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Fiscal Year 1983 & 1984 NC OE COO NTY,,,-F LOR_I DA MUNICIPAL SERVICE DISTRICT FINAW.M.. STA"rEMENTS SEPTEMBER_30, 1984 AND 198-3 ICE W & ROSASCO CERTIFIED PUBLIC ACCOUNTANTS CONTENTS Pa Independent Auditors' Opinion 1 Financial Statements: Balance Sheets 2 Statements of Revenue, Expenses and Fund Equity 3 Statements of Changes in Financial Position 4 Notes to Financial Statements 5-7 Supplemental Schedules: Restricted Assets 8 Residential Waste Fees Assessed and Uncollected 9 Schedule of Insurance In Force 10 Management Letter 11-13 Bond Compliance Letter 14 KEMP & ROSASCO Certified Public Accountants 1438 KENNEDY DR. #12 LUANI PLAZA 9 P. 0. BOX 309 KEY WEST, FL 33041-0309 ORVIS M. KEMP, C.P.A. (305) 294-2581 MEMBER OF AMERICAN INSTITUTE M. 0. KEMP, C.P.A. AND FLORIDA INSTITUTE OF PETER L. ROSASCO, Jr., C.P.A. CERTIFIED PUBLIC ACCOUNTANTS MA VA E. GREEN,' C.P.A. DEREK PARKER, C.P.A. Honorable Members of the Board of County Commissioners Monroe County, Florida We have examined the Balance Sheet of the Monroe County, Florida Municipal Service District as of September 30, 1984 and 1983 and the related State- ments of Revenues, Expenses, and Fund Equity, and Changes in Financial Position for the years then ended® Our examination was made in accordance with generally accepted auditing standards and, accordingly, included such tests of accounting records and such other auditing procedures as we con- sidered necessary in the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of the Monroe County, Florida Municipal Service District at September 30, 1984 and 1983 and the results of its operations and the changes In financial position for the years then ended in conformity with generally accepted accounting principles applied on a consistent basis® Our examination was made for the purpose of forming an opinion on the finan- cial statements taken as a whole® The supplemental schedules of Restricted Assets, Residential Waste Fees Assessed and Uncollected, and Insurance in Force are presented for purposes of additional analysis and are not a required part of the financial statements® Such information has been subjected to the auditing procedures applied in the examination of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole® Kemp & Rosasco Certified Public Accountants February 14, 1985 N N h '1 00 N'.. 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V -11)-� M O W M N t0 - d' va Irni In O�vo+lo rn ^r o 0 o v , 10 V I V W V N V 00'.... r V r 01 co N n 00 N V N'... 10 V1 I(1 N N M Itl IO 0) 0) N_ r r 3 U7 O+ a - c c m O c U t (D C V c E O 0 (o w N 0 0 u + E > t c 4- a)c vOi n O m m c} C N C ¢ W L L 0 0 0 ¢ D OI a) p 4- VI A m U m M L O m O m G 4- m- - 0 + d U) > U 0 0 > m L Ti- O 0 t + Ut L•- C L L N - V } } O + C m } 0 0 0 L Ut O N vl L Z m + 0 (n N L U L ¢ V•- (D m y C - C In a} D L} U a a)w of n.. m J c m a ¢ N N +- O L 0 O v + L O+ E O -•- F- ¢ c - a) C L - L VI VI+- - IWn 0 E n LE m 4- 0+ m IL UO mc 0 U Dn }Z wQ I- m In E + O + {- - J Lm 4-c J V 0 O N m+ 0c m O -aO1 + ¢ L I- L F- E O 0 O O O CQO-•- 0 L 0 > > m C•- J W c J Q0 CUU- ¢ U CL W J MONROE C0gNTY,_Q0RjDA MUNICIPAL SERVICE DISTRICT STATEMENTS OF REVENUESL EXEENSES AND KIM ECHJITY' 9 8 4 A ND 113 83 FOR THE YEARS ENDED SEPT EMBER 3002LAP-M 1984 1983 Operating Revenues: Special assessments 4,612,666 $ 2,292,622 General taxes 22,532 956,750 Waste collection fees 369,591 256,991 Franchise fees 271,223 248,446 Miscellaneous 630 21,806 Payments from other governments and excess fees 8151L811 5 900 Total Operating Revenues 5 36u21453 3 ZE2,215, Operating Expenses: Professional services 1 ,816,158 1*460,777 Personal services 1,312,740 1,108,175 Depreciation and depletion 725,568 653,825 Operations 778,297 650,810 Repairs and maintenance ......422L212 00�7 ......228L26 3�O Total Operating Expenses 52L!z.27.5 411811654 Operating Income (Loss) 2961678 (399039) Nonoperating Revenue (Expense) : Interest Income 466,829 528,735 Loss on disposal of equipment (34,346) - Interest expense & paying agent fees (8831 (9 468) Total Nonoperating Revenue (Expense) --2122AID ------(374L733) Income (Loss) Before Operating Transfers ( 154,200) (773,872) Operating Transfers (Out) (263,212) (214,998) Net Income (Loss) (417,739) (988,870) Fund Equity, October 1 4 271 i 'll 512591981 L Fund Equity, September 30 3,853,372 S 4,271, 111 The accompanying notes are an Integral part of these financial statements. --3- MONIROE C0U91-Y, F10RIDA MUNICIPAL SERVICE DISTR&T STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE YEARS ENDED SEPTEMBER 30, _1984 AID 1983 1984 1983 Sources Of Working Capital : Operations: Net income ( loss) $ (417,739) $ (988,870) Items not requiring working capital : Depreciation and depletion 725,568 653,825 Amortization of bonds discount 6,778 10,314 Loss on disposal of fixed assets 3411346, - Working capital provided (used) by operations 348,953 (324,731) Decrease In restricted assets 448,451 399,943 Proceeds from long-term note - 114,660 Decrease ( increase) in working cyap Ital -------HAD .......... 653,453 Total Sources of Working Capital 793,907 S 043,325 Uses Of Working Capital : Decrease in liabilities payable from restricted assets: Accrued interest 437,346 $ 2,299 Revenue bonds 45,000 .......42L2Q Total Decrease In Liabilities Payable from Restricted Assets 482,346 42,299 Retirement of long-term debt and portions becoming current 60,372 104,288 Additions to property, plant & equipment 251 696,738 Total Use of Working Capital $ 793,907 $ 843,325 Increase (Decrease) In Components of Working Capital : Cash $ (142,472) $ (494,336) Investments (624,794) (90,679) Due from other. governments 38,951 - Accounts receivable 581,017 115,859 Accounts payable V 5,981 (109,833) Other current liabilities 1444814. ......(744461) Increase (Decrease) In Working Capital $ 3,497 $ (653,453) The accompanying notes are an integral part of these financial stat onents. -4-, MONROE COUNTY, FLORIDA MUNICIPAL SERVICE DISTRICT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30L_ 1984 AND 1983 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General - The Monroe County, Florida Municipal Service District (the "MSD"') is an instrumentality of Monroe County (the "County") authorized to own and operate solid waste collection facilities of the County. Basis of Accou�In - The MSD follows the accrual basis of accounting. Investments - Investments consist primarily of U.S. Treasury obligations, carried at amortized cost which approximates market value. Property and depreciation - Property is recorded at cost. Expenditures for maintenance, repairs and minor renewals and betterments are expensed as incurred. Major renewals and betterments are treated as property acquisitions. Depreciation and depletion expense is provided on property and sanitary landfill sites using the straight-line method over the esti- mated useful lives of the assets as follows: Description Years Sanitary landfill sites 1 - 10 Buildings and other improvements 10 - 20 Machinery and equipment 3 - 10 The cost and accumulated depreciation of property dispositions are removed from the accounts with the related gain or loss on disposition reflected in net income. Discount on Bonds Payable - The discount on Revenue Bonds Payable is amor- tized using the straight-line method over the maturity of the bonds. NOTE 2 - PENSION PLAN The County participates in the Florida Retirement System (the "System") which covers substantially all of the County's full-time employees. Presently, the System does not require contributions from covered employees. Pension costs for MSD employees for the years ended September 30, 1984 and 1983 as required and defined by the System, approximated $ 109,646 and $ 95,662 respectively. -5- MnKIDM7 COUKITv FLORIDA M6NCIPAL SERV' ICE DISTRICT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1984 AND 1983 NOTE 2 - PENSION PLAN (Continued) Contributions of all participating agencies throughout the State of Florida are pooled to fund accrued benefits under the System. System officials have reported that the System has an actuarially computed unfunded past service liability of approximately $6.5 billion as of July 1 , 1983, the latest valuation date of the plan. This amount repre- sents an obligation of the System and not of the participating agencies. The most recent actuarial study indicates that, if certain actuarial assumptions are realized and certain increases to the contribution rates are made, this unfunded past service liability will be liquidated within 30 years. NOTE 3 - LONG-TERM DEBT Long-term debt consists of the following: Improvement Bonds, secured by revenues of 1984 1983 MSD which are obligations solely of MSD, payable in installments of various amounts each October 1 until 2001 , the remainder due October 1 , 2011 , bearing interest at 9.80 to 11 .25% $ 7,865,000 $ 7,960,000 Unamortized discount 1762222 999 _1 Net Improvements Bonds 7,688,778 7,777,001 Lease obligations, secured by equipment with a purchase cost of $ 114,660, pay- able in monthly installments of $ 5,283, including interest at 10.75%. 10j567 .....721604 Total long-term debt 7,699,345 7,849,,605 Less current portion 10,567 1072232 Net long-term debt $ 7,688,778 $ 7,742,373 -6- MONROE CON TY FIORIDA .L _._ MUNK.. IPAL SERVICE DISTRICT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30' 1984 AND 1983 NOTE 3 - LONG-TERM DEBT (Continued) Long-term debt matures as follows: September 30 1985 $ 10,567 1986 55,000 1987 65,000 1988 700000 1989 80,000 Thereafter 7 595 000 7,875,567 Less unamortized discounts 176 222 $ 7,699,345 The improvement bonds are payable from special assessments (residential waste collection fees) levied annually on residential properties within the MSD that are furnished solid waste collection services, including interest on such assessments, payments received from franchise solid waste collectors with respect to commercial property in the MSD, all other non- ad valorem funds received by the MSD in connection with furnishing solid waste disposal services by the MSD, excluding any Federal and State funds received, and interest earned on funds received from providing such ser- vices. The improvement bonds are payable solely from the revenues generated by the MSD and do not constitute a general obligation of the County® -7- M ONROE COUNTY FLORIDA MUNICIPAL SERVICE DISTRICT RESTRICTED ASSETS SEPTEMBER 30,_ 1984 AND 1983 1984 1983 Fund Description: Sinking Fund: Cash 7,633 j484L905 Reserve Fund: Cash 2,472 2,472 Investments 975,035 955,336 Interest Receivable 44,958 ,958 1,022,465 1,002,766 L == Renewal and Replacement Fund: Cash 1 ,745 2,429 Investments 247 403 _237,597 249L148 240.1026 Cash with Fiscal Agent 5,488,693 511�9786�7 Total Restricted Assets $ 6,767,939 $ 6,925,564 MONROi:::d C;OP. NT.,r f P._OR I DA RV. SJDI...NT_?AY.... WASTE FI...:ES ASSESSED AW``iD UNCOE.._E.._ECTEC".1 SEPTEMBE 84 .: ......_.....::....... Percentage Of Year.. Of Total Fees Uncollected A..r Uncollected To Assessment Assessed OH inal RoH Less l eserye for 11nco t' a ep ,..,, b°,as Net Residential Waste MONROE COUNTY, FLORIDA MUNICIPAL SERVICE DISTRICT SCHEDULE INSURANCE IN FORCE SEPTEMBER 30 1.984 Amount DesSr| fl2 mf Co� 2 s Carrier Po| l P�i� f Coverane Comprehensive Business Policy The Fidelity and 4/1/83 - Casualty Company 4/1/85 a° Fire, Windstorm, efz° of New York a° Major equipment- replacement cost buildings, personal property & fanks- $ 481 *47O b° Contractor's Equip. b~ $ 557*629 c° Scheduled Property c° Data Processing Equipmenf- $ 3G6*O8O d~ Honesty Blanket Bond d~ $ 50*000 General Liability Constitution State 2/16/84 - $ 500*000 (CSL) Ins. Company 2/16/85 Auto Liability American Southern 2/16/84 - $ 500*000 (CSL) Ins. Company 2/16/85 Umbrella Liability Prmfoofivo 2/16/84 - $ 500*000 National Ins. 2/16/85 Public Official International 4/19/83 - $ 1*000,000 Liability Surplus Lines 4/19/85 Worker's Compensation Self-insured Continuing Statutory and Employer's L/ab° Worker's Compensation Safety Mutual 10/1/83 - $ 5°OOO*OOO Specific Excess Casualty Corp. 10/1/84 $ 1 *000*000 Aggregate Excess -1O- KEMP 1& ROSASCO Certified Public Accountants 1438 KENNEDY DR. #12 LUANI PLAZA 9 P. 0. BOX 309 KEY WEST, FL 33041-0309 ORVIS M. KEMP, C.P.A. (305) 294-2581 MEMBER OF AMERICAN INSTITUTE M. O. KEMP, C.P.A. AND FLORIDA INSTITUTE OF PETER L. ROSASCO, Jr., C.P.A. CERTIFIED PUBLIC ACCOUNTANTS MARVA E GREEN, C.P.A. DEREK PARKER, C.P.A. February 14, 1985 Mr. Danny L. Kolhage Clerk Ex Officio Board of County Commissioners Monroe County, Florida Key West, FLorlda 33040 Dear Sir: We have examined the financial statements of Monroe County, Florida, Municipal Service District (MSD) for the years ended September 30, 1984 and 1983, and have issued our report thereon dated February 14, 1985. As part of our exami- nation, we made a study and evaluation of the MSD's system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards. The purpose of our study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for expressing an opinion of the MSD's financial statements. Our study and evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole. The observations reported herein should be considered in the context of the reponsibility of management for establishing and maintaining a system of internal accounting control, the objectives of and inherent limitations on such a system, and the definition of a material weakness for purposes of this report, which are described in the Appendix to this report. Our study and evaluation made for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the system. Accordingly, we do not express an opinion on the system of internal accounting control of the MSD taken as a whole. However, our study and eva- luation disclosed no condition that we believe is a material weakness. Our examination did, however, disclose the following conditions that, although not considered by us to be material weaknesses, are weaknesses in internal accounting control for which corrective action might be taken. _11- Mr. Danny L. Kolhage Clerk Ex Officio Board of County Commissioners Page 2 Compliance with Bond Covenants Observation: We reviewed section 15E of Resolution No. 215 - 190 which, as strictly Interpreted, requires the MSD to make assessments at certain minimum levels based on, among other things, the cost of operations and maintenance. However, there appears to be a conflict between Section 15E, Resolution 215 - 1980 and Resolution 78 - 191 which Is an amendment to Resolution 215 - 1980. Resolution 78 - 1981 allows pledged funds remaining in the Revenue Fund to be used for any lawful purpose, which includes operations. Recommendation: The County should obtain an opinion from bond counsel in order to resolve this apparent inconsistency. We further recommend that you discuss this matter with the consulting engineers and take appropriate action. Regulatory Reporting Requirements We have reviewed the financial report filed with the Department of Banking and Finance for the year ended September 30, 1984, pursuant to Section 218. 6, Florida Statutes, and have found the amounts reported therein to be In agreement with the amounts included in the financial statements on which we have issued our report dated February 14, 1985. The Rules of the Auditor General , State of Florida, require that this letter be filed with the Auditor General along with audited financial statements. This report is intended solely for the use of management and the Auditor General and should not be used for any other purpose. We appreciate the cooperation extended to us during the course of our examina- tion. We would be pleased to discuss these matters further with you at your convenience. Sincerely, Kemp & eosasco Certified Public Accountants -12- APPENDIX MANAGEMENT'S RESPONSIBILITY FOR, AND THE OBJECTIVES AND LIMITATIONS OF, INTERNAL ACCOUNTING CONTROL AND THE DEFINITION OF A MATERIAL WEAKNESS The following comments concerning management's responsibility for internal accounting control , the objectives of and the inherent limitations on a system of internal accounting control, and the definition of a material weakness are excerpts from Statements on Auditing Standards of the American Institute of Certified Public Accountants. Management's Responsibility Management .. . is responsible for establishing and maintaining a system of Internal accounting control . In fulfilling this responsibility, estimates and judgements by management are required to assess the expected benefits and related costs of control procedures. Objectives The objectives of a system are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting prin- ciples. Limitations Because of inherent limitations in any system of internal accounting control, errors or irregularities nevertheless may occur and not be detected. Also, projection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with procedures may deteriorate. Material Weakness A material weakness (for the auditor's purpose) is a condition in which the specific control procedures, or the degree of compliance with them, do not (in the auditor's judgement) reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the finan- cial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned func- tions. These criteria may be broader than those that may be appropriate for evaluating weaknesses in accounting control for management or other purposes. -13- KEMP & ROSASCO Certified Public Accountants 1438 KENNEDY DR. #12 LUANI PLAZA 9 P. 0. BOX 309 KEY WEST, FL 33041-0309 ORVIS M. KEMP, C.P.A. (305) 294-2581 MEMBER OF AMERICAN INSTITUTE WM. 0. KEMP, C.P.A. AND FLORIDA INSTITUTE OF PETER L. ROSASCO, Jr., C.P.A. CERTIFIED PUBLIC ACCOUNTANTS MARVA E. GREEN, C.P.A. DEREK PARKER, C.P.A. Honorable Members of the Board of County Commissioners Monroe County, Florida We have examined the Balance Sheet of the Monroe County, Florida Municipal Service District as of September 30, 1984 and 1983 and the related statements of Revenues, Expenses, and Fund Equity, and Changes in Financial Position for the year then ended. Our examination was made in accordance with generally accepted auditing standards and, accordingly, Included such tests of accounting records and such other auditing procedures as we considered necessary in the circumstances. In connection with our examination, nothing came to our attention that caused us to believe that the Monroe County, Florida Municipal Service District was not in compliance with any of the terms, covenants, provisions, or conditions of section 15 of Resolution No. 215 which was adopted by the Board on August 26, 1980, as amended and supplemented. However, it should be noted that our examination was not directed primarily toward obtaining knowledge of such non- compliance Kemp & Rosasco Certified Public Accountants February 14, 1985