HomeMy Public PortalAbout2011 AFRTOWN OF GULF STREAM, FLORIDA
FINANCIAL STATEMENTS WITH INDEPENDENT
AUDITOR'S REPORT THEREON
SEPTEMBER 30, 2011
TOWN OF GULF STREAM, FLORIDA
SEPTEMBER 30, 2011
TABLE OF CONTENTS
Pates
Independent Auditor's Report 1-2
Management's Discussion and Analysis (required supplementary information) 3- 10
Basic Financial Statements
Government -wide Financial Statements
Statement of Net Assets
11
Statement of Activities
12-13
Fund Financial Statements
Balance Sheet — Governmental Funds
14
Reconciliation of the Balance Sheet — Governmental Funds to
the Statement of Net Assets
15
Statement of Revenues, Expenditures, and Changes in Fund Balance -
Governmental Funds
16
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balance of the Governmental Funds to the Statement of Activities
17
Statement of Net Assets — Proprietary Fund
18
Statement of Revenues, Expenses, and Changes in Net Assets —
Proprietary Fund
19
Statement of Cash Flows — Proprietary Fund
20
Notes to the Financial Statements
21-40
Required Supplemental Information Other Than MD&A
Schedule of Revenues, Expenditures, and Changes in Fund Balance —
Budget and Actual — General Fund 41
Notes to the Budgetary Required Supplemental Information 42
Other Reports
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 43-44
Management Letter in Accordance With the Rules of the Auditor General
of the State of Florida 45-48
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INDEPENDENT AUDITOR'S REPORT
The Honorable Mayor and Members of the Town Commission
Town of Gulf Stream, Florida
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We have audited the accompanying financial statements of the governmental activities, the
business -type activities, and each major fund of the Town of Gulf Stream, Florida as of and for the
year ended September 30, 2011 which collectively comprise the Town's basic financial statements
as listed in the table of contents. These financial statements are the responsibility of the Town of
Gulf Stream's management. Our responsibility is to express opinions on these financial statements
based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with U.S.
generally accepted auditing standards and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. 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 opinions.
The Town has not recognized the other postemployment benefits (OPEB) expense and obligation
in the governmental activities financial statements as required in accordance with U.S. generally
accepted accounting principles as provided in Governmental Accounting Standards Board
Statement No. 45. The effects of that departure on the financial statements are not reasonably
determinable. The Town also has not disclosed the descriptive information about other post
employment benefits required by standards.
In our opinion, except for the effects of the omission of the OPEB expense and obligation for the
governmental activities as described in the preceding paragraph, the financial statements referred
to above present fairly, in all material respects, the respective financial position of the
governmental activities of the Town of Gulf Stream, Florida, as of September 30, 2011, and the
respective changes in financial position thereof for the year then ended in conformity with U. S.
generally accepted accounting principles.
AMEREM INBTITME OFCEFMFIrD PUBLICACCOUMANTS • FLORDA INSTITUTE OF CERTFED P1)8MACC0INTAMB • CPNMERICAINMRNATIONAL
In addition, in our opinion, the financial statements referred to above present fairly, in all material
respects, the respective financial position of the business -type activities and each major fund of the
Town of Gulf Stream, Florida, as of September 30, 2011, and the respective changes in financial
position and cash flows, where applicable, thereof for the year then ended in conformity with U.S.
generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued our report dated February
29, 2012, on our consideration of the Town of Gulf Stream's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts,
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 read in conjunction with this report in considering the results of our audit.
Accounting principles generally accepted in the United States of America require that the
Management's Discussion and Analysis on pages 3 through 10 and the budgetary comparison
information on pages 41 and 42 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 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 and 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
Management has omitted the Schedule of Funding Progress for Other Postemployment Benefits
that accounting principles generally accepted in the United States of America require to be
presented to supplement the basic financial statements. Such missing 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. Our opinion on the basic
financial statements is not affected by this missing information.
West Palm Beach, Florida
February 29, 2012
Management's Discussion and Analysis
The Town of Gulf Stream's (the "Town") discussion and analysis is designed to:
A. Assist the reader in focusing on significant financial issues
B. Provide an overview of the Town's financial activity
C. Identify changes in the Town's financial position
D. Identify any material deviations from the financial plan (approved budget)
E. Identify individual fund issues or concerns
Since the Management's Discussion and Analysis (MD&A) is designed to focus on the current
years activities, resulting changes and currently known facts, please read it in conjunction with
the Town's financial statements, which follow this section.
FINANCIAL HIGHLIGHTS
➢ The assets of the Town of Gulf Stream exceeded its liabilities at the close of the most
recent fiscal year by $10,951,007(net assets). Of this amount, $1,500,669 (unrestricted
net assets) may be used to meet the government's ongoing obligations to citizens and
creditors.
➢ The government activities revenues were $7,898,848 at the close of fiscal year 2011.
➢ The business -type activities revenues were $967,684 at the close of fiseal year 2011.
➢ The total cost of all Town programs was $3,769,130 during the fiscal year 2011.
At the end of the 2011 fiscal year, unassigned fund balance for the general fund was
$1,432,019 or 56% of total general fund expenditures.
USING THIS REPORT
In light of the fact that this is a very different presentation from the pre -GASB 34 Statements, the
following graphic is provided for your review.
MD&A
BASIC
FINANCIAL
STATEMENTS
REQUIRED
SUPPLEMENTAL
INFORMATION
Management's Discussion & Analysis
(Required supplemental information)
Government -wide financial Fund Financial Statements
statements (new)(pages I1-13) (Refocused)(Pages 14-20)
Notes to the financial statements (Expanded/
Restructured) (Pages 21-40)
Required supplementary information
(Other than MD&A) (Expanded) (Pages 4142)
Management's Discussion and Analysis
The financial statement's focus is on both the Town as a whole (government -wide) and on the
major individual funds. Both perspectives (government -wide and major fund) allow the user to
address relevant questions, broaden a basis for comparison (year to year or government to
government), and enhance the Town's accountability.
Government -Wide Financial Statements
The government -wide financial statements are designed to provide readers with a broad
overview of the Town of Gulf Stream's finances, in a manner similar to a private -sector
business. The Statement of Net Assets includes all of the government's assets and liabilities. All
of the current year's revenues and expenses are accounted for in the statement of activities
regardless of when cash is received or paid.
The two government -wide statements report the Town's net assets and how they have changed.
Net assets, the difference between the Town's assets and liabilities, is one way to measure the
Town's financial health or financial position. Over time, increases or decreases in the Town's
net assets are indicators of whether its financial health is improving or deteriorating. You will
need to consider other non-financial factors, however, such as changes in the Town's property
tax base and the condition of the Town's roads, to assess the overall health of the Town.
In the Statement of Net Assets and the Statement of Activities, we divide the Town into two
kinds of activities:
➢ Government activities — Most of the Town's basic services are reported here, including
the police, public services and general administration. Property taxes, franchise fees and
state shared revenue finance most of these activities.
➢ Business -type activities — The Town charges a fee to customers to help it cover all or
most of the cost of certain services it provides.
Fund Financial Statements
Our analysis of the Town's major funds begins on page 5. The fund financial statements provide
detailed information about the most significant fdnds — not the Town as a whole. Funds are
accounting devices that the Town uses to keep track of specific sources of funding and spending
for a particular purpose.
Governmental Funds — Most of the Town's basic services are included in governmental
funds, which focus on (1) how cash and other financial assets can be readily converted to
cash flow and (2) the balances left at year-end that are available for spending.
Consequently, the governmental fund statements provide a short-term view that helps
you determine whether there are more or fewer financial resources that can be spent in
the near future to finance the Town's programs.
rd
Management's Discussion and Analysis
➢ Proprietary Funds — Services for which the Town charges customers a fee are generally
reported in proprietary funds. Proprietary funds, like the government -wide statements,
provide both long and short-term financial information.
• The Town's enterprise fund (one type of proprietary fund) is the same as its
business type activities, but provides more detail and additional information,
such as cash flows.
FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE
Net Assets
The Town's combined net assets for the fiscal year ending 2011 are reported at $10,951,007.
Net assets of the Town's governmental activities for the fiscal year ending 2011 are $8,740,871.
The net assets of our business -type activities are reported at $2,210,136 for the fiscal year ending
2011. Overall the financial position of the total primary government is better than the prior year,
with a slight increase in net assets for the governmental activities and for the business type
activities.
Town of Gulf Stream
Statement of Net Assets
As of September 30, 2011
k
Governmental
Business -type
Activities
Activities
TOTAL
2010
2011
2010
2011
2010
2011
Current and Other Assets
$ 1,552,077
$ 6,740,409
$ 174,190
$ 236,549
$ 1,726-167
$ 6,976,958
Capital Assets19_._
1.718
2.187.195
2.080.774
2.076.178
4.372.492
4.263.373
TOTALASSETS
3,843795
8,927,604
2154,964
2.312.727
6.098.759
11,240.331
Current and Other Liabilities
131,71--5
169,809
93,761
102,591
225,486
272,400
Long-term Liabilities
19.668
16.924
19.668
16,924
TOTAL LIABILITIES
151.393
186.733
93.761
102,591
245.154
289.324
Net Assets:
Invested in Capital Assets
2-191,718
2,187,195
2,080,774
2,076,178
4,372,492
4-163,373
Restricted—Dredging Projects
17,820
17,820
17,820
17,820
Restricted— Underground Utilities
5,169,145
5,169,145
Unmtricted
1.382.864
1.366.711
80.429
133.958
1.463,293
1.500.669
TOTAL NET ASSETS$fi
ZP87
' '
S 5 853 605
S 10 951 007
k
Management's Discussion and Analysis
Changes in Net Assets
The statement of activities presents information showing how the government's net assets
changed during the most recent fiscal year. All changes in net assets are reported as soon as the
underlying event giving rise to the change occurs, regardless of the timing of related cash flows.
Thus, revenues and expenses are reported in this statement for some items that will only result in
cash flows in the future fiscal periods (i.e., uncollected taxes and earned but unused vacation
leave).
➢ The increase in net assets for governmental activities totaled $5,048,469. The increase
in net assets was primarily due to special assessments levied to finance the cost of
placing overhead electric, cable television and telephone utilities underground.
➢ The special assessments had an assessable cost of $5,518,144, and the Town received
prepayments in the amount of $2,885,049.
➢ The increase in business -type net assets was $48,933. The increase in net assets was due
in part to increased revenue and increased asset acquisitions.
Revenues
Program Revenues:
Charges for Services
Operating & Capital Grants
General Revenues:
Property Taxes
Communications Taxes
Gas Taxes
Utility Service Taxes
Franchise Fees
Unrestricted Investment Earnings
Intergovernmental Revenues
Other
Transfers
Total Revenues
Expenses
Governmental Activities:
General and Administrative
Police Department
Fire Protection
Streets
Sanitation
Physical Environment
Business -type Activities:
Water
Total Expenses
Change in Net Assets
Net Assets - Beginning
Net Assets - Ending
Town of Gulf
Stream's
Changes in Net
Assets
Governmental
Business -type
Activities
Activities
TOTAL
2010
2011
2010
2011
2010
2011
8 189,973
$ 5,586,070
$961,402
$967,684
S 1,151,375
S6,553,754
22,054
14,136
22,054
14,136
1,972,342
1,838,039
1,972,342
1,838,039
64,143
63,219
64,143
63,219
28,678
29,424
28,678
29,424
66,807
139,486
66,807
139,486
118,277
118,374
118,277
118,374
31,113
6,252
31,113
6,252
73,082
73,948
73,082
73,948
32,026
29,900
32,026
29,900
2.598.495
7.898.848
96102
967.684
3.559.897
8.866.532
691,214
690,434
691,214
690,434
1,341,437
1,366,538
1,341,437
1,366,538
286,250
300,563
286,250
300,563
224,477
208,455
224,477
208,455
111,953
114,887
111,953
114,887
169,502
169,502
o06,551
918.751
906.551
918.751
'-2.655.331
2.850.379
906,551
918,751
3,561,883
3.769J.30
(56,836)
5,048,469
54,850
48,933
(1,986)
5,097,402
73. 49.238
3.692.402
2.106.353
2.161,103
5.855.591
5.853.605
S2MAL,
HIM. &ll
&2jbLzu,
,
S5.853.6u
814
Management's Discussion and Analysis
More than half the Town's revenue comes from Charges for Services. (Please see chart below.)
Charges for
71%
Revenues — Governmental Revenues by Source
Other
axes
Intergovernmental
4%
Management's Discussion and Analysis
The Town's expenses cover a range of services, with 48% related to public safety. (Please see
chart below.)
Expenses — Governmental Expenses by Function
Gener.
Fire P
Financial Analysis of the Governmental Fund on the Fund Basis
48%
As the Town of Gulf Stream completed the year, the general fund reported a fund balance of
$1,462,012, a decrease of $2,199 from the previous fiscal year. The decrease was due primarily
to an increase in Police Department expenditures.
The general fund ended the 2011 fiscal year with $12,173 in nonspendable fund balance,
$17,820 in restricted fund balance, and $1,432,019 in unassigned fund balance.
H
Management's Discussion and Analysis
Financial Analysis of the Proprietary Fund
Total net assets of the water fund at the end of the fiscal year 2011 were $2,210,136. The net
assets of the water fund have increased slightly from last year. Water rates were not changed and
there were not any major improvements.
General Fund Budgetary Highlights
Over the course of the year, The Town Commission revised the budget once. With these
adjustments, actual expenditures were $1,285 more than the final budget amounts. Revenues
were $14,086 more than the final budget amounts.
CAPITAL ASSET AND DEBT ADNIINSTRATION
Capital Assets
At the end of fiscal year 2011, the Town had invested $4,263,373 in a broad range of capital
assets including police equipment, buildings, infrastructure and water improvements. Additional
information can be found in Note 3 of the notes to the financial statements.
Town of Gulf Stream's Capital Assets
(Net of depreciation)
as of September 30, 2011
Governmental
Business -type
Activities
Activities
TOTAL
2010 2011
2010 2011
2010
2011
Land
$ 376,523 $ 376,523
$ $
$ 376,523
$ 376,523
Construction in Process
15,432
15,432
Buildings& Improvements
282,749 257,796
2,069,193 2,066,183
2,351,942
2,323,979
Equipment
110,318 91,492
11,581 9,995
121,899
101,487
Infrastmcture
1.522.128 1.445.952
1.522.128
1.445.952
TOTALS
$
$2.080.774 $2.07fi.17R
S4 7 49
Management's Discussion and Analysis
Debt
As of September 30, 2011 the Town had no debt, but had $77,481 in long term compensated
absences as shown in the following table: Additional information can be found in note 6 of the
notes to the financial statements.
Town of Gulf Stream's
Long -Term Liabilities
As of September 30, 2011
Governmental Business -type
Activities Activities TOTAL
2010 2011 2010 2011 2010 2011
Compensated Absences 63,527 S 77 481 $ $ 63,527 77,481
TOTALS
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
For the 2012 fiscal year, general fund revenue projections are comparable to the previous year.
➢ The budget is balanced by using reserves from the 2011 fiscal year.
➢ There is not a change in user rate fees for fiscal year 2012.
➢ The millage rate was increased to 2.9265 mills, which is the rolled -back rate.
➢ As of September 30, 2011, the Town had not borrowed anything towards the
Undergrounding Project but does plan on acquiring aloan for approximately $2,626,612
during the fiscal year 2012.
CONTACTING THE TOWN'S FINANCIAL MANAGEMENT
This financial report is designed to provide our residents and creditors with a general overview
of the Town's finances and demonstrates the Town's accountability for the money it receives and
disburses. If you have any questions about this report or need additional information, please
contact the Town of Gulf Stream, 100 Sea Road, Gulf Stream, FL 33483.
10
TOWN OF GULF STREAM, FLORIDA
Statement of Net Assets
September 30, 2011
Assets
Cash and cash equivalents
Investments
Accounts receivable
Assessments receivable
Inventories
Internal balances
Prepaid expenses
Capital assets
Non -depreciable
Depreciable (net of depreciation)
Total assets
Liabilities
Liabilities
Accounts payable
Accrued liabilities
Refund payable
Damage deposit bonds
Deferred revenue
Compensated absences payable
Payable within one year
Payable after one year
Total liabilities
Net assets
Primary Government
109,264
Governmental
Business -type
5,555
Activities
Activities
Total
11,803
11,803
60,557
$ 641,284
$ $
641,284
1,343,217
289,324
1,343,217
63,102
159,835
222,937
4,754,139
4,754,139
12,173
12,173
(73,506)
73,506
3,208
3,208
391,955
391,955
1,795,240
2,076,178
3,871,418
8,927,604 2,312,727 11,240,331
64,673 44,591
109,264
27,221
27,221
5,555
5,555
58,000
58,000
11,803
11,803
60,557
60,557
16,924
16,924
186,733 102,591
289,324
Invested in capital assets
2,187,195
2,076,178 4,263,373
Restricted for dredging projects
17,820
17,820
Restricted for underground utilities
5,169,145
5,169,145
Unrestricted
1,366,711
133,958 1,500,669
Total net assets
$ 8,740,871
$ 2,210,136 $ 10,951,007
See notes to the financial statements.
11
TOWN OF GULF STREAM, FLORIDA
Statement of Activities
For the Year Ended September 30, 2011
Functions/Programs
Primary Government
Governmental activities
General government
Police department
Fire protection
Streets
Sanitation
Physical environment
Total governmental activities
Business -type activities
Water
Total primary government
12
918,751 967,684
$ 3,769,130 $ 6,553,754
Charges for
Expenses
Services
$ 690,434
$ 127,064
1,366,538
2,108
300,563
208,455
114,887
118,251
169,502
5,338,647
2,850,379
5,586,070
918,751 967,684
$ 3,769,130 $ 6,553,754
General revenues
Property taxes
Communications services taxes
Gas taxes
Utility service tax
Franchise taxes
Intergovernmental shared revenues
Unrestricted investment earnings
Miscellaneous revenues
Total general revenues
Change in net assets
Net assets - beginning
Net assets - ending
1,838,039
Net (Expense) Revenue and
63,219
'rogram Revenues
Changes in Net Assets
29,424
Operating Capital
Primary Government
118,374
Grants and Grants and
Governmental Business -type
73,948
Contributions Contributions
activities activities
Total
29,900
$ 14,136 $
$ (549,234) $ $
(549,234)
5,097,402
(1,364,430)
(1,364,430)
$ 8,740,871 $ 2,210,136
(300,563)
(300,563)
(208,455)
(208,455)
3,364
3,364
5,169,145
5,169,145
14,136
2,749,827
2,749,827
48,933
48,933
$ 14,136 $
2,749,827 48,933
2,798,760
General revenues
Property taxes
Communications services taxes
Gas taxes
Utility service tax
Franchise taxes
Intergovernmental shared revenues
Unrestricted investment earnings
Miscellaneous revenues
Total general revenues
Change in net assets
Net assets - beginning
Net assets - ending
1,838,039
1,838,039
63,219
63,219
29,424
29,424
139,486
139,486
118,374
118,374
73,948
73,948
6,252
6,252
29,900
29,900
2,298,642
2,298,642
5,048,469 49,933
5,097,402
3,692,402 2,161203
5,953,605
$ 8,740,871 $ 2,210,136
$ 10.951,007
See notes to the financial statements.
13
TOWN OF GULF STREAM, FLORIDA
Balance Sheet- Governmental Funds
September 30, 2011
See notes to the financial statements.
14
Special
Total
General
Assessment
Govemmenlal
Fund
Fund
Funds
Assets
Cash and cash equivalents
S
51,221
S
590,063
S 641,284
Investments
1,343,217
1,343,217
Accounts receivable
63,102
63,102
Assessments receivable
4,754,139
4,754,139
Due from other funds
130,914
130,914
Inventories
12,173
12,173
Total assets
S
1,600,627
S
5,344 202
S 6,944,829
Liabilities and fund equity
Liabilities
Accounts payable
$
26,085
S
38,588
$ 64,673
Accrued liabilities
27,221
27,221
Refund payable
5,555
5,555
Due to other funds
73,506
130,914
204,420
Deferred revenue
11,803
2,453,598
2.465,401
Tocol liabilities
138,615
2,628,655
2,767,270
Fund equity
Nonspendable
Inventories
12,173
12,173
Restricted for
Dredging projects
17,820
17,820
Underground utilities
2,715,547
2,715,547
Unassigned
1,432,019
1,432,019
Total fund equity
1,462,012
2,715,547
4,177,559
Total liabilities and fund equity
$
1,600,627
S
5,344,202
S 6,944,829
See notes to the financial statements.
14
TOWN OF GULF STREAM, FLORIDA
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
September 30, 2011
Fund balance of governmental funds
Amounts reported for governmental activities in the statement of
net assets are different because:
Capital assets used in governmental activities are not financial
resources and therefore, are not reported in the governmental fund.
Governmental capital assets
Less accumulated depreciation
5 4,177,559
5 4,090,021
(1,902,826) 2,187,195
Revenue is recognized when earned in the governmentiwde statements
regardless of when it is collected. Governmental funds recognize revenue
when it is both measurable and available.
Deferred revenue
Long-term liabilities are not due and payable in the current
period and therefore, are not reported in governmental funds.
Compensated absences
Net assets of governmental activities
See notes to the financial statements.
15
2,453,598
(77,481)
5 8,740,871
TOWN OF GULF STREAM, FLORIDA
Statement of Revenues, Expenditures and Changes in Fund Balance
Governmental Funds
For the Year Ended September 30, 2011
Revenues
Taxes
Intergovernmental revenue
Licenses and permits
Charges for services
Fines and forfeits
Investment earnings
Special assessments
Miscellaneous
Total revenues
Expenditures
Current
General and administrative
Police department
Fire protection
Streets
Sanitation
Physical environment
Capital outlay
Total expenditures
Excess (deficiency) of revenues
over (under) expenditures
Net change in fund balance
Fund balance - beginning of the year
Fund balance - end of the year
$ 1,462,012 $ 2,715,547 $ 4,177,559
See notes to the financial statements.
16
Special
Total
General
Assessment
Governmental
Fund
Fund
Funds
$ 2,088,120
$
$ 2,088,120
103,848
103,848
214,336
214,336
121,057
121,057
2,108
2,108
6,252
6,252
2,885,049
2,885,049
24,480
24,480
2,560,201
2,885,049
5,445,250
625,245
625,245
1,306,622
1,306,622
300,563
300,563
144,333
144,333
114,887
114,887
169,502
169,502
70,750
70,750
2,562,400
169,502
2,731,902
(2,199)
2,715,547
2,713,348
(2,199)
2,715,547
2,713,348
1,464,211
1,464,211
$ 1,462,012 $ 2,715,547 $ 4,177,559
See notes to the financial statements.
16
TOWN OF GULF STREAM, FLORIDA
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balance of the Governmental Funds to the Statement of Activities
For the Year Ended September 30, 2011
Net change in fund balance ofgovernmental funds $ 2,713,348
Amounts reported for governmental activities in the statement of
activities are different because:
Governmental funds report capital outlays as expenditures.
However, in the statement of activities, the cost of those assets
is depreciated over their estimated useful life.
Expenditures for capital assets
Less current year depreciation
Gains and losses on the disposal of fixed assets are not reported
in the governmental funds but are reported in the statement of
activities
Net book value of fixed asset disposals
Governmental funds include revenues collected within 60 days
of year end as deferred revenue. Government -wide reporting
recognizes revenues when they are earned, regardless of when they
are collected.
Special assessments
Some expenses reported in the statement of activities do not
require the use of current financial resources and therefore, are
not reported as expenditures of governmental funds.
Increase in long-term compensated absences
Change in net assets of governmental activities
See notes to the financial statements.
17
$ 70,750
(161,865) (91,115)
(13,408)
2,453,598
(13,954)
$ 5,048,469
TOWN OF GULF STREAM, FLORIDA
Statement of Net Assets
Proprietary Fund
September 30, 2011
Assets
Current assets
Enterprise
Fund
Accounts receivable
$ 159,835
Due from other funds
73,506
Prepaid expenses
3,208
Total current assets
236,549
Noncurrent assets
Depreciable capital assets 2,720,800
Less acumulated depreciation (644,622)
Total noncurrent assets 2,076,178
Total assets 2,312,727
Liabilities
Current liabilities
Accounts payable 44,591
Deposits payable 58,000
Total current liabilities 102,591
Total liabilities 102,591
Net assets
Invested in capital assets 2,076,178
Unrestricted 133,958
Total net assets $ 2,210,136
See notes to the financial statements.
18
TOWN OF GULF STREAM, FLORIDA
Statement of Revenues, Expenses and Changes
in Net Assets
Proprietary Fund
For the Year Ended September 30, 2011
Operating revenues
Charges for services
Total operating revenues
Operating expenses
Water purchases
Repairs and maintenance
Management fees
Depreciation expense
Payment in lieu of taxes
Other expenses
Field visit service
Total operating expenses
Operating income
Non-operating revenues
Connection fees
Total non-operating revenues
Change in net assets
Net assets - beginning of the year
Net assets - end of the year
Enterprise
Fund
S 964,504
964,504
559,614
182,203
65,000
67,017
29,900
9,425
5,592
918,751
45,753
3,180
3,180
48,933
2,161,203
S 2,210,136
See notes to the financial statements.
19
TOWN OF GULF STREAM, FLORIDA
Statement of Cash Flows - Proprietary Fund
For the Year Ended September 30, 2011
Cash flows from operating activities:
Receipts from customers
Payments to suppliers
Internal activity - payments to other funds
Net cash provided by operating activities
Cash flows from capital financing activities:
Connection fee receipts
Acquisition and construction of fixed assets
Internal activity - payments to other funds
Net cash used by capital financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents - beginning of the year
Cash and cash equivalents - end of the year
Cash flows from operating activities:
Operating income
Adjustments to reconcile operating income to
net cash provided by operating activities:
Depreciation
Changes in assets and liabilities:
Increase (decrease) in:
Accounts payable
Deposits
Decrease (increase) in:
Accounts receivable
Prepaid expenditures
Total adjustments
Net cash provided by operating activities
See notes to the financial statements.
20
Enterprise
Fund
$ 1,007,595
(790,086)
(65,000)
152,509
3,180
(62,421)
(93,268)
(152,509)
$ 45,753
67,017
(3,670)
12,500
30,591
318
106,756
$ 152,509
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Town of Gulf Stream, Florida (the "Town") have been prepared in
conformity with generally accepted accounting principles (GAAP) as applied to governmental
units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting
body for establishing governmental accounting and financial reporting principles. The Town's
significant accounting policies are described below.
Reportine Entity
The Town of Gulf Stream, Florida is a municipal corporation organized pursuant to Chapter 31276,
1955 Laws of Florida. The Town operates under the Commission/Mayor form of government. The
Town's major operations include general government, public safety, streets, sanitation, and water
services.
The underlying concept of the governmental financial reporting entity is that governmental
organizations are responsible to elected governing officials; therefore, financial reporting should
report the elected officials' accountability for those organizations. Furthermore, the financial
statements of the reporting entity should allow users to distinguish between the primary
governments and its component units if any, by communicating information about the component
units and their relationships with the primary government. A component unit is a legally separate
organization for which the elected officials of the primary government are financially accountable.
Determining factors of financial accountability include appointment of a voting majority,
imposition of will, financial benefit or burden on a primary government, or fiscal dependency. In
addition, component units can be other organizations for which the nature and significance of their
relationship with a primary government are such that exclusion would cause the reporting entity's
financial statements to be misleading or incomplete.
Based upon application of these criteria, the Town of Gulf Stream has determined that there are no
additional governmental departments, agencies, institutions, commissions, public authorities or
other governmental organizations operating within the jurisdiction of the Town that would be
required to be included in the Town's financial statements.
21
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Government -wide and Fund Financial Statements
The basic financial statements include both government -wide and fund financial statements. The
government -wide financial statements (i.e., the statement of net assets and the statement of
activities) report information on all of the non -fiduciary activities of the primary government.
For the most part, the effect of inter -fund activity has been removed from these statements.
Governmental activities, which normally are supported by taxes and intergovernmental revenues,
are reported separately from business -type activities, which rely on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
function are offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific function. Program revenues include 1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function
and 2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function. Taxes and other items not included among program
revenues are reported instead as general revenues.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental and enterprise funds are reported as separate columns in the fund
financial statements.
Measurement Focus. Basis ofAccounthiz and Financial Statement Presentation
The government -wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as are the proprietary fund financial statements.
Revenues are recorded when earned and expenses recorded when a liability is incurred, regardless
of the timing of related cash flows. The Town does not accrue property tax revenues since the
collection of these taxes coincides with the fiscal year in which levied, and since the Town
consistently has no material uncollected property taxes at year end. Grants and similar items are
recognized as revenue as soon as all eligibility requirements imposed by the provider have been
met.
When both restricted and unrestricted resources are available for use, it is the Town's policy to use
restricted resources first, then unrestricted resources as they are needed.
�17
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Measurement Focus. Basis ofAccounting, and Financial Statement Presentation (Continued)
As a general rule the effect of inter -fund activity has been eliminated from the government -wide
financial statements. Exceptions to this general rule are payments -in -lieu of taxes and other
charges between the Town's water and sewer function and various other functions of the Town.
Elimination of these charges would distort the direct costs and program revenues reported for the
various functions concerned.
Governmental Funds
Governmental fund financial statements are reported using the current financial resources
measurement focus and the modified accrual basis of accounting. Revenues are recognized as
soon as they are both measurable and available. Revenues are considered to be available when
they are collectible within the current period or soon enough afterwards to pay liabilities of the
current period. The Town considers revenues collected within 60 days of the year end to be
available to pay liabilities of the current period. Expenditures are generally recorded when a
liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures relating to compensated absences and claims and judgments are recorded only when
payment is due.
Fines and permit revenues are not susceptible to accrual because generally, they are not measurable
until received in cash. Property taxes, franchise taxes, licenses, interest revenue, intergovernmental
revenues, and charges for services associated with the current fiscal period are all considered to be
susceptible to accrual and have been recognized as revenues of the current fiscal period. All other
revenue items are considered to be measurable and available only when cash is received by the
Town.
The Town reports the following major governmental funds:
The General Fund is the general operating fund of the Town, and it is used to account for all
financial resources except those required to be accounted for in another fund.
The Special Assessment Special Revenue Fund is used to account for financial resources relating to
the underground utility project.
23
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Proorietary Funds
Proprietary Funds are used to account for operations (a) that are financed and operated in a
manner similar to private business enterprises where the intent of the governing body is that the
costs (expenses, including depreciation) of providing goods or services to the general public on a
continuing basis be financed or recovered primarily through user charges or (b) where the
governing body has decided that periodic determination of revenues earned, expenses incurred,
and net income is appropriate for capital maintenance, public policy, management control,
accountability, or other purposes. Proprietary funds distinguish operating revenues and expenses
from non-operating items. Operating revenues and expenses generally result from providing
services and producing and delivering goods in connection with a proprietary fund's principal
ongoing operations. Operating expenses report on the costs to maintain the proprietary systems,
the cost of sales and services, administrative expenses and depreciation on capital assets. All
revenues and expenses not meeting this definition are reported as non-operating revenues and
expenses.
The Town reports the following major proprietary fund:
The Municipal Water Fund was established to account for the provision of water services to Town
residents.
Government Accounting Standards Board (GASB) Statement #20, Accounting and Financial
Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Funds,
provides proprietary activities with a choice of authoritative guidance issued after November 30,
1989. The Town of Gulf Stream, Florida has elected to follow GASB pronouncements
exclusively after that date.
Cash and Cash Equivalents
Cash and cash equivalents include amounts on deposit in demand accounts and money market
accounts. For the purposes of the statement of cash flows, the Town considers all highly liquid
investments with a maturity of three months or less when purchased to be cash equivalents.
Investments
Investments in the Local Government Surplus Funds Trust Fund, a 2a -7 -like pool, are carried at
fair value. A 2a -7 -like pool is not registered with the SEC as an investment company, but
nevertheless, has a policy that it will, and does, operate in a manner consistent with the SEC's rule
2a-7 of the Investment Company Act of 1940, which comprises the rules governing money market
lJ
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments (Continued)
funds. Thus, this pool operates essentially as a money market fund. Investments in certificates of
deposits are carred at amortized cost that approximates market, because these investments are
considered to be nonparticipating interest earning investment contracts that are not affected by
changes in interest rates.
Accounts Receivable
Trade and other receivable are shown net of an allowance for estimated uncollectible amounts.
Charges for solid waste collection and water usage are billed on a bi-monthly cycle. The Town
recognizes revenue and the related receivables for the estimated unbilled usage at year end.
Capital Assets
Capital assets, which include plant, property, equipment, and infrastructure assets (e.g. roads,
bridges, and sidewalks) are reported in the applicable governmental or business -type activities
columns in the governmental -wide financial statements. Capital assets are defined by the
government as assets with an estimated life in excess of one year and an initial cost of more than
$1,000. Such assets are recorded at cost or the fair market value of the assets at the time of
purchase or contribution. The Town is a Phase 3 government under GASB 34 and has elected
not to report major general infrastructure assets retroactively. Depreciation has been provided
over the useful lives using the straight line method. The estimated useful lives are as follows:
Buildings 10-30 years
Equipment 3-15 years
Infrastructure 25-50 years
Water Infrastructure 40-50 years
Inventory
Inventories consist of expendable supplies held for consumption which are carred at cost (first -in,
first -out). The Town accounts for inventories using the consumption method, under which
expenditures are recognized only when inventory items are used. Reported inventory is equally
offset by nonspendable fund balance which indicates that it does not constitute "available spendable
resources" even though it is a component of net current assets.
25
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Compensated Absences
Compensated absences are absences for which employees will be paid, such as vacation, sick
leave, and sabbatical leave. A liability for compensated absences that is attributable to services
already rendered and that is not contingent on a specific event that is outside the control of the
government and its employees is accrued as employees earn the rights to the benefits.
Compensated absences that relate to future services or that are contingent on a specific event that
is outside the control of the government and its employees are accounted for in the period in
which such services are rendered or such events take place. All vacation, sick leave, and
sabbatical leave is accrued when incurred in the government -wide and proprietary fund financial
statements. A liability for these amounts is reported in governmental funds only if they have
matured, for example, as a result of employee resignations and retirements. Town employees
may accumulate up to 5 days of vacation leave and 120 days of sick leave. Accumulated vacation is
payable to employees upon termination or retirement at the rate of pay on that date. Sick leave can
only be used for paid time off and is not paid to any employee upon termination.
Interest Cost
Interest costs in governmental funds are charged to expenditures as incurred. Construction period
interest incurred in governmental funds is not capitalized. Construction period interest incurred in
proprietary funds is capitalized and included in the cost of the assets in accordance with generally
accepted accounting principles.
Interfund Transactions
Transactions between funds consist of loans, services provided, reimbursements, or transfers. The
current portion of interfund loans are reported in the fund financial statements as "due from other
funds" and "due to other funds" while the non-current portion of interfund loans are reported as
"advances to other funds" and "advances from other funds". Any residual balances outstanding
between the governmental activities and business -type activities are reported in the government -
wide financial statements as "internal balances". Services deemed to be reasonably equivalent in
value, are treated as revenue and expenditures/expenses.
incurs a cost, charges the appropriate benefiting fund
interfund transactions are presented as transfers.
26
Reimbursements occur when one fund
and reduces its related cost. All other
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Deferred Revenues
The government reports deferred revenue on its government wide statement of net assets,
proprietary statement of net assets, and governmental funds balance sheet. Deferred revenues arise
when a potential revenue does not meet both the "measurable" and "available" criteria for
recognition in the current period. Deferred revenues also arise when the government receives
resources before it has a legal claim to them, as when grant monies are received prior to incurring
qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or
when the government has a legal claim to the resources, the liability for deferred revenue is
removed and revenue is recognized.
Fund Balance
In the fund financial statements, governmental funds report fund balance classifications that
comprise a hierarchy based primarily on the extent to which the Town is bound to honor constraints
on the specific purposes for which amounts in those funds can be spent. Fund balance is reported
under the following categories:
1. Nonspendable fund balances — Includes amounts that cannot be spent
because they are either (a) not in spendable form or (b) legally or
contractually required to be maintained intact. The "not in spendable form"
criterion includes items that are not expected to be converted to cash, for
example, inventories and prepaid amounts. It also includes the long-term
amount of loans and notes receivable, as well as property acquired for resale.
However, if the use of the proceeds from the collection of those receivables
or from the sale of those properties is restricted, committed, or assigned,
then they should be included in the appropriate fund balance classification
(restricted, committed, or assigned), rather than the nonspendable fund
balance. The corpus (or principal) of a permanent fund is an example of an
amount that is legally or contractually required to be maintained intact.
2. Restricted fund balance — Includes amounts that are restricted to specific
purposes when constraints placed on the use of resources are either (a)
externally imposed by creditors (such as through debt covenants), grantors,
contributors, or laws or regulations of other governments, or (b) imposed by
law through constitutional provisions or enabling legislation.
27
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fund Balance (Continued)
3. Committed fund balance — Includes amounts that can be used only for
specific purposes pursuant to constraints imposed by an ordinance, the
Town's highest level of decision making authority. Those committed
amounts cannot be used for any other purpose unless the Town removes or
changes the specified use by taking the same type of action (an ordinance) it
employed to previously commit those amounts.
4. Assigned fund balance — Includes amounts intended to be used by the Town
for specific purposes, but are neither restricted or committed. Intent should
be expressed by the Town Commission or the Town Manager to which the
Town Commission has delegated authority to assign amounts to be used for
specific purposes. The authority form making an assignment is not required
to be the Town's highest level of decision making authority. Constraints
imposed on the use of assigned amounts are more easily removed or
modified than those imposed on amounts classified as committed.
5. Unassigned fund balance — Includes the residual classification for the general
fund. This classification represents fund balance that has not been assigned to
other funds and that has not been restricted, committed, or assigned to
specific purposes within the general fund. The general fund should be the
only fund that reports a positive unassigned fund balance amount. In other
governmental funds, it may be necessary to report a negative unassigned fund
balance if expenditures incurred for specific purposes exceeded the amounts
restricted, committed, or assigned to those purposes.
When an expenditure is incurred for purposes for which both restricted and
unrestricted (committed, assigned, or unassigned) amounts are available, it is the
Town's policy to reduce restricted amounts fust. When an expenditure is incurred
for purposes for which amounts in any of the unrestricted fund balance
classifications could be used, it is the Town's policy to reduce committed amounts
first, followed by assigned amounts, and then unassigned amounts.
28
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Assets
Equity in the government -wide and enterprise fund statements are classified as net assets and
displayed in following three components:
Invested in capital assets, net of related debt — Consists of capital assets including
restricted capital assets, net of accumulated depreciation and reduced by the outstanding
balances of any bonds, notes or other bon•owings that are attributable to the acquisition,
construction or improvement of those assets.
2. Restricted net assets — Consists of net assets with constraints placed on the use either by:
1) external groups such as creditors, grantors, contributors, or laws or regulations of other
governments; or 2) law through constitutional provisions of enabling legislation.
3. Unrestricted net assets — All other net assets that do not meet the definition of "restricted"
or "invested in capital assets, net of related debt."
Budgetary Data
Formal budgetary integration is employed as a management control device during the year for the
General Fund and the Municipal Water Fund. Appropriations are legally controlled at the
department level. All budgets are legally enacted and are adopted on a basis consistent with
generally accepted accounting principles. Budgeted amounts are as originally adopted, or as
emended by appropriate action. The Special Assessment Special Revenue Fund is not budgeted
because it is not legally required to be budgeted.
Property Taxes
Under Florida law, the assessment of all properties and the collection of all county, municipal,
and school board property taxes are consolidated in the offices of the County Property Appraiser
and County Tax Collector. The laws of the State regulating tax assessment are also designed to
assure a consistent property valuation method statewide.
The tax levy of the Town is established by the Town Commission prior to October 1 of each
year, and the Palm Beach County Property Appraiser incorporates the Town's millages into the
total tax levy, which includes Palm Beach County and Palm Beach County School Board tax
requirements.
29
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property Taxes (Continued)
All property is reassessed according to its fair market value January I of each year, which is also
the lien date. Each assessment roll is submitted to the Executive Director of the State
Department of Revenue for review to determine if the rolls meet all the appropriate requirements
of state statutes.
All taxes are due and payable on November 1 of each year or as soon thereafter as the assessment
roll is certified and delivered to the Tax Collector. All unpaid taxes become delinquent on April
1 following the year in which they are assessed. Discounts are allowed for early payment at the
rate of 4% in the month of November, 3% in the month of December, 2% in the month of
January and I% in the month of February. The taxes paid in March are without discount.
Delinquent taxes on real property bear interest of 18% per year. On or prior, to June 1 following
the tax year, certificates are sold for all delinquent taxes on real property. After the sale, tax
certificates bear interest of 18% per year or any lower rate bid by the buyer. Application for a tax
deed on any unredeemed tax certificates may be made by the certificate holder after a period of
two years.
Delinquent taxes on personal property bear interest of 18% per year until the tax is satisfied
either by seizure and sale of the property or by the five year statute of limitations.
Use of Estimates
The financial statements and related disclosures are prepared in conformity with accounting
principles generally accepted in the United States. Management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent
assets and liabilities at the date of the financial statements, and revenue and expenses during the
period reported. These estimates include assessing the collectibility of accounts receivable, the use
and recoverability of inventory, and useful lives and impairment of tangible and intangible assets,
among others. Estimates and assumptions are reviewed periodically and the effects of revisions are
reflected in the financial statements in the period they are determined to be necessary. Actual
results could differ from the estimates.
30
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 2 — DEPOSITS AND INVESTMENTS
Deposits
As of September 30, 2011, the carrying amount of the Town's deposits was $1,981,676 and the
bank balances totaled $2,028,271. The Town also had cash on hand of $200. Town's deposits
include checking accounts, money market accounts, and certificates of deposit. The Town had two
money market accounts with a total bank balance and carrying amount of $783,341. The certificates
of deposit and money market accounts are reported as investments in the balance sheet.
As of September 30, 2011, the Town held the following certificates of deposit:
Days to Maturity Fair Value
296
$255,420
297
261,509
328
40.322
$557.251
In addition to insurance provided by the Federal Depository Insurance Corporation, deposits are
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
Treasure requires all Florida qualified public depositories to deposit with the Treasure or another
banking institution eligible collateral. In the event of failure of a qualified public depository, the
remaining public depositories would be responsible for covering any resulting losses. The Town's
deposits are considered insured for custodial credit risk purposes.
Investments
Florida statutes authorize the Town to invest in the Local Government Surplus Funds Trust Fund
administered by the State Treasurer, negotiable direct obligations of or obligations unconditionally
guaranteed by the U.S. Government, interest-bearing time deposits in financial institutions located
in Florida and organized under Federal or Florida laws, obligations of the Federal Farm Credit
Banks, the Federal Home Loan Mortgage Corporation, the Federal Home Loan Bank or its district
banks, or obligations guaranteed by the Government National Mortgage Association, and
obligations of the Federal National Mortgage Association.
The State Board of Administration is part of the Local Governments Surplus Funds Trust Fund
and is governed by Chapter 19-7 of the Florida Administrative Code. These rules provide
guidance and establish the general operating procedures for the administration of the Local
Governments Surplus Funds Trust Fund. Additionally, the Office of the Auditor General
31
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 2 — DEPOSITS AND INVESTMENTS (Continued)
Investments (Continued)
performs the operational audit of the activities and investments of the State Board of
Administration. The Local Government Surplus Funds Trust Fund is not a registrant with the
Securities and Exchange Commission (SEC); however, the board has adopted operating
procedures consistent with the requirements for a 2a-7 fund.
On December 4, 2007, based on recommendations from an outside financial advisor, the State
Board of Administration restructured the Pool into two separate pools. Pool A, (Local
Government Surplus Funds Trust Fund Investment Pool) consisted of all money market
appropriate assets. Pool B, (Surplus Funds Trust Fund) consisted of assets that either defaulted
on a payment, paid more slowly than expected, and/or had any significant credit and liquidity
risk. At the time of the restructuring, all current pool participants had their existing balances
proportionately allocated into Pool A and Pool B. On August 3, 2009, the SBA announced
"Florida PRIME" as the highly enhanced version of the SBA's prior Local Government
Investment Pool.
At September 30, 2011, Florida PRIME was assigned a "AAA(m)" principal stability fund rating
by the Standard and Poor's Ratings. Florida PRIME is considered a SEC 20 -like fund, thus, the
account balance should also be considered its fair value. Fund B is not considered a SEC 20 -like
fund and is not rated by any nationally recognized rating agency.
The weighted average days to maturity (WAM) of Florida PRUVIE at September 30, 2011, was 38
days. A portfolio's WAM reflects the average maturity in days based on final maturity or reset
date, in the case of floating rate instruments. WAM measures the sensitivity of Florida PRIME to
interest rate changes.
The weighted average life (WAL) of Fund B at September 30, 2011, was 4.82 years. A
portfolio's WAL is the dollar weighted average length of time until securities held reach
maturity. WAL is based on legal final maturity dates for Fund B as of September 30, 2011.
Additional information regarding the Local Government Surplus Funds Trust Fund may be
obtained from the State Board of Administration.
32
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 2 — DEPOSITS AND INVESTMENTS (Continued)
Investments (Continued)
As of September 30, 2011, the Town held the following investments:
Weighted
Average
Fair
Maturi
Value
State Board of Administration Investment Pool
Florida PRIME 38 days
$ 1,086
Fund B 4.82 years
1.539
MEW"
The investments in the State Board of Administration Pool are reported as investments in the
balance sheet.
Credit Risk
Credit risk is the risk that an issuer or other counter party to an investment will not fulfill their
obligations. The Town's investment policies limit its investments to high quality investments to
control credit risk. At September 30, 2011, Florida PRIME was rated "AAA(m) by Standard and
Poor's Ratings Services. Fund B is not rated by any nationally recognized rating agency.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an
investment. The Town does not have a formal investment policy that limits investment maturities
as a means of managing exposure to fair value losses arising from increasing interest rates.
33
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 3 RECEIVABLES
As of September 30, 2011, the Town's receivables for the individual major funds, including
applicable allowances for uncollectible accounts, are as follows:
NOTE 4 - CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2011, was as follows:
Governmental Activities:
Capital assets not
being depreciated:
Land
Construction in Process
Capital assets being depreciated:
Buildings
Infrastructure
Equipment
Total at historical cost
Less accumulated depreciation for:
Buildings
Infrastructure
Equipment
Total accumulated
depreciation
Governmental activities capital
assets, net
Beginning
Special
Ending
Balance
Additions
General
Assessment
Water
$ 376,523
$
Fund
Fund
Fund
Total
Taxes
$ 27,720
$
$
$ 27,720
Accounts - unbilled
21,041
145,392
166,433
Accounts - billed
2,872
1,948)
14,443
17,315
Due from other governments
11,469
4,090,021
11,469
Special assessments
556,466
4,754,139
4,754,139
Subtotal
63,102
4,754,139
159,835
4,977,076
Allowance for uncollectibles
(38,540)
355,412
1,779,501
161,8653(
Net receivables
$ 63,102
$ 4,754,139
$ 159,835
$ 4,977,076
NOTE 4 - CAPITAL ASSETS
Capital asset activity for the year ended September 30, 2011, was as follows:
Governmental Activities:
Capital assets not
being depreciated:
Land
Construction in Process
Capital assets being depreciated:
Buildings
Infrastructure
Equipment
Total at historical cost
Less accumulated depreciation for:
Buildings
Infrastructure
Equipment
Total accumulated
depreciation
Governmental activities capital
assets, net
Beginning
Ending
Balance
Additions
Deletions
Balance
$ 376,523
$
$
$ 376,523
15,432
15,432
839,215
17,780
856,995
2,394,167
2,394,167
461,314
37 5385(
1,948)
446,904
4,071,219
70,7505(
1,948)
4,090,021
556,466
42,733
599,199
872,039
76,176
948,215
350,996
42,956
(38,540)
355,412
1,779,501
161,8653(
8,540)
1,902,826
2 29
191.1151
$ (13,4081
2.187.195
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 4 — CAPITAL ASSETS (Continued)
Depreciation expense was charged to functions and programs of the primary government as
follows:
Governmental activities:
General government $58,229
Police department 39,514
Streets 64,122
Total depreciation expense for
governmental activities
Business -type activities:
Municipal Water $ 67.017
35
Beginning
Additions Deletions
Balance
Business -Type Activities:
Capital assets not being depreciated:
$
Capital assets being depreciated:
61,878
Water system unprovements
2,598,231
Equipment
60,148
Total at historical cost
2,658379
Less accumulated depreciation for:
644,622
Water system improvements
529,038
Equipment
48,567
Total accumulated
depreciation
577,605
Business -type activities capital
assets, net
12XM=4
Depreciation expense was charged to functions and programs of the primary government as
follows:
Governmental activities:
General government $58,229
Police department 39,514
Streets 64,122
Total depreciation expense for
governmental activities
Business -type activities:
Municipal Water $ 67.017
35
Ending
Additions Deletions
Balance
60,691
2,658,922
1,730
61,878
62,421
2,720,800
63,701
592,739
3,316
51,883
67,017
644,622
Depreciation expense was charged to functions and programs of the primary government as
follows:
Governmental activities:
General government $58,229
Police department 39,514
Streets 64,122
Total depreciation expense for
governmental activities
Business -type activities:
Municipal Water $ 67.017
35
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 5 — INTERFUND RECEIVABLES AND PAYABLES
Individual interfund receivables and payables at September 30, 2011, are as follows:
Receivable Fund Payable Fund
Amount
General Fund Special Revenue Fund
$ 130,914
Water Fund General Fund
73,506
2 2
The outstanding balance between funds results from the time lag between the dates that interfund
goods and services are provided or reimbursable expenditures occur and payments between funds
are made.
NOTE 6 — LONG-TERM LIABILITIES
The Town's long-term liabilities consist solely of compensated absences. The change in long-term
liabilities is as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
Governmental activities:
Compensated absences $ 16.527 $ (2.5731 $]Z 18 55
On June 30, 2011, the Town adopted Resolution No. 011-12 authorizing the borrowing of the
principal amount not to exceed $5,497,742 to finance the cost of the project of undergrounding the
electric, cable television, and telephone utility facilities serving the municipality. The obligation to
be known as Promissory Note, Undergrounding Project. Such debt shall not be a general obligation
of the Town but shall be payable only from special assessments levied by the Town pursuant to
Resolution No. 011-11, available non ad valorem revenues, and certain other monies. As of
September 30, 2011, the Town had not borrowed any funds pursuant to the Note. See Note 14 for
details of the special assessments.
36
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 7 — DEFERRED COMPENSATION PLAN
The Town offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. The plan, available to all Town employees, permits them to defer a
portion of their salary until future years. The deferred compensation is not available to employees
until termination, retirement, death, or unforeseeable emergency.
Assets of the plan are invested in either mutual funds or insurance contracts. In 1998, the Plan was
amended to conform to changes in the Internal Revenue Code brought about by the Small Business
Job Protection Act of 1996 (the "Act"). The Act requires that eligible deferred compensation plans
established and maintained by governmental employers be amended to provide that all assets of the
plan be held in trust, or under one or more appropriate annuity contracts or custodial accounts, for
the exclusive benefit of plan participants and their beneficiaries. As a result of this change, plan
assets are no longer subject to the claims of the Town's general creditors.
Because the Town has little administrative involvement and does not perform the investing function
for funds in the Plan, the Town's activities do not meet the criteria for inclusion in the fiduciary
funds of a government. Consequently, the Plan was removed from the Town's financial statements.
NOTE 8 — DEFINED CONTRIBUTION EMPLOYEE RETIREMENT PLAN
On November 28, 1990, the Town passed Resolution No. 90-8, authorizing the establishment of a
401(a) plan (the "Plan"). All full-time employees are eligible to participate in the Plan upon
completion of six months of service and attaining age 18. This defined contribution pension plan is
administered by the International City Management Association Retirement Corporation. In a
defined contribution plan, benefits depend solely on amounts contributed to the Plan plus
investment earnings. The plan requires that the Town and the employees contribute an amount
equal to 20.92% and 8.0%, respectively, of the employee's base salary each month. The Town's
contribution for each employee and investment earnings allocated to the employee's account vest at
a rate of 20% per year of service completed. Employees are eligible for normal retirement upon
attainment of the age of 59-1/2. Town contributions and interest forfeited by employees who leave
employment before satisfying the vesting requirement are used to reduce the Town's current -period
contribution requirement. Plan assets are not considered the Town's assets; therefore, they are not
included in the Town's basic financial statements. The Plan does not issue a stand alone financial
report.
The Town's total payroll for the fiscal year ended September 30, 2011, was $1,157,371, with
covered payroll of $1,097,008. The Town's required and actual contribution for the year was
$229,494 equaling 20.92% of covered payroll. The employees' contribution for the year was
$87,761 equaling 8.0% of covered payroll. The investments are held in various mutual funds and
employees can direct employer and employee contributions made on their behalf.
37
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 9 — INTERLOCAL AGREEMENTS
Interlocal EMS Service Agreement with the City of Delray Beach
On July 14, 2009, the Town entered into an agreement with the City of Delray Beach whereby the
City of Delray Beach will provide the Town with emergency medical services. The term of the
agreement was for 10 years beginning on October 1, 2009, and extending through September 30,
2019. The annual service fee the Town paid under the agreement was $300,563 in the current fiscal
year. The annual service fees for future years will be the current year fee of $300,563, adjusted
annually based on the "All Urban Customers — United States April Consumer Price Index" or an
increase of five percent (5.0%), whichever is greater.
Interlocal Dispatch Service Agreement with the City of Delray Beach
On October 1, 2007, the Town entered into a new agreement with the City of Delray Beach for
dispatch services. The agreement shall automatically renew for five one year renewals unless either
party notifies the other in writing of their intent not to renew at least 90 days prior to the start of the
renewal term. The agreement shall terminate on September 30, 2012. The annual service fee the
Town paid under the agreement was $51,192 for the fiscal year ended September 30, 2011. The
service fees for subsequent years shall be adjusted from the previous year based on the "All Urban
Consumers — United States April Consumer Price Index".
NOTE 10 —OPERATING LEASE
On July 24, 2008, the Town entered into an operating lease for a copier for use in the Town Hall.
The lease is for 60 months and requires monthly payments of $531 that commenced in August
2008. For the year ended September 30, 2011, the Town made payments of $6,372 pursuant to the
lease.
The following is a schedule of the Town's required future minimum lease payments under the
agreement:
Year Ended
Member 30
2012
2013
Total
Minimum
Lease Payments
$ 6,372
5.310
$11.682
38
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 11— COMMITMENTS
On August 18, 2008, the Town amended the solid waste and recycling collection franchise
agreement with Waste Management Inc. of Florida (WMI). The agreement terminates on
September 30, 2013. Under the terms of the agreement, the Town informs WMI of the total number
of residential and multi -family units that have a Certificate of Occupancy each year on September 1.
WMI bills all multi -family units that are serviced by a container. The monthly charges for the
remainder of the units that are serviced by means other than by containers are paid by the Town.
WMI bills the Town monthly for these services at the then current rate as adjusted from time to
time by the terms and conditions of the agreement. For the year ended September 30, 2011, the
Town made payments of $114,887 pursuant to the agreement.
NOTE 12 — OTHER POST EMPLOYMENT BENEFPTS (OPEB)
The Town was required to implement Governmental Accounting Standards Board Statement 45
(GASB 45), Accounting and Financial Reporting by Employers for Post Employment Benefits
Other than Pensions for fiscal year ending September 30, 2011. Retirees of the Town pay an
amount equal to the actual premium for health insurance charged by the carrier, but there is an
implied subsidy in the healthcare insurance premium charged for active employees, who are
younger than retirees on average. This implied subsidy constitutes other post employment benefits
under GASB 45.
The Town elected not to apply GASB 45. The effects of that departure on the financial statements
are not reasonably determinable. The Town also has not disclosed the descriptive information about
other post employment benefits required by standards.
NOTE 13 —RISK MANAGEMENT
The Town is exposed to various risks of loss related to torts as well as theft of, damage to, and
destruction of assets. The Town is also exposed to errors and omissions, injuries to employees, and
natural disasters. The Town purchases commercial insurance to cover the various risks. Retention
of risks is limited to those risks that are uninsurable and deductibles ranging from $250 to $2,500
per occurrence. Review of the past three years claims reveals settled claims have not exceeded
insurance coverage.
39
TOWN OF GULF STREAM, FLORIDA
Notes to the Financial Statements
September 30, 2011
NOTE 14 — SPECIAL ASSESSMENT
On June 30, 2011, the Town adopted Resolution 011-11 levying non -ad valorem special
assessments on properties specially benefitted by a capital improvement project to place
underground the overhead electric, cable television, and telephone utility facilities that serve a
portion of the Town and its inhabitants. The special assessments were calculated using a
methodology that fairly and reasonably apportions the cost of the project among the benefitted
parcels in proportion to the benefits to such parcels. The calculation methodology used an
equivalent benefit unit assigned for three categories: 1) improved safety 2) improved reliability and
3) improved aesthetics.
Property owners were given the option to pay the entire amount of the assessment in advance of the
Town obtaining financing for the project. The special assessments are subject to prepayment only
on or before November 1, 2011. Assessments that are not prepaid shall be payable in not less than
10 nor more than 20 yearly installments. The special assessments shall bear interest not exceeding
10% per annum over the term of the financing obtained by the Town and will include annual costs
related to administration and collection not to exceed 5%. The total assessable cost was $5,518,144,
and the Town received prepayments in the amount of $2,885,049. See Note 6 for a discussion of the
related financing for the project.
NOTE 15 — ACCOUNTING CHANGE
GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions,
enhances the usefulness of fund balance information by providing clearer fund balance
classifications that can be more consistently applied and by clarifying the existing governmental
fund type definitions. The Town implemented this standard during the fiscal year ended
September 30, 2011. Changes to fund balance reporting of governmental funds are reflected in
the financial statements and schedules. Related disclosures are included in Note 1.
NOTE 16 — BUDGET TO ACTUAL COMPARISONS
For the year ended September 30, 2011, General Fund expenditures exceeded appropriations by
$1,285, and the following departments had an excess of expenditures over appropriations.
General and administrative $ 8,860
Police $ 25,427
Ell
TOWN OF GULF STREAM, FLORIDA
Required Supplemental Information
Schedule of Revenues, Expenditures and Changes in Fund Balance
Budget and Actual
General Fund
For the Year Ended September 30, 2011
Variance with
Final Budget
Budgeted
Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
Taxes
Ad valorem taxes
$ 1,848,753
$ 1,848,753
S 1,838,039
$ (10,714)
Local option fuel taxes
30,798
30,798
29,424
(1,374)
Utility service taxes
142,000
142,000
139,486
(2,514)
Communications services taxes
69,000
69,000
63,219
(5,781)
Local business tax
15,000
15,000
17,952
2,952
Total taxes
2,105,551
2,105,551
2,088,120
(17,431)
Licenses and permits
Building permits
43,000
43,000
95,962
52,962
Franchise fees
135,700
135,700
118,374
(17,326)
Total licenses and permits
178,700
178,700
214,336
35,636
Intergovernmental revenue
State revenue sharing proceeds
62,461
62,461
63,503
1,042
Shared revenue from other local units
6,000
6,000
10,445
4,445
Payment in lieu of taxes
29,900
29,900
29,900
Total intergovernmental revenue
98,361
98,361
103,848
5,487
Charges for services
Solid waste collection fees
114,887
114,887
118,251
3,364
Other
15,616
15,616
2,806
(12,810)
Total charges for services
130,503
130,503
121,057
(9,446)
Judgments, fines and forfeits
Judgments and fines
4,000
4,000
1,808
(2,192)
Violation of local ordinances
300
300
Total judgments, fines, and forfeits
4,000
4,000
2,108
(1,892)
Investment earnings
29,000
29,000
6,252
(22,748)
Miscellaneous revenues
Contributions
14,136
14,136
Other
10,344
10,344
Total miscellaneous revneues
24,480
24,480
Total revenues
2,546,115
2,546,115
2,560,201
14,086
Expenditures
General and administrative
616,385
616,385
625,245
(8,860)
Police
1,321,513
1,336,513
1,361,940
(25,427)
Fire
303,315
303,315
300,563
2,752
Streets
188,695
188,695
159,765
28,930
Sanitation
116,207
116,207
114,887
1,320
Total expenditures
2,546,115
2,561,115
2,562,400
(1,285)
Excess (deficiency) of revenues
over (under) expenditures
$
$ (15,000)
(2,199)
S 12,801
Fund balance, beginning of year
1,464,211
Fund balance, end of year
$1,462,012
41
TOWN OF GULF STREAM, FLORIDA
Notes to the Budgetary
Required Supplemental Information (RSI)
General Fund
September 30, 2011
NOTE 1 - BUDGETS AND BUDGETARY ACCOUNTING
Budgets are adopted for the General Fund and the Water Fund. The Special Assessment Special
Reveune Fund is not legally required to be budgeted and is not budgeted.
A budgetary comparison schedule is presented for the General Fund as required by generally accepted
accounting principles. The procedures for establishing budgetary data reflected in the budgetary
comparison schedule are as follows:
Prior to August 1, the Town Manager submits to the Town Commission a proposed operating
budget for the fiscal year commencing the next October 1. The operating budget includes
proposed expenditures and the means of financing them.
2. Public hearings are conducted to obtain taxpayer comments.
3. Prior to October 1, the budget is legally enacted through the passage of an ordinance.
4. The Town Manager is authorized to transfer budgeted amounts within any department.
However, any revisions that alter the total expenditures of any department must be approved by
the Town Commission by a legally enacted ordinance.
5. Budgets are adopted on a basis consistent with generally accepted accounting principles.
6. Appropriations along with encumbrances lapse at September 30.
NOTE 2 - BUDGET AND ACTUAL COMPARISONS
Formal budgetary integration is employed within the accounting system as a management control
device. Appropriations are legally controlled at the department level and expenditures may not legally
exceed appropriations at that level. For the year ended September 30, 2011, General Fund expenditures
exceeded appropriations by $1,285, and the following departments had an excess of expenditures over
appropriations.
General and administrative $ 8,860
Police
$ 25,427
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GOVERNMENTAUDITING STANDARDS
The Honorable Mayor and Members of the Town Commission
Town of Gulf Stream, Florida
We have audited the financial statements of the governmental activities, the business -type
activities, and each major fund of the Town of Gulf Stream, Florida, as of and for the year ended
September 30, 2011, which collectively comprise the Town of Gulf Stream's basic financial
statements and have issued our report thereon dated February 29, 2012. The report on the
governmental activities was qualified because the Town has not recognized the other
postemployment benefits (OPEB) expense and obligation which is required in accordance with
U.S. generally accepted accounting principles as provided in Governmental Accounting
Standards Board Statement No. 45. 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 Town of Gulf Stream, Florida'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 Town of Gulf Stream, Florida's internal control over financial
reporting. Accordingly, we do not express an opinion on the effectiveness of the Town of Gulf
Stream, Florida's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented,
or detected and corrected on a timely basis.
43
A111811CM INSTninr= OFCEITTRM PUBLICACCOUNTiINTB•FLOADAINSTnI EOr CEMV&D PLIMMACCOLMMM• CPAMMICAINTERNATIONAL
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
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 Town of Gulf Stream, Florida'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 determination of financial statement
amounts. However, providing an opinion on compliance with those provisions was not an
objective of our audit, and accordingly, we do not express such an opinion. The results of our
tests disclosed no instances of noncompliance or other matters that are required to be reported
under Government Auditing Standards.
We noted certain matters that we reported to management of the Town of Gulf Stream, Florida in
the accompanying Management Letter in Accordance with the Rules of the Auditor General
dated February 29, 2012.
This report is intended solely for the information and use of management, the Town Commission,
others within the entity, the Florida Auditor General, 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.
West Palm Beach, Florida
February 29, 2012
44
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MANAGEMENT LETTER IN ACCORDANCE WITH
THE RULES OF THE AUDITOR GENERAL
-- ----
OF THE STATE OF FLORIDA
BEUE GLADE OFROr
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The Honorable Mayor and Members of the Town Commission
Town of Gulf Stream, Florida
We have audited the financial statements of the Town of Gulf Stream, Florida, as of and for the
year ended September 30, 2011, and have issued our report thereon dated February 29, 2012.
The Town has not recognized the other post -employment benefits (OPEB) expense and obligation
in the governmental activities financial statements as required in accordance with U.S. generally
accepted accounting principles as provided in Government Accounting Standards Board Statement
No. 45. The effects of that departure on the financial statements are not reasonably determinable.
The Town also has not disclosed the descriptive information about other post employment benefits
required by standards.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America, and the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States. We have issued our
Independent Auditor's 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. Disclosures in that report, which is dated February 29, 2012
should be considered in conjunction with this Management Letter.
Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor
General, which governs the conduct of local government entity audits performed in the State of
Florida. This letter includes the following information, which is not included in the aforementioned
auditor's reports.
45
AMEREM INff7Mrr OFCEFMFIM PUBLICACCMNTAMB • FLORDA INSTMIM OF CEFMFED PUKMAOCO MAMB • CPAMERICAIMERNATIONNL
PRIOR YEAR COMMENTS
Rules of the Auditor General require that we determine whether or not corrective actions
have been taken to address significant findings and recommendations made in the
preceding annual financial audit report.
There were no items in the prior year that required a response by management.
CURRENT YEAR COMMENTS
Investment of Public Funds
Rules of the Auditor General require our audit to include a review of the Town's
compliance with Section 218.415, Florida Statutes, regarding the investment of public
funds. In connection with our audit, the results of our procedures did not disclose any
instances of noncompliance with Section 218.415, Florida Statutes.
Current Year Recommendations
Rules of the Auditor General require that we address in the Management Letter any
recommendations to improve financial management. In connection with our audit, we did
not have any recommendations that are required to be reported in this letter.
Violations of Provisions of Contracts or Grant Agreements. or Abuse
Rules of the Auditor General require that we address violations of 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.
Matters Inconsequential to the Financial Statements
Rules of the Auditor General provide that the auditor may, based on 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.
Oversight Unit and Component Units
Rules of the Auditor General require that the name or official title and legal authority for
the primary government and each component unit of the reporting entity be disclosed in
this management letter, unless disclosed in the notes to the financial statements. This
information is disclosed in Note 1 to the financial statements, but has been repeated here.
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The Town of Gulf Stream, Florida is a municipal corporation organized pursuant to
Chapter 31276, Laws of Florida, 1955. Based upon the application of criteria defined in
publications cited in Chapter 10.553, Rules of the Auditor General, the Town has
determined that there are no component units related to the Town.
Consideration ofFinancial Emergency Criteria
Rules of the Auditor General, require a statement be included as to whether or not the local
government entity has met one or more of the conditions described in Section 218.503(1),
Florida Statutes, and identification of the specific condition(s) met. In connection with our
audit, we determined that the Town of Gulf Stream, Florida did not meet any of the
conditions described in Section 218.503(1), Florida Statutes.
Annual Financial Report
Rules of the Auditor General require that we determine whether the annual financial report
for the Town of Gulf Stream, Florida for the fiscal year ended September 30, 2011, filed
with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida
Statutes, is in agreement with the annual financial audit report for the fiscal year ended
September 30, 2011. In connection with our audit, we noted that the two reports were in
substantial agreement.
Financial Condition Assessment Procedures
Pursuant to Rules of the Auditor General, we applied financial condition assessment
procedures. It is management's responsibility to monitor the Town of Gulf Stream,
Florida's financial condition, and our financial condition assessment was based in part on
representations made by management and the review of financial information provide by
management. The results of our procedures did not disclose any matters that are required
to be reported.
Excess ofExDendituures OverAnnromiations
Findin¢ 2011-1
Condition: As indicated in Note I to the Budgetary Required Supplementary Information
for the year ended September 30, 2011, certain departments had expenditures in excess of
appropriations.
Criteria: Florida Statutes prohibit expenditures in excess of appropriations.
Effect: Noncompliance with budgetary requirements.
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Recommendation: We recommend that management periodically review budget to actual
comparisons and amend the budget as necessary to eliminate expenditures in excess of
appropriations.
Management Response: The Town will make interim budget adjustments as necessary.
Single Audits
The Town expended less than $500,000 of federal awards and less than $500,000 of state
financial assistance for the year ended September 30, 2011. Consequently, the Town was
not required to have a federal single audit or a state single audit.
Response to Mannpement Letter
We did not audit management's response to the Management Letter and express no opinion
on it.
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,
the Town Commission, others within the entity, the Florida Auditor General, 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.
West Palm Beach, Florida
February 29, 2012
i?aw 2 ►�; �.2�. 4 �Y�1Nneti DA.
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