabilities. As of September 30, 1985 encumbrances in the General Fund amounted to $7 , 23 0 . (e) CASH Cash accounts for the interest-bearing accounts. City maintained in are (f) -rNVE~TMFNTS Investments, consisting of t,;~~tiiJ.cat~u r-f J.ep"'lsit arIJ. ~ORe.Y,i!;.""~,~P:.,.,;,.,,,l-,,~"""'~ market accounts, are stated at cost which Q.~prf,.;.~:tn1='l.tes'l:.;j",P';",,"'-' market. (g) INVENTORIES Inventories of motor fuels are stated at cost determined on a first-in, first-out basis. (h) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment acquired for general governmental purposes are recorded as expenditures in the General Fund and capitalized at cost in the general fixed 12 I I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 oNOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINU,ED) (h) PROPERTY. PLANT AND EQUIPMENT (CONTINUED) assets group of accounts. No depreciation has been provided on general fixed assets. The utility plant and equipment utilized in the City's water and sewer system is stated at cost. Depreciation has been provided principally at a composite rate of 2-1/2% per year for assets acquired prior to October 1. 1981. Assets acquired after October 1. 1981 are depreciated by the straight-line method over their estimated useful lives for periods of five to forty years. Interest costs on construction in progress for the City's sewer plant are capitalized and added to the cost of construction and will be amortized over the estimated useful life of the plant (See Note 4). (i) ALLOCATION OF ADMINISTRATIVE CHARGES Certain administrative expenses are incurred by the City's General Fund on behalf of the City's Water and Sewer Fund. The General Fund charges for these services based upon estimates of City management personnel. The reimbursement for these services is recorded as an operations expense of the Water and Sewer Fund and as a reduction of financial and administrative expense of the General Fund. For the year ended September 30. 1985. these rol,:::lrges ~::-:;-mnted to $55.715. ~j i \,~'~C.'\TION AND 0J:~K :..:~AvF .... ~:,~;, . - ..-." Full-time and per,:t~nent emp::"<)y~\;;.~ accr\l;e'8;.",paid vacation ranging from six days after six ~.C'~t:~9 vI continuous service up to 20 days after fifteen years of service. Unused vacation may be accumulated up to a maximum of thirty days. 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 25% of the unused sick leave balance. (k) TOTAL COLUMNS ON COMBINED STATEMENTS The columns enti tIed "Totals (MemoI'andum Only)" included in the combined financial statements section of this report are 13 I I I I I I I I I I I I I I I I I I I - CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (k) TOTAL COLUMNS ON COMBINED STATEMENTS (CONTINUED) presented only to facilitate financial analysis. These total columns are not comparable to consolidated financial information as the basic reporting entity is by fund type which utilizes differing bases of accounting. In addition, interfund eliminations have not been made in the aggregation of this data. NOTE 2 - PROPERTY TAXES The City's property tax is levied each October 1 on the assessed value listed as of the prior January 1 for all real and tangible personal property located in the City. Assessed values are established by the County Property Appraiser at 100 percent of estimated market value. The assessed value for the list of October 1, 1984, upon which the 1984/85 levy was based, was $73,878,151. Taxes are due no later than March 31 with discounting of taxes being offered for early payment. Discounts range from 4% if taxes are paid in November to 1% for taxes paid in February. Current tax collections for the year ended September 30, 1985 were 98.5% of the tax levy. Property taxes levied for 1984/85 are recorded as receivables, net of estimated uncollectibles. The net receivables collected during 1984/85 an~ ~::;pf>ct.~~;j to be collected in 1985/86 are recognized as revenues j~6 19t~../~~.f'P.i:i<l1P-~ye3.r levies were recorded using these same ..:: 3-;::,::; -1 :.::<i..cti, a!:d remaiIlng2~eC3ei\T~a:ct.~~e~valuated;;.;.101.:..-i.lY . !~OTE 3 - f'_~OPF~PTY. PLANT .::;AND'~EQUIPMENT The carrying value of property, plant, and equipment recorded in the water and sewer fund as of September 30, 1985 is summarized as follows: Utility plant in service - Balance, September 30, 1984 Acquired during the year ended September 30, 1985 (inCluding additions to construction-in- progress of $4,489,229 $ 4,853,891 4,836,972 14 I I I I I I I I I I I I -I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 . NOTE 3 - PROPERTY, PLANT AND EQUIPMENT (CONTINUED) TOTAL 9,690,863 Less accumulated depreciation 1,435,232 NET BOOK VALUE $ 8,255,631 ----------- ----------- The carrying value of property, plant and equipment at September 30, 1985 included $2,880,343 in carrying value of assets acquired prior to October 1, 1981. Depreciation expense for the year ended September 30, 1985 was $140,665. Construction-in-progress additions for the current year included $250,547 of capitalized interest associated with the new wastewater collection and wastewater treatment systems presently being constructed by the City (See Note 11). A summary of changes in General Fixed Assets for the year ended September 30, 1985 is as follows: Land and improvements Buildings and improve- ments "?'urr.i.shings and equipment Rol ~i~sto~;': 'TOTAL Balance 10-1-84 $ 760,653 Retire- ments Balance 9-30-85 805,358 Additions $44,705 $ $ 257,905 261,071 ...____33!,,!..997 257,9(1~ :;'{j...;.750 331,997 42,145 ll_:]::'~ --- 466 ~,~.~"" I 1. ~~I) ....-- -~- ~.:;i::,.<.., c,,!' 6u1, ~?~ S-.,_ ~~6 $1 , 6.91! .-41,0 C~7 , 85G ---------- ---------- ~ -~-_. ------ '-...------ ---_.- _____.._<o~ -----... - --'--- - ----- - NOTE 4 - BOND ANTICIPATION NOTES PAYABLE On October 1, 1984, the City issued $2,212,900 in bond anticipation notes, with a due date of October 1, 1985 in anticipation of receipt of proceeds from the sale of $2,212,900 in additional Water and Sewer Revenue Bonds Series 1983 authorized by ordinance 487, enacted June 20, 1983, as amended. Charges relating to that sale are reflected as fiscal charges in the water and sewer fund. Proceeds of the 1983 Series B Revenue Bonds were received on September 26, 1985 to allow for repayment on the Bond Anticipation Notes on October 1, 1985. Those proceeds were placed in a restricted cash account for Bond Construction proceeds; the balance at September 30, 1985 in that account was $2,369,047. 15 I 'I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER30, 1985 NOTE 5 - LONG-TERM DEBT Long-term debt as of September 30, 1985 is summarized as follows: GENERAL LONG-TERM DEBT $480,500 original issue General Obligation Bonds, due in annual installments of $15,000 to $35,000 through July 1, 1996 Notes payable: 7% capital improvement notes to a bank due $9,500 semiannually plus interest, through May 1988 secured by and payable from a pledge of the City's share of one half cent Florida State sales tax $ 300,000 57,000 8% capital improvement note to a bank, due $9,167 annually, plus interest, through 1988~ collateralized by funds other than ad valorem taxes 27,499 8.5% installment note, due $1,123 monthly including interest through January 1, 1987, secured by equipment with a carrying value of $48,754 16,219 8.49% installment note, due $304 monthly including interest through September 15, 1987, secured by equipment wit~~ ~ ::e::-:;'.X~",;J.g value of $10,500 6,689 .-~ .,~ "'l'OTAL Gcll,SRAI. .I.I'::i'rG-'l'Fi\l~ i)BRT '.,'~:$-' 4.07, il07 --------- --------- REVENUE BONDS $400,000 original issue 1972 Water and Sewer Serial Bonds, due in annual installments of $5,000 to $24,000 through January 1, 2012~ interest at 5% $ 348,000 $1,000,000 original issue 1983 Water and Sewer Serial Bonds, Series A, due in annual installments of $10,000 to $110,000 through January 1, 2004~ interest rate of 10-1/2%; net of unamortized discount of $27,631 962,369 16 I I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 NOTE 5 - LONG-TERM DEBT (CONTINUED) REVENUE BONDS (CONTINUED) $2,212,900 original issue 1983 Water and Sewer Bonds, Series B, due in annual installments ranging from $2,900 to $105,200 through September 1, 20257 interest rate of 9-1/8% (bond R-1) and 9-3/4% (bond R-2) 2,212,900 TOTAL REVENUE BONDS $3,523,269 ---------- ---------- Outstanding general obligation bonds above are redeemable at the option of the City on any interest payment date by payment of a premium of 3 percent through 1986, 2 percent between 1986-91 and 1 percent after July 1, 1991. Interest is payable at 6.75 percent for bonds maturing through 1990, at 6.875 percent for bonds maturing 1991 through 1995, and at 6.75 percent for bonds maturing in 1996. The 1972 water and sewer revenue bonds are secured by a pledge of the net revenues of the water and sewer system and cigarette taxes. The bonds are redeemable in whole or in part in inverse order on any interest date at par and accrued interest. 1983 Water and SC':;('2!" Rp"H"~mH~ Bonds, Series A and Series B, are secured by a pledge o! tn.<;'l ..1E"t'r~:rve,I1Ues..9f the water and sewer system, public se:nr.ic;c: ::.;l::..:~;3,..i:ranch_is.e,:'1reVel1Ue~"an~.tat{=' ravenue ~b.ariJ!g funds. Th'-~ :,,:,,''plcdr;e cf .an~ J. ienon.. piedged:,fundsr:a.~)' a poxi ty -..,i t:t:.~ t~e..;~ pI ed~J'..2 of 09:.:\d liel.-l on th.c(}'t:edged=LfundS2<tor:5i.&e-cure payment of the outstanding 19'72 water ~n<1 .:;~wer re.enaeborids. For the 1983 Series A, bOlids maturing after .Ja~::mc:.ry 7..- 1994 and prior to January 1, 2000 are redeemable by payment of a premium ranging from 3% to 1/2%. Bonds maturing after January 1, 2000 are redeemable at par. For the 1983 Series B, bond principal payments maturing after September 1, 1992 and prior to September 1, 2004 are redeemable by payment of a premium ranging from 4% to 1%. Bond principal payments maturing after September 1, 2004 are redeemable at par. The various bond indentures contain provisions which require maintenance and flow of monies through various specific funds, minimum and maximum amounts to be maintained in various sinking funds and restricted funds. The City is in compliance with all such significant limitations and restrictions. 17 I I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 NOTE 5 - LONG-TERM DEBT (CONTINUED) REVENUE BONDS (CONTINUED) In conjunction with the issuing of the 1983, Series A, Water and Sewer Revenue Bonds, the City entered into an escrow deposit agreement with Barnett Banks Trust Company, N.A. of Jacksonvi1le,Florida for the purpose of depositing sufficient funds in escrow to provide sufficient funds to refund the remaining principal and interest payments of the 1958 Water and Sewer Revenue Bond issue and to pay all costs associated with the management of the escrow account. A summary of the changes in all long-term debt for the year ended September 30, 1985 is as follows: 18 .~~~_t~'"4~~"":~:~~-~~.r:;..~~ ;.;. ,,',~:,:~~:~ ~.-:~'~.~.-t ':'~4.4:~~.:'~~::'...._. .~t__ .-~ ii: ':~:~:~ Annual principal requirements for the next five years are as follows: Year ended September 30, 1986 1987 19P-e 1;'89 1~9u Then~after };~ TOTAL CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) $ 20,000 2o.~v\Jlj ~5... .~~~-f: :J5.. !)!;o '{5,000 __ '" i;. n i-; -.; ------- $300,000 -------- -------- SEPTEMBER 30, 1985 $ (k3,973 $ 63,973 $ 6,000 $ 20,000 -'-;, ~ i l ~ !; 55,269 7,000 20,000 ~8,165 53,165 7,000 25,QOO 25, o,(ro,~~ '" .. NH) 25, !'lOC. 25,000 ~~-,?," 0, 000 :1 .'~ ,.. - ,. , ...Ii ,,'\lV _1857MO 313,000 870,OGG Zh;7 , ...07 $407,407 $348,000 $ 990,000 --------- -------- -------- ---------- ---.----- -------- -------- ---------- 19 $ 7,100 7,7CD at st)(t=' 2,1f!9,GGu $2,212,900 ---------- ---------- $ 26,000 27,000 39,100 ~~~ ~ .'~;j 16; ~O~--; ? -~ '7 .., .11 . . [II . _~!.. . '-4 ~ .~ $3,550,900 ---------- ---------- $ 89,973 S~;2{;9' ~2#265 64,700 71,500 _-= ~:"57 , 600. $3 , S 5 ~. 3 \f.~ ---------- ---------- CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) - SEPTEMBER 30, 1985 General Long-Term Debt General Obligation Notes Bonds Payable Total Proprietary Water and Sewer Revenue Bonds NOTE 5 - LONG-TERM DEBT (CONTINUED) 1983A Series 1972 Series Total Total Long-Term Debt 1983B Series The annual requirements to amortize all debt outstanding as of September 30, 1985, including interest payments totalling $8,083,112 are as follows: ...._'.... Year ended September 30, ." 1986 $ 40,437 $ 51,154 $ 91,591 $ 193,720 $ 122,900 ... 23,400 $ 340,020 $ 431,611 ~ 1987 39,0.87 40,104 79 , 191 208,177 120,800 24,100 353,077 432,268 1988 42,73il 29,385 72,123 215,277 123,438 23,750 362,465 434,588 1989 41,050 41,050 215,211 120,813 23,400 359,424 400,474 1990 39,363 39,363 215,288 122,925 24,050 362,263 401,626 1991 37, 67~; 37,675 215,291 119,775 23,650 358,716 396,391 1992 40,956 40,956 215,318 121,363 24,250 360,931 401,887 1993 38,894 38,894 215,260 117,688 23,800 356,748 395,642 1994 36,83'. 36,831 215,218 118,750 24,350 358,318 395,149 1995 39,769 39,769 215,282 119,287 23,850 358,419 398,188 1996 37,36~ 37,362 215,333 119,300 24,350 358,983 396,345 1997 215,262 118,787 23,800 357,849 357,849 1998 215,269 117,750 24,250 357,269 357,269 1999 215,235 116,187 23,650 355,072 355,072 2000 215,250 118,837 24,050 358,137 358,137 2001 215,197 115,700 23,400 354,297 354,297 2002 215,264 116,775 23,750 355,789 355,789 2003 215,225 116,800 23,050 355,075 355,075 2004 215,269 115,775 23,350 354,394 354,394 '"005 215~~~~ 22,600 237,868 237,868 2006 ~lS, 20'S 22,850 238,055 238,055 2007 215,259 ~~.050 238,309 238,309 2008 - 215,193 ~.~ ~'2;j" 200 2~e.o~~3 23 B ,~ ~n, - 2009 ~15,188 23,300 23B,4:88 ?38,4N~ 2.010 215,207 24,350 239,557 239,557 2011 ~ 15. J J ~~ 24,300 239,613 239,613 2012 215,256 25,200 240,456 240,456 2013 - .215,310 215,310 215,310 2014 215,318 215,318 215,318 2015 215,233 215,233 215,233 2016 215,307 215,307 215,307 2017 215,266 215,266 215,266 2018 215,252 215,252 215,252 2019 215,291 215,291 215,291 2020 215,298 215,298 215,298 2021 215,286 215,286 215,286 2022 215,263 215,263 215,263 2023 215,325 215,325 215,325 2024 215,259 215,259 215,259 2025 215,221 215,221 215,221 TOTAL $434,162 $120,643 $554,805 $8,581,864 $2,263,650 $641,100 $11,486,614 $12,041,419 -------- -------- -------- ---------- ---------- -------- ----------- ----------- -- - - - - --. -------- -------- ---------- ---------- -------- ----------- ----------- ~n lo>;.::-:--i~:r:-.:::!. ~..,,: . .::\' :~ _:.~ . ;1'..Ci ..,.,t. -.;..; -~,~;~ <:.." -'t...:~.;,;/:.~~.:-:. ~,'i>..-:.:,.~~.--'- ?i I I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER 30, 1985 NOTE 6 - CONTRIBUTED CAPITAL The source and additions to contributed capital are as follows: Source Balance Balance 10-1-84 Additions 9-30-85 t!! 266,688 $ 110,182 $ 376,870 ~ 3:)Q.761 338,761 '-11.. ! -J!; 154-903 22,s:063 .4 . ',-. . .".....-...-~ _' __417 ,_74, C> _ .L ... 1.,\ \.. b i.9- ~ ':i 2: ~~~'-9, ?/i2 l-~~, ~uo 1CO,COO 275,000 275,000 918,941 918,941 $2,088,921 $1,184,026 $3,272,947 ---------- ---------- ---------- ---------- ---------- ---------- Connection fees Developers , i Federal gran,t;" ". !..e>caJ Puitotld;c Works -~rant Fe:de,cCl~, "l~'ev:enue::-$ha:tri'Il'gFunds General Fund h~ _, " ", Okeechobee Beach Wa te:::' Association Environmental Protection Agency Grant TOTAL NOTE 7 - REVENUE BOND RESERVE AND RETIREMENT FUNDS The 1972, 1983 Series A and 1983 Series B Water and Sewer Revenue Bond ordinances require, among other things, deposits on a monthly basis, of amounts necessary to provide for semi-annual and annual interest and annual principal requirements. In addition the 1972 Revenue Bond ordinance requires a reserve of $23,400 while the 1983 Revenue Bond ordinance requires a reserve equal to the maximum annual debt service requirement on outstanding bonds, which was $124,750 for the Series A and $21,527 for the Series B at September 30, 1985. At September 30, 1985, the amounts required and the amounts on deposit are as follows: 1983 1983 1972 Series A Series B Revenue Revenue Revenue Bonds Bonds Bonds Total Maximum reserve $23,400 $124,750 $21,527 $169,677 Deposits for bond principal and interest requirements 17,550 53,981 71,531 Balance of construction funds required to be deposited in sinking fund 2,380 2,380 Reserve balance - September 30, 1985 $43,330 $178,731 $21, 527 $243,588 ------- -------- ------- -------- ------- -------- ------- -------- 21 I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 NOTE 7 - REVENUE BOND RESERVE AND RETIREMENT FUNDS (CONTINUED) At September 30, 1985, amounts included in restricted assets (cash and investments) in the accompanying combined balance sheet for these requirements totalled $275,535. NOTE 8 - RENEWAL AND REPLACEMENT FUND 1'he 1983 Reven\.'e Bond ordinance;c""'~e:C!;IU~.~~fJ""'f,;"II\G~~th:!.y u.~1.-:=::;.1t.~ of $1,667 int..c. a .r-encwal auo rerla~tit~fund\;\:1nt-ti::1;[ace!(1JiT'..1la~ed (i...._i,:;.Jf'~~.e tQ_t.~l $10e. 000 ~ Thp. fund m?y be~f-Gr5C9f:.l_:s;,.Qf';~X4:E!ni::;io:us: :;.~;...l(~,..geul;nt?, or adtlitions to, or replacement'"'ef;\eap;-i,)tfc;l~j:r~SSf't::J .-:;;t !:~1~ sewer :::;ystem and emergency repairs. At September 30~'!9J3;., S35.QOO was required to be on deposit. Investments included as restricted assets in the accompanying combined balance sheet for the renewal and replacement fund totalled $27,616 in a certificate of deposit and the balance included in a pooled funds money market account which totalled $161,188. NOTE 9 - PENSION PLANS The City has three pension plans covering substantially all the City's regular employees. Total pension expense for the year was $41,757 including, with respect to the general employes benefit plan, amortization of past service cost over a 33 year period. It is the City's pOlicy to fund pension expense as determined by actuarial valuation. Mandatory employee contributions to the plans are at the rate of 5% of earnings. Accumulated employee contributions totalled $230,840 at September 30, 1985 as follows: General Police Fire $ 144,822 65,643 20,375 $ 230,840 TOTAL --------- --------- The City's contribution by fund for the year ended September 30, 1985 was: General Fund Proprietary Fund $ 22,807 18,950 $ 41,757 TOTAL --------- ---------- 22 . I I I I I :1'"- I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENrS (CONTINUED) SEPTEMBER 30, 1985 NOTE 9 - PENSION PLANS (CONTINUED) At September 30, 1985, the net asset valuation by the autuary included $618 of employer contribution due in the General Employees Pension Fund. The plans covering the City's firefighters and pOlice officers are also funded by the State of Florida from a tax on fire insurance premiums collected. State contributions to these plans totalled $9,566 and $28,795, respectively, during the year end~~ S~~teulb~r 30, 1J) as. ,1! ,;:!~~..,f the aot'.;~~l proi?3~:lt ".:,::..1:~,f;:ac.cti.mulated pl$;;"pene!,l,;;'" :;;'I"~d ;:'1.c:l.l.l r;Jet asc~ts as ;,jf O(;t(',b~')::~.9aS'D.;::..{t-he,."i':,,11\OS~', re~~"!.~ valuation date) is as follows: Principal actuarial assumptions used in the valuation above are summarized as follows: Mortality - The 1951 Group Annuity Mortality Table Projected by Scale C to 1970 (regraduated); females set back 5 years. Interest - 7% per year compounded annually, net of expenses. 23 I I I I I I -I' I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED) SEPTEMBER 30, 1985 NOTE 9 - PENSION PLANS (CONTINUED) Retirement age - 60 for pOlice officers and fire- fighters, 65 for all other employees, immediately if over assumed retirement age. Salary increases - 6% for pOlice and general, 7% for firefighters, until the assumed retirement ag~. OiItd'''-'''~ -',Jdll:...' '!!'!'>"Funding &1iot}-loo mett40d - -- F.""''':"'~n~Ltry age a-:t.lv\.d:::l cc~;t. ,~' NOTE 10 - HOSPICE GRANT The City applied for and received a Community Services Block Grant of $2,813. Hospice of the Treasure Coast-Okeechobee Branch was the subgrantee. The City received the funds and, upon presentation of invoice by Hospice, would disburse the funds thereto accordingly, up to the total amount of grant monies. NOTE 11 - COMMITMENTS AND CONTINGENCIES As of September 30, 1985, the City has been awarded grants totalling $1,000,000 from Farmers Home Administration and $1,339,700 from the Environmental Protection Agency to be used in connection with construction of the City's new wastewater treatment plant. During the current fiscal year, $154,903 was received from the Farmers Home Administration Grant and $918,941 from the Environmental Protection Agency Gran t. In conjunction with the construction of its new wastewater treatment plant, the City has entered into contracts with Widell and Associates, Inc. totalling $3,328,057 for plant construction, Taddie Underground Utility Company, Inc. and M & M Contracting Co., a joint venture for wastewater collection system construction for $1,816,080, and Broome Van Ostran and Associates, Inc. for related engineering services totalling $286,965. 24 I I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA GENERAL FUND SCHEDULE OF REVENUES (BUDGET AND ACTUAL) YEAR ENDED SEPTEMBER 30, 1985 TAXES Ad valorem taxes Franchise fees Utili ty servic~"'".t:g~,Ef~,.;;."< . . ~.: ".~.~;:~~ :>. ~'~;~':""~~" ':::'~~:\~'"~:~t ._ IN'i'ERG()'VE~TAL'REVENUES State shared revenue Cigarette tax State revenue sharing Mobile home licenses 1/2 cent sales tax Alcoholic beverage licenses Gasoline tax refund Local option gasoline tax Shared Revenues from Other Local Uni ts County occupational licenses Dual tax - county 1/2 cent sales tax - county City share of 5th and 6th cent gas tax TOTAL INTERGOVERNMENTAL REVENUES CHARGES FOR SERVICES Sanitation fees Miscellaneous LICENSES AND PERMITS Occupational licenses BUilding permits Competency cards FINES AND FORFEITURES Court fines Police education Code enforcement fines - Budget $ 298,320 171,500 . 213,500 . -61' ~f>. · :> - - - -- ....---.- - 73,000 176,000 1,500 90,000 2,000 1,200 110,00'0 453,700 1,500 3,500 2,150 45,000 52,150 505,850 237,300 1,150 238,450 30,000 21,035 1,500 52,535 19,000 750 50 --n-;800 Actual $309,298 208,614 196,168 '~/14. 080 68,913 176,013 932 104,681 2,210 4,694 131,162 488,605 2,155 9,237 49,855 61,247 549,852 269,972 1,790 271,762 38,484 16,268 1 , 67 8 56,430 25,287 2,805 28,092 SCHEDULE 1 Variance favorable (unfavorable) $ 10,978 37,114 (17,332) 30, 7 ~L (4,087) 13 (568) 14,681 210 3,494 21,162 34,905 655 5,737 (2,150) 4,855 9,097 44,002 32,672 640 33,312 8,484 (4,756) 178 3,895 6,287 2,055 (50 ) 8,292 I I I I I I 1 I I I I I I I I I I I I SCHEDULE 1 (CONTINUED) CITY OF OKEECHOBEE, FLORIDA GENERAL FUND SCHEDULE OF REVENUES (CONTINUED) (BUDGET AND ACTUAL) YEAR ENDED SEPTEMBER 30, 1985 Budget ...~.; .,' ,',;;'Actua.l.. Variance favorable (unfavorable) rut~rest earnings ~:.~-")o"..".oo~. .".,$:;-., ,3.1.,791., ..... ~-_ -.,U::: " ~~"~.r',__ ._,';''.- __ _ _ ~ 4 "': ~.." ~ .L.L:.';;.~ MISCELLANEOUS Hospice Grant (Note 10) Other Sale of assets Rents and royalties Refunds of prior year expenditures TOTAL 2,813 2,813 500 636 136 500 712 212 2,750 2,580 (170) 500 2,832 2,332 4,250 9,573 5,323 $1,524,205 $1,661,580 $137,375 ---------- ---------- -------- ---------- ---------- -------- , I ~ I I I I I I I I I I I I I I I I I I SCHEDULE 2 CITY OF OKEECHOBEE, FLORIDA GENERAL FUND SCHEDULE OF EXPENDITURES (BUDGET AND ACTUAL) YEAR ENDED SEPTEMBER 30, 1985 Budget Variance favorable (unfav2!:....~le ) Actual 'DTJ '-1I,! C SJlFFTY !..c; 'J' "~n~ '";rc .rmen t . -- :::'.;:.!:to'..)n'" 1 a~~vic'p's ~-- Or9~~t~ng ~xpenses Capital outlay ....~ ,~ ~...; :- '- , .....-, '.:._.i!- -- ~ 1!.~~~.~!O ~1,973 .~4'#'9_37 , 83,381 8'1~,4.7 2 1,,9.:09 53,200 49,119 "-.,e,4, '0 8 1. -~--_. 543,491 532,564 $,iC, ;;;;0 177,797 175,344 2,453 55,870 54,556 1,314 27,309 20,586 6,723 260,976 250,486 10,490 43,527 39,337 4,190 8,200 5,628 2,572 1,500 1,500 53,227 44,965 8,262 857,694 828,015 29,679 Fire Control Personal services Operating expenses Capital outlay Protective Inspections Personal services Operating expenses Capital outlay TOTAL PUBLIC SAFETY General Government Legislative Personal services Operating expenses Capital outlay 36,266 30,427 5,839 22,322 30,129 (7 , 807 ) 1,500 1,500 60,088 60,556 (468) 53,311 38,371 14,940 9,590 10,480 (890) 1,500 4,206 (2,706) 64,401 53,057 11,344 105,215 103,509 1,706 37,370 39,740 (2,370) 10,700 4,219 6,481 (60,000) (55,715) (4,285) 93,285 91,753 1,532 Executive Personal services Operating expenses Capital outlay Financial and Administrative Personal services Operating expenses Capital outlay Allocation of administrative charges - I I II I I I I ,,'-"'fGENERAL: :OOVERNMZm i CO:.,,!"!. N....Je.:,) } ':'1'-.. ,-.. compr.ehensi ve Planr.h~~ ., :;;':.."->'<L Personal ser.riceR ~'~"-Operating ex~t::nb~"~ Capi -: ;" 1.. ':;'11 tla:z- I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA GENERAL FUND SCHEDULE OF EXPENDITURES (CONTINUED) (BUDGET AND ACTUAL) YEAR ENDED SEPTEMBER 30, 1985 Judicial Personal services Operating expenses Capital outlay TOTAL GENERAL GOVERNMENT TRANSPORTATION Road and Street Facilities Personal services Operating expenses Capital outlay PHYSICAL ENVIRONMENT Garbage/Solid Waste Control Services Personal services Operating expenses Capi tal ou tlay HUMAN SERVICES Health Personal services Operating expenses Capital outlay - Budget .~ -' 4,985 700 5,685 4,885 700 5,585 229,044 142,357 109,885 127,298 379,540 198,100 198,100 19,425 .-19,425 Actual ".. ., 3,183 3,183 2,972 2,972 211,521 138,784 120,085 46,047 304,916 255,229 255,229 22,238 - SCHEDULE 2 (CONTINUED) Variance favorable (unfavorable) . ~_. i s ,=-- ,',:--,.-"'.,,,,,, 1,802 700 2,502 '''''/;..-,;: 1,913 700 2,611 17,523 3,573 (10,200) 81,251 74,624 (52,129) (57,129) (2,813) "'-22,238 -"... '-'--(2',813) - _______. I I I I I I I I I I I I I I I I I I I - SCHEDULE 2 (CONTINUED) CITY OF OKEECHOBEE, FLORIDA GENERAL FUND SCHEDULE OF EXPENDITURES (CONTINUED) (BUDGET AND ACTUAL) YEAR ENDED SEPTEMBER 30, 1985 _Budget Actual Variance favorable (unfavorable) CULTURE/RECREATION~, Pa~:1cEl and Reerea tion Persona l. se'pv.ie-es Operating expenses~ Capital outlay $ J.' $ 15,000 15,000 INTRAGOVERNMENT SERVICES Public Works Personal services Operating expenses Capital outlay 6,497 6,497 8,503 8,503 TOTAL EXPENDITURES 24,325 23,537 788 2,345 1,752 593 26,670 25,289 1,381 $1,725,473 $1,653,705 $71,768 ---------- ========== ------- ---------- ------- I I I I I I I I I I I I I I I I I I I - CITY OF OKEECHOBEE, FLORIDA PENSION TRUST FUNDS ASSETS Ic~~stm~nts in ~aving8 c~rtificates ~nd mOT.ley mary.;:?!t account.s (at cost, which approxima tes market) Fund balances - Reserved for retirement COMBINING BALANCE SHEET SEPTEMBER 30, 1985 Police officers' retirement fund ~~--1;;;,c -::~-:"'~"'- $ 346,497 --------- --------- $ 346,497 --------- --------- Firemen's retirement fund . .'..................... $126, -,,)3' -------- -------- $126,405 -------- -------- - SCHEDULE 3 General employees' retirement ~--!~nd Total ~~~'~lU3 $974,306 -------- -------- -------- -------- $501,403 $974,306 -------- -------- -------- -------- I I I I I I .-:I,} I I I I , I I I I I I I I SCHEDULE 4 CITY OF OKEECHOBEE, FLORIDA PENSION TRUST FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30, 1985 Police officers' retirement fund Firemen's retirement fund General employees' retirement fund Total REVENUES St~ te ta~ 01:; r, ; :-;-;sJr.a-~cc premiwr.o ~;mp 1 n~ler ' s contributions Employee's contributions Interest earnings $ 28,,95 t': ... 9,566 $ -- "~..\:G,',$!- 38,.3-61 323 41,434 41, 'j ~7 11,806 30,285 70,886 5,988 10,856 26,733 33,498 44,293 119,225 51,292 85,434 216,844 EXPENSES Employees' contribution refunds Retirement benefits paid REVENUES OVER EXPENSES 5,182 2,624 17,210 25,016 19,292 19,292 5,182 2,624 36,502 44,308 65,704 24,109 82,723 172,536 280,793 102,297 418,680 801,770 $346,497 $126,406 $501,403 $974,306 -------- -------- -------- -------- -------- -------- -------- -------- Fund balances, September 30, 1984 Fund balances, September 30, 1985 - I I I I I I "I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA PENSION TRUST FUNDS SCHEDULE 5 COMBINING STATEMENT OF CHANGES IN FINANCIAL POSITION YEAR ENDED SEPTEMBER 30, 1985 ""SOURCES OF WORKING CAPITAL -'P"h';:'O-"" Excess of revenUf'R , ,.", "over "exlSe:ns€.n: USES OF WORKING CAPITAL INCREASE IN WORKING CAPITAL ELEMENTS OF INCREASE (DECREASE) IN WORKING CAPITAL Cash Investments, at cost INCREASE IN WORKING CAPITAL Police officers' retirement fund $65,704 $65,704 ------- ------- $(8,793) 74,497 $65,704 ------- ------- Firemen's retirement fund S24,109 $24,109 ------- ------- $(5,193) 29,306 $24,109 ------- ------- General employees' retirement fund $ 82,723 $ 82,723 -------- -------- $ (21,780) 104,503 $ 82,723 -------- -------- Total \. -. ~.,' $172,536 $172,536 -------- -------- $(35,770) 208,306 $172,536 -------- -------- I I I I I I r1 I I I I I I I I I I I I SCHEDULE 6 CITY OF OKEECHOBEE, FLORIDA SPECIAL REVENUE FUND - FEDERAL REVENUE SHARING STATEMENT OF REVENUES AND EXPENDITURES (BUDGET AND ACTUAL) YEAR ENDED SEPTEMBER 30, 1985 _.F~\ug?t, . Actual Variance favorable (unfavorable) i\.EVENU.e~ :Kevent;,€. ::;hi'u jr.t~tii tiemeIits $ 72,'COC,,~ &:'1,.5~1 ~~ (49) Expenditures 72,000 71,951 (49) OTHER FINANCING USES Operating transfers out 72,000 77,008 (5,008) EXPENDITURES OVER REVENUES $ $(5,057) $(5,057) -------- ------.-- -------- -------- -------- -------- I I I I I I 1 I I I I I I I I I I I I SCHEDULE 7 CITY OF OKEECHOBEE, FLORIDA DEBT SERVICE FUND STATEMENT OF REVENUES AND EXPENDITURES (BUDGET AND ACTUAL) YEAR ENDED SEPTEMBER 30, 1985 Budget Ac t:U21. .......---.- Variance favorable (unfavorable) REVENUES ~ 'v'alorem_'t~'"te~ la tF-:res t il'-::..:.me ~",::"'$ 13,7-10 ....,.,~..:;. ~-- f,::-'~~ .", -....-- ,$ 13,7?7 6,223 ~~q,~ s '.J: ...~, 13-,710, " 6 ~ ..2 ~. ~! _-;,290 EXPENDITURES Bond principal retirements Bond interest expense Professional fees EXPENDITURES OVER REVENUES 20,000 20,000 21,788 21, 7 87 1 500 500 42,288 42,287 1 $(28,578) $(22,287) $6,291 --------- --------- ------ --------- --------- ------ SCHEDULE 8 CITY OF OKEECHOBEE, FLORIDA WATER AND SEWER ENTERPRISE FUND SCHEDULE OF CHANGES IN RESERVE ACCOUNTS YEAR ENDED SEPTEMBER 30, 1985 Total Reserved Renewal and Replace- men t Fund Bond Reserve and Retirement Fund Total Current Maturities ," Maximum Reserve Balance - September 30, 1984 $217,055 $15,000 $202,055 $ 53,905 $148,150 ADDITIONS From Operating Fund Bond principal requirement Bond interest requirement Renewal and replancement requirement Interest earned on investment Transfer to current maturities 45,027 45,027 23,500 21,527 121,688 121,688 121,688 20,000 20,000 26,493 2,291 24,002 9,601 14,401 3,392 (3,392) 213,208 22,491 190,717 158,181 32,536 ~-~~~~:~).:~~ ,_..~.1.._.~ .- - - , . $0:;.. \.,,:..~_'Io,,:. .~~:.:"' ~. ~._,.-.:~ .j~ i~~~i_). '~.",.;J..<')~.. DEDUCTIONS Payments For Bond principal Bond interest Transfer to Revenue Fund 16,000 122,175 135,500 151,675 278,588 2,491 2,491 35,000 16,000 122,175 11,009 149,184 243,588 16,000 122,175 138,175 $ 73,911 11,009 11,009 $169,677 LIABILITIES PAYABLE From Restricted Assets Current portion of bonds payable Accrued iutez.-est -------- -------- -------- -------- '2 6 . .j;,W _~J_O: 3~} _< 15_$. 3TI. ,,26,000 30,337 56,337 ., Balance - September 30, 1985 $222,251 $35,000 $187,251 -------- -------- ------- ------- -------- -------- I 'I I I I I I I I I I I I I I I I I I CITY OF OKEECHOBEE, FLORIDA SUMMARY OF INSURANCE COVERAGE SEPTEMBEER 30, 1985 DESCRIPTION FIRE AND EXTENDED COVERAGE Buildings and contents (90 percent co-insurance" $:;'~"'C cp-ductible) COMPREaIDilSIVE GENERAL l.IA-RILl?Y Bodily injury Prop'erty damage Persona]:."injury li~i:!.l.i.:y LAW ENFORCEMENT LIABILITY Bodily injury, personal injury property damage ($1,000 deductible) Workers' compensation and employer's liability VEHICULAR EQUIPMENT Bodily injury and property damage Uninsured motorist Collision ($250 deductible) Comprehensive ($250 deductible) Scheduled property floater ($250 deductible) PUBLIC OFFICIALS BONDS City clerk Other employees Public official liability ($1,000 deductible) SCHEDULE 9 COVERAGE $1,954,350 !>OO. f;OO 500,000 500,000 1,500,000 Statutory rates 500,000 35,000 ACV ACV 307,897 20,000 20,000 1,500,000 I I I I I I I I I I I I I I I I I I I SCHEDULE 10 CITY OF OKEECHOBEE, FLORIDA SCHEDULE OF ASSESSED VALUES, TAX LEVIES AND RATES - LAST TEN YEARS ASSESSED VALUES REAL PERSONAL PROPERTY PROPERTY YEAR $14,042,767 13,.06(;, o:\2~ '''', :/1:2,102,10;" .,:10,664,660 10,475,123 9,725,167 '8,787, 66 ~ e;527, e':'~ 6,872,990 7,241,590 1985 1984 1983 1.982 1,981 '.980 1979 1978 1977 1976 $59,835,384 57,820,098 54,725,644 57,589.,.,660 ' 57...,036,510 '31 ';'"'2!Z~,;220. 34 , 7 5 6 , 6 9 O'"'~";.,,: 34,065,350 28,053,703 24,370,665 TOTAL HOMESTEAD EXEMPTION $73,878,151 70,880,718 66,827,745 $19,504,959 19,007,098 17,665,060 J.4, is:?. 210 14~061,geo ~.1'J3,43!' 5,034,700 4,905,430 4,702,690 4,585,570 .::~ .~se:- 320 ".'5~J . ~11, cD~ fO;9:,O.9~7 ~3,544,354 42,653,194 34,926,693 31,612,255 1=".......... TAX LEVIES AND APPLICABLE RATES LEVIES RATES DEBT GENERAL DEBT GENERAL SERVICE GOVERNMENT YEAR SERVICE GOVERNMENT MILLS MILLS 1985 $14,008 $314,056 $ .150 $4.251 1984 13,483 307,480 .150 4.338 1983 12,674 261,497 .150 3.913 1982 8,668 291,007 .127 4.250 1981 8,574 286,924 .127 4.250 1980 36,386 335,209 .58 5.500 1979 40,248 179,780 .83 4.137 1978 41,852 168,054 .88 3.940 1977 43,989 157,519 1.11 4.510 1976 35,090 145,732 1.11 4.610 --. --'---~-_.----------~--_.._-----~-- SCHEDUI,E 11 CITY OF OKEECHOBEE, FLORIDA SCHEDULE OF CERTAIN REVENUES AND UTILITY CUSTOMERS LAST TEN YEARS REVENUES - OTHER THAN PROPERTY TAXES - GENERAL FUND State Fire Revenue Depart- Sharing Occupational Utility Fines and Franchise ment Anti-Recessiorl Year (Note) Licenses Taxes Forfeitures Fee Permits Interest Payment Fund Miscellaneous $349,607 $38,484 $196,168 $28,092 $208,614 $16,268 $31,791 $ $ ," 1985 $ 9,573 1984 346,742 42,119 133,768 22,764 185,428 25,508 34,363 31,083 1983 329,260 40,138 118,812 20,493 152,921 14,836 25,091 21,985 . .'" 1982 251,194 32,175 114,551 23,031 154,823 10,493 64,132 43,250 1981-- 257,325 22,228 108,286 13,813 137,759 23,459 69,536 4,240 1980 243,055 20,084 100,857 19, 827 110,587 12,995 61,733 1,671 1979 251,212 20,551 93,107 18,125 93,232 10,856 76,173 2,035 1978 243,923 17,974 92,458 18,317 87,758 7,401 54,990 7,776 25,863 7,076 1977 235,839 18,783 82,858 24,817 72,821 8,349 49,860 35,000 51,084 16,662 1976 243,536 17,491 80,779 46,477 54,324 9,065 43,099 15,000 3,737 .-~.....-.~~........t.-'''~: :~.~ .-, -.....~..-..~-: Connec- tion Inter- Charges Water Water Sewer Delin- est on (in Aid Meters Water Meters Total Un- Sewer Service Water Impact quent Miscel- Invest- of cons- Hydrant in Oper- Meters nonoper- Water Metered Conn- Year Charges ~Jllings.. Fees Charges laneous ments truction Rental ation Cut Off ation Meters Customer ections - - - -.--...-....- 1985 ~t84"075 $g,46...4.25 .$212,787 $20, 671 $ 8,583 $'33,511 ~110,181 $ 7,320 1. ..-' ."':<" .328 3,835 512 .,.;~!~ ~: , 198,4, ':_3~... 993 335,234 29,012 14,'57-3 9,661 ~_1 0" 3 67 ,~O..11:1 _7 : )Jtj,~ ).275 336 . 3.611 462 1983 ~3G;18? 712,251 2-6,775 20,,146 11, 21~i 5~~,S12 25,16~ '27 , .~.00 J.lf!2 ._>_3:70 3,472 462 . . 1982 ~OS, ~;';:J ~~'~~.l~ 272 17,372 22,324 73,181 13,"00 27.::JO -) "'-u -1'30 . ~ ~c~'13 3,272 46:':: _...1.1:;.. 1981 82,359 '569,905 12,228 6,647 70,738 24,525 27,OuO 2,979 222 13 3,214 459 1980 79,453 535,973 9,580 6,732 53,657 15,650 23,280 2,849 272 1 3,122 450 1979 66,844 494,849 9,280 5,557 33,288 23,460 22,440 2,738 286 13 3,037 430 1978 59,724 436,451 9,140 3,658 30,961 19,975 25,000 2,612 236 19 2,867 428 1977 59,506 413,666 10,220 2,838 18,225 13,660 25,000 2,454 281 6 2,741 10 424 1976 49,867 357,349 7,404 47,046 14.289 10,956 25,000 2,394 268 1 2.663 29 423 Note - Includes additional two-cent cigarette tax and 1/2 cent sales tax I I I I I I I I I I I I I I I I I I I The Honorable Mayor and Members of City Council City of Okeecbobee, Florida WE:: are presenting ,f~~.your 'consid:eX;-p.tic.;;.. vtrT "<";;.,i.<,.-..i~~:S ~::1d ,..-cC r.~commendt".tion~ n~ga.~'[ng.the'intei'Italaccountin;; '~'..l!t.rc),: .~,...,_t]i{-' City. These commentfr~recommendatipn:s'carop t.,::, a~:= & t tetJ.tioD during the course of our examination o~ ~be combined f.J.nancia.i.. statements of the City of Okeech,~)8e, Flv~iua (the "City") for the year ended September 30, 1985 which was reported upon on December 4, 1985. As a result of our examination, we became aware of a material weakness in the internal accounting control for the City's general fixed asset group of accounts and property, plant, and equipment of the City's water and sewer fund, which is discussed in Exhibit I. This information should be considered in light of Exhibit III which describes the purpose of our study and evaluation of internal accounting controls as part of our examination, and such information is intended solely for the use of your management in assessing the control environment. The comments and recommendations presented in Exhibit II are intended to improve the system of internal accounting control and are divided into the following major objectives: Protecting Assets Improving Operational Efficiency We would like to take this opportunity to acknowledge the courtesy and assistance extended to us by the personnel of the City during the course of our examination. ;: .;J n / ;J -: '1 /, ) 10.[;f'Vct~;h!~ /~1 ;>';2 t) ~ DiBartolomeo, McBee & Sloan Certified Public Accountants December 4, 1985 I I !I I I I I I I I I I EXHIBIT I ESTABLISHMENT OF FIXED ASSETS CONTROLS The Ci~y has not maintained adequate detailed records in support of the recorded cost of the water and sewer plant in service or the amounts included in the general fixed assets group of accounts and we were unable to obtain sufficient supporting documentation to form an opinion with respect to (a) the stated cost of property items acquired in years prior to October 1, 1981 (b) the accumulated depreciation applicable to the water and sewer utility plant in service at September 30, 1985 or the provision for the year then ended. SC~U:id financial a&ninistration i.n":'saf~X'ding U~~,p. i;i;ii",,:.nlment in:=:Lxed" -='Sf'ets is ()~~most importance in the 'Of steward s; .lip respOll sib i 1 i t: i...: g . """~'e - . "'l::.E!sponsib i 1 it iE:tJ effectively discharged only through . '-adequate fL~eci accounting. co i ..:~ ~ e eAcrr-:.se ....,J.~jJ~~:;,~ C?D. b~ ~tisets By maintaining fixed assets records, the City will realize several benefits: Fixed assets can be inventoried periodically to ensure that they are properly controlled. Responsibility for custody and effective use of fixed assets can be clearly established. Information regarding sources of supply, prices, and useful lives will be readily available. If information regarding maintenance costs is also inCluded in the subsidiary ledgers, ratios of cumulative maintenance costs to original costs can be developed. Records will be readily available to substantiate the amount of grants used to finance expenditures for fixed assets. Furthermore, the determination of costs for building or equipment use is facilitated. The latter is important to obtain reimbursement for the use of buildings and equipment in Federal and State aid programs. Information is insurance needs from insurance. readily available and to substantiate both losses to determine recoverable Information is available for the preparation of a Statement of General Fixed Assets. Establishing fixed assets records when none existed before can be a difficult and time consuming task. One approach is to: I I I I I I i' ,- I I I I I I I I I I I I I EXHIBIT I (CONrINUED) ESTABLISHMENT OF FIXED ASSETS CONTROLS (CONTINUED) 1. Define clearly what constitutes the fixed assets categories, (e.g., land, buildings, improvements other than buildings, equipment) 1 a fixed asset (i.e., minimum dollar value and useful life)1 and the location "control" areas. 2. Plan and perform a complete inventory of all fixed assets. In creating the inventory records, obtain as much of the information to be included in the individual assets records as :is possible, e.g., asset description, location, "J'~ndor or m7J.nufacturer and acquisition date. Fixed asset,.~ .... icl0ntifi'~at.10n tags should he affixed at the t.:lme.'!:Ji~ p.hy~ical in\p,.".nt.ory :is taken.. .., - - ~ ':-,Si::ngn valut!s to each fixed d6setaccording to accept;~9- principles. More specifically, the AICPA Industry Audit Guide, "Audits of State and Local Governmental Units," sets forth the basis for valuing fixed assets of a governmental unit: "Such assets should be recorded at historical cost, or estimated historical cost, if the original cost is not available, or, in the case of gifts or contributions, at the fair market value at the time received." Several procedures can be used to determine the valuation. Reference to the historical records, such as vendors' invoices, contracts, purchase orders, capital expenditure authorizations, cancelled checks, gift acknowledgements, or other documents on hand. Correspondence with vendors, donors, etc. Use of an asset valuation reasonably reflective of historical value, provided it is reliable, if historical or fair market value is not available. Historical cost as reasonably estimated by employees for small items of relatively low value, e.g., tools, office furniture, and equipment. Reliance on independent outside appraisals for assets which cannot be valued by one of the above methods or some other reasonable method. It is important to emphasize, however, that the appraisal should be based upon estimated historical cost, not on replacement cost or some other basis. :f-- . I I I I I I I I I I I I I I I I I I I EXHIBIT I (CONTINUED ) ESTABLISHMENT OF FIXED ASSETS CONTROLS (CONTINUED) Evaluation of fixed assets in the above manner will enable the City to establish reasonably accurate initial fixed asset values. Once initial records are established, the City concurrently implement the kinds of controls enabling it to maintain control over the fixed procedures should include: will want to and procedures assets. These y;€ontz'ol cve:r. the prop(~?: input into the records for all H.'<;'<€.ix-ed'-., ~sbet adG..i.Y'.ic.;n.d, ~ale6. aba:..~donmeIlts~ and transfers. periooJ.-' reconciliations of detail ledgers to the general It:!dger. Periodic inventory of fixed assets by location. Verification that any asset traded in for a new acquisition is properly removed from the records. CUSTOMER DEPOSITS A detail listing of customer deposits in the water and sewer should be generated from the computer at least quarterly. listing should be used to reconcile to the amount shown on general ledger for that account balance. fund This the I I I I I I I I I I I I I I I I I I , EXHIBIT II PROTECTING ASSETS DATA PROCESSING DISASTER PLANNING Attbe present time, the City does not have formal written policies for safeguarding of processed information or alternative sources of equipment support in the event of disaster. We recommend that a comprehensive contingency plan be developed, documented and periodically tested to ensure continued data processing services as needed in the event of a disaster. Consideration should be given to the fOllowing areas: Assumptions. (pctend al c1 isasterr.:;, damage, etc.) 'Disaster recovery' responsibilities. t:e_: ~:?!loOae numbers ai"'U ~~~: Off-site Fto~age of documentation and forms. backup and data systems, Inventory of hardware, software, and forms respective vendors for rebuilding the data center. with Location of off-site storage and access procedures. Application processing priorities, hardware requirements for each and their approximate run times. Procedures for updating the contingency plan. A written agreement would reduce the chance of misunderstanding between parties and thereby help ensure that alternative processing capability is available should a disaster disable the City's computer facility. The contract should cover matters such as: Initial contract duration and renewal provisions. Circumstances constituting an emergency requiring backup. Priority of contract arrangement relative to other similar arrangements. Provision for periodic testing of the backup arrangement. Basis for backup consideration: fixed fee, usage fee, mutual backup agreement or some combination thereof. Specific hardware requirements. Backup site manpower support expected,if any. Operating conditions under disaster and testing conditions: I I I I I I 'I I I I I I I I I I I I , EXHIBIT II (CONTINUED) DATA PROCESSING DISASTER PLANNING (CONTINUED) Hours of operation. Nature (e.g., dedicated proc€ssing) Minimum processing units to be supplied on a daily basis (e.g., four hours CPU). Process to negotiate extension of service. Nonmainframe resource reQui:c;'::'tlent.~. SoftwcH'eenviromnent to' be supp~ ice b~! t.l".e '~aC".,k.up f.~:i.te. Notification '<-"-af 'impending C"~Jc.ngG"" co eithel:' hardware or software at the backup aite. Handling of proprietary information, programs, and data. Special security considerations, if any. IMPROVING OPERATIONAL EFFICIENCY PURCHASE ORDERS The present use of purchase orders is handled in a manner which circumvents the actual purpose of such, purchase orders are prepared after the fact: usually from invoices or other supporting documentation. The purchase orders should be used in a proper and timely manner. CASH DISBURSEMENTS The City currently uses manual checks to pay some vendors' invoices rather than process them through its accounts payable system. When manual checks are employed to pay invoices, care should be taken to ensure that any outstanding purchase order is removed from encumbrances. To alleviate problems which may occur by the use of manual checks and the failure to properly relieve encumbrances, the City should consider increasing the frequency of payment of accounts payable; whereby all checks could be computer generated. This should also be done for all funds. DATA PROCESSING SYSTEM INTEGRATION The City's utility and payroll software applications operate independently from the City's general ledger software application I I I I I I I I I I I I I I I I I , I EXHIBIT II (CONTINUED) DATA PROCESSING SYSTEM INTEGRATION (CONTINUED) necessitating manual accv.mulation of utility billings, adjustments and collections, and payroll information for posting to the general ledger accounts. The City should consider having the necessary software modifications to fully integrate its utility and payroll programs with the general ledger. Integration of the various applications should reduce time in accumulating financial information and decrease the likelihood of error in recording information. lli~PLOYEE INSURANCE 'l'he insi;.rance b~) 1 i~;.;jior employee insurfi-!:.-.;E: L:OVc.i-'c~;;(' shvu 1.d t.)~ reconciled on a more timely-basis 'to a'.low !.\",:- ;:..dj ustmentf'. VACATION ACCRUAL During the fiscal year various employees vaction accrual exceeded the maximum allowed for carryover. City policy should encourage all employees to use their vaction time annually. This practice allows for another employee to perform that job duty and is also encouraged for basic internal operating control for the City. BUDGET PREPARATION In the preparation of its annual budgets for the various operating funds, the City currently follows the practice of relying on cash surpluses to fund projected shortfalls between budgeted revenues and expenditures. As an example, for the years 1981 through 1985 available cash at the beginning of the City's budget year and actual results for the general fund are summarized below: 1981: Beginning cash balances Excess of expenditures over revenues at year end $ 569,396 29,380 1982: Beginning cash balances Excess of expenditures over revenues at year end 506,213 167,866 I I I I I I I I I I I I I I I I I I I EXHIBIT II (CONTINUED) BUDGET PREPARATION (CONTINUED) 1983: Beginning cash balances Excess of expenditures over revenues at year end 391,177 62,485 1984: Beginning cash balance Excess of revenues over expenditures at year end 300,616 15,497 1985: Beginning cash balance ~~xceElS 0f .l"".,jenues over 0xpendit.,;.res ;;<t .:;'~a.Z""-eend 335,925 84,883 With the continued growth of the community and increased demands for city services coupled with construction of a new wastewater facility, the City should explore all possibilities for additional revenue sources and continue in its cost conscious efforts to maximize services at the least cost to the City and its taxpayers. The implementation of changes recommended in this letter can be facilitated if management and Council: Consider and establish priorities for implementing the changes. Develop an overall plan and method of implementation that reflects the priorities. Assign the responsibility for carrying out each change to a specific individual. Establish time-frames for implementation of each change. Schedule progress reports from the responsible City officials and conduct progress meetings to further discuss progress and to resolve problems that arise. I I I I I I .1 I I I I I I I I I I I I EXHIBIT III INTERNAL CONTROL As part of an examination of financial statements, we perform study and evaluation of an entity's system of internal accQunting control to the extent we consider necessary to evaluate the system as required by generally accepted auditing standards. The purpose of our study and evaluation is to determine the nature, timing and extent of the auditing procedures necessary for expressing an opinion on an entity's financial statements. Our study and evaluation is more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole. 'T::>~ (" ;.t.: (s m?nagen.ent is resi/msible for ..e$tabli~hing; aIl~ ,"i::.~iD'-~.i.,?~.'::.~ ":""",a system of. ;Dter~~aJ acC")ugt-ing control.. In "':1'1..f.1-L:;_':~Y t~i.:; r'~sponsP'j:ity, e~timatef3 artd<::,~judgmeIlt'6. .maq"e",;by .ulClnagement are required LO aStiess the expectedbene.fitsand related costs of control procedures. The objectives of a :-"y~t",;ii' are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transaction are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any system of internal accounting control, errors or irrgularities may nevertheless occur and not be detected. Also, projection of any evaluation of the system to future periods, is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. A study and evaluation made for the limited purpose describe above would not necessarily disclose all material weaknesses in the system. Accordingly, an expression of an opinion on the system of internal accounting control taken as a whole cannot be made.