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Fiscal Year 2006 MONROE COUNTY, FLORIDA PROPERTY APPRAISER Financial Statements For the Year Ended September 30, 2006 MONROE COUNTY, FLORIDA PROPERTY APPRAISER Contents Page Independent Auditors' Report_____________ 2 - 3 BASIC FINANCIAL STATEMENTS Balance Sheet—General Fund 4 Statement of Revenues, Expenditures and Changes in Fund Balances - General Fund 5 Notes to Financial Statements 6 — 10 ------------------------------------------------------------------------------------------ REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues and Expenditures - Budget and Actual 11- General Fund - ------------------------------- SUPPLEMENTARY INDEPENDENT AUDITORS' REPORTS Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards______ _______________ _______________________ 12 - 13 Independent Auditors' Management Letter--------------------------------------------------------------------- 14 - 15 i CVRT)V1LD PUBLIC ACCOUNTANTS CONSULTANTS INDEPENDENT AUDITOR'S REPORT To the Honorable Ervin A. Higgs, Property Appraiser of Monroe County, Florida: We have audited the accompanying financial statements of the major fund of the Monroe County, Florida Property Appraiser (the "Property Appraiser"), as of and for the year ended September 30, 2006, which comprise the Property Appraiser's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Property Appraiser's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and 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. As discussed in Note 1, the accompanying financial statements were prepared for the purpose of complying with Section 218.39(2), Florida Statutes, and Chapter 10,550, Rules of the Auditor General-Local Governmental Entity Audits, and are not intended to be a complete presentation of the financial position of Monroe County, Florida, and the results of its operations and the cash flows of its proprietary funds in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the major fund of the Property Appraiser as of September 30, 2006, and the changes in its financial position thereof for the year then ended, in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated January 18, 2007 on our consideration of the Property Appraiser's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. . That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 2 The budgetary comparison schedule on page 11 is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted primarily of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and we express no opinion on it. This report is intended solely for the information and use of management and applicable state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Orlando, Florida January 18, 2007 3 BASIC FINANCIAL STATEMENTS MONROE COUNTY, FLORIDA PROPERTY APPRAISER Balance Sheet General Fund September 30, 2006 Assets Cash and cash equivalents $ 649,578 Total assets $ 649,578 Liabilities and Fund Balance Liabilities: Accounts payable $ 7,277 Accrued wages and benefits payable 56,283 Due to Board of County Commissioners 504,295 Due to other governmental units 81,723 Total liabilities 649,578 Fund balance - Total liabilities and fund balance $ 649,578 The notes to the financial statements are an integral part of this statement. 4 MONROE COUNTY, FLORIDA PROPERTY APPRAISER Statement of Revenues, Expenditures and Changes in Fund Balances General Fund Year Ended September 30, 2006 Revenues: Charges for services Board of County Commisioners $ 2,861,962 Other taxing districts 755,298 Investment income 26,285 Miscellaneous 7,053 Total revenues 3,650,598 Expenditures: Current: Personnel services 2,401,076 Operating expenditures 586,751 Capital outlay 76,753 Total expenditures 3,064,580 Other financing uses: Transfers to Board of County Commissioners (504,295) Transfers to other governmental units (81,723) Total other financing uses (586,018) Excess of revenues over expenditures - Fund balance, beginning of year - Fund balance, end of year $ - The notes to the financial statements are an integral part of this statement. 5 MONROE COUNTY, FLORIDA PROPERTY APPRAISER Notes to Financial Statements Year Ended September 30, 2006 Note 1 —Summary of significant accounting policies Reporting Entity— The Monroe County, Florida Property Appraiser (the "Property Appraiser") is a separately elected county official established pursuant to the Constitution of the State of Florida. The Property Appraiser's financial statements do not purport to reflect the financial position or the results of operations of Monroe County, Florida (the"County)taken as a whole. Entity status for financial reporting purposes is governed by Statements No. 14 and No. 39 of the Governmental Accounting Standards Board (GASB). Although the Property Appraiser's Office is operationally autonomous, it does not hold sufficient corporate powers of its own to be considered a legally separate entity for financial reporting purposes. Therefore, the Property Appraiser is reported as a part of the primary government of the County. Measurement focus, basis of accounting, and financial statement presentation - The o Supervisor of Elections' financial statements are prepared for the purpose of complying with z Section Florida Statutes, and Chapter Rules of the Auditor General-Local Governmental Entity Audits, which require the Property Appraiser to only present fund financial statements. The General Fund is used to account for all revenues and expenditures applicable to the general operations of the Property Appraiser. This fund is presented as a major governmental fund and uses the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Property Appraiser considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, expenditures related to compensated absences and claims and judgments are recorded only when payment is due. The extent to which General Fund revenues exceed expenditures is reflected as transfers out and as liabilities to the Monroe County Board of County Commissioners (the "Board") and other governmental agencies in the same proportion as fees paid by each governmental unit to total fees earned by the Property Appraiser. Budgetary Requirements — Expenditures are controlled by budget appropriations in accordance with the requirements set forth in the Florida Statutes. The budget is prepared on a basis consistent with accounting principles generally accepted in the United States of America. Cash and Cash Equivalents and Investments — The Property Appraiser's presents as cash and cash equivalents all demand deposits and other highly liquid investments with maturities of 90 days or less when purchased. Cash and cash equivalents consist of cash on hand and demand deposits. 6 ' MONROE COUNTY, FLORIDA PROPERTY APPRAISER Notes to Financial Statements Year Ended September 30, 2006 Note 1 —Summary of significant accounting policies (continued) Capital Assets — Tangible personal property used in the Property Appraiser's operations are recorded as expenditures in the General Fund at the time assets are received and a liability is incurred. Purchased assets are capitalized at historical cost in the government-wide financial statements of the County. In addition, the Board provides office space used by the Property Appraiser at no charge. Compensated Absences — The Property-Appraiser permits employees to accumulate earned but unused vacation and sick pay benefits. Related long-term obligations amounting to $183,134 at September 30, 2006, are included in the government-wide financial statements of the County. Use of Estimates- The preparation of financial statements requires management to make use of estimates that affect reported amounts. Actual results could differ from estimates. Note 2— Deposits and Investments As of September 30, 2006, the Property Appraiser has demand deposits of$649,578. Demand and time deposits are fully insured by the Federal Deposit Insurance Corporation or are covered by the State of Florida collateral pool, a multiple institution pool with the ability to assess its members for collateral if a member institution fails. Florida Statutes and the Property Appraiser's investment policy authorize investments in certificates of deposit, savings accounts, repurchase agreements, the Local Government Surplus Funds Trust Fund administered by the Florida State Board of Administration, money market funds, direct obligations of the U.S. Treasury and federal agencies and instrumentalities. Note 3— Retirement system Plan Description — The Property Appraiser's employees participate in the Florida Retirement System ("FRS"), administered by the Florida Department of Administration. Employees elect to participate in either the defined benefit plan ("Pension Plan"), a cost sharing, multiple-employer, defined benefit retirement plan, or the defined contribution plan (Investment Plan) under the FRS. As a general rule, membership in the FRS is compulsory for all employees working in a regularly established position for a state agency, county government, district school board, state university, community college, or a participating city or special district within the State of Florida. The FRS provides retirement and disability benefits, annual cost-of living adjustments, and death benefits to Plan members and beneficiaries. Benefits are established by Chapter 121, Florida Statutes, and Chapter 60S, Florida Administrative Code. Amendments to the law can be made only by an act of the Florida Legislature. 7 I` MONROE COUNTY, FLORIDA PROPERTY APPRAISER Notes to Financial Statements Year Ended September 30, 2006 Note 3— Retirement system (continued) Benefits under the Pension Plan are computed on the basis of age, average final compensation, and service credit. Regular class employees who retire at or after age 62 with 6 years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation for each year of credited service. Vested employees with less than 30 years of service may retire before age 62 and receive reduced retirement benefits. Special risk class employees (swom law enforcement officers, firefighters, and correctional officers) who retire at or after age 56 with 6 years of credited service, or with 25 years of service regardless of age, are entitled to a retirement benefit payable monthly for life equal.to 3.0% of their final average compensation for each year of credited service. Senior Management Service class employees who retire at or after age 62 with at least 6 years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 2.0% of their final average compensation for each year of credited service. Elected Officers' class employees who retire at or after age 62 with at least 6 years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 3.0% (3.33% for judges and justices) of their final average compensation for each year of credited service. A post-employment health insurance subsidy is also provided to eligible retired employees through the FRS in accordance with Florida Statutes. In addition to the above benefits, the FRS administers a Deferred Retirement Option Program ("DROP"). This program allows eligible employees to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed 60 months after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. For employees electing to participate in the Investment Plan rather than the Pension Plan, vesting occurs at one year of service. These participants receive a contribution of self-direction in an investment product with a third party administrator selected by the State Board of Administration. The State of Florida annually issues a publicly available financial report that includes financial statements and required supplementary information for the FRS. The latest available report may be obtained by writing to the State of Florida Division of Retirement, Department of Management Services, 2639 North Monroe Street, Building C, Tallahassee, Florida 32299-1560 or accessing their internet site at www.frs.state.fl.us. B MONROE COUNTY, FLORIDA PROPERTY APPRAISER Notes to Financial Statements Year Ended September 30, 2006 Note 3— Retirement system (continued) Funding Policy -- The FRS is noncontributory for members. Governmental employers are required to make contributions to the FRS based on statewide contribution rates. The contribution rates by job class at September 30, 2006 were as follows: regular, 9.85%; special risk, 20.92%; special risk administrative support, 12,55%; county elected officers, 16.53%; senior management, 13.12%; and DROP participants, 10.91%. These rates, which became effective on July 1, 2006, represented a significant increase for all job classes, as compared to the rates that were in effect for the first nine months of the 2006 fiscal year. During the fiscal year ended September 30, 2006, the Property Appraiser contributed to the Plan an amount equal to 8.96% of covered payroll. Property Appraiser contributions to the FRS for the fiscal years ended September 30, 2004 through 2006 were $136,035, $152,603 and $182,655, respectively, which were equal to the required contributions for each fiscal year. The Property Appraiser has historically contributed amounts equal to required contributions and, therefore, does not have a pension asset or liability as determined in accordance with GASS Statement No. 27. Note 4— Risk management The Property Appraiser is exposed to various risks of loss related to tort; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The Property Appraiser participates in the coverage provided by the Board for Workers' Compensation, Group Insurance, and Risk Management internal service funds. Under these programs, Workers' Compensation provides $1,000,000 coverage per claim for regular employees. Risk Management has a $5,000,000 excess insurance policy for general liability claims with a $100,000 self insured retention, and building property damage is covered for the actual cost of the buildings with a deductible between $100,000 and $250,000. Deductibles for windstorm and flood vary by location. Monroe County purchases commercial insurance for claims in excess of coverage provided by the funds and for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three years. The Property Appraiser makes payments to the Workers' Compensation, Group Insurance and Risk Management Funds based on estimates of the amounts needed to pay prior and current year claims. Note 5- Commitments Operating Leases — The Property Appraiser has entered into noncancelable lease commitments for office equipment. Total lease expenditures amounted to $28,409 during the year ended September 30, 2006. The following is a schedule by years of minimum future obligations under the leases: 2007 $ 10,896 2008 7,518 2009 3,570 Total $ 21,984 9 MONROE COUNTY, FLORIDA PROPERTY APPRAISER Notes to Financial Statements Year Ended September 30, 2006 Note 6— Litigation The Property Appraiser is a parry from time to time in various lawsuits and other claims incidental to the ordinary course of its operation, some of which are covered by the Board's self- insurance program. While the results of litigation cannot be predicted with certainty, management believes the final outcome of such litigation will not have a material adverse effect on the Property Appraiser's financial position. 10 REQUIRED SUPPLEMENTARY INFORMATION MONROE COUNTY,FLORIDA PROPERTY APPRAISER Schedule of Revenues and Expenditures Budget and Actual-General Fund Year Ended September 30,2006 General Fund Variance with Final Budget Original Final Positive Budget Budget Actual (Negative) Revenues: Charges for services: Board of County Commissioners $ 2,856,881 $ 2,861,962 $ 2,861,962 $ Other taxing districts 755,298 755,298 755,298 - Investment income - - 26,285 26,285 Miscellaneous - 7,053 7,053 Total revenues 3,612,179 3,617,260 3,650,598 33,338 Expenditures: Current: Personnel services 2,684,581 2,689,662 2,401,076 298,586 Operating expenditures 686,528 686,528 586,751 99,777 Capital outlay 241,070 241,070 76,753 164,317 Total expenditures 3,612,179 3,617,260 3,064,580 552,680 Other financing uses: Transfers to Board of County Commissioners - - (504,295) (504,295) Transfers to other governmental units - - (81,723) (81,723) Total other financing uses - - (586,018) (586,018) Excess of revenues over expenditures - - - - Fund balance,beginning of year - - - Fund balance,end of year $ - $ $ - $ 11 SUPPLEMENTARY INDEPENDENT AUDITORS' REPORTS CONSUETANIS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Ervin A. Higgs, Property Appraiser of Monroe County, Florida: We have audited the financial statements of the major fund of the Monroe County, Florida Property Appraiser (the "Property Appraiser") as of and for the year ended September 30, 2006, which collectively comprise the Property Appraiser's basic financial statements, and have issued our report thereon dated January 18, 2007 for the purpose of compliance with Section 218.39(2), Florida Statutes, and Chapter 10.550, Rules of the Auditor General-Local Governmental Entity Audits.. 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 Property Appraiser's internal control over financial reporting 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 over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud 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. We noted no matters involving the internal control over financial reporting and its operations that we consider to be material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Property Appraiser'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. 12 This report is intended solely for the information and use of management and applicable state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Orlando, Florida ,January 18, 2007 13 CKRTIFIED PUBLIC INDEPENDENT AUDITORS' MANAGEMENT LETTER To the Honorable Ervin A. Higgs, Property Appraiser of Monroe County, Florida: We have audited the financial statements of the Monroe County, Florida Property Appraiser(the "Property Appraiser"), as of and for the year ended September 30, 2006, which collectively comprise the Property Appraiser's basic financial statements, and have issued our report thereon dated January 18, 2007 for the purpose of compliance with Section 218.39(2), Florida Statutes, and Chapter 10.550, Rules of the Auditor General-Local Governmental Entity Audits. 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 Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, dated January 18, 2007, and it should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General. Those rules (Section 10.554(1)(h)l) require that we address in the management letter, if not already addressed in the auditors' report on internal control over financial reporting, compliance and other matters, 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 recommendations in the preceding year's annual financial audit report. The Rules of the Auditor General (Section 10.554(1)(h)2) state that a management letter shall have a statement as to whether or not the Property Appraiser complied with Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit of the financial statements of the Property Appraiser, the results of our tests did not indicate that the Property Appraiser was in noncompliance with Section 218.415 regarding the investment of public funds. The Rules of the Auditor General (Section 10.554(1)(h)3) require disclosure in the management letter of any recommendations to improve the Property Appraiser's financial management, accounting procedures and internal controls. There were no recommendations in connection with the fiscal 2006 financial statement audit. 14 h The Rules of the Auditor General (Section 10.554(1)(h)4) require disclosure in the management letter of the following matters if not already addressed in the auditors' reports on compliance and internal controls: (1) violations of laws, rules, regulations, and contractual provisions that have occurred, or are likely to have occurred; (2) improper or illegal expenditures; (3) improper or inadequate accounting procedures (e.g., the omission of required disclosures from the financial statements); (4) failures to properly record financial transactions; and (5) other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of, the auditor. There were no such matters noted. The Rules of the Auditor General (Section 10.554(1)(h)5) also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial statements. The Property Appraiser is a separately elected county official established pursuant to the Constitution of the State of Florida. There are no component units related to the Property Appraiser. This report is intended solely for the information and use of management, the State of Florida Office of the Auditor General, and applicable state agencies, and is not intended to be and should not be used by anyone other than these specified parties. Orlando, Florida January 18, 2007 15 �ORIDq �v�sME:r� AA Q � F ti� v y MONROE COUNTY PROPERTY APPRAISER fi 1►J .�*•� y� COUNTY COURTHOUSE P.O. BOX 1176 °01"` KEY WEST, FLORIDA 33041 CFA PHONE (305) 292-3420 ERVIN A. HIGGS, CY A.-CRA March 20, 2007 Department of Financial Services Bureau of Local Government Finance Room 1001 Capitol Building Tallahassee, Florida 32399-0350 RE: Management Audit Response Dear Sir: In response to the Auditors Report on internal control for fiscal year 2005-2006,please find the following: There were no findings for the fiscal year 2005-2006 If you require any further information,please feel free to contact our office- Sincerely, a ERVIN A. HIGGS, C.F.A.-C MONROE COUNTY PROPERTY APPRAISER EAHJlk MEMBER PROFESSIONAL APPRAISERS ASSOCIATION OF FLORIDA FLORIDA ASSOCIATION OF PROPERTY APPRAISERS-•INTERNATIONAL ASSOCIATION OF ASSESSING OFFICERS NATIONAL ASSOCIATION OF REVIEW APPRAISERS