Year ended 2010 - City of Frostproof

Transcription

CITY OF FROSTPROOF FLORIDA
ANNUAL FINANCIAL REPORT
For the Year Ended September 30 2010
City of Frostproof Florida
TABLE OF CONTENTS
Page No
INTRODUCTORY SECTION
A1
List of Principal Officials
FINANCIAL SECTION
Independent Auditors Report
B1
Management Discussion and Analysis Required
s
Supplementary Information
C1
Basic Financial Statements
Governmentwide Financial Statements
Statement of Net Assets
D1
Statement of Activities
D2
Fund Financial Statements
Balance Sheet
D3
Governmental Funds
Reconciliation of the Governmental Funds Balance Sheet to the Statement
D4
of Net Assets
Statement of Revenues Expenditures and Changes in Fund Balances
D5
Governmental Funds
Reconciliation of the Statement of Revenues Expenditures and Changes in
Fund Balances of the Governmental Funds to the Statement of Activities
D6
D7
Proprietary Funds
Statement of Revenues Expenses and Changes in Fund Net Assets
Proprietary Funds
D8
Statement of Cash Flows
D9
Proprietary Funds
Statement of Fiduciary Net Assets
Fiduciary Funds
Statement of Changes in Fiduciary Net Assets
Fiduciary Funds
D 11
D 12
E1
Notes to Financial Statements
Required Supplementary Information
Budgetary Comparison Schedule
General Fund
F1
Pension Trust Funds
Schedule of Funding Progress and Schedule
of Contributions from Employers and Other Contributing Entities
Other Postemployment Benefits Schedule of Funding Progress and
Schedule of Contributions from Employers
Notes to Required Supplementary Infonnation
F2
F3
F4
TABLE OF CONTENTS Cont
d
FINANCIAL SECTION Cont
d
fie No
Other Supplementary Information
Combining Statements NonMajor Governmental Funds
Combining Balance Sheet
Combining Statement of Revenues Expenditures and Changes in Fund Balances
Combining Statements Fiduciary Funds
Combining Statement of Fiduciary Net Assets
Combining Statement of Changes in Fiduciary Net Assets
G1
G2
G3
G4
COMPLIANCE SECTION
Compliance Information
Independent Auditors Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards
H1
Independent Auditors Report on Compliance with Requirements That Could
Have a Direct and Material Effect on Each Major Federal Program and
State Project and on Internal Control Over Compliance in Accordance with
OMB Circular A133 and Chapter 10
550 Rules of the Auditor General
H3
Schedule of Expenditures of Federal Awards and State Financial Assistance
Projects
H5
Notes to Schedule of Expenditures of Federal Awards and State Financial
H6
Assistance Projects
Schedule of Findings and Questioned Costs
Projects
Federal Awards and State
H7
Independent Auditors Management Letter
H8
City of Frostproof s Explanation to Auditors Management Letter
H12
INTRODUCTORY SECTION
LIST OF PRINCIPAL OFFICIALS
September 30 2010
Name
Title
Maw
City Council
Kay S Hutzehnan
Council Members
Anne W Dickinson
Diana Webster Biehl
Ralph C Waters
J Wesley Wise
City Manager
Tenny R Croley
City Attorney
Brian W Haas
City Engineer
Steven A Dutch
Jennifer Codo Salisbury
City Planner
Melody S Walsh
Finance Manager
City Clerk
Sarah J Adelt
Fire Chief
William W Lord
Building Official
Clifton Smith
Library Director
Melissa D Hadden
James R Keene
Public Works Director
Sharon A Bass
Utility Manager
A1
FINANCIAL SECTION
Turner A Wiggins C
A
P
Donald J Smit C
A
P
Pamela M Burby C
A
P
John S Reineke C
A
P
INDEPENDENT AUDITORS REPORT
Honorable Mayor and Members of the City Council
We have audited the accompanying financial statements of the governmental activities the businesstype
activities each major fund and the aggregate remaining fund information of the City of Frostproof Florida
s basic
the City as of and for the year ended September 30 2010 which collectively comprise the City
financial statements as listed in the table of contents These financial statements are the responsibility of
the City
s management Our responsibility is to express opinions on these financial statements based on
our audit
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement
An audit includes examining on a test basis evidence supporting the amounts and
disclosures in the financial statements An audit also includes assessing the accounting principles used and
the significant estimates made by management as well as evaluating the overall financial statement
presentation We believe that our audit provides a reasonable basis for our opinions
In our opinion the financial statements referred to above present fairly in all material respects the
respective financial position of the governmental activities the businesstype activities each major fund
and the aggregate remaining fund information of the City as of September 30 2010 and the respective
changes in financial position and cash flows where applicable thereof for the year then ended in
conformity with accounting principles generally accepted in the United States of America
In accordance with Government Auditing Standards we have also issued our report dated March 1 2011
on our consideration of the City
s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws regulations contracts and grant agreements and other matters
The purpose of that report is to describe the scope of our testing of internal control over financial reporting
and compliance and the results of that testing and not to provide an opinion on the internal control over
financial reporting or on compliance That report is an integral part of an audit performed in accordance
with Government Auditing Standards and should be considered in assessing the results of our audit
Accounting principles generally accepted in the United States of America require that the management
s
discussion and analysis and the required supplementary information as listed in the table of contents be
presented to supplement the basic financial statements Such information although not a part of the basic
financial statements is required by the Governmental Accounting Standards Board who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate
operational economic or historical context We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States
of America which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with management
s responses to our inquiries the basic
financial statements and other knowledge we obtained during our audit of the basic financial statements
We do not express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or provide any assurance
B
30 Fourth Street S
W Winter Haven Florida 33880
863 2998084
1
42729 U
S Highway 27 Davenport Florida 33837
cpa winterhaven
www
com
863 353 0001
City of Frostproof
Page Two
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City
s financial statements as a whole The introductory and the other supplementary
information sections are presented for purposes of additional analysis and are not a required part of the
fmancial statements The accompanying schedule of expenditures of federal awards and state financial
assistance projects is presented for purposes of additional analysis as required by U
S Office of
Management and Budget Circular A133 Audits of States Local Governments and Non Profit
Organizations and Chapter 10
550 Rules of the Auditor General and is also not a required part of the
financial statements The other supplementary information section and the Schedules of Expenditures of
Federal Awards and State Financial Assistance are the responsibilty of management and were derived from
and relate directly to the underlying accounting and other records used to prepare the financial statements
The information has been subjected to the auditing procedures applied in the audit of the financial
statements and certain additional procedures including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the financial statements or to the
financial statements themselves and other additional procedures in accordance with auditing standards
generally accepted in the United States of America In our opinion the information is fairly stated in all
material respects in relation to the financial statements as a whole
kr4y
O
I uRPn m ek
sn
ee
npa n
1
March 1 2011
Winter Haven Florida
7
S DISCUSSION
MANAGEMENT
ANALYSIS
S DISCUSSION AND ANALYSIS
MANAGEMENT
September 30 2010
The Management
s Discussion and Analysis section provides an overview of the City of Frostproof
s
s financial performance for the fiscal year ended September 30 2010 Please consider this
City
information presented here in conjunction with the City
s financial statements which follow this section
FINANCIAL HIGHLIGHTS
The assets of the City exceeded its liabilities at September 30 2010 by 17
400 net assets
723
Of this amount 084
697 unrestricted net assets may be used to meet the City
3
s ongoing
obligations to citizens and creditors
The City
s total net assets increased this year by 692
843 or 11
1
61 percent
The City
s governmental activities reported ending net assets of 515
107 an increase of
9
053 for the year
107
The City
s business type activities reported ending net assets of 885
615 an increase of
8
736 This increase is largely due a capital grant received this year
1
639
The City
s total debt at the end of the year showed a net increase of 733
837 This increase is
attributable to loan proceeds used in the construction of the wastewater Phase II and IIIa projects
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis serves as an introduction to the City of Frostproof
s basic financial
statements which are comprised of three components 1 government wide financial statements 2 fund
financial statements and 3 notes to the financial statements This report also contains other
supplementary information in addition to the basic financial statements The nature of the three
components of the basic financial statements is described as follows
Reporting the City as a Whole
Governmentwide Financial Statements
The governmentwide financial statements consist of two financial statements that address the financial
position and results of operations of the City taken as a whole These two financial statements are the
Statement of Net Assets and the Statement of Activities
These statements include all assets and
liabilities using the full accrual basis of accounting which is similar to the accounting used by most
private sector companies All of the current year
s revenues and expenses are recorded regardless of
when cash is received or paid
The Statement of Net Assets presents information on all of the City
s assets and liabilities with the
difference between the two reported as net assets Over time increases or decreases in net assets may
serve as a useful indicator of whether the financial position of the City is improving or deteriorating
The Statement of Activities presents total revenues and total expenses of the City with the difference
between the two equaling the increase or decrease in net assets during the year
C
1
MANAGEMENT
September 30 2010
Governmentwide Financial Statements Cont
d
The information in each of these two statements presents the activity of the City as governmental
activities or business type activities
Governmental activities This category of the government wide financial statements represents
those activities provided by the City not financed by the imposition of a user fee assessed
directly and exclusively against the users of those activities These activities of the City include
general government public safety transportation streets culture library City Hall auditorium
etc and community affairs recreations and parks Property taxes franchise and utility taxes
and intergovernmental revenues finance most of these activities
Businesstype activities This category of the governmentwide financial statements includes
those activities which the City charges a fee to customers to cover all or most of the cost of the
services the City provides These business type activities consist of water wastewater treatment
sanitation and storm water services
The government wide financial statements include only the City of Frostproof There are no component
units
Reporting the City
s Most Significant Funds
This is the second section of the basic financial statements These statements present information that
centers on individual funds A fund is a grouping of related accounts that provides control over the
resources that are segregated for specific activities or objectives The City also uses fund accounting to
ensure and demonstrate compliance with financerelated legal requirements All the funds of the City are
divided into three categories governmental proprietary and fiduciary
Governmental funds account for essentially the same functions reported as
governmental activities in the government wide financial statements However unlike the government
wide financial statements governmental fund financial statements focus on nearterm inflows and
outflows of spendable resources
Governmental funds
The reason for this different accounting approach is that the activities in these funds are not financed from
a direct user fee As a result there is no emphasis placed on measuring annual net profit or loss resulting
from those operations Instead the accounting for these funds focuses on whether there will be enough
cash flow available in a given year to finance the costs of providing services The emphasis is more
focused on activities occurring within a one year budget period rather than the longterm
Reconciliation schedules within these fund financial statements provide the differences between the
modified accrual basis of accounting used in these governmental fund financial statements and the full
accrual basis of accounting used in the governmentwide financial statements
C 2
MANAGEMENT
September 30 2010
Fund Financial Statements Governmental funds Cont
d
The City has one major governmental fund referred to as the General Fund The General Fund accounts
for the activities of a variety of different programs that are not financed from direct user charges As a
major fund the General Fund is accounted for in a separate column on the governmental fund financial
statements All of the other governmental funds of the City are reported collectively as nonmajor funds
This column
and consolidate into a single column of information titled other governmental funds
represents the activity of the City
s special revenue funds which are segregated from the General Fund
due to legal requirements regulatory provisions or administrative action
The City adopts an annual appropriated budget for its General Fund A budgetary comparison schedule is
provided to demonstrate compliance with the budget
The governmental fund financial statements are immediately following the governmentwide financial
statements The budgetary comparison schedule for the General Fund is outside of the basic financial
statements in a section of this report titled required supplementary information
Proprietary funds are those funds classified as businesstype activities in the
Proprietary funds
governmentwide financial statements The basis of accounting used within these statements is the same
full accrual method used in the private sector where the intent is that the costs of providing goods and
services are financed primarily through user charges There is no difference between the basis of
accounting used in the governmentwide statements and the proprietary fund financial statements
The City has only one proprietary fund the Enterprise Fund This fund appears in the only column in the
proprietary funds financial statements
Fiduciary funds Fiduciary funds account for the activities of the City
s pension trust funds These
activities benefit parties outside the City such as retired City employees Fiduciary funds are not reflected
in the governmentwide financial statements because the resources of these funds are not available to
support the City
s own programs The accounting basis used for fiduciary funds is similar to that used for
proprietary fiends
Notes to the Financial Statements
The notes to the financial statements comprise the third section of the basic financial statements The
notes provide additional information that is essential to a full understanding of the data provided in the
government wide and fund financial statements
Other Information
In addition to the three components included in the basic financial statements this annual financial report
also includes supplementary information described as follows
Required supplementary information
This section of the report includes the following
additional information 1 schedules that compare the annual operating budgets adopted by the City for
the major governmental funds to the actual revenues and expenditures reported for the year and 2 trend
information regarding the performance of the City
s pensions trust funds and the City
s obligation for
other postemployment benefits
C 3
MANAGEMENT
September 30 2010
Other Information Cont
d
Combining statements This section of the report includes detailed financial information for
each of the various funds of the City that were aggregated into consolidated columns within the
fund financial statements
GOVERNMENT WIDE FINANCIAL ANALYSIS
Net assets may serve as a useful indicator over time of a government
s
financial position In the current year the City
s combined net assets as of September 30 2010 were
400 The City
723
17
s combined revenues including contributions grants taxes and charges for
services were 414
327 Total expenses citywide were 722
6
483 The increase to citywide net
4
assets was 692
843 The following schedule is the condensed Statement of Net Assets for the current
1
and the prior years For more detailed information see the Statement of Net Assets on page D1
Statement of Net Assets Summary
Governmental Activities
2010
2009
Total
Business tvne Activities
2010
2009
2010
2009
570
5
956
Current and other assets
934
3
063
138
4
737
753
1
958
432
1
219
688
5
021
Capital assets
068
2
5
77
211
9
131
315
9
4
90
129
9
052
12
131
746
089
500
14
10
438
785
657
217
12
199
023
18
753
775
15
220
711
23
709
346
21
Current liabilities
156
74
152
101
136
466
180
654
292
540
332
755
Non current liabilities
460
29
438
27
418
5
068
684
4
231
616
103
590
128
884
5
204
338
5
411
528
4
5
47
987
5
820
669
7
4
11
467
5
001
068
2
5
77
200
745
315
9
4
90
096
1
105
547
4
7
65
501
538
299
2
6
78
673
512
12
615
742
283
1
701
614
268
11
Restricted
Unrestricted
085
3
247
914
2
042
837
611
274
88
697
3
084
002
3
316
9
9 000 462
615
8
885
6 879 246
400
723
17
708
879
15
Total assets
Total liabilities
Net Assets
Invested in capital assets
net of related debt
Total net assets
608
1
778
reflects its
Net Assets Invested in Capital Assets The largest portion of the City
s net assets 71
9
investments in capital assets e
g land buildings equipment and infrastructure less any debt used to
acquire those assets that is still outstanding The City uses these capital assets to provide services to
citizens consequently these assets are not available for future spending Although the City
s investment
in its capital assets is reported net of related debt it should be noted that the resources needed to repay
this debt must be provided from other sources since the capital assets themselves cannot be used to
liquidate these liabilities
Net Assets Restricted Restricted net assets representing 7
2 of total net assets are subject to external
restrictions on how they may be used
Net Assets Unrestricted Unrestricted net assets comprise 20
9 of total net assets and may be used to
meet the City
s ongoing obligations to citizens and creditors
As of September 30 2010 the City is able to report positive balances in all three categories of net assets
for the City as a whole
C 4
MANAGEMENT
September 30 2010
Statement of Activities
Revenues and expenses are presented in the following table which reflects the
condensed Statement of Activities for the current and the prior years For more detailed information see
the Statement of Activities on page D2
Statement of Activities Summary
2010
Revenues
Program revenues
Charges for services
Operating grantscontrib
Capital grantscontrib
2009
051
367
239
893
375
189
506
349
244
321
258
165
374
0
1
64
372
694
976
742
479
617
122
230
237
635
550
7
Total
Businesstype Activities
2010
2009
2010
2009
601
1
003
535
1
794
968
1
054
894
1
981
2
1
44
338
2
557
239
893
084
2
356
300
8
1
85
465
246
503
2
815
374
0
1
64
372
694
976
742
479
617
122
230
237
635
807
24
598
42
863
60
General revenues
Property taxes
Franchise and utility taxes
Intergovernmental
revenues unrestricted
Impact fees
Investment earnings
unrestricted
Other revenues
Total revenues
Expenses
General government
Public safety
Transportation
Culture
Community affairs
629
40
294
52
257
17
969
1
569
8
645
3
645
3
829
2
461
650
2
785
991
553
039
0
1
38
639
425
757
254
102
108
562
380
103
811
403
464
803
216
081
100
497
3
953
902
3
321
327
6
414
553
6
106
991
553
039
0
1
38
639
425
757
254
102
108
562
380
103
811
403
464
803
216
081
100
581
6
1
89
635
363
059
1
1
01
474
386
Water and
581
6
1
89
635
363
wastewater treatment
Sanitation
978
49
603
49
978
49
603
49
380
2
528
154
2
770
103
2
194
537
1
136
483
4
722
691
3
906
933
448
015
496
394
1
759
365
2
185
843
1
692
861
2
200
843
1
692
861
2
200
508
018
13
15 8
708
Stormwater
Total expenses
059
1
1
01
474
386
Change in Net Assets
Before Transfers
Change in Net Assets
Net assets
Net assets
880
341
880
341
Transfers
Beginning
Ending
053
107
015
496
736
1
639
365
2
185
000
9
462
504
8
447
879
6
246
514
4
061
708
879
15
9
9 000 462
615
8
885
879
6
246
400
723
17
This decrease is largely due to
Revenues The City
s total revenues decreased by 225
692 or 3
44
decreases in operating and capital grants which will vary from year to year depending on City projects
Sewer line hookups to residents
Expenses The City
s total expenses increased by 791
816 or 21
4
homes septic tank abandonments and grant expenses account for 535
960 of this increase Also the
s contract to the Polk County Sheriff
City
s Office increased 161
572 this year
C 5
MANAGEMENT
September 30 2010
The following pie chart illustrates revenues of governmental revenues by source for the year ended
September 30 2010 Taxes which include property franchise and utility taxes comprise 63 of the
s governmental revenues and increased 164
City
525 over the prior year
Governmental Revenues by Source
Taxes
63
Intergovernmental
8
Investment
yams ac
other
income
Contributions
13
15
The following pie chart illustrates governmental expenses for the year ended September 30 2010 Public
safety is the largest activity and comprises 43 of the City
s governmental expenses This department
increased by 226
936 from the prior year
Governmental Expenses
General government
23
Community affair
5
Culture
Public safety
11
43
Transportation
18
C
6
MANAGEMENT
September 30 2010
The following pie chart illustrates businesstype revenues by source for the year ended September 30
2010 Grants and contributions comprise 54 of the City
s business type revenues The City received
894 from the Florida Department of Environmental Protection Agency this year for construction
1
981
of Phase II of the wastewater system
BusinessType Revenues by Source
46
Capital grants
contribution
54
The following pie chart illustrates business type expenses for the year ended September 30 2010 The
water and wastewater system accounts for 81 of the City
s business type expenses
BusinessType Expenses
Sanitatior
17
Water
Stormwater
wastewater
81
2
C 7
MANAGEMENT
September 30 2010
FINANCIAL ANALYSIS OF THE CITY
S FUNDS
As noted earlier the City of Frostproof uses fund accounting to segregate the transactions of the City into
specific types of operations
Governmental Funds
The fund financial statements for the governmental funds are provided on pages
D 3 to D6 of this report The focus of the City
s governmental funds is to provide information on near
term inflows outflows and balances of spendable resources Such information is useful in assessing the
s financing requirements In particular unreserved fund balances may serve as a useful measure of a
City
s net resources available for spending at the end of the fiscal year
government
The City maintains one separate governmental fund classified as a major fundthe General Fund Three
other funds are reported collectively as nonmajor funds The General Fund is the chief operating fund of
the City It is used to account for all financial resources except those required to be accounted for in
another fund
At the end of the year the unreserved fund balance of the General Fund increased by 728
138 to
814 while total fund balance decreased by 208
2
745
064 to 318
695 Both of these changes are
3
largely attributable to the elimination of the General Fund
s advance to the Enterprise Fund by repayment
by the Enterprise Fund and an operating transfer by the General Fund to the Enterprise Fund
Proprietary Funds
The City
s proprietary fund the Enterprise Fund provides the same type of
information found in the governmentwide financial statements but in more detail
The fund financial statements for the proprietary fund are provided on pages D7 to D10 of this report
Fiduciary Funds The City uses fiduciary funds to report assets held in a trustee or agency capacity that
are therefore not available to support City programs General and Police Pension Trust Funds are
presented in the fiduciary fund financial statements on pages D11 to D12 of this report
BUDGETARY HIGHLIGHTS
The General Fund
s budgetary comparison schedule is presented in this report on page F 1 The City
revised its original budget on November 15 2010 to reflect additional revenues and changes in
expenditures due primarily to salary allocations of some employees and a reduction in expected
transportation and capital outlay expenditures
The General Fund slightly exceeded its budget appropriations in the public safety department but total
expenditures were less than the total amount budgeted
C 8
MANAGEMENT
September 30 2010
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
The City
s investment in capital assets for its governmental and business type activities as of September
30 2010 amounts to 18
199 net of accumulated depreciation This investment in capital assets
023
includes land buildings improvements vehicles equipment furnishings water and wastewater treatment
system and stormwater system This amount represents a net increase of 446
247 or 14
2
2 over last
year
The following table provides a comparative summary of net capital assets by category for both
governmental and businesstype activities
Capital Assets
Net of Depreciation
Governmental
Businesstype
Activities
2010
Land
167
836
962
2
956
Buildings
Intangible assets
Activities
2009
2010
167
836
061
3
653
371
69
371
69
300
105
216
937
300
105
216
937
843
262
635
278
725
451
11
563
6
6
16
914
537
Idle assets
Improvements other than
buildings
Machinery and equipment
Infrastructure
943
181
341
764
754
438
990
083
210
733
533
37
Water and sewer system
Stormwater system
Construction in progress
Total net assets
957
534
5 277 068
Total
2009
4 990 315
2010
2009
237
207
962
2
956
300
105
937
216
207
237
653
0
3
61
300
105
937
216
181
943
184
0
1
27
754
438
725
451
11
957
534
083
990
845
0
1
11
533
37
616
6
563
914
537
960
2
718
15
753
775
998
104
960
2
718
998
104
131
746
12
10 785 438
S 18
021199
With the implementation of GASB Statement No 34 the City began capitalizing infrastructure assets
prospectively and elected not to retroactively capitalize these assets
Major capital asset events during the current fiscal year included the following
Construction of sewer lines and sewer laterals
Citywide paving project
Chlorine analyzer auto dialer at wells 1 and 5 sodium hypochlorite
system at north and south water plants
Automated license plate reader
Two 2010 Ford trucks
Dash mounted mobile radios
The City has entered into a commitment for engineering services related to Phase IIlb the expansion of
the wastewater treatment facility These engineering fees amount to 200
000 in total with 104
998
expended in the current year and 95
002 to be expended next year
Additional information on the City
s capital assets can be found in Note 3 B on pages E13 to E14 of this
report
C 9
MANAGEMENT
September 30 2010
Debt Administration
At the end of the current fiscal year the City had total debt outstanding in the amount of 068
418 in
5
bonds and loans payable
outstanding debt
The table below provides a comparative summary of the City
s
Outstanding Debt
Governmental
Business type
Activities
2010
Activities
2009
2010
Revenue bonds payable net
Loans payable
Total debt
S
I
Total
2009
2010
2009
755
1
599
799
1
074
755
1
599
799
1
074
662
3
469
885
2
157
662
3
469
885
2
157
684
4
231
5
684
4
231
418
k1
Loan proceeds totaled 958
962 and debt retired in the current year totaled 225
125
Additional information on the City
s debt can be found in Notes 3 E and 3 F on pages E16 to E18 of
this report
ECONOMIC FACTORS AND NEXT YEAR
S BUDGETS AND RATES
The City Council passed Resolution 2008 30 Review and Adjustment of Water Rates which establishes
that water service rates shall be reviewed annually and adjusted in accordance with the Consumer Price
Index CPI as necessary to maintain compliance with state and federal regulatory requirements The
water and wastewater rate increase for 2010
2011 will be 0
56 according to the Consumer Price Index
The City is in the fourth year of a five year contract with the Polk County Sheriff
s Office to provide law
enforcement services which has resulted in a reduction in expenses This contract is saving the City over
5M during the five year contract
1
Construction for Phase II and Phase IIIa wastewater project began in March 2009 and is now complete
creating a revenue base for an additional 295 customers Community Budget Issue Request CBIR and
State Revolving Funds SRF funds were used for this project The City is currently beginning Phase
IIIb expansion of the wastewater treatment plant using additional CBIR funds
The City
s elected officials approved the budget for fiscal year 10 11 on September 27 2010
CONTACTING THE CITY
S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens taxpayers customers investors and creditors
with a general overview of the City
s finances and to demonstrate the City
s accountability for the money
it receives If you have any questions about this report or need additional financial information please
contact the City
s Finance Manager at the Frostproof City Hall 111 West First Street Frostproof Florida
C
10
BASIC FINANCIAL STATEMENTS
STATEMENT OF NET ASSETS
September 30 2010
Governmental
Business type
Activities
Activities
Total
ASSETS
159
275
655
7
2
92
536
369
352
135
860
168
601
431
485
137
137
19
135
352
023
60
110
652
230
6
346
1
633
485
137
997
187
836
167
232
1
5
09
606
496
12
525
249
442
664
17
757
358
211
9
131
089
500
14
220
711
23
30
347
993
17
386
033
172
17
416
380
165
35
44
496
435
18
44
496
435
18
816
25
496
5
2
17
536
369
Cash and cash equivalents
Investments
Receivables current
Customer accounts net
60
023
716
66
230
6
202
745
Franchise and utility service taxes
Intergovernmental
Notes receivable
Restricted cash and cash equivalents
Deferred debt expense net
Net pension asset
advance contributions
Capital assets
Nondepreciable
Depreciable net
Total assets
394
585
LIABILITIES
Accounts payable
Accrued wages and vacation
Liabilities payable from restricted assets
Customer deposits
Interest payable
816
25
Deferred revenue
Noncurrent liabilities
Total liabilities
436
231
976
201
092
2
5
16
216
5
092
616
103
884
5
204
987
5
820
277
5
068
465
7
547
615
742
12
134
255
255
134
791
6
641
469
940
96
085
3
247
367
283
836
924
837
611
940
96
084
6
3
97
107
9
515
615
8
885
400
723
17
460
29
Due within one year
Due in more than one year
NET ASSETS
Invested in capital assets
net of related debt
Restricted for
Debt service
791
6
Public safety
Capital improvements
Other purposes
Unrestricted
Total net assets
The notes to the financial statements are an integral part of this statement
D 1
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BALANCESHEET
GOVERNMENTAL FUNDS
September 30 2010
General Fund
Other
Total
Governmental
Governmental
Funds
Funds
ASSETS
Investments
249
4
2
82
536
369
Receivables current
Franchise and utility service taxes
Intergovernmental
247
35
66
716
230
6
313
43
60
023
716
66
230
6
313
43
202
745
202
745
023
60
Notes receivable
Advances to other funds
496
5
2
17
536
369
Restricted assets
Total assets
773
3
269
247
35
808
3
516
30
202
993
17
145
347
30
313
43
993
17
43
313
756
29
458
43
409
121
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable
Accrued wages
Advances from other funds
Deferred revenue
756
29
Total liabilities
951
77
Fund Balances
Reserved For
Cultural activities
Advances to other funds
Public safety
Hurricane damages
Transportation improvements
941
96
43
313
791
6
603
58
001
83
865
499
941
96
43
313
791
6
603
58
001
83
865
499
10
295
764
81
10
295
764
81
Unreserved
Designated
Public safety
Undesignated
General Fund
814
2
745
814
2
745
211
8
Special Revenue Funds
Total fund balances deficit
695
3
318
211
8
Total liabilities and fund balances
773
3
269
247
35
D 3
211
8
687
3
107
808
3
516
RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
September 30 2010
Fund Balances
687
3
107
Total Governmental Funds
Amounts reported for governmental activities in the Statement of Net Assets
are different because
Capital assets used in governmental activities are not current financial resources
and therefore are not reported in the governmental funds balance sheet
277
5
068
Other longterm assets are not available to pay for current period expenditures and
therefore are deferred in the funds
Revenues collected more than 30 days from year end
Net pension obligation overfunded and advance contributions
940
3
168
860
Certain longterm liabilities including leases payable are not due and payable in the
current period and therefore are not reported as liabilities in the governmental funds
Longterm liabilities at yearend consist of
460
29
Accrued compensated absences
107
9
515
Net assets of governmental activities
D 4
STATEMENT OF REVENUES EXPENDITURES
AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
General Fund
Other
Total
Governmental
Governmental
Funds
Funds
REVENUES
Taxes
374
0
1
64
372
694
Property
179
46
582
135
419
290
331
3
544
40
237
15
Licenses and permits
Intergovernmental
Fines and forfeitures
Investment income
Other
Total revenues
736
2
591
704
21
374
0
1
64
372
694
179
46
135
582
123
312
255
76
331
3
40
629
492
91
044
98
834
2
635
85
EXPENDITURES
Current
575
16
487
657
499
942
343
384
071
185
398
52
020
603
602
2
775
213
52
654
2
988
816
133
831
45
647
179
Community affairs
Capital outlay
487
657
682
937
343
384
250
154
398
52
445
586
Total expenditures
General government
Public safety
Transportation
Culture
817
4
821
30
Excess Deficiency of Revenues
Over Under Expenditures
OTHER FINANCING SOURCES USES
Operating transfers out
880
341
880
341
Total other financing sources uses
880
341
880
341
Net change in fund balances
064
208
831
45
233
162
Fund Balances Deficit Beginning of Year
903
3
382
042
54
849
3
340
Fund Balances Deficit End of Year
695
3
318
211
8
687
3
107
D 5
RECONCILIATION OF THE STATEMENT OF REVENUES EXPENDITURES AND
CHANGES IN FUND BALANCES OF THE GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
Net Change in Fund Balances Total Governmental Funds
233
162
Amounts reported for governmental activities in the Statement of Activities are
different because
Governmental funds report capital outlays as expenditures However in the
governmentwide statement of activities the cost of those assets is
allocated over their estimated usefal lives as depreciation expense
The amount of capital assets recorded in the current period
The depreciation expense for the current period
Revenues previously included in the governmentwide statement of activities
reported in the current year as revenues in the statement of revenues
expenses and changes in fund balance governmental funds
020
603
267
316
186
5
Pension contributions were less than the annual pension cost and
therefore decreased the net pension asset
259
10
in the Statement of Activities
Some expenses reported in the Statement of Activities do not require
the use of current financial resources and therefore are not reported
as expenditures in governmental funds
Change in accrued compensated absences
Change in net assets of governmental activities
D 6
022
2
053
107
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
September 30 2010
Enterprise
Flinn
ASSETS
Current assets
159
275
Receivables
352
135
585
394
924
108
Customers net
Intergovernmental
104
1
829
Total current assets
Noncurrent assets
507
492
12
131
746
485
137
137
19
Capital assets net of accumulated depreciation
Deferred debt expenses net
Net pension asset
Total noncurrent assets
260
395
13
Total assets
089
500
14
LIABILITIES
Current liabilities
386
033
172
17
Accounts payable
Accrued wages and vacation
Liabilities payable from restricted assets
Customer deposits
Interest payable
Bonds and notes payable Current portion
44
496
435
18
976
201
112
668
Total current liabilities
Noncurrent liabilities
705
1
600
492
5
3
10
Revenue bonds
Notes payable
Total noncurrent liabilities
216
5
092
Total liabilities
884
5
204
NET ASSETS
465
7
547
Invested in capital assets net of related debt
Restricted
Debt service
255
134
367
283
837
611
Unrestricted
615
8
885
Total net assets
D 7
STATEMENT OF REVENUES EXPENSES AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
Enterprise
Fund
Operating Revenues
Water and wastewater Pledged as security for
revenue bonds
Stormwater
Assessment and franchise fees
Sanitation
Total operating revenues
169
1
1
43
954
50
880
406
601
1
003
Operating Expenses
Personal services
Contract services
Depreciation and amortization
Insurance
Materials and supplies
Repairs and maintenance
Sanitation fees
Utilities
Miscellaneous
Total operating expenses
Operating Income Loss
236
857
608
644
163
430
691
38
810
58
824
41
148
329
086
105
502
16
901
1
689
686
300
Non Operating Revenues Expenses
Investment revenue
Interest expense
Total non operating revenues expenses
Income loss before contributions and transfers
Capital Grants
Transfers from other funds
Change in net assets
969
1
201
505
536
199
222
500
894
1
981
880
341
736
1
639
Net Assets Beginning of Year
879
6
246
Net Assets End of Year
615
8
885
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
Enterprise
Fund
Cash Flows From Operating Activities
580
1
978
Cash received from customers
Cash payments to suppliers for goods and services
Cash payments to employees for services
Net cash provided used by operating activities
735
2
1
23
946
237
297
119
Cash Flows From NonCapital Financing Activities
045
541
Repayment of interfund liability
880
341
Proceeds from advances from other funds
Net cash provided used by noncapital financing activities
Cash Flows From Capital and Related Financing Activities
Proceeds from capital grants
Proceeds from longterm debt
165
199
234
2
232
962
958
226
650
875
201
570
2
932
Principal payments on longterm debt
Interest paid on capital debt
Acquisition and construction of capital assets
Net cash provided used by capital and
737
193
related financing activities
Cash Flows From Investing Activities
Increase in certificate of deposit
474
969
1
Investment revenue
Net cash provided used by investing activities
495
1
Net increase decrease in cash and cash equivalents
364
115
Cash and cash equivalents Beginning of Year
001
737
Cash and cash equivalents End of Year
365
852
Reconciliation of cash and cash equivalents
Current Assets
275
159
924
108
Cash
Restricted cash including time deposits
Noncurrent Assets
507
492
Restricted cash
Less certificate of deposit with maturity
greater than three months
225
24
365
852
Total cash and cash equivalents at year end
P
STATEMENT OF CASH FLOWS Cont
d
PROPRIETARY FUNDS
Enterprise
Fund
Reconciliation of Operating Income to Net Cash
Provided By Operating Activities
Operating income
686
300
Adjustments to reconcile operating income to net cash
provided by operating activities
419
297
866
10
451
2
Depreciation
Amortization
Bad debts net of recoveries
Change in assets and liabilities
Increase Decrease in accounts receivable
Increase Decrease in accounts payable
Increase Decrease in compensated absences payable
Increase Decrease in customer deposits
997
10
032
6
1
0
89
577
6
297
119
Net cash provided by operating activities
D 10
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
September 30 2010
Pension
Trust Funds
ASSETS
678
7
3
74
961
10
Investments
Accrued interest and dividends
785
3
639
Total assets
LIABILITIES
Accounts payable
Total liabilities
NET ASSETS
785
3
639
Held in trust for pension benefits
D 11
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
Pension
Trust Funds
ADDITIONS
Contributions
Employer
City
Employee
635
31
147
7
24
605
State
387
63
Total contributions
Investment income loss
149
292
Investment income
Less investment advisor fee
292
149
231
25
Net investment income loss
918
266
Total investment income
Total additions
305
330
DEDUCTIONS
666
132
Benefits paid
Refunds former plan members
Administrative expense
786
015
19
Total deductions
467
152
838
177
Net Assets Beginning of Year
607
3
801
Net Assets End of Year
785
3
639
D
12
NOTES TO FINANCIAL STATEMENTS
September 30 2010
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A
General Statement
is a political subdivision of the State of Florida created
by Home Rule Charter adopted by Ordinance 342 on May 9 1977 and approved by referendum on
May 17 1977 under the municipal home rule powers act Florida Statutes Chapter 166
The City of Frostproof Florida the City
The City operates under a CouncilManager form of govermnent and provides general municipal
services to the citizens of the City of Frostproof These services include police and fire protection
parks and recreation library transportation and general administrative services Police protection is
currently subcontracted out to the Polk County Sheriffs Office The City also operates water
wastewater treatment sanitation and stormwater utility systems Currently a board of five elected
Council members governs the City
The financial statements of the City are prepared in conformity with generally accepted accounting
principles GAAP as applied to government units The Governmental Accounting Standards Board
GASB is the accepted standard setting body for establishing governmental accounting and financial
reporting principles The City has elected not to apply the Financial Accounting Standards Board
FASB pronouncements issued after November 30 1989 as permitted by GASB Statement No 20
to its businesstype activities and enterprise funds The more significant of the City
s accounting
policies are described below
B
ReDortin2 Enti
The City
s basic financial statements include the accounts of all City operations and any legally
separate entities component units required by generally accepted accounting principles GAAP
to be included in the reporting entity
Under Statement No 14 of the Governmental Accounting Standards Board the financial statements
of the primary government are required to include those legally separate entities referred to as
component units which meet the criteria for inclusion in the reporting entity by virtue of the
significance of their operational or financial relationships with the City
In applying these criteria management has determined that there are no component units to be
included within the City
s reporting entity
C
Measurement Focus Basis of Accounting and Financial Statement Presentation
The City
s basic financial statements consist of both governmentwide statements reporting the City
as a whole and fund financial statements reporting the City
s major funds
The governmentwide statements report information on all the activities of the City with the
exception of fiduciary employee pension trust activities which are excluded because their resources
are not available to support the City
s programs
Both the governmentwide and fund financial statements categorize primary activities as either
governmental or businesstype
E 1
September 30 2010
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Cont
d
C Measurement Focus Basis of Accounting and Financial Statement Presentation Cont
d
The City
s police and fire protection transportation library community affairs recreation and parks
s water
and general administrative services are classified as governmental activities The City
wastewater treatment sanitation and stormwater services are classified as businesstype activities
GovernmentWide Financial Statements
The governmentwide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting Revenues are recorded when earned and expenses are
recorded at the time liabilities are incurred
The government wide Statement of Net Assets presents both the governmental and business type
activities in separate consolidated columns This statement recognizes all longterm assets capital
assets and receivables as well as longterm debt and obligations of the City The City
s net assets are
reported in three parts 1 invested in capital assets net of related debt 2 restricted net assets and
3 unrestricted net assets
The governmentwide Statement of Activities presents the gross and net cost of each of the City
s
primary activities Gross expenses which include depreciation are expenses clearly identifiable with
each specific activity Program revenues are those revenues directly derived from each activity such
as charges to customers who directly benefit from services provided by the activity or grants and
contributions restricted for use by a specific activity Taxes and other revenue items not properly
included as program revenues are reported as general revenues
These financial statements are organized into funds each of which is considered to be a separate
accounting entity with a self balancing set of accounts Separate statements are presented for
governmental and proprietary activities Each major fund is presented in a separate column and all
nonmajor funds are aggregated and presented in a single column GASB No 34 defines criteria for
the determination of a major fund This criteria is based on each fund
s assets liabilities revenues
and expendituresexpenses in relationship to all the funds of the City The City
s major funds are the
General Fund and the Enterprise Fund
Governmental fund financial statements are presented using the current financial resources
measurement focus and the modified accrual basis of accounting Revenues are recognized when
susceptible to accrual when they become both measurable and available Measurable means the
amount of the transaction can be deterinined and available means collectible within the current
period or within 30 days after year end Grant revenues are considered earned and are accrued
simultaneously with the grant expenditure Expenditures are recorded when the related fund liability
is incurred
The accrual basis of accounting is utilized by all proprietary and fiduciary funds
Funds are classified into three categories governmental proprietary and fiduciary The funds used
by the City are as follows
E 2
September 30 2010
d
C Measurement Focus Basis of Accounting and Financial Statement Presentation Cont
d
Fund Financial Statements Cont
d
Governmental Funds
Governmental funds are used to account for all or most of a government
s general activities The
s governmental funds are as follows
City
General Fund
The General Fund is the general operating fluid of the City All financial
resources except those required to be accounted for in another fund are accounted for in the
General Fund
Special Revenue Funds Special Revenue Funds are used to account for revenue sources that
are usually restricted by law regulation or administrative action
Proprietary Funds
Proprietary funds are used to account for activities similar to those found in the private sector
where the determination of net income is necessary or useful to sound financial administration
The City
s proprietary fund is as follows
Enterprise Fund The Enterprise Fund is used to account for operations that are financed and
operated in a manner similar to private business enterprises where the costs expenses
including depreciation of providing water wastewater treatment sanitation and stormwater
services to the general public on a continuing basis are financed through user charges
Fiduciary Funds
Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent
for individuals private organizations other governments or on behalf of other funds within the
government The City
s fiduciary funds are as follows
Pension Trust Funds
Pension Trust Funds are used to account for the activities of the City
s
police and general employee retirement systems
D Assets Liabilities and Net Assets or Equity
1 Cash Cash Equivalents and Investments
The City
s cash and cash equivalents include all cash on hand time and demand deposits For the
purpose of the Statement of Cash Flows for the proprietary funds the City includes all cash on hand
demand deposits and tune deposits with an original maturity of three months or less
Investments including those of the pension trust funds are stated at fair value which is either a
quoted market price or the best available estimate
E 3
September 30 2010
d
D
Assets Liabilities and Net Assets or Eauity Cont
d
2 Receivables
In the government wide financial statements receivables consist of all revenues earned at yearend
and not yet received Major receivable balances for the governmental activities include grants and
sales utility and franchise taxes Receivables for businesstype activities represent grants and
unpaid bills for utility services Allowances for uncollectible accounts receivable are based upon
historical trends Receivables are reported net of allowances for uncollectible accounts receivable
where applicable At year end this allowance amounted to 4
190 in the businesstype activities
Notes receivable represent amounts due on the purchase of cemetery lots
3 Due From
Due To or Advances FromAdvances To
Transactions between funds that result in amounts owed are referred to as either due from
to other
funds for current interfund loans or advances from
to other funds for noncurrent interfund loans
Amounts receivable from or payable to other funds are reflected in the accounts of the fund until
liquidated Any remaining balances are reported in the government wide statements as internal
balances
4 Inventories Prepaid Items and Other Assets
Inventories of expendable supplies are recorded at yearend if material
These inventories are
reported at cost on a firstin firstout basis They are recorded as expenditures at the time individual
inventory items are used
Prepaid items are for payments made by the City in the current year to provide services occurring in
the subsequent fiscal year
The City has accumulated a surplus in its net pension obligations by funding more than the required
retirement contributions in prior years This asset is recorded in the proprietary fluids and the
government wide financial statements
5 Designated and Restricted Assets
The City Council has designated certain monies to be accumulated over several years to finance the
replacement and
or improvement of capital assets Designated assets are presented only in the
governmental funds financial statements and represent the City
s intended use of such monies
Restricted assets represent assets that are legally restricted to specific uses by law or contract These
assets and if applicable the related liabilities are presented in the governmental and proprietary
funds financial statements and the governmentwide financial statements
In cases in which both unrestricted and restricted net assets are available to finance an expense or
program the City
s policy is to utilize restricted assets first whenever possible
E 4
September 30 2010
d
D Assets Liabilities and Net Assets or Equity Cont
d
6 Capital Assets
Capital assets include property plant equipment and infrastructure assets The City defines capital
assets as assets with an initial individual cost of more than 1
000 5
000 for infrastructure assets
and an estimated useful life in excess of one year The costs of normal maintenance and repairs that
do not add to the value of the asset or materially extend asset lives are not capitalized Improvements
are capitalized and depreciated over the remaining useful lives of the related fixed assets as
applicable
In the governmentwide statements capital assets are valued at cost where historical records are
available and at an estimated historical cost where no historical records exist Donated fixed assets
are valued at their estimated fair market value on the date received
With the implementation of GASB Statement No 34 the City began capitalizing infrastructure assets
prospectively However at this time the City has elected not to retroactively capitalize infrastructure
assets
Depreciation is recorded as an expense of each applicable governmental function in the Statement of
Activities with accumulated depreciation netted with capital assets in the Statement of Net Assets
Depreciation is provided over the assets estimated useful lives using the straightline method of
depreciation The range of estimated useful lives by type of assets is as follows
Years
Assets
25
15
Land improvements
Buildings
Utility system
Machinery equipment and furniture
40
25
50
20
15
5
15
7
Vehicles
50
25
Infrastructure
7 Deferred Debt Expenses and Bond Discounts
The City has bonds payable issued in the proprietary funds Bond discounts and issuance costs are
deferred and amortized over the term of the bonds using the bonds outstanding method which
approximates the effective interest method Bond discounts are presented as a reduction of the face
amount of the revenue bonds payable The issuance costs are recorded as deferred debt expense
8
Deferred Revenue
In the governmental funds certain unearned revenues are reported as deferred revenue Revenue
cannot be recognized until it has been earned and it becomes available to finance expenditures of the
current period In the proprietary fields and for the governmental activities in the governmentwide
statements deferred revenue is reported for unearned revenue regardless of its availability
E 5
September 30 2010
d
D Assets Liabilities and Net Assets or Equity Cont
d
9
Compensated Absences
The City allows employees to accumulate vacation time up to certain lirnits and to be compensated
for this time upon termination of employment The liability for these compensated absences is
recorded as longterm debt in the government wide statements In the fund financial statements
governmental funds report only the compensated absence liability payable from expendable available
financial resources while the proprietary funds report the liability as it is incurred
10 LongTerm Debt
All longterm debt to be repaid from governmental and businesstype resources is recorded as a
liability in the governmentwide statements Longterm debt for governmental funds is not reported
as a liability in the fund financial statements The debt proceeds are reported as other financing
sources and payment of principle and interest is reported as expenditures The accounting for
proprietary fund debt is the same in the fund statements as it is in the governmentwide statements
11 Equity Classifications
GovernmentWide Statements Equity is classified as net assets and displayed in three
components
Consists of capital assets including restricted
capital assets net of accumulated depreciation and reduced by the outstanding balances of any
Invested in Capital Assets Net of Related Debt
debt that is attributable to these capital assets
Restricted Net Assets Consists of net assets with constraints placed on the use either by external
groups such as grantors or other govermnents or by law through constitutional provisions or
enabling legislation In the Statement of Net Assets the City reports 291
279 of restricted net
1
assets of which 224
204 is restricted by enabling legislation
Unrestricted Net Assets
Consists of all other net assets that do not meet the definition of the
other two classifications above
Governmental fund equity is classified as fund balance Fund balance is further
classified as reserved and unreserved Reserved balances represent those portions of fund equity not
appropriable for expenditure or legally segregated for a specific future use Unreserved fund balance
is further split between designated and undesignated Designated fund balances represent tentative
Fund Statements
plans for future use of financial resources Proprietary fund equity is classified the same as in the
governmentwide statements
12 Use of Estimates
The preparation of basic financial statements in conformity with generally accepted accounting
principles as applicable to government entities requires management to make use of estimates that
affect the reported amounts in the basic financial statements Actual results could differ from
estimates
E 6
September 30 2010
d
E
Revenues Expenditures and Expenses
1 Revenues
Property taxes franchise taxes licenses and interest associated with the current fiscal period are all
susceptible to accrual Property taxes are levied annually based on the value of real property and
tangible personal property as assessed on January 1 These taxes are payable from November until
the following March and are recognized in the same fiscal period in which the taxes are due
The key dates in the property tax cycle are as follows
Due By
Taxes are levied
January 1
Beginning of fiscal year for which taxes have been levied
October 1
November 1
Tax bills rendered
Property taxes payable
November 30
Maximum discount
April 1
May 31
Delinquent
Tax certificates sold
2 Operating Revenues and Expenses
The City
s proprietary funds distinguish between operating and nonoperating revenues and expenses
Operating revenues and expenses are those that result from providing services and producing and
delivering goods and
or services including depreciation and excluding interest cost All other
revenues and expenses are reported as nonoperating
3 Interfund Transactions
Permanent reallocation of resources between the funds of the City is classified as interfund transfers
Transfers between governmental or proprietary funds are netted as part of the reconciliation to the
governmentwide financial statement presentation
NOTE 2
A
STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY
Encumbrances
Encumbrance accounting under which purchase orders contracts and other commitments for the
expenditure of monies are recorded in order to reserve that portion of the applicable appropriation is
employed as an extension of formal budgetary integration
Encumbrances outstanding at year end are reported as reservations of fund balances in the
governmental funds They do not constitute expenditures or liabilities because the commitments will
be honored during the subsequent year Appropriations and encumbrances lapse at the end of each
fiscal year
E 7
September 30 2010
NOTE 2
B
STEWARDSHIP COMPLIANCE AND ACCOUNTABILITY Cont
d
Budgetary Policv
The City charter establishes the fiscal year as the twelvemonth period beginning October 1 st The
departments submit to the City Manager a budget of estimated expenditures for the ensuing fiscal
year after which the City Manager subsequently submits a proposed budget of estimated expenditures
and revenues to the City Council
Upon receipt of the budget estimates the City Council holds public hearings on the proposed budget
Information about the budget ordinance is then published in the official newspaper of the City
On or before September 30 the budget is legally enacted for the General and Enterprise Funds
through the passage of an ordinance The City Manager is authorized to transfer budgeted amounts
between line items and departments however any revisions that alter the total expenditure of any
fund must be approved by the City Council Expenditures for the General Fund may not exceed
legal appropriations at the department level
Budgeted amounts are as originally adopted and as amended by the City Council For the year ended
September 30 2010 the City Council amended the original budget on November 15 2010
The budgetary
Budgetary information is presented as Required Supplemental Information
comparison schedule for the General Fund the only major governmental fund is presented on page
F1
C
Comuliance with Finance Related Legal and Contractual Provisions
The City has complied with the provisions of the Series 2001A Series Revenue Bonds the United
States Department of Agriculture Rural Utilities Service RUS program and the State of Florida
Revolving Loan covenants that require assets to be accumulated in a restricted account for the
payment of future debt service
The City has complied with the required payment of debt service principal and interest when due
The City is required by the loan covenants of the revenue bonds and the U
S Department of
Agriculture loans to provide net water and wastewater revenues sufficient to pay 120 of the debt
service coverage for these loans for the current year The loans from the Florida Department of
Environmental Protection FDEP require net water and wastewater revenues sufficient to pay 115
of the debt service coverage on these loans for the year The City complied with these debt coverage
percentages See the detailed calculation on page E18
D Deficit Fund Equity
At the end of the year the City Hall Restoration Expendable Trust Fund had a deficit fund balance of
193 This deficit is expected be eliminated by contributions raised by charity events in the next
43
few years
E 8
September 30 2010
NOTE 3
A
DETAILED NOTES ON ALL FUNDS
Cash and Investments
Custodial credit riskDeposits
Custodial credit risk for deposits is the risk that in the event of a bank failure the City
s cash
deposits may not be returned to the City
At September 30 2010 the carrying amount of the City
s cash deposits was 888
138 and the bank
4
balance was 848
104 A net difference of 34
4
040 between these two balances is created by
timing differences on disbursements which have not yet cleared the bank at the end of the year In
addition the City had 400 cash on hand at September 30 2010
All deposits cash and certificates of deposit are insured by coverage under the Federal Deposit
Insurance Corporation FDIC up to the amount of 250
000 at each bank All deposits are held in
qualified public depositories These depositories participate in a shared risk collateral pool overseen
by the State of Florida and established by Florida Statute The State of Florida collateral pool is a
multiple financial institution pool which provides for additional amounts to be assessed to the
members of the pool if the value of the pool
s collateral is inadequate to cover a loss The amounts
covered by the pool are considered insured for financial reporting disclosure requirements As a
result of this arrangement management believes the City
s deposits are not exposed to custodial
credit risk
Restricted cash
Certain cash and cash equivalents are legally restricted in the Statement of Net Assets at September
30 2010 as follows
Govenumental
Business Type
Activities
Activities
865
499
Transportation
Library
Impact fees
Building permits
Hurricane damages
Customer deposits
96
941
001
83
792
6
603
58
203
141
44
496
568
273
Debt service
164
142
Stormwater impact fees
202
745
Total restricted cash
431
601
Custodial credit riskInvestments
Custodial credit risk for investments is the risk that in the event of a failure of the counterparty the
City will not be able to recover the value of its investments or collateral securities that are in the
possession of an outside party
E 9
September 30 2010
NOTE 3
A
DETAILED NOTES ON ALL FUNDS Cont
d
Cash and Investments Cont
d
Custodial credit riskInvestments cont
d
The City
s investments are secured through a thirdparty custodial arrangement in the City
s name
except for the money market funds and the external investment pool in the Florida Municipal
Pension Trust Fund FMPTF
Investments
As of September 30 2010 the City had the following investments at fair value
Governmental
Fiduciary
Activities
Funds
Total
Portfolio
Investment Type
Money market funds
Certificates of deposit
18
546
990
350
S Treasuries
U
U Government agencies
S
FMPTF a
Municipal bonds
Corporate bonds
Corporate stocks
Total investments
369 536
412
176
70
4
605
130
206
403
178
1
546
329
43
147
436
194
958
990
350
605
130
403
206
178
1
546
329
43
147
436
603
1
236
603
1
236
69
38
774
3
678
144
4
214
00
100
47
8
15
3
98
4
44
28
05
1
52
10
a An external investment pool in which the City has a beneficial interest in the portfolio not in the
individual securities held withiii each portfolio Separately issued financial statements may be
obtained by contacting the Administrator for the Florida Municipal Pension Trust Fund 301
Bronough Street Suite 300 Tallahassee Florida 32301
Florida Statutes authorize investment of surplus funds in Securities and Exchange Commission
registered money market funds with the highest credit quality rating from a nationally recognized
rating agency in interestbearing time deposits or savings accounts in qualified public depositories a
shared risk collateral pool overseen by the State of Florida in the Local Government Surplus Funds
Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal
Cooperation Act and in direct obligations of the U
S Treasury The City
s investments except those
investments within the pension plan trust funds are invested solely in money market fluids and
certificates of deposit The certificates of deposit are invested in either a qualified public depository
or are covered by FDIC insurance The pension plan trust funds are allowed to invest in corporate or
other bonds and in common stock with certain limitations
The investments held by governmental activities serve as collateral for a loan from Citizens Bank
Trust a liability in the businesstype activities The balance outstanding on this loan at the end of the
year is 189
795
E 10
September 30 2010
NOTE 3
A
d
d
Summary of Cash and Investments
Reconciliation of cash and investments to amounts shown on the Statement of Net Assets and the
Cash including time deposits
Investments
Restricted cash including time deposits
655
7
2
92
536
369
346
1
633
774
3
678
Investments
283
8
502
Total
Total Reconciled
Cash including time deposits
139
4
288
Investments
144
4
214
283
8
502
Total
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates could adversely affect an investment
s fair
value The City does not have a formal investment policy that limits investment maturities as a
means of managing its exposure to fair value losses arising from increasing interest rates
As of September 30 2010 the City had the following investments with interest rate risk
F Va
Weighted
Average
Maturity
years a
Investment Type
United States Treasuries
Government Agencies
Federal Home Loan Mortgage Corporation
Federal National Mortgage Association
Government Mortgage Pools
FHLMC mortgage pools
FNMA mortgage pools
Government National Mortgage Association mortgage pools
Municipal bonds
Corporate bonds
FMPTF Corporate bond fund b
Total investments with interest rate risk
605
130
52
1
10
781
727
25
01
66
352
296
66
249
37
329
43
147
436
78
1
22
1
68
10
72
1
955
441
32
1
258
1
441
39
8
a Weighted average years to maturity are used to estimate the interest rate risk
b Portion of FMPTF external pool invested in bond fund
E 11
04
September 30 2010
NOTE 3
A
d
d
Credit Risk
The following displays the credit quality ratings of the City
s applicable investments
Credit Ratings a
Investment Type
Money market funds
Not rated
AAA
United States Treasuries
United States Agencies
United States Agencies Mortgage Pools
Government National Mortgage Association
Municipal bonds
Corporate bonds
FMPTF Broad Market High Quality Bond Portfolio
AAA
AAA
Not rated
Not rated
Not rated
AA to AAA
AA to AAA
V4
AA
a The credit rating service listed above is Standard and Poor
s except for the FMPTF
broad market high quality bond portfolio which is rated by Fitch
Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its
obligations The credit ratings above are provided to indicate associated credit risk The investment
policies of the pension trust funds have certain criteria regarding credit ratings allowed for their
investments
Concentration of credit risk Concentration of credit risk is when five percent or more of the total
investments are invested with one issuer Investments issued or explicitly guaranteed by the United
States government and investments in mutual funds or pools are excluded There were no
concentrations to disclose for the year ended September 30 2010
E 12
September 30 2010
NOTE 3
d
B
Capital Assets
1
Capital Activity
Capital asset activity for the year ended September 30 2010 was as follows
Ending
Beginning
Governmental activities
Balance
Increases
Decreases
Balance
Capital assets not being depreciated
Land
836
167
836
167
Total capital assets not being
depreciated
836
167
836
167
Capital assets being depreciated
Buildings
Capitalized building lease
Improvements other than buildings
Equipment
Infrastructure
Total capital assets being depreciated
Less accumulated depreciation for
Buildings
Capitalized building lease
Improvements other than buildings
Equipment
Infrastructure
Total accumulated depreciation
588
77
947
2
4
89
154
97
613
1
521
523
2
274
588
77
982
8
294
409
2
4
78
154
97
613
1
521
424
2
368
538
11
494
176
410
43
988
414
456
8
862
020
603
765
3
1
01
145
12
438
623
691
1
158
877
5
634
3
383
107
806
429
2
902
46
363
145
767
13
267
316
822
4
479
753
286
109
5
232
990
4
315
286 753
277
5
068
398
458
588
77
588
77
571
4
1
09
574
14
340
670
758
1
933
644
19
873
3
062
Total capital assets being depreciated
net
Governmental activities capital assets
net
E 13
September 30 2010
NOTE 3
B
d
Capital Assets Cont
d
1 Capital Activity Cont
d
Ending
Beginning
Businesstype activities
Capital assets not being
depreciated
Land
Intangible assets
371
69
718
9
2
60
300
105
298
2
443
154
5
163
937
216
937
216
Idle assets
371
69
104
998
300
105
Total capital assets not being
depreciated
Capital assets being depreciated
Water and wastewater system
Stormwater system
Total capital assets being
depreciated
Less accumulated depreciation for
Water and wastewater system
Stormwater system
Total accumulated depreciation
Total capital assets being
depreciated net
Businesstype activities capital
assets net
352
3
326
298
2
443
881
0
9
18
709
658
167
1
5
64
935
13
154
5
163
606
496
14
048
183
644
672
953
572
608
57
561
630
543
250
10
235
5
710
253
486
15
318
4
2
02
795
120
318
294
817
2
431
368
343
892
16
062
34
297
419
433
7
112
816
4
413
438
785
10
114
7
856
338
39
338
39
525
249
12
154
5
163
Depreciation expense including amortization of capital leases was charged to functions as follows
Governmental activities
64
791
492
87
365
39
976
68
Culture
643
55
Community affairs
Total depreciation expense
316 26
Businesstype activities
Water and sewer system
Stormwater system
Total depreciation expense
405
402
892
16
419 297
E 14
718
367
236
3
728
2 Depreciation Expense
General government
Public safety
Transportation
323
7
2
31
687
137
131
746
12
September 30 2010
NOTE 3
C
d
Interfund Receivables Payables and Transfers
Individual interfund receivable and payable balances as of September 30 2010 are as follows
Receivable Fund
A mnrnnt
Payable Fund
General Fund
313
43
Nonmaj or
Governmental Fund
City Hall Restoration
Purpose of Advances
The advance listed above is to fniance the City Hall Restoration Expendable Trust Fund
s necessary
expenditures needed to complete a restoration project which were in excess of grant funds received
This interfund balance is not expected to be repaid within the next year
Individual interfund transfer balances as of September 30 2010 are as follows
Receivable Fund
Payable Fund
Enterprise Fund
General Fund
Amount
880
341
Purpose of Transfers
The transfer listed above was authorized by the City Council to rectify the Enterprise
s Fund
overdrawn balance in the pooled cash bank account
D
Leases
Operating Leases
In August 2009 a new lease for two copiers began with a teen of five years The following are the
future minimum lease payments remaining for this lease
A mnnnt
Vanr Fnfl
2011
2013
407
1
1
4
07
407
1
2014
172
1
2012
Total
Lease expense for the year totaled 1
407
E 15
5 393
September 30 2010
NOTE 3
E
d
LongTerm Liabilities
1 LongTerm Liability Activity
Longterm liability activity for the year ended September 30 2010 is summarized as follows
Amount Due
Beginning
Balance
Additions
Reductions
Ending
Within One
Balance
Year
Other liabilities
438
27
978
31
956
29
460
29
460
29
438
27
978
31
9561
29
29 460
460
29
820
1
000
000
45
775
1
000
000
50
926
20
525
1
401
19
493
1
Compensated absences
Total Governmental
Businesstype Activities
Revenue bonds payable
Unamortized discount on
revenue bonds
Loans payable
885
2
157
962
958
650
181
662
3
469
469
153
Total Business type
684
4
231
962
958
S 225
125
5 418 068
976
201
2
Revenue Bonds
Revenue bonds payable are comprised of the following individual obligations
Lender
Interest
Issue
Ending
Rate
Amount
Balance
10 to
3
Water and Sewer System Revenue Bonds
105
2
000
775
1
000
75
4
2001A Series
Unamortized discount on 2001A Series Bonds
125
34
401
19
755
1
599
Total revenue bonds payable
These bonds were issued as the first of a group of notes authorized
to be issued to provide funds for the construction of the wastewater plant Phase I
2001A Series Revenue Bonds
These bonds are secured by the net revenues of the water and wastewater systems and any legally
available nonad valorem revenues of the City This bond issue requires that funds be deposited into
a sinking fund monthly at amounts which will fully fund the next succeeding principal and interest
payments when due The City is also required to maintain a reserve account at various specified
amounts and to provide net water and wastewater revenues sufficient to maintain a minimum debt
service coverage of 120
Payments are due in annual installments including principal and interest varying from 141
369 to
the final payment amount of 142
088 due in September 2031
E 16
September 30 2010
NOTE 3
E
d
LongTerm Liabilities Cont
d
3 Loans Payable
Loans payable are comprised of the following individual obligations
Lender
Interest
Issue
Ending
Rate
Amount
Balance
63
4
099
311
000
0
2
00
275
1
000
000
350
384
273
290
6
1
61
207
1
000
000
331
00
4
000
200
795
189
16
3
Florida Dept of Environmental Protection
Florida Dept of Environmental Protection
US Dept of Agriculture Rural Utilities Services
09
2
US Dept of Agriculture Rural Utilities Services
Citizens Bank
Trust
75
4
62 469
a
k
Total loans payable
State of Florida Department of Environmental Protection Loans These loans provided funds
for the collection transmission and treatment of the wastewater system in the northwest and
southeast quadrants of the City and for the planning and design of new collector sewers In the
current year the City received 958
962 in additional funds for the extension of wastewater lines to
additional areas of the City Phases II and Ma
Payments are due in semiannual installments includuig principal and interest The first loan above
has installments varying of 10
455 with the last one due in June 2027 The second loan has
installments of 66
360 with the last one due in December 2024
United States Department of Agriculture Rural Utilities Service RUS Loans These two loans
were the second in a group of loans authorized to provide funds for the construction of the
wastewater plant Phase 1
Payments are due in annual installments including principal and interest The first loan above has
installments varying from 73
333 to the final payment of 72
278 due in December 2043 The
second loan has installments varying from 20
078 to the final payment of 19
879 due in December
2043
State of Florida Department of Environmental Protection and RUS Loans The net revenues of
the water and wastewater system are also pledged for the repayment of the State of Florida and
United States Department of Agriculture Rural Utilities Service RUS loans These loans are
subordinate to the 2001A Series Revenue Bonds These loans require maintaining sinking and
reserve accounts as described under revenue bonds above The State of Florida loans also require a
minimum debt service coverage of 115 of the City
s net water and wastewater revenues
Trust The City obtained this loan for the purpose of acquiring a well field for the
future growth of the water utility system This loan is secured by investments held in the General
Fund Payments are due in quarterly instalhnents varying from 861 in October 2009 to a balloon
payment of 182
757 on April 1 2013 when the loan matures
Citizens Bank
E 17
September 30 2010
NOTE 3
E
d
LongTerm Liabilities Cont
d
4 Summary of Debt Service Requirements to Maturity
Annual debt service requirements of all longterm bonds and notes payable for business type
activities as of September 30 2010 are as follows
Year Ending
Principal
976
201
194
196
315
382
486
195
505
181
109
1
339
256
1
947
644
824
662
400
000
339
September 30
2011
2012
2013
2014
2015
2016 2020
2021 2025
2026 2030
2031 2035
2036 2040
210
532
209
200
982
190
465
188
970
181
357
798
259
590
014
372
305
184
518
111
Total
412
508
403
396
297
573
951
383
475
363
907
1
696
847
1
206
196
1
658
967
584
518
450
000
330
278
24
278
354
418
5
068
052
3
889
470
8
957
2041 2045
Total
Interest
Interest expense for the year totaled 201
505 all of which was expensed and is included as a direct
function expense of water and wastewater treatment in the Statement of Activities
F
Pledged Revenues
The City is required by the loan covenants of the water and wastewater
revenue bonds to provide debt service coverage for bond payments of 120 for the year The
Florida Department of Environmental Protection FDEP also requires coverage of 115 for its loan
payments for the year The City is in compliance with these debt service coverages as follows
Debt Service Coverage
145
1
138
Gross revenues a
Less
549
711
164
9
Operating expenses b
Annual bond reserve requirement
Net available revenue
Revenue bonds
Debt service requirements Revenue bonds
Coverage Revenue bonds
Revenue bonds
Required net revenues for revenue bonds 230
910 x 1
2
263
586
910
230
253
263
586
092
277
309 171
FDEP
630
153
Debt service requirements FDEP
Coverage Revenue bonds
201
a Includes operating revenues for water and wastewater treatment and investment revenue
b Excludes sanitation expenses 363
635 stormwater expenses 49
978 depreciation for
water and wastewater 402
405 and items expensed relating to construction of Phase II and IIIa
of the wastewater system 535
960
E 18
September 30 2010
NOTE 3
F
d
Pledged Revenues Cont
d
Future Revenues
The City has pledged future revenues net of certain operating expenses for
payment of debt The following table provides a summary of the pledged revenues for the City
s
outstanding debt issues Additional information regarding the City
s pledged revenue can be found
in the preceding sections of this note
Percentage of
Net Revenues
Total
Pledged Revenue
Water and wastewater
Revenue
Principal
Current Year
Current
to Principal
Pledged
Through
and Interest
Principal and
Year Net
and Interest
Outstanding
Interest Paid
Revenue
Paid
2043
11
12
281
8
680
541
384
427
595
84
154
G Fund Equity
In the governmental fluid financial statements reserves and designations separate portions of fund
balances Reserves represent legal restrictions placed on assets which are not subject to modification
by the City Designations are by actions of the City Council and can be increased reduced or
eliminated by similar actions
Reserved Fund Balances
Reserved fund balances as of September 30 2010 are described as
follows
Reserved for Cultural Activities Represents unexpended funds from the Polk County
library cooperative under the State Aid to Libraries Program monies are restricted to library
use
Reserved for Advances to Other Funds Represents a portion of the fluid balance that does
not constitute an available spendable resource because the advances are noncurrent
Reserved for Public Safety Represents unexpended funds received from building permits
which are restricted to building department expenses
Reserved for Hurricane Damages Represents unexpended monies received from FEMA
to be spent on certain replacements resulting from damages from the hurricanes in 2004
Represents unexpended proceeds received from
Reserved for Capital Improvements
impact fees which are restricted to capital facility projects
Represents unspent gas tax monies restricted
by the state for transportation capital improvements
Reserved for Transportation Improvements
Designated Fund Balances
Designated fund balances as of September 30 2010 are described as
follows
Designated for Public Safety Represents funds transferred from the Police Officers
Association Trust Fund to the General Fund when the City closed down its police
department Funds are to be used by the Fire Department
Designated for Capital Improvements
Represents fluids set aside to finance capital
improvements in the fire and transportation departments by the City Council
E 19
September 30 2010
NOTE 3
G
d
Fund Equity Cont
d
In the proprietary fund financial statements restricted net assets represent restrictions imposed by
parties outside the City
Restricted Net Assets Restricted net assets as of September 30 2010 are described as follows
Restricted for Debt Service Represents amounts set aside according to revenue bonds and
loan debt covenants to pay unmatured principal and interest
Represents unspent impact fees and stormwater
Restricted for Capital Improvement
revenue to be used for improvements to capital facility projects and the stormwater system
respectively
H
Pension Plans
The City maintains two separate singleemployer defined benefit pension plans for its employees
Each plan provides retirement disability and death benefits to plan members and beneficiaries Both
plans were adopted by City ordinance and are governed by separate boards of trustees These pension
plans do not issue standalone financial reports These plans are subject to review by independent
actuaries in order to determine annual required contributions The City contributes to the General
Employees Pension Trust Fund
The Police Officers Pension Trust Fund receives proceeds from an excise tax on property insurance
premiums to fund its annual required contribution While the City no longer has its own police
department many of the City police officers who transferred to the Polk County Sheriff
s Office
elected to remain with the City retirement plan If the excise tax proceeds on property insurance
premiums are not adequate to maintain the actuarial soundness of the City plan the Polk County
s Office will contribute to the plan but is not required to contribute more than the Florida
Sheriff
retirement system percentage The City will contribute any remaining shortfall
1
Plan Descriptions
A General Employees Pension Trust Fund
All employees working at least 20 hours each week excluding police officers are
required to participate in the City
s general employees pension plan after one year of
service Upon retirement employees are entitled to a benefit of 1
5 of their average
monthly compensation as defined in the plan for each year of credited service Normal
retirement age is 65 with at least 10 years of vested service Early retirement age is 55
with at least 10 years of vested service The plan also provides disability benefits for
participants who are disabled on a continuous and permanent basis
E
20
September 30 2010
NOTE 3
d
H
Pension Plans Cont
d
1
Plan Descriptions Cont
d
B Police Officers Pension Trust Fund
Currently members of the plan are the police officers who elected to remain with the plan
when they transferred to the Polk County Sheriff
s Office Upon retirement members
are entitled to a benefit at 3
55 of their average final compensation as defined in the
plan for each year of credited service Normal retirement age is 55 with the completion
of 10 years of credited service or age 52 with the completion of 25 years of credited
service Early retirement age is 45 with at least 10 years of credited service The plan
also provides disability benefits for members who become totally and permanently
disabled
2
Summary of Actuarial Methods Assumptions and Related Information for Each Plan
General Employees
Police Officers
Pension Trust
Pension Trust
Latest date
101 10
10
1
10
Frequency
Every other year
Annual
Aggregate
Entry age normal
Actuarial Valuation
Cost method
Accounting Policies
Basis of accounting
Accrual
Accrual
Assets valuation
Reporting
Market value
4 year smooth market
Membership
Active
Retiree
19
4
5
4
10
5
beneficiaries
Terminated vested
By and on Behalf of City
Contribution
Rates
City
Required
13
6
Contributed
00
6
As needed
1
Plan members
1
32
554
241
24
31
081
081
31
Annual pension cost
Actual contributions made
City contribution made from the
Funding Standard Account
Amortization
Remaining period
Method
30 years
Level dollar open
Actuarial assumptions
Investment rate of return net of
investment related expenses
Projected salary increases
Includes inflation at
Costofliving adjustments
E 21
Level
27 years
of pay closed
25
7
8
5
5
6
25
3
0
3
None
0
3
September 30 2010
NOTE 3
H
3
d
Pension Plans Cont
d
Threeyear Trend Information
Actuarially
Net Pension
Year
Determined
Percentage
Ended
Contribution
Contributed
Obligation
Asset
General
Employees
30
9
10
30
9
09
30
9
08
081
31
29
721
699
21
00
100
00
100
00
100
Police Officers
30
9
10
30
9
09
24
241
022
3
00
100
30
9
08
4
00
100
00
942
54
183
496
62
052
42
Development of Net Pension Asset NPA
General
Police
Employees
Officers
Pension Trust
Pension Trust
101 10
101 10
Actuarially Detennined Contribution A
081
31
241
24
000
5
Interest on NPA
313
13
Adjustment to A
Annual Pension Cost
081
31
554
32
Contributions Made
081
31
241
24
313
8
Increase Decrease in NPO
NPO Begimiing of Year
NPO Ending of Year
496
X62
183
54
Contribution made from the Funduig Standard Account
As of September 30 2010 the General Employees Pension Trust has no calculated Net Pension
Asset however the City has made advance contributions in the amount of 133
814 for that plan
5
Method Changes
The Police Officers Pension Trust Plan changed the assumption for mortality from the 1983
Group Annuity Mortality Table to the RP 2000 Combined Healthy Table The General
Employees Pension Trust Plan changed the administrative expense assumption from a flat
000 per year to a 4
5
5 loading of the total projected benefit liability
6
Other Information
The General Employees Pension Trust Plan uses the aggregate actuarial cost method to
calculate the ARC The aggregate actuarial cost method does not identify or separately amortize
unfunded actuarial accrued liabilities The Schedule of Funding Progress is presented in the
Required Supplementary Infonnation section using the entry age normal cost method in order to
provide information that serves as a surrogate for the funded status and funding progress of the
plan
E 22
September 30 2010
NOTE 3
H
6
d
Pension Plans Cont
d
Other Information Cont
d
The Schedule of Funding Progress presented as Required Supplementary Information following
the Notes to the Financial Statements presents multiyear trend information about whether the
actuarial value of plan assets is increasing or decreasing over time relative to the accrued liability
for benefits
The projection of benefits for financial statement reporting purposes does not explicitly
incorporate the potential effects of legal or contractual funding limitations
There are no stand alone financial reports issued for the pension trust funds
I
Other Employee Benefits Plans
The City contributes 6 of the City Manager
s salary to a deferred compensation plan established for
the benefit of the City Manager The City Manager is required to contribute a minimum 1 of her
salary All contributions are 100 vested The City
s contributions to this plan for the year ended
September 30 2010 was 4
542
The City also offers its employees who have completed one year of continuous service an optional
non contributory deferred compensation plan created pursuant to Internal Revenue Code Section
457 Both plans are administered by thirdparty custodians and the plans assets are not considered
part of the reporting entity and are not included in these financial statements
J
Other Post Employment Benefits OPEB
The City provides retiring employees the option to continue participating in the
s health dental and vision insurance benefits and group term life insurance benefits at the same
City
rate as active employees The contribution requirements of the City and plan members are
established and can be amended by the City Council These contributions are neither guaranteed nor
Plan Description
mandatory
Retirees who do not choose within thirty days after termination of employment to
participate lose eligibility to participate in the future Participating retirees must pay 100 of the
costs of any insurance they elect to continue The plan does not issue a publicly available financial
report
In order to comply with the requirements of The Governmental Accounting
Standards Board GASB No 45 Accounting and Financial Reporting by Employers for
Postemployment Benefits Other Than Pensions the City had an actuarial valuation of
postemployment benefits performed Since the City is required to comingle retirees and active
employees in determining the health plan cost there exists an implicit subsidy to retirees that creates
an OPEB liability on the part of the City This pronouncement is being implemented prospectively
and the City does not intend to fund this actuarial accrued liability and will pay any current costs on a
pay as you go basis
Funding Policy
Participants The City has 17 active employees Of these 3 are fully eligible for benefits and 14 are
not yet fully eligible There are no retired participants
E 23
September 30 2010
NOTE 3
J
d
Other Post Employment Benefits OPEB Cont
d
Annual OPEB Cost and Net OPEB Obligation
The following shows the components of the
s annual OPEB cost for the year the amount actually contributed to plan which is zero since the
City
plan is not being funded and the changes in the City
s net OPEB obligation to the plan
Annual Required Contribution ARC
Adjustment to ARC
000
2
Annual OPEB Cost
000
2
Contributions Made
000
2
Increase in Net OPEB Obligation
Net OPEB Obligation Beginning of Year
Net OPEB Ending of Year
2 000
The City
s annual OPEB cost the percentage of annual OPEB cost contributed to the plan and the
net OPEB obligation for the year are as follows
of Annual
Year
Annual OPEB
OPEB Cost
Net OPEB
Ended
Cost
Contributed
Obligation
30
9
10
000
2
00
0
000
2
Actuarial Methods and Assumptions
Actuarial valuations are based on numerous assumptions
concerning the cost of benefits to be provided in the future the contributions expected to be made by
retirees in the future the incidence and level of benefit coverage in the future and the future
demographic experience of the current active employees of the City and current retirees and their
covered dependents The following were used in the current year evaluation
Valuation date
10
1
8
Actuarial cost method
Projected unit credit
Amortization method
15year open period level dollar payment
00 per annum
4
includes inflation at 2
75 per annum
Investment return
Healthcare cost trend rate
s
Insurance Premiums
00 for 201011 graded
10
Select rates
to 6
00 for 2018
19
Ultimate rates
00 per annum
5
E
24
September 30 2010
NOTE 3
J
d
Other Post Employment Benefits OPEB Cont
d
Calculations of benefits for financial reporting
purposes are based on the plan as understood by the City and the plan members and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs
Actuarial Methods and Assumptions Cont
d
between the City and plan members to that point The actuarial methods and assumptions used are
designed to reduce short
term volatility in actuarial accrued liabilities and the actuarial value of
assets consistent with the longterm perspective of the calculations
Actuarial valuations for an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future Actuarially determined
amounts are subject to continuous revisions as actual results are compared to past expectations and
new estimates about the future are formulated Although the valuation results are based on values
which the City
s actuarial consultant believes are reasonable assumptions the valuation results reflect
a longterm perspective and as such are merely an estimate of what future costs may actually be
Other Information The Schedule of Funding Process following the notes presents multiyear trend
information about whether the actuarial value of the plan assets is increasing or decreasing over time
relative to the actual accrued liability for benefits Since this is the first year of implementation and
the City is iunplementing prospectively only the current year is presented in this year
s report
K
Risk Management
The City is exposed to various risks of loss related to torts theft of damage to and destruction of
assets errors and omissions injuries to employees employee health claims and natural disasters for
which the City carries commercial insurance All coverage remains constant from the prior year
L
Commitments and Contingencies
1
Construction Commitments
The City routinely enters into various construction commitments At September 30 2010 the most
significant commitments follow
Commitment
Total Project
ect
Phase IIIbWastewater system
Engineering fees
000
200
Expended
998
104
Outstanding
002
95
The City received a grant through the Florida Department of Enviromnental Protection Agency to pay
for Phase IIlb of the wastewater system
2
Contract with Polk County Sheriffs Office
Effective January 1 2007 the City contracted with the Polk County Sheriff
s Office to provide police
services within the City This contract is for the period from January 1 2007 to September 30 2011
The following are the annual amounts which are paid in quarterly installments due on this contract
Amount
Year End
2011
082
732
Expense for the year totaled 659
109 on this contract for police services
E 25
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
Variance with
Final Budget
Budgeted Amounts
Final
Original
Positive
Actual
Negative
REVENUES
Taxes
Licenses and permits
Intergovernmental
15
000
450
11
38
000
350
23
347
2
040
701
2
430
736
2
591
423
490
950
938
830
453
320
147
650
78
460
722
516
290
990
932
930
397
320
160
250
80
480
638
487
657
682
937
633
28
343
384
154
250
398
52
445
586
13
587
070
6
852
27
035
52
764
2
700
726
2
260
602
2
775
485
123
370
0
1
64
280
684
100
46
370
554
960
290
Fines and forfeitures
Investment income
Other
Total revenues
4
374
0
1
64
372
694
179
46
135
582
419
290
331
3
544
40
237
15
840
0
1
16
000
471
000
17
380
542
370
273
Property
092
10
79
765
27
541
331
3
544
2
8
1
13
161
35
EXPENDITURES
General govermnent
Public safety
Transportation
Culture
Community affairs
Capital outlay
Total expenditures
692
4
660
417
830
24
816
133
646
158
000
350
000
500
880
341
120
158
660
767
830
524
064
208
766
316
OTHER FINANCING SOURCES USES
Operating transfers out
NET CHANGE IN FUND BALANCES
See accompanying notes to other required supplementary information
F 1
PENSION TRUST FUNDS
SCHEDULE OF FUNDING PROGRESS
Actuarial
UAAL as a
Accrued
Actuarial
Actuarial
Valuation
Value of Assets
Date
a
Liability
AAL
b
Unfunded AAL
UAAL
Funded Ratio
ba
b
a
Covered
of Covered
Payroll
c
Payroll
b ac
General Employees Pension Trust
101 10
09
1
10
08
1
10
07
1
10
06
1
10
05
1
10
27
114
236
914
732
0
1
44
934
951
550
975
157
1
976
034
1
232
184
1
271
A
N
A
N
A
N
68
106
494
914
774
447
A
N
115
353
A
N
A
N
A
N
A
N
A
N
A
N
A
N
A
N
184
1
271
00
0
A
N
00
0
A
N
A
N
00
100
643
551
00
0
33
87
183
755
253
186
232
176
549
167
389
285
060
335
22
230
Police Officers Pension Trust
10
1
10
09
1
10
08
1
10
967
2
364
07
1
10
167
8
2
34
610
2
123
476
2
475
101 06
1011105
193
3
3
39
299
3
136
000
3
000
726
2
894
693
2
581
686
2
195
147
9
2
16
978
2
399
423
046
737
320
636
32
28
90
273
107
93
103
458
83
209
720
91
98
90
96
19
92
21
172
52
18
02
64
24
29
59
62
Actuarial accrued liability is calculated using the entry age normal cost method after 2006 as required by
GASB Statement No 50 No actuarial valuations were performed for 2009 2007 or 2006 UAAL not less than zero
SCHEDULE OF CONTRIBUTIONS FROM EMPLOYERS AND
OTHER CONTRIBUTING ENTITIES
Annual
Year Ended
Required
Polk
City
County Sheriff
State
Percentage
September 30
Contribution
Contribution
Contribution
Contributed
General Employees Pension Trust
2010
2009
2008
2007
2006
2005
31
081
721
29
699
21
847
20
041
20
260
45
081
31
00
100
29
721
699
21
847
20
041
20
260
45
00
100
00
100
00
100
00
100
00
100
Police Officers Pension Trust
2010
846
48
2009
901
28
2008
32
814
460
82
2007
24
241
458
28
052
42
859
55
24
605
879
25
203
53
601
26
00
100
01
188
29
290
00
100
00
100
2006
2005
601
26
The 2010 City contribution of 24
241 was paid from the Funding Standard Account
F 2
00
100
OTHER POSTEMPLOYMENT BENEFITS
SCHEDULE OF FUNDING PROGRESS
Actuarial
UAAL as a
Accrued
Actuarial
Actuarial
Valuation
Value of Assets
Date
a
10
1
8
Liability
AAL
b
Unfunded AAL
UAAL
ba
000
6
000
6
Funded Ratio
ab
00
0
Covered
of Covered
Payroll
c
Payroll
b ac
000
474
August 1 2010 is the first fiscal year that an actuarial valuation was performed on the City
s Other
Postemployment Benefits Plan
SCHEDULE OF CONTRIBUTIONS FROM EMPLOYERS
Annual
Year Ended
Required
City
Percentage
September 30
Contribution
Contribution
Contributed
2010
00
0
000
2
F3
27
1
NOTES TO REQUIRED SUPPLEMENTARY INFORMATION
September 30 2010
BUDGETARY COMPARISON SCHEDULE
The Budgetary Comparison Schedule in the accompanying Required Supplemental Information
section presents a comparison of the legally adopted budget as amended with the actual results in
the General Fund The originally adopted budget is presented for purposes of comparison to the
final amended budget
Governmental fund budgets are prepared this year using the modified accrual basis of accounting
which is the same basis of accounting used by the General Fund for financial statement reporting In
the past the City prepared its budget on a basis which had some differences from generally accepted
acounting principles However over the years these differences have diminished and a comparison
on the same basis as the financial statements is now considered more appropriate
REOUIRED SUPPLEMENTARY INFORMATION
1
PENSION TRUST FUNDS
Schedule of Funding Progress
In the past the schedule of funding progress was not required to be presented when pension plans
used the aggregate actuarial cost method because this method does not identify or separately
amortize unfunded actuarial accrued liabilities Now GASB Statement No 50 requires that such
plans present this funding information using the entry age actuarial cost method Therefore the
General Employees Pension Trust Fund now presents this funding schedule as required in order to
provide information that serves as a surrogate for the funded status and funding progress of the plan
2
City Contributions
The annual required contribution for the Police Officers Pension Trust Fund is generally
contributed by the Polk County Sheriff
s Office limited to the Florida retirement system percentage
The City contributes if there is any remaining shortfall This plan receives contributions from a one
percent excise tax imposed by the City on casualty insurance proceeds from an excise tax on fie
insurance which is collected by the State of Florida and remitted to this plan
For additional information regarding the pension trust funds refer to Note 3 H on pages E20 to E23
in the notes to the financial statements
1
OPEB
Schedule of Funding Progress
New this year is the application of GASB No 45 which requires the calculation of a possible future
City obligation for an implicit subsidy by providing retirees with the option to continue participating
in the City
s health dental vision and group term life insurance benefits The calculation of this
liability is 6
000
2
City Contributions
The City is not funding this liability and will pay any costs on a pay as you go basis Currently
there are no retirees participating in this benefit
For additional information regarding OPEB refer to Note 34 on pages E23 to E25 in the notes to
the financial statements
F 4
OTHER SUPPLEMENTARY INFORMATION
COMBINING STATEMENTS
NONMAJOR FUNDS
OTHER GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
Special revenue funds account for proceeds from certain specific revenue sources These funds are
recorded separately as directed by legal requirements regulatory provisions or administrative action As
with the General Fund the prirnary accounting focus is on the sources and uses of available funds and the
financial activity is reported using the modified accrual basis of accounting
City Hall Restoration Expendable Trust Fund
This fund was created originally to account for contributions received to be used for the restoration of City
Hall formerly the old Frostproof High School The City is also receiving grant funds from the State of
Florida Department of State Division of Historical Resources to be used for this purpose
Latt Maxcy Memorial Library Expendable Trust Fund
This fund was created for use by the library Financing is provided by donations from the public and is
used for expenditures not normally covered in the City budget process
Fire Department Trust Fund
This fund was created for use by the volunteer firemen The City remits checks to this fund which are used
to pay the volunteer firemen for fire calls and meetings Excess money is used for expenditures not
normally covered in the City budget process
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
September 30 2010
Latt Maxey
Memorial
Fire
Restoration
Library
Departmen
Expendable
Expendable
t Trust
City Hall
Fund
Total
ASSETS
Total assets
265
878
8
104
26
247
35
265
878
8
104
26
247
35
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable
Advance from other funds
Total liabilities
145
145
313
43
313
43
458
43
458
43
Fund Balances
Unreserved
193
43
878
8
104
26
211
8
Total fund balances deficit
193
43
878
8
104
26
211
8
878
8
104
26
247
35
Total liabilities and fund balances
265
G 1
COMBINING STATEMENT OF REVENUES EXPENDITURES
AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
Latt Maxey
City Hall
Memorial
Restoration
Expendable
Library
Expendable
Department
Trust Fund
Trust Fund
Trust Fund
Fire
Total
REVENUES
704
21
704
21
85
85
534
67
721
8
255
76
238
89
806
8
044
98
817
4
4
8
17
821
30
575
16
Investment income
Other
Total revenues
EXPENDITURES
Current
Public safety
Culture
556
28
Capital outlay
575
16
265
2
Total expenditures
131
45
265
2
817
4
213
52
107
44
265
2
989
3
831
45
107
44
265
2
989
3
831
45
Fund Balances Deficit Beginning of year
300
87
143
11
115
22
042
54
Fund Balances Deficit End of year
193
43
878
8
104
26
Net change in fund balances
G 2
211
8
FIDUCIARY FUNDS
PENSION TRUST FUNDS
General Employees Pension Trust Fund
This plan was created October 1 1985 to provide retirement benefits for City employees with more than
one year of service
Police Officers Pension Trust Fund
This fund was created May 28 1985 to provide a retirement fund for police officers The plan currently
covers the police officers who elected to remain with the plan when they transferred to the Polk County
s Office in January 2008
Sheriff
COMBINING STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
September 30 2010
General
Police
Employees
Officers
Pension Trust
Pension Trust
Fund
Fund
Totals
178
1
546
132
5
2
96
961
10
678
7
3
74
961
10
178
1
546
607
2
093
785
3
639
178
1
546
607
2
093
785
3
639
ASSETS
Investments
Accrued interest and dividends
Total assets
LIABILITIES
Accounts payable
Total liabilities
NET ASSETS
Held in trust for pension benefits
G 3
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
General
Police
Employees
Officers
Pension Trust
Pension Trust
Fund
Fund
ADDITIONS
Contributions
Employer
City
635
31
635
31
Other
605
24
147
7
24
605
908
36
479
26
387
63
326
98
823
193
149
292
326
98
193
823
231
25
292
149
231
25
326
98
592
168
918
266
234
135
071
195
305
330
499
37
167
95
666
132
597
3
418
15
015
19
882
41
585
110
467
152
352
93
486
84
838
177
Net assets Beginning of year
085
1
194
522
2
607
607
3
801
Net assets End of year
178
1
546
607
2
093
785
3
639
273
5
Employee
State
Total contributions
874
1
Investment income loss
Investment income
Total investment income
Less investment advisor fee
Net investment income loss
Total additions
DEDUCTIONS
Benefits paid
Refunds former plan members
786
Administrative expense
Total deductions
G 4
786
COMPLIANCE SECTION
Turner A Wiggins C
A
P
Donald J Smit C
A
P
Pamela M Burby C
A
P
John S Reineke C
A
P
INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities the businesstype activities each
major fund and the aggregate remaining fund information of the City of Frostproof Florida the City
as of and for the year ended September 30 2010 which collectively comprise the City
s basic financial
statements and have issued our report thereon dated March 1 2011 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
Internal Control Over Financial Reporting
In planning and performing our audit we considered the City
s internal control over financial reporting as a
basis for designing our auditing procedures for the purpose of expressing our opinions on the financial
statements but not for the purpose of expressing an opinion on the effectiveness of the City
s internal
control over financial reporting Accordingly we do not express an opinion on the effectiveness of the
s internal control over financial reporting
City
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees in the norinal course of performing their assigned functions to prevent or
detect and correct misstatements on a timely basis A material weakness is a deficiency or combination of
deficiencies in internal control such that there is a reasonable possibility that a material misstatement of
the City
s financial statements will not be prevented or detected and corrected on a timely basis
Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in the internal control over
financial reporting that might be deficiencies significant deficiencies or material weaknesses We did not
identify any deficiencies in internal control over financial reporting that we consider to be material
weaknesses as defined above
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City
s financial statements are free of material
misstatement we performed tests of its compliance with certain provisions of laws regulations contracts
and grant agreements noncompliance with which could have a direct and material effect on the
detennination of financial statement amounts However providing an opinion on compliance with those
provisions was not an objective of our audit and accordingly we do not express such an opinion The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards
H
30 Fourth Street S
1
863 2998084 42729 U
www com
epawinterhaven
863 3530001
Page Two
We noted certain matters that we reported to the management of the City in the accompanying
management letter dated March 1 2011
This report is intended solely for the information and use of management City Council others within the
entity and federal and state awarding agencies and pass through entities and is not intended to be and
should not be used by anyone other than these specified parties
M44
coo
14
SAit
Rei
J
OUPE
j
fwmpa
ekeSt
March 1 2011
H 2
Turner A Wiggins
Donald J Smit
Pamela M Burby
John S Reineke
G
i
ompany P
A
Certified Public Accountants
INDEPENDENT AUDITORS REPORT ON COMPLIANCE WITH
REQUIREMENTS THAT COULD HAVE A DIRECT AND
MATERIAL EFFECT ON EACH MAJOR FEDERAL PROGRAM
AND STATE PROJECT AND ON INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A133
AND CHAPTER 10
550 RULES OF THE AUDITOR GENERAL
Compliance
We have audited the compliance of the City of Frostproof Florida the City with the types of
compliance requirements described in the U
S Office of Management and Budget OMB Circular A133
Compliance Supplement and the requirements described in the State of Florida Department of Financial
Services State Projects Compliance Supplement that could have a direct and material effect on each of its
major federal programs and state projects for the year ended September 30 2010 The City
s major federal
programs and state projects are identified in the summary of auditors results section of the accompanying
Schedule of Findings and Questioned Costs Compliance with the requirements of laws regulations
contracts and grants applicable to each of its major federal programs and state projects is the responsibility
of the City
s management Our responsibility is to express an opinion on the City
s compliance based on
our audit
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States OMB Circular A133 Audits ofStates
Local Governments and Non Profit Organizations and Chapter 10
Those standards OMB Circular A133 and Chapter 10
550 Rules of the Auditor General require that we
plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of
compliance requirements referred to above that could have a direct and material effect on a major federal
program or state project occurred An audit includes examining on a test basis evidence about the City
s
compliance with those requirements and performing such other procedures as we considered necessary in
the circumstances We believe that our audit provides a reasonable basis for our opinion Our audit does
not provide a legal determination of the City
s compliance with those requirements
In our opinion the City complied in all material respects with the compliance requirements referred to
above that could have a direct and material effect on each of its major federal programs and state projects
for the year ended September 30 2010
Internal Control Over Compliance
The management of the City is responsible for establishing and maintaining effective internal control over
compliance with the requirements of laws regulations contracts and grants applicable to federal programs
and state projects In planning and performing our audit we considered the City
s internal control over
compliance with the requirements that could have a direct and material effect on a major federal program
or state project in order to determine our auditing procedures for the purpose of expressing our opinion on
compliance and to test and report on internal control over compliance in accordance with OMB Circular A
133 and Chapter 10
550 Rules of the Auditor General but not for the purpose of expressing an opinion
on the effectiveness of internal control over compliance Accordingly we do not express an opinion on the
effectiveness of the City
s internal control over compliance
H 3
30 Fourth Street S
863 299 8084
42729 U
epawinterhaven
www
com
863 353 0001
C
A
P
A
P
C
A
P
C
A
P
C
Page Two
A deficiency in internal control over compliance exists when the design or operation of a control over
compliance does not allow management or employees in the normal course of performing their assigned
functions to prevent or detect and correct noncompliance with a type of compliance requirement of a
federal program or state project on a timely basis A material weakness in internal control over
compliance is a deficiency or combination of deficiencies in internal control over compliance such that
there is a reasonable possibility that material noncompliance with a type of compliance requirement of a
federal program or state project will not be prevented or detected and corrected on a timely basis
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be deficiencies significant deficiencies or material weaknesses We did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses as
defined above
This report is intended solely for the information and use of management City Council others within the
City federal and state awarding agencies and pass through entities and is not intended to be and should
not be used by anyone other than these specified parties
lf1n
Snvu nekeC
o
ei rnPana 1
t
3tcRPr
March 1 2011
H 4
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AND STATE FINANCIAL ASSISTANCE PROJECTS
Federal CFDA
Grant or Program Title
State CSFA
ContractGrant Number
Expenditures
FEDERAL FINANCIAL AWARDS
U Department of Environmental Protection
S
Indirect Program
Passed through the Florida Department
of Environmental Protection
Capitalization GrantsState Revolving Fund
458
66
CS120001 050
738
16
2010 JAGC Polk8 4X 121
803
16
2010 ARRCPolk2 W7 032
301
937
S Department of Justice
U
Bureau of Justice Assistance
Indirect Programs
Passed through the Florida Department of
Law Enforcement
Edward Byrne Memorial JAG Program
Edward Byrne Memorial JAG Program
6
1
19
000
15
119
21
Total U
S Department of Justice
Total Federal Financial Awards
420
958
STATE FINANCIAL AWARDS
Florida Department of Environmental
Protection Agency
Passed through Ecosystem Management
and Restoration TF
Statewide Surface Water Restoration
and Wastewater Projects
039
37
LP 6824
860
1
419
860
1
419
Total State Financial Awards
H 5
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AND STATE FINANCIAL ASSISTANCE PROJECTS
September 30 2010
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A
General Statement
The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance
Projects includes the federal and state grant activity of the City of Frostproof Florida The
information in this schedule is presented in accordance with accounting principles generally
accepted in the United States of America as applicable to governmental units and the requirements
of the Office of Management and Budget OMB Circular A133 Audits of States Local
Governments and Non Profit Organizations and Chapter 10
Therefore some amounts presented in this schedule may differ from amounts presented in or used
in the preparation of the basic financial statements
B
Basis of Accounting
The basis of accounting refers to when revenues and expenditures are recognized in the accounts and
reported in the basic financial statements Grant related expenditures for the governmental fund
types are presented using the modified accrual basis of accounting Grant related expenditures for
the proprietary fiend types are presented using the accrual basis of accounting Generally monies
must be expended on the specific purpose or project before any amounts will be paid to the City
therefore revenues are recognized based upon expenditures recorded
LOANSPAYABLE
NOTE2
The City has entered into agreements with the State of Florida Department of Environmental
Protection under a federal program whereby the State provides low interest loans to the City to
finance the cost of specified capital improvements to the City
s wastewater system The details of
these loans are described in Note 3 of the financial statements The proceeds from these loans are
disbursed to the City on a reimbursement basis as eligible construction expenditures are incurred
NOTE 3
RECONCILIATION OF RECEIPTS AND EXPENDITURES
The City has received reimbursements in the current year for prior year expenditures as follows
Federal Awards CFDA 66
458
Current year expenditures
Prior year expenditures
Total accrued reimbursement
301
937
661
21
962
958
Federal Awards CFDA 97
036
031
5
5
State Awards CSFA 37
039
Current year expenditures
NOTE 4
860
1
419
562
34
894
1
981
CONTINGENCIES
Grant monies received and disbursed by the City are for specific purposes and are subject to review
by the grantor agencies Such reviews may result in requests for reimbursement due to disallowed
expenditures Based upon prior experience the City does not believe that such disallowances if
any would have a material effect on the financial position of the City
H 6
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FEDERAL AWARDS AND STATE PROJECTS
A
SUMMARY OF AUDITORS RESULTS
Financial Statements Section
1
The type of auditors report issued on the financial statements
2
Internal control over financial reporting
3
Unqualified
Material weaknesses identified
No
Significant deficiencies not considered to be material weaknesses
No
Noncompliance material to the financial statements
6
1
Federal Awards and State Projects Section
4
5
6
Internal control over a major federal program or state project
Material weaknesses identified
No
Significant deficiencies not considered to be material weaknesses
No
The type of auditors report issued on compliance with requirements
applicable to the major federal programs and state projects
Audit findings that are required to be reported in accordance with
section 510
a of OMB Circular A133 or Chapter 10
557 Rules of
No
the Auditor General
7
Unqualified
Programs tested as major programs
Federal CFDA 66
458 Capitalization GrantsState Revolving Funds
Passed through the Florida Department of Environmental Protection
State CSFA 37
039
Statewide Surface Water Restoration and Wastewater
Projects Passed through Ecosystem Management and Restoration TF
Department of Environmental Protection Agency
D
8
The threshold used for distinguishing between Type A and B programs
9
Auditee qualified as lowrisk pursuant to OMB Circular A133
FINANCIAL STATEMENTS FINDINGS
No findings reported
C FINDINGS AND QUESTIONED COSTSMAJOR FEDERAL PROGRAMS
OR MAJOR STATE PROJECTS
No findings reported
D
OTHER ISSUES
10 No Summary Schedule of Prior Audit Findings is required because there were no
prior audit findings related to state projects and a federal single audit was not
required in the prior year
11 No Corrective Action Plan is required because there were no findings required to be
reported under the Federal or Florida Single Audit Acts
H 7
000
300
No
Turner A Wiggins C
A
P
Donald J Smit C
A
P
Pamela M Burby C
A
P
John S Reineke C
A
P
Company P
A
Certified Public Accountants
INDEPENDENT AUDITORS MANAGEMENT LETTER
We have audited the financial statements of the City of Frostproof Florida the City as of and for the
fiscal year ended September 30 2010 and have issued our report thereon dated March 1 2011
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America the standards applicable to financial audits contained in Government Auditing Standards issued
by the Comptroller General of the United States and OMB Circular A133 Audits of States Local
Governments and Non Profit Organizations We have issued our Independent Auditors Report on
Compliance and Internal Control over Financial Reporting and Compliance and Other Matters
Independent Auditors Report on Compliance with Requirements Applicable to each Major Federal
Program and State Project and on Internal Control over Compliance and Schedule of Findings and
Questioned Costs Disclosures in those reports and schedule which are dated March 1 2011 should be
considered in conjunction with this management letter
Additionally our audit was conducted in accordance with the provisions of Chapter 10
550 Rules of the
Auditor General which governs the conduct of local governmental entity audits performed in the State of
Florida This letter includes the following information which is not included in the aforementioned
s reports or schedule
auditor
Section 10
l Rules of the Auditor General requires that we determine whether or not
i
1
554
corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report Corrective actions have been taken to address findings
and recommendations made in the preceding annual financial audit report except as noted below
under the heading Prior Year Findings and Recommendations
Section 10
2 Rules of the Auditor General requires our audit to include a review of the
i
1
554
provisions of Section 218
415 Florida Statutes regarding the investment of public funds In
connection with our audit we determined that the City of Frostproof complied with Section
415 Florida Statutes
218
Section 10
3 Rules of the Auditor General requires that we address in the management
i
1
554
letter any recommendations to improve financial management In connection with our audit we
have the following finding and recommendation
Finding 1001
Retainage for completed work on the City
s wastewater construction project was not
recorded into the City
s transactions
Criteria
Accounts payable for proprietary funds should include all liabilities of that fund
u x
30 Fourth Street S
863 2998084
42729 U
epawinterhaven
www
com
863 3530001
Page 2
Context
Payables related to the construction project were recorded as pay requests were approved
Since retainage was deducted from the amount currently due the contractor it was not
included in the recorded payables
Effect
Since this is related to a construction project for which the City is receiving grant revenue
the omission of retainage payable also impacted grant revenue and receivable as
expenses are accrued
Cause
It appears the cause of this omission was human error
Recommendation
Capturing nonroutine liabilities requires attentiveness and thought Every effort should
be made to consider what significant transaction might not have been captured in the
s general ledger
City
Section 10
4 Rules of the Auditor General requires that we address violations of
i
1
554
provisions of contracts or grant agreements or abuse that have occurred or are likely to have
occurred that have an effect on the financial statements that is less than material but more than
inconsequential In connection with our audit we did not have any such findings
Section 10
5 Rules of the Auditor General provides that the auditor may based on
i
1
554
professional judgment report the following matters that have an inconsequential effect on
financial statements considering both quantitative and qualitative factors 1 violations of
provisions of contracts or grant agreements fraud illegal acts or abuse and 2 deficiencies in
internal control that are not significant deficiencies In connection with our audit we did not
have any such findings
Section 10
6 Rules of the Auditor General requires that the name or official title and
i
1
554
legal authority for the primary government and each component unit of the reporting entity be
disclosed in this management letter unless disclosed in the notes to the financial statements For
the legal authority of the City of Frostproof Florida see Footnote A of the Summary of
Significant Accounting Policies in the Notes to Financial Statements of the basic financial
statements The City does not have any component units included in its reporting entity
Section 10
a Rules of the Auditor General requires a statement be included as to
7
i
1
554
whether or not the local governmental entity has met one or more of the conditions described in
Section 218
1 Florida Statutes and identification of the specific condition
503
s met In
connection with our audit we determined that the City of Frostproof Florida did not meet any of
the conditions described in Section 218
1 Florida Statutes Although the City Hall
503
Restoration Expendable Trust Fund has a deficit in unrestricted fund balance the General Fund
has a sufficient unreserved fund balance to cover this deficit
H 9
Page 3
Section 10
b Rules of the Auditor General requires that we determine whether the
7
i
1
554
annual financial report for the City of Frostproof Florida for the fiscal year ended September 30
2010 filed with the Florida Department of Financial Services pursuant to Section 218
a
1
32
Florida Statutes is in agreement with the annual financial audit report for the fiscal year ended
September 30 2010 In connection with our audit we determined that these two reports were in
agreement
Sections 10
c and 10
7
i
1
554
7 Rules of the Auditor General we applied financial
556
condition assessment procedures It is management
s responsibility to monitor the City
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 The results of
our financial condition assessment procedures indicated that the City
s overall financial condition
was not deteriorating as of September 30 2010
PRIOR YEAR FINDINGS AND RECOMMENDATIONS
Finding 1002
Internal controls over capital assets inventory continue to be a problem this year
Criteria
The City should have inventory records by department heads which reconcile to the
s historic capital asset records
City
Context
This was a finding in prior years The City has previously been working on this problem
but employees have lacked the time to complete the inventory records
Effect
The City has not adequately safeguarded capital assets and inventory items from loss or
misappropriation
Cause
The capital asset reconciliation process is not finished due to the amount of time needed
to complete this project The personnel involved have to work on this project in addition
to their normal daily duties
Recommendation
The City should complete this project and thereafter these records should be kept current
and updated for proper disposals and additions
The City
s response to the findings identified in our management letter is described in the accompanying
explanation to the auditors management letter We did not audit the City
s response and accordingly
we express no opinion on it
H 10
Page 4
Pursuant to Chapter 119 Florida Statutes this management letter is a public record and its distribution is
not limited Auditing standards generally accepted in the United States of America require us to indicate
that this letter is intended solely for the information and use of management and the Florida Auditor
General and is not intended to be and should not be used by anyone other than these specified parties
oe
M44Ln
nekee6YrnPoiw 1
March 1 2011
11
H
1
gfie 1711iznclltt 611t y
CITY OF FROSTPROOF
S FXPLA ATION
TO MANAGEMENT LETTER
Auditor General
s Office
Claude Popper Building Room 401
111 West Madison Street
Tallahassee Florida 32399
1450
In response to the findings and recommendations in the Management Letter issued ire accordance with the
rules of the Auditor General
State of Florida by our auditars Wiggins Smit Burly Roineke
P Certified Public Accountants we submit the following
A
Co
CURRE YEAR FINDINGS AND RFCONMENDATIONS
Finding 10
01
Retainage for completed work on the City
s wastewater construction project was not
recorded into the City
s transactions
Comments on Findings The City agrees
n or P
lanned The my i6alii6s the Iiiixtarice d fakiiij4 tzoiia steps
when involved in larger projects and will make a conscientious effort to be mindful of
unusual transactions
Finding 1042
Internal controls over capital assets inventory continue to be a problem this year
Comments on Findings The City agrees
Actions Taken or Planned The inventory has been compiled but not reconciled with
the capital assets record The City has purchased fixed asset software and will continue
working on this project until complete
Sincerely
Melod
Finance Manager
Wa
March 3 2011
H 12
Frostproof Florida
Equal Opportunity Employer
111 WEST FIRST STREET 2ND FLOOR
FROSTPROOF FLORIDA 33843
0308
O BOX 308
P
863 635
7855
FAX 863 635
7856
SUNCOM 515
2366

Year ended 2010 - City of Frostproof

Transcription

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