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HomeMy Public PortalAboutCAFR 1992.pdfCOMPREHENSIVE ANNUAL FINANCIAL REPORT of the Village of Key Biscayne, Florida for the Fiscal Year Ended September 30, 1992 Prepared by The Finance Department VILLAGE OF KEY BISCAYNE, FLORIDA COUNCIL - MANAGER FORM OF GOVERNMENT VILLAGE COUNCIL Rafael Conte, Mayor Michael Hill, Councilman Betty Q. Sime, Councilwoman Cliff Brody, Councilman Ray Sulllivan, Vice -Mayor Joe Rasco, Councilman Mortimer Fried, Councilman VILLAGE MANAGER C. Samuel Kissinger VILLAGE ATTORNEY Weiss, Serota & Helfman FINANCE DIRECTOR Jack Neustadt INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Rachlin & Cohen VILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 1992 TABLE OF CONTENTS PAGE I. INTRODUCTORY SECTION Letter of Transmittal 1-6 Village of Key Biscayne Organization Chart 7 II. FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT 9 GENERAL PURPOSE FINANCIAL STATEMENTS (COMBINED STATEMENTS - OVERVIEW): Combined Balance Sheet - All Fund Types and Account Groups 11 Statement of Revenues, Expenditures and Changes in Fund Balance - General Fund 12 Statement of Revenue, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund 13 Index to Notes to Financial Statements 15 Notes to Financial Statements 17-24 COMBINING AND INDIVIDUAL FUND AND ACCOUNT GROUP - STATEMENTS AND SCHEDULES GENERAL FUND: Balance Sheet Schedule of Revenues and Expenditures - Budget and Actual (Supplemental Data) 25 26-27 FIDUCIARY FUND: Statement of Changes in Assets and Liabilities - Agency Fund 29 ACCOUNT GROUP: GENERAL FIXED ASSETS ACCOUNT GROUP: Schedule of General Fixed Assets By Source 31 VILLAGE OF KEY BISCAYNE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 1992 TABLE OF CONTENTS (CONTINUED) PAGE III. STATISTICAL TABLES (SUPPLEMENTAL DATA): Comments on the Statistical Tables 33 General Government Expenditures by Function 35 General Revenues By Source 36 Assessed and Estimated Actual Value of All Taxable Property 37 Property Values, Construction and Bank Deposits 38 Utilities Service Tax Revenue By Source 39 Franchise Revenue By Source 40 Interest Revenue By Source 41 Principal Taxpayers 42 Demographic Statistics 43 Miscellaneous Statistical Data 44 IV. SUPPLEMENTARY AUDITOR'S REPORTS SECTION: Independent Auditor's Report on Internal Control Structure Based on an Audit of General Purpose Financial Statements Performed in Accordance With Government Auditing Standards Independent Auditor's Report on Compliance Based on an Audit of General Purpose Financial Statements Performed in Accordance With Government Auditing Standards 45-48 49-50 Introductory Section Department of Finance Mayor Rafael Conte Vice Mayor Clifford Brody Village Council Mortimer Fried Michael Hill Joe Rasco Betty Sime Raymond P Sullivan Honorable Mayor and Village Council Village of Key Biscayne, Florida The Comprehensive Annual Financial Report of the Village of Key Biscayne for the fiscal year ended September 30, 1992, is hereby submitted. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the Village. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of the Village. All disclosures necessary to enable the reader to gain an understanding of the Village's financial activities have been included. The comprehensive annual financial report is presented in four sections. The introductory section includes this transmittal letter, the Village's organizational chart and a list of principal officials. The financial section includes the auditor's report on the financial statements and the individual fund and account group financial statements and schedules. The statistical section includes selected financial and demographic information. The fourth section contains the Report on Internal Control Structure and the Report on Compliance with Laws and Regulations submitted by our auditors. Government Structure The Village of Key Biscayne was incorporated on June 18, 1991, and operates under a Council -Manager form of government. The Village Council is comprised of the Mayor and six members and is responsible for enacting ordinances, resolutions and regulations governing the Village as well as appointing the members of various advisory boards, the Village Manager, Village Attorney and Village Clerk. As Chief Administrative Officer, the Village Manager is responsible for enforcement of laws and ordinances and appoints and supervises the department heads of the Village. ECONOMIC CONDITIONS AND OUTLOOK General Information LOCATION: Key Biscayne is a barrier island situated between the Atlantic Ocean to the east and Biscayne Bay to the west. The island is located just south of Virginia Key, a separate island connected to the mainland south of downtown Miami by the Rickenbacker Causeway. The 1990 U.S. Census population was 8,854 and another 4,000 reside on the island seasonally. 85 West McIntyre Street • Key Biscayne, Florida 33149 • (305) 365-8903 • Fax (305) 365-5556 MISSION STATEMENT T O PROVIDE A SAFE, QUALI TY ('OMMUNI I'Y ENVIRONMENT FOR ALI ISLANDERS THROUGH RI SPONSIBLE GOVERNMENT" -1- The Village, an incorporated municipality of approximately 1.25 square miles, is located on the Island of Key Biscayne and is bordered to the north by Crandon Park, a 960 acre county park administered by Dade County, and to the south by Bill Baggs Cape Florida State Recreation Area, a park of approximately 600 acres. DISLOCATION EVENT AND ITS IMPACT: On Monday, August 24th, Hurricane Andrew paid a visit to Key Biscayne making an impact that will be felt for decades. Water caused flooding of homes, schools, businesses, hotel, streets, and landscaping. Wind did additional damage to structure and vegetation. MAJOR INITIATIVES: During this initial year of incorporation, most services were provided by Dade County. Property taxes for the year were assessed, collected, and retained by Dade County. The Village has advised Dade County, as provided in the interlocal agreement with the County, that the Village Police Department will be activated as of March 1, 1993. The Village council adopted the General Fund budget on September 29, 1992, and also established a stormwater utility fund. FINANCIAL INFORMATION Accounting System. Internal and Budgetary Control The Village's accounting records for governmental funds operations are maintained on a modified accrual basis, with revenues being recorded when available and measurable, and expenditures being recorded when the services or goods are received and the liabilities are incurred. Budgetary control is maintained at the fund level. Expenditures that could result in an overextended balance are not released until additional appropriations are made available. Internal accounting controls have been designed to provide reasonable, but not absolute, assurance regarding safeguarding of assets against loss from unauthorized use or disposition and the reliability of financial records for preparing financial statements and maintaining accountability. The concept of reasonable assurance recognizes that the cost of control should not exceed the benefits likely to be derived and the evaluation of costs and benefits requires estimates and judgment by management. All internal control evaluations occur within the above framework. We believe the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. -2- Reporting Entity and its Services The City includes for financial reporting purposes, in conformance with NCGA Statement 3, all funds and account groups that are controlled by or dependent upon the Village Council. The Village currently provides the following services for its citizens: Public Safety (fire protection provided by Dade County), Police (by March 1, 1993), Planning and Zoning, Building Permits, Public Works, Parks and Recreation facilities, Development, General and Administrative services. Reporting Standards The form and content of the Comprehensive Annual Financial Report and the accompanying financial statements and statistical tables were prepared in conformance with standards set forth by: 1. Governmental Accounting Standards Board (GASB) 2. Financial Accounting Standards Board (FASB) 3. National Council on Governmental Accounting (NCGA) 4. The Auditor General, State of Florida 5. The Charter of the Village of Key Biscayne 6. The Government Finance Officers Association of the United States and Canada General Government Functions The General Fund is the general operating fund of the Village. General tax revenues and other receipts that are not allocated by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures, fixed charges and capital improvement costs not paid through other funds are paid from this fund. The amount of revenues from various sources and their percent to total are shown in the following schedule: Revenues: Revenue Sources Percent Amount, of Total Fees and Licenses $ 15,766 .8% Intergovernmental 60,738 3.0% Utility Taxes 979,236 48.5% Franchise Fees 151,392 7.5% Other 23,276 1.1% FEMA 783,280 38.9% Interest 4.480 2% Total S2.018.168 100.0% -3- The intergovernmental revenue source represents state shared revenues for which the Village qualified as of July 1, 1992 Expenditures: Percent Function Amount of Total General Government $ 484,051 30.6% Public Works 86,580 5.5% Community Development 45,408 2.9% Parks & Recreation 11,779 .8% Public Safety 13,511 .9% Disaster Relief (Hurricane) 783,280 49.6% Non -Departmental 90,000 5.7% Capital Outlay 65.261 4.0% Total S1,579,870 122A.2% Fiduciary Funds Fiduciary Funds are Trust and Agency Funds established for the purpose of accounting for assets held in a trustee capacity or as an agent for individuals, private organizations and other governments. As of September 30, 1992, the following were recorded as Fiduciary Funds: Deferred Compensation The Deferred Compensation Fund accounts for certain deferred compensation plans offered by the City for its employees. These plans were created in accordance with Internal Revenue Codes §457 and §401. The plans, managed by independent plan administrators, permit employees to defer a portion of their salary until future years. The Deferred Compensation fund had $4,113 in investments for the fiscal year ended September 30, 1992. Cash Management The Village had two cash management vehicles in this first fiscal year; an investment account or money market account in the Key Biscayne Bank under an agreement which provides for overnight investments of both the investment account and the operating account. In addition, the Village has an investment account with the Florida Local Government Trust Fund administered by the State Board of Administration, which was modest as of September 10, 1992. It is anticipated that this will be the primary cash management vehicle for surplus funds in the future. Department Administration The Village established a one million dollar line of credit with the Key Biscayne Bank. The Village, on September 22, 1992, borrowed $250,000 against that Credit Line to pay contractors hired to remove debris caused by Hurricane Andrew. This loan remained outstanding at the close of the Fiscal Year and was repaid on October 23, 1992. -4- Aisk Management The village is insured with the Florida Municipal Insurance Trust for liability and property coverages; and with the Florida Municipal Self Insurance Fund for Workers Compensation coverage. The liability limit under the policy is $5,000,000. Enterprise Funds Enterprise Funds are established to finance and account for the acquisition, operation and maintenance of facilities and services, and the cost of providing these goods and services on a continuing basis is financed through the collection of charges from users. For the 1992-93 Fiscal Year, the Village Council established a budget for the Stormwater Management Utility Fund. The Village is in the process of hiring an engineering firm to design and prepare plans for the Stormwater Management System. General Fixed Assets The general fixed assets of the Village are those assets used in the performance of general governmental functions. In accordance with generally accepted accounting principles for local governments, the Village does not record depreciation on general fixed assets nor does it record roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and similar assets that are immovable and of value only to the Village. Assets are recorded at cost except donations which are recorded at fair market value at the date of receipt. As of September 30, 1992, the general fixed assets acquired amount to $65,261. Independent Audits Provisions in the State Statutes require an annual audit of the books of account, financial records and transactions of all administrative departments of the Village by independent Certified Public Accountants. This requirement has been complied with and the auditor's report has been included in this report. Certificate of Achievement for Excellence in Financial Reporting The Government Finance Officers Association of the United States and Canada (GFOA) awards a Certificate of Achievement for Excellence in Financial Reporting. The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. We believe our current report conforms to the Certificate of Achievement Program requirements, and we are submitting it to CFOA. -5- Acknowledgements The preparation of this report could not have been accomplished without the efficient and dedicated services of the staff of the Village. We express our appreciation to all members of the Staff who assisted and contributed to the preparation of this report. A special vote of thanks and appreciation is also extended to the firm of Rachlin & Cohen for their professional approach and high standards in the conduct of their independent audit of the City's financial records and transactions. Respectfully submitted, C. Samuel Kissinge Village Manager `r1204ta-r Jack Neustadt Finance Director -6- VILLAGE OF REY BISCAYNE, FLORIDA ORGANIZATIONAL CHART VILLAGE COUNCIL. VILLAGE MAYOR VIIAGO CLERIC VILLAGE MANAGER VXItAGE ATTORNET PUBLIC WORKS PUBLIC . SAFETY COMMUNITY AFFAIRS GENERAL GOVERNMENT PARKS & RECREATION COMMUNITY DEVELOPMENT Financial Section RACHLIN & COHEN CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS 1320 SOUTH DIXIE HIGHWAY PENTHOUSE CORAL GABLES, FLORIDA 33146-2964 TELEPHONES: DADE (305) 667-0412 BROWARD (305) 764-7717 FAX: (305) 665-7456 Independent Auditor's Report To the Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida 700 SOUTHEAST THIRD AVENUE SUITE 400 FT. LAUDERDALE, FLORIDA 33316-1102 TELEPHONES: BROWARD (305) 764-7717 DADE (305) 667-0412 FAX: (305) 764-7835 We have audited the general purpose financial statements of the Village of Key Biscayne, Florida as of September 30, 1992 and for the year then ended, as listed in the table of contents. These financial statements are the responsibility of the Village's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and 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 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 opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Village of Key Biscayne, Florida, at September 30, 1992 and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. Our audit was conducted for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The individual fund and account group financial statements for the year ended September 30, 1992 and the schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the Village of Key Biscayne, Florida. Such information has been subjected to auditing procedures that were applied in the audit of the general purpose financial statements and, in our opinion, is fairly presented in all material respects in relation to the general purpose financial statements taken as a whole. The information shown in the statistical section listed in the table of contents has not been subjected to the auditing procedure applied in the audit of the general purpose financial statements and, accordingly, we express no opinion thereon. Coral Gables, Florida December 11, 1992 -9- MEMBER OF SL MMIT INTERNATIONAL ASWR'IATES, INC WITH OFFICES IN PRINCIPAL CITIES THROUGHOUT THE WORLD GENERAL PURPOSE FINANCIAL STATEMENTS (COMBINED STATEMENTS - OVERVIEW) VILLAGE OF KEY BISCAYNE, FLORIDA COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUP GOVERNMENTAL FIDUCIARY FUND TYPE FUND TYPE GENERAL AGENCY ASSETS Cash $ 114,297 $ Investments, At Market Due From FEMA, Net of Allowance For Disallowed Claims of $90,000 1,887,674 Utility Deposit General Fixed Assets Total Assets LIABILITIES. FUND BALANCE AND OTHER CREDITS 50 4,113 $2,002.021, $ 4.113, LIABILITIES: Accounts Payable and Accrued Expenses $ 106,199 $ Note Payable - Short Term 250,000 Deferred FEMA Revenue 1,194,394 Deferred Rent 13,130 Deferred Benefits Payable _ Total Liabilities FUND BALANCE AND OTHER CREDITS: Investment in General Fixed Assets 4.113 1.563.723 4.113 Fund balance: Reserved For Beach Restricted Fund 20,237 Unreserved and Undesignated 418.061 Total Fund Balance and Other Credits 438.298 Total Liabilities, Fund Balance and Other Credits $2,002,021 $ 4.113 ACCOUNT GROUP GENERAL FIXED ASSETS 65.261 TOTALS (MEMORANDUM ONLY) SEPTEMBER 30, 1992 $ 114,297 4,113 1,887,674 50 65,261 1.11,Lil $2,071,395 65,261 65,261 $ 106,199 250,000 1,194,394 13,130 4,113 1.567.836 65,261 20,237 418.061 503,559 65 261 U.071.395 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS -11- VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - GENERAL FUND FISCAL YEAR ENDED SEPTEMBER 30, 1992 GOVERNMENTAL FUND TYPE GENERAL REVENUES: Utility Taxes $ 979,236 Franchise Fees 151,392 Intergovernmental 60,738 Licenses and Permits 15,766 Other 23,276 Interest 4,480 FEMA 783,280 Total Revenues 2,018.168 EXPENDITURES: Current: General Government 484,051 Public Works 86,580 Community Development 45,408 Parks and Recreation 11,779 Public Safety 13,511 Hurricane 783,280 Non -Departmental 90,000 Capital Outlay 65.261 Total Expenditures EXCESS REVENUE OVER EXPENDITURES FUND BALANCE, OCTOBER 1, 1991 FUND BALANCE, SEPTEMBER 30, 1992 1,579.870 438,298 $ 438,298 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS -12- VILLAGE OF KEY BISCAYNE, FLORIDA STATEMENT OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL - GENERAL FUND FISCAL YEAR ENDED SEPTEMBER 30, 1992 REVENUES: Utility Taxes Franchise Fees Intergovernmental Licenses and Permits Other Interest FEMA BUDGET $ 800,000 1,024,700 Total Revenues 1.824.700 EXPENDITURES: Current: General Government Public Works Community Development Parks and Recreation Public Safety Hurricane Non -Departmental Capital Outlay 696,200 108,000 143,000 165,000 627,000 85.500 Total Expenditures 1.824.700 EXCESS REVENUES OVER EXPENDITURES VARIANCE FAVORABLE ACUAL (UNFAVORABLE) $ 979,236 $179,236 151,392 151,392 60,738 (963,962) 15,766 15,766 23,276 23,276 4,480 4,480 783.280 783.280 2.018.168 193.468 484,051 212,149 86,580 21,420 45,408 97,592 11,779 153,221 13,511 613,489 783,280 (783,280) 90,000 ( 90,000) 65.261 20.239 1.579.870 244.830 S 438.298 $438.298 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS -13- VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1992 PAGE NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( 1) Financial Reporting Entity 17 ( 2) Basis of Presentation - Fund Accounting 18 ( 3) Financial Statement Measurement Focus 18 ( 4) Basis of Accounting 19 ( 5) Budgets And Budgetary Accounting 20 ( 6) Memorandum Only - Total Columns 20 NOTE B - DEPOSITS AND INVESTMENTS 21 NOTE C - FIXED ASSETS 21 NOTE D - NOTE PAYABLE - SHORT TERM 21 NOTE E - LITIGATION, COMMITMENTS AND SUBSEQUENT EVENT 22 NOTE F - DEFERRED COMPENSATION PLAN 23 NOTE G - DEFINED CONTRIBUTION PLAN 23 NOTE H - POST -EMPLOYMENT BENEFITS 23 VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1992 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of the Village of Key Biscayne's significant accounting policies is presented to assist the reader in interpreting the financial statements and other data in this report. The policies are considered essential and should be read in conjunction with the accompanying financial statements. The accounting policies of the Village of Key Biscayne conform to generally accepted accounting principles (GAAP) as applied to governmental units. This report, the accounting systems and classification of accounts conform to standards of the Governmental Accounting Standards Board (GASB) and the Government Finance Officers Association of the United States and Canada (GFOA), which is the accepted standard -setting body for establishing governmental accounting and financial reporting principles. Accounting treatment and the financial statements also incorporate current recommendations of the National Committee on Governmental Accounting and auditing standards of the American Institute of Certified Public Accountants included in the Industry Audit Guide "Audits of State and Local Governmental Units". 1. Financial Reporting Entity The Village of Key Biscayne (Village), located in Dade County, is a political subdivision of the State of Florida. The Village, which was incorporated in 1991, operates under a Council -Manager form of government. Under the initial government, six council members and the Mayor were elected by the voters. The Village will hold municipal elections for fiscal year 1993. Effective for fiscal year 1994, each council member will serve a four year term (limited to two consecutive terms). The Mayor will hold office for a two year term (limited to two consecutive terms). The Vice -Mayor is appointed by the council and Mayor for a one year term. During the absence or incapacity of the Mayor, the Vice -Mayor shall have all the powers, authority, duties and responsibilities of the Mayor. The Mayor serves as chairperson of public meetings and executes certain documents authorized by charter, ordinance or resolution. In addition to the general government function, the Village provides its residents with public works, public safety, parks and recreation, and community development functions. The Village does not provide educational, fire or hospital facilities. Those services are provided by the Dade County School Board and Metropolitan Dade County, respectively. This report includes financial statements of the funds and account group required to account for those financial activities which are related to the Village and are controlled by or dependent upon the Village's legislative body, the Village Council. Control or dependence upon the Village was determined on the basis of budget adoption, taxing authority, or the Village's legal responsibility to fund any deficits that may occur. -17- VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1992 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2. Basis of Presentation — Fund Accounting The Village's accounting systems are organized and operated on the basis of funds and account groups, which are the basic fiscal and accounting entities in governmental accounting. A fund is a separate accounting entity with a self -balancing set of accounts. An account group is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources. The funds and account group are classified as follows: GOVERNMENTAL FUND: The GENERAL FUND is the general operating fund of the City. It is used to account for all financial resources except those that are required to be accounted for in specific funds. Resources are generated primarily from local utilities service taxes, franchises, licenses and permits, intergovernmental revenue and charges for services. Expenditures are incurred to provide public safety, general government, recreation, community development, community affairs and public works services. AGENCY FUND: The agency fund is used to account for assets that the Village holds on behalf of others as their agent. ACCOUNT GROUP: An Account Group is used to establish accounting control and accountability over the Village's general fixed assets. Accordingly, the Village maintains a General Fixed Asset Account Group. 3. Financial Statement Measurement Focus The accounting and reporting treatment applied to the fixed assets associated with the general fund is determined by that fund's measurement focus. GOVERNMENTAL FUND This fund is used to account for the Village's expendable financial resources and related current liabilities. Measurement focus is upon financial flow and financial position (sources, uses and balances of resources), rather than upon net income determination. Only current assets and current liabilities are included on its balance sheet with fund balance representing available spendable resources. -18- VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1992 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 3. Financial Statement Measurement Focus (Continued) Basic financial statements necessary to fairly present financial position and operating results for this fund is the Balance Sheet and the Statement of Revenue, Expenditures and Changes in Fund Balance. GENERAL FIXED ASSETS Fixed assets used in governmental fund type operations are accounted for in the General Fixed Assets Account Group, rather than in the governmental funds. General fixed assets purchased are initially reported as expenditures in the general fund and are capitalized at historical cost or estimated cost if actual historical cost is not available in the general fixed assets account group, except for certain infrastructure improvements which include streets, alleys, sidewalks, drainage and lighting systems. Depreciation is not required and has not been provided on general fixed assets. 4. Basis of Accounting The basis of accounting refers to the timing when revenues and expenditures are recognized in the accounts and reported in the financial statements. GOVERNMENTAL FUND This fund uses the modified accrual basis of accounting as follows: REVENUES Generally, revenues are recognized when earned except for certain revenue sources which are not susceptible to accrual. Revenues in the following categories are considered susceptible to accrual because they are both measurable and available to finance expenditures of the current period: • Intergovernmental Revenues • Interest Earned The following revenues are not considered susceptible to accrual in the governmental fund because they are not both measurable and available to finance expenditures of the current period: • Fees and Licenses • Utility Taxes • Sales Taxes • Franchise Fees -19- VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1992 A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 4. Basis of Accounting (Continued) GOVERNMENTAL FUND - REVENUES (Continued) The Village reports deferred revenues in its balance sheet. Deferred revenues arise when a potential revenue does not meet both the "measurable and available criteria" for recognition in the current period. In subsequent periods, when both revenue recognition criteria are met, the liability for deferred revenue is removed from the balance sheet and revenue is recognized. EXPENDITURES Expenditures are generally recognized when the related liability is incurred. Exceptions to this rule are: 1) accumulated unpaid vacation and sick pay, worker's compensation and capital leases, are not recognized in the General Fund since the amount to be liquidated from available spendable resources is recorded in the General Long -Term Debt Account Group; 2) principal and interest on general long-term debt which is recorded as an expenditure on its due date. Neither of the two exceptions noted above relate to the financial reporting of the Village. 5. Budgets and Budgetary Accounting The Village is legally required to adopt an annual budget for its General Fund. Budgets are controlled at the fund level and all unencumbered appropriations lapse at the end of the fiscal period. Budgets can be amended during the fiscal year by Council adoption of the proposed amendments. Budgetary comparisons presented in this report are made on a budgetary basis, which is also GAAP basis. Therefore, there are no adjustments necessary to convert budgetary basis expenditures for the year ended September 30, 1992 to a GAAP basis. There were no supplemental budgetary appropriations in the current fiscal year. The Village did not utilize encumbrance accounting in fiscal 1992, which was their inception year. 6. Memorandum Only — Total Columns Total columns on the various statements which are captioned "Memorandum Only", aggregate the columnar amounts presented by fund type and account group and are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. -20- VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1992 B. DEPOSITS AND INVESTMENTS At September 30, 1992, the Village maintained cash book balances of $114,297. The total balance per bank was $422,390. The difference between the bank balance and the Village's book balance is due to outstanding checks and deposits in transit. In addition to insurance provided by the Federal Depository Insurance Corporation (FDIC), all cash is held in banking institutions approved by the State Treasurer of the State of Florida, to hold public funds. Under Florida Statutes Chapter 280, Florida Security for Public Deposits Act, the State Treasurer requires all Florida qualified public depositories to deposit with the Treasurer or another banking institution eligible collateral equal to from 50% to 125% of the average daily balance for each month of all public deposits in excess of any applicable deposit insurance held. The percentage of eligible collateral (generally in the form of U.S. Government and agency securities, state or local government debt, or corporate bonds) to public deposits is dependent upon the depository's financial history and its compliance with Chapter 280. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. Accordingly, all amounts reported as cash are deemed as insured and are, therefore, not subject to classification by credit risk category under the provisions of GASB Statement No. 3. Included in the agency funds are investments, which are stated at market value, and are held by the ICMA Retirement Trust. CARRYING MARKET VALUE VALUE Investments in mutual funds S 4.133 S 4.113 C. FIXED ASSETS A summary of changes in general fixed assets by function is as follows: Balance October 1, 1991 Additions peletions Balance September 30, 1992 General Government 565.261, S - 565.261 D. NOTE PAYABLE — SHORT TERM The Village obtained a $1,000,000 line of credit on September 10, 1992 with a banking institution to finance emergency interim funds to pay various expenses created as a result of Hurricane Andrew until such time as it receives revenues from federal or state agencies. The Village pays 2.25% below prime with interest payable monthly on any funds drawn. The line of credit matures on September 10, 1993. The amount drawn as of September 30, 1992 which is $250,000, was repaid in October, 1992 and is reported as a current liability on the general fund balance sheet. -21- VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1992 E. LITIGATION, COMMITMENTS, AND SUBSEQUENT EVENT Litigation The Village is involved in several lawsuits the outcome of which should not have a material effect on the financial position of the Village. Commitments 1. The Village is obligated under an operating lease for office space for a period of three years commencing March 1, 1992. The lessee is not obligated to pay any rent for the first six months of the first lease year. Under generally accepted accounting principles, rent should be expensed evenly over the lease term. Therefore, deferred rent is included in the general fund balance sheet to account for the difference between rent paid and rent expensed. The following is the commitment under the lease: Fiscal Year 1993 $ 41,000 1994 50,000 1995 21.000 $112,000 2. In August 1992, the Village entered into an interlocal agreement with Metropolitan Dade County in order to 1) delineate the responsibilities for service levels, and costs of municipal services to be provided to the Village by the County for the fiscal year 1992 transition year, 2) delineate the responsibilities for service levels, and costs of municipal services, should the Village desire to continue these municipal services, for fiscal year 1993, 3) outline procedures whereby the Village may from time to time as it deems appropriate, provide all or some of those municipal services in lieu of the County, and 4) outline the general terms of future lease agreements between the County and the Village concerning specified capital assets. Subsequent Event As a result of Hurricane Andrew, the Village applied for federal assistance from the Federal Emergency Management Agency (FEMA). The Village filed damage survey reports (DSR's) with FEMA totaling $1,977,674. This is reported as a receivable, Due from FEMA, on the General Fund Balance sheet. In October 1992, the Village received $1,156,363 of the amount requested. In addition, the Village expended $807,280 for hurricane related expenditures in fiscal year 1992 offset by revenues of the same amount. The difference between the receivable and the recorded revenue is reported as deferred revenue in the General Fund Balance Sheet. -22- VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1992 F. DEFERRED COMPENSATION PLAN The Village of Key Biscayne established a deferred compensation plan in fiscal year 1992. The plan is voluntary and the Village does not contribute. Employees may elect to defer up to 25% of their annual income, not to exceed $7,500 annually. Deferred compensation deposits are made into the employees' accounts through payroll deductions before income taxes are withheld. There were no contributions for the fiscal year ended September 30, 1992. It is the opinion of the Village that the Village has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The plan assets are the property of the Village subject only to the claims of the Village's general creditors. Participant rights under the plan are equal to those of general creditors in an amount equal to the fair market value of the deferred account of the participants. G. DEFINED CONTRIBUTION PLAN The Village of Key Biscayne is a single employer that contributes to the Village of Key Biscayne Money Purchase Plan, which is a defined contribution pension plan. The plan currently covers the Village Manager. Contributions for fiscal year ended September 30, 1992 were $4,140 which is 9% of the covered payroll. A defined contribution pension plan provides pension benefits in return for services rendered, provides an individual account for each participant and specifies how contributions to the individual's account are to be determined instead of specifying the amount of benefits the individual is to receive. Under a defined contribution pension plan, the benefits a participant's account will receive depends solely on the amount contributed to the participant's account, the returns earned on investments on those contributions, and forfeitures of other participants' benefits that may be allocated to such participant's account. The Village is required to contribute an amount equal to 9% of the manager's gross earnings. The manager is not required and does not contribute to the plan. The Village has no liability to the manager covered by this plan other than the employer contribution to the plan. Assets of the plan are considered assets of the Village. Although 100% vested from the first day of employment, the manager shares equal risk with other general creditors of the Village in the unlikely event these assets would be needed to pay for liabilities of the Village. The Village's total payroll for fiscal year 1992 is $135,000 of which $46,000 is current years covered payroll. -23- VILLAGE OF KEY BISCAYNE, FLORIDA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1992 G. DEFINED CONTRIBUTION PLAN The Money Purchase Plan held no securities of the Village or other related parties during the year or as of the close of the fiscal year. H. POST —EMPLOYMENT BENEFITS The Village does not offer post -employment benefits. Therefore there is no disclosure necessary for GASB statement No. 12 "Disclosure of Information on Post -Employment Benefits." -24- COMBINING AND INDIVIDUAL FUND AND ACCOUNT GROUP STATEMENTS AND SCHEDULES GENERAL FUND • The General Fund is the principal fund of the Village and is used to account for resources traditionally associated with governments which are not required to be accounted for in another fund. VILLAGE OF KEY BISCAYNE, FLORIDA GENERAL FUND BALANCE SHEET SEPTEMBER 30, 1992 ASSETS Cash $ 114,297 Due from FEMA, net of allowance for disallowed claims of $90,000 1,887,674 Utility deposit 50 Total Assets 52,002,021 LIABILITIES AND FUND BALANCE Liabilities: Accounts payable and accrued expenses Note payable - short term Deferred FEMA revenue Deferred rent Total Liabilities Fund balance: Reserved for beach restricted fund Unreserved and undesignated Total fund balance $ 106,199 250,000 1,194,394 13,130 1,563,723 20,237 418,061 438,298 Total Liabilities and Fund Balance 52,002.021 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS -95- VILLAGE OF KEY BISCAYNE, FLORIDA GENERAL FUND SCHEDULE OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL FISCAL YEAR ENDED SEPTEMBER 30, 1992 VARIANCE FAVORABLE BUDGET ACTUAL (UNFAVORABLE) UTILITY TAXES FRANCHISE FEES INTERGOVERNMENTAL County Subsidized Revenue Sales Tax $ 800.000 $ 990,869 S 190,869 1,024,700 1,024,700 151.392 151.392 (1,024,700) 50.612 50,612 50.612 ( 974.088) LICENSES AND PERMITS: Occupational Licenses 145 145 Building Permits 14,344 14,344 Water Meter Permits 300 300 14.789 14,789 OTHER: Donations 20,760 20,760 Miscellaneous 1.986 1.986 22.746 22,746 INTEREST 4.480 4.480 FEMA REVENUE 783,280 783,280 Total revenues 11,824,700 12,018,168 2. 193,468 GENERAL GOVERNMENT: Legal: Personal Services $ $ $ Current Expenditures 150,000 202,460 ( 52,460) Capital Outlay - - 150,000 202.460 ( 52,460) Council: Personal Services Current Expenditures Capital Outlay Administrative: Personal Services Current Expenditures Capital Outlay 14,000 5,186 8,814 14.000 5,186 8,814 210,000 158,765 51,235 322,200 117,640 204,560 85.500 65,261 20.239 617,700 341.666 276,034 Total General Government $ 781,700 S 549.312 $ 232,388 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS -26- VILLAGE OF KEY BISCAYNE, FLORIDA GENERAL FUND STATEMENT OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL (Continued) FISCAL YEAR ENDED SEPTEMBER 30, 1992 PUBLIC WORKS: Personal Services Current Expenditures Capital Outlay COMMUNITY DEVELOPMENT Personal Services Current Expenditures Capital Outlay PARKS & RECREATION: Personal Services Current Expenditures Capital Outlay PUBLIC SAFETY: Personal Services Current Expenditures Capital Outlay HURRICANE EXPENDITURES: Personal Services Current Expenditures Capital Outlay BUDGET 108,000 108.000 VARIANCE FAVORABLE ACUAL (UNFAVORABLE) $ $ 86,580 21,420 86,580 21.420 143,000 45,508 97,592 143,000 45.508 97.592 165,000 11,779 153,221 165.000 11.779 153,221 627,000 13,511 613,489 627.000 13.511 613.489 783,280 (783,280) 783.280 ( 783,280) NON -DEPARTMENTAL 90.000 ( 90.000) Total Expenditures S� 24.700 $1.59.870 s 244.830 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS -27- AGENCY FUND • This Fund is used to account for assets held for employees in accor- dance with the provisions of Inter- nal Revenue Code Section 401 and 457. VILLAGE OF KEY BISCAYNE, FLORIDA AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES SEPTEMBER 30, 1992 BALANCE BALANCE OCTOBER 1, SEPTEMBER 30, 1991 ADDITIONS DELETIONS 1992 ASSETS Investments, at market LIABILITIES Deferred benefits payable S4,113 LIMFIIIIL0111= L.:LW Ste- 4113 1==L= 2...161L2 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS -29- GENERAL FIXED ASSETS ACCOUNT GROUP • To account for fixed assets used for general government purposes. VILLAGE OF KEY BISCAYNE, FLORIDA SCHEDULE OF GENERAL FIXED ASSETS BY SOURCE SEPTEMBER 30, 1992 GENERAL FIXED ASSETS: Furniture and Equipment 65 261 INVESTMENT IN GENERAL FIXED ASSETS BY SOURCE: General Fund 1.6_1.211 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 11 Statistical Section STATISTICAL TABLES (SUPPLEMENTAL DATA) VILLAGE OF KEY BISCAYNE, FLORIDA COMMENTS ON THE STATISTICAL TABLES SEPTEMBER 30, 1992 The statistical tables in this section reflect the activities of fiscal year 1992 which was the Village's initial year of operation: The following statistical tables recommended by the National Council on Governmental Accounting are not included for the reasons stated below: 1. Tables which concern general obligation debt are omitted because the Village has no general obligation debt as of September 30, 1992. 2. Computation of Legal Debt Margin - The Village's charter and the Constitution of the State of Florida, Florida State Statute 200.181 does not provide for a legal debt limit. 3. The table of Special Assessment Collections has been omitted because the Village has no outstanding assessments as of September 30, 1992. 4. Property Tax Levies and Collections - The Village has not levied any property taxes for fiscal year 1992. 5. Unless otherwise specified, the source of all information was developed within the Village. -33- VILLAGE OF KEY BISCAYNE, FLORIDA GENERAL GOVERNMENT EXPENDITURES BY FUNCTION FISCAL YEAR 1992 GENERAL GOVERNMENT $1,468,000 (1) PUBLIC PARKS AND ,SAFETY RECREATION $13,511 $11,779 PUBLIC WORKS TOTAL $86,580 $1,579,870 (1) Includes $873,280 Hurricane Andrew Expenses to 9/30/92. -35- VILLAGE OF KEY BISCAYNE, FLORIDA GENERAL GOVERNMENT REVENUES BY SOURCE FISCAL PROPERTY FEES AND INTERGOVERN- UTILITY FRANCHISE YEAR TAXES (1) LICENSES MENTAL (2) TAXES FEES OTHER .INTEREST TOTAL 1992 $ $15,766 $934,018 $979,236 $151,392 $23,276 $4,480 $2,018,168 (1) The Village imposed property taxes for the first time for the 1992-93 fiscal year. (2) Includes FEMA Note: General Fund Only VILLAGE OF KEY BISCAYNE, FLORIDA ASSESSED AND ESTIMATED ACTUAL VALUE OF ALL TAXABLE PROPERTY NET ASSESSED FISCAL REAL PERSONAL PROPERTY YEAR PROPERTY PROPERTY VALUE 1992 $1,601,826,518 $15,314,570 $1,617,141,088 Note: Property taxes remained the property of Metropolitan Dade County for fiscal year 1992 as they provided all the municipal services for the Village. Beginning with fiscal year 1993, the Village will be entitled to collect property taxes. -37- VILLAGE OF KEY BISCAYNE, FLORIDA PROPERTY VALUES, CONSTRUCTION AND BANK DEPOSITS FOR THE MONTH OF SEPTEMBER, 1992 * TOTAL RESIDENTIAL FISCAL PERMITS NUMBER YEAR ISSUED OF UNITS VALUATION 1992 35 25 $638,483 SOURCE: (1) COMMERCIAL PERMITS TOTAL OF BANK DEPOSITS (1) ISSUED VALUATION CONSTRUCTION (000s OMITTED) 10 $401,058 $1,039,541 $20,282,998 Federal Reserve Bank Atlanta, GA. Information is for Metropolitan Dade County, which the Village of Key Biscayne is a part of. Information is not available for the Village of Key Biscayne alone. * In accordance with the provisions of an interlocal agreement with Dade County, the Village of Key Biscayne assumed the permitting function on September 1, 1992. -38- VILLAGE OF KEY BISCAYNE, FLORIDA UTILITIES SERVICE TAX REVENUE BY SOURCE FISCAL YEAR ELECTRICITY TELECOMMUNICATIONS I�1S FUEL OIL WATER TOTAL 1992 $676,919 $157,887 $35,552 $3,048 $105,830 $979,736 Note: All Utility tax revenues are recorded in the General Fund. -39- VILLAGE OF KEY BISCAYNE, FLORIDA FRANCHISE REVENUE BY SOURCE FISCAL CABLE YEAR ELECTRICITY TELEVISION 1992 $112,658 $38,734 TOTAL $151,392 Note: All franchise fee revenues are included in the General Fund. -40- VILLAGE OF KEY BISCAYNE, FLORIDA INTEREST REVENUE BY SOURCE FISCAL GENERAL YEAR FUND TOTAL 1992 $4,480 $4,480 -41- VILLAGE OF KEY BISCAYNE, FLORIDA PRINCIPAL TAXPAYERS SEPTEMBER 30, 1992 TAXABLE TAXPAYER VALUATION VMS $40,579,026 ROYAL BISCAYNE 39,142,694 BISCAYNE BEACH HOTEL ASSN. 30,268,400 FINIVEST INVESTMENT, ET AL (KEY COLONY) 11,044,583 PYRAMID DEVELOPMENT (SO. OCEAN LANE DRIVE) 6,124,800 KEY BISCAYNE SHOPPING CENTER 6,000,000 RED DRAGON'S SANDS (301 OCEAN DRIVE) 5,405,294 FERNWAY BUILDERS, INC. (GALLERIA MALL) 5,198,970 PICPAN, INC. 4,936,397 C. G. REBOZO (2 HARBOR POINT) 4,638,354 SOURCE: Dade County Property Appraisers Office -42- VILLAGE OF KEY BISCAYNE, FLORIDA DEMOGRAPHIC STATISTICS POPULATION Estimates of Population by Age UNDER 18 YEARS 18 TO 64 YEARS 65 YEARS OR OLDER NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT TOTAL 1990 1,646 19 5,684 64 1,524 17 8,854 Estimates of Population by Race ANGLO BLACK HISPANIC TOTAL 1990 5,028 36 3,790 8,854 INCOME * Per Capita Income ANGLO BLACK HISPANIC 1990 POT AVAILABLE AT THIS TIME TOTAL UNEMPLOYMENT RATES**(Percent) 1983 1984, 1984 1986 1987 1988 1.989 1990 1991, 1992 Dade County 9.8 7.8 7.5 6.7 5.8 5.3 6.3 6.7 8.8 11.8 Village of Key Biscayne 3.8 * SOURCE: Bureau of Census, Income Division **SOURCE: State Department of Labor -43- VILLAGE OF KEY BISCAYNE, FLORIDA MISCELLANEOUS STATISTICAL DATA SEPTEMBER 30, 1992 Date of Incorporation 1991 Form of Government Council -Manager Area 1.2 Square Miles Miles of Streets 20.2 Linear Miles Fire Protection: Number of Stations 1 (Operated by Dade County) Police Protection: Number of Stations 1 (Operated by Dade County) Education: Elementary Attendance Centers 1 Number of Students 498 Number of Teachers 32 Dade County Water & Sewer Authority Number of Customers Average Daily Consumption Sewers: Number of Customers Fire Hydrants 1,725 2,500,000 gallons 807 122 Building Permits Issued 35 (Began September 1, 1992) Recreation and Culture: Number of Parks 1 Number of Libraries 1 (Operated by Dade County) Number of Tennis Centers 1 Number of Recreational Centers 1 Employees: Full Time 9 -44- Supplementary Auditor's Reports Section RACHLIN & COHEN CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS 1320 SOUTH DIXIE HIGHWAY PENTHOUSE CORAL GABLES, FLORIDA 33146-2964 TELEPHONES. DADE (305) 667-0412 BROWARD (305) 764-7717 FAx (305) 665-7456 700 SOUTHEAST THIRD AVENUE SUITE 400 FT. LAUDERDALE, FLORIDA 33316-1102 TELEPHONES: BROWARD (305) 764-7717 DADE (305) 667-0412 FAX: (305)764-7835 Independent Auditor's Report on Internal Control Structure Based on an Audit of General Purpose Financial Statements Performed in Accordance With Government Auditing Standards To the Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida We have audited the general purpose financial statements of the Village of Key Biscayne, Florida as of and for the year ended September 30, 1992, and have issued our report thereon dated December 11, 1992. We conducted our audit in accordance with generally accepted auditing standards and 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. In planning and performing our audit of the general purpose financial statements of the Village of Key Biscayne, Florida for the year ended September 30, 1992, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control structure. The management of the Village of Key Biscayne, Florida is responsible for establish- ing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. For the purpose of this report, we have classified the significant internal control structure policies and procedures in the following categories: • General Ledger • Cash Receipts and Disbursements • Accounts Payable and Related Expenditures -45- MEMBER OF SUMMIT INTERNATIONAL ASSOCIATES, INC. WITH OFFICES IN PRINCIPAL CITIES THROI GHOST THE WORLD. MEMBER OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS DIAISION FOR SFC PRACTICE cEcTInN ANn THE PRIVATE CO MPAvcc Po<rrlrr Crrr,nw To the Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida Page Two • Fixed Assets • Revenues and Receivables • Budget • Payroll and Personnel • Purchasing • Accounting Applications • Budget • Payroll and Personnel • Purchasing • Accounting Applications For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risks. We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. 1. Cash Receipts Due to the limited number of personnel of the Village, there is a lack of segregation of duties within the cash function. Procedures should be implemented to mitigate the lack of segregation of duties and to safeguard assets (e.g. one person opens the mail and records cash receipts; a second person makes the bank deposit and prepares the bank reconciliation). However, this is mitigated due to all fees being paid directly to the Bank. 2 Cash Disbursements During the course of our audit, we noted that voided checks were not properly mutilated. (i.e. signature section not torn away). We suggest that all voided checks be properly mutilated (and maintained) so as to prevent improper and. or future use. 3. Accounting Software Due to the fundamental differences between governmental fund and non -governmental accounting, we recommend that governmental software be utilized to process, record and summarize the transactions of the individual funds. Due to the expansion of the Village, the current accounting software will not properly serve the needs of the Village. At your request, we are available to recommend a governmental software package. -46- To the Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida Page Three 4. Personnel Files The Village needs to maintain adequate personnel files for each employee which at a minimum contains a W-4, I-9 (immigration form), documentation showing pay rate, change in pay rate, date of hire, application, and requests for leave. The current files do not contain adequate documentation. 5. Compensated Absences In order to track vacation leave and sick leave, employee attendance records should be maintained on a monthly basis. This would enable the Village to have the data available to properly compensate persons for vacation and sick time each employee. There is no adequate current tracking of vacation and sick leave availability. 6. Electronic Data Processing (EDP) A password should be utilized by authorized personnel to enter data into any computer accounting applications so as to avoid alteration of financial data. During the course of our audit, we noted that a password was not required to retrieve, record or delete current financial information. The Village has subsequently instituted a password system. 7. Fixed Assets A fixed asset detail should be maintained to track the property of the Village. The detail should include, at a minimum, date acquired, description and the cost. A tag numbering system is also recommended to help track the assets. A fixed asset detail did not exist for fiscal year 1992. 8. Purchase Orders We noted that purchase orders are issued to different departments but no log or detail by purchase order number is maintained. We recommend that a log be maintained to control accountability for all purchase orders. Each department should be responsible for reporting to the person responsible for maintaining the log. A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. -47- To the Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida Page Four Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe none of the reportable conditions described above is a material weakness. This report is intended for the information of management, the Mayor and Village Council. This restriction is not intended to limit the distribution of this report, which is a matter of public record. &a. -,. ., ,4/... Coral Gables, Florida December 11, 1992 -48- RACHLIN & COHEN CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS A PARTNERSHIP OF PROFESSIONAL ASSOCIATIONS 1320 SOUTH DIXIE HIGHWAY PENTHOUSE CORAL GABLES, FLORIDA 33146-2964 TELEPHONES: DADE (305) 667-0412 BROWARD (305) 764-7717 FAX: (305) 665-7456 700 SOUTHEAST THIRD AVENUE SUITE 400 FT. LAUDERDALE, FLORIDA 33316-1102 TELEPHONES: BROWARD (305) 764-7717 DADE (305) 667-0412 FAX: (305) 764-7835 Independent Auditor's Report on Compliance Based on an Audit of General Purpose Financial Statements Performed in Accordance With Government Auditing Standards To the Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida We have audited the general purpose financial statements of the Village of Key Biscayne, Florida as of and for the year ended September 30, 1992, and have issued our report thereon dated December 11, 1992. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. Compliance with laws, regulations, contracts and grants applicable to the Village of Key Biscayne, Florida is the responsibility of the management of the Village of Key Biscayne. As part of obtaining reasonable assurance about whether the general purpose financial statements are free of material misstatement, we performed tests of the Village of Key Biscayne, Florida compliance with certain provisions of laws, regulations, contracts and grants. However, our objective was not to provide an opinion on overall compliance with such provisions. The results of our tests indicate that, with respect to the items tested, the Village of Key Biscayne, Florida complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the Village of Key Biscayne, Florida had not complied, in all material respects, with those provisions. In connection with our audit of the general purpose financial statements of the Village of Key Biscayne, Florida for the year ended September 30, 1992, we report the following in accordance with Chapter 10.550, Rules of the Auditor General, Local Governmental Entity Audits which requires that this report specifically address, but not be limited to, the matters outlined in Rule 10.554(1)(f): 1. This is the initial audit for the Village of Key Biscayne. 2. Recommendations to improve the local governmental entity's present financial management, accounting procedures, and internal accounting controls have been addressed in the report on the internal control structure. -49- MEMBER OF St MMIT INTERNATIONAL ASSOCIATES, INC. WITH OFFICES IN PRINCIPAL CITIES THROUGHOUT THE WORLD. MEMBER OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS DIVISION FOR SEC PRACTICE SECTION AND THE PRIVATE COMPANIES PRACTICE SECTION To the Honorable Mayor, Village Council and Village Manager Village of Key Biscayne, Florida Page Two 4. During the course of our audit, nothing came to our attention that caused us to believe that the Village of Key Biscayne, Florida: a. Was in violation of any laws, rules or regulations. b. Made any illegal or improper expenditures. c Had improper or inadequate accounting procedures except as addressed in the report on the internal control structure. d. Failed to record financial transactions which could have a material effect on the Village's general purpose financial statements. e Had other inaccuracies, irregularities, shortages and defalcations. Our audit was not directed primarily toward obtaining knowledge toward all possible improprieties and, accordingly, our study was limited as described in the second paragraph of this report. 5. The financial report for the year ended September 30, 1992 filed with the Department of Banking and Finance pursuant to Section 218.32 Florida Statutes was in agreement with the annual financial audit report for the same period. 6. The Rules of the Auditor General - County and District Tangible Property (Chapter 10.400) are not applicable to the Village of Key Biscayne, Florida. This report is intended solely for use of management and the Auditor General of the State of Florida and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which, upon acceptance by the Council of the Village of Key Biscayne, Florida, is a matter of public record. 4eiduz ‘,4_ Coral Gables, Florida December 11, 1992 -50-