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Fiscal Year 1998f 1 _ 1 1 1 MONROE COUNTY. FLORIDA CLERK OF THE CIRCUIT COURT FINANCIAL STATEMENTS f SEPTEMBER 30, 1998 KEMP & GREEN, PA. CERTIFIED PUBLIC AO00UNTANTS CONTENTS Paqes Independent Auditors' Report 1-2 Financial Statements: Balance Sheet 3 Statement of Revenues and Expenditures - Budget and Actual - General Fund- 4 Notes to Financial Statements 5-9 Supplemental Schedule: Statement of Changes in Assets and Liabilities - Agency Fund 10 Other Reports: t Auditors' Report on Compliance liance and on p p Internal Control over Financial Reporting 11-12 Independent Auditors Management Letter 13-14 KEMP £4 GREEN, P.A. Certified- Public Accountants 1438 KENNEDY DRIVE P. O. BOX 1529 WM, O. KEMP, C.P.A. KEY WEST, FLORIDA 33041-1529 (305) 294-2581 MARVA E. GREEN, C.P.A. FAX # (305) 294-4778 INDEPENDENT AUDITORS' REPORT Mr. Danny L. Kolhage Clerk of the Circuit Court Monroe County, Florida MEMBER OF AMERICAN INSTITUTE AND FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS We have audited the financial statements of the Clerk of the Circuit Court of Monroe'County, Florida as of September 30 1998 and for the year then ended, listed in the accompanying table of contents. These financial statements are the responsibility of the Cleric of the Circuit Court.. Our responsibility is to express an opinion on these financial,statements based on our audit. We conducted our audit in. accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 1 a reasonable basis for our opinion. As discussed inNote1, the financial statements present only the Clerk and ' are not intended to present fairly the financial position of Monroe County, Florida and the results of operations and cash flows of its proprietary fund types and non expendable trust funds in conformity with generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Clerk of the Circuit Court of Monroe County, Florida as of September 30, 1998 and the results of its operations for the year then ended in conformity, with generally accepted accounting principles. Our audit was conducted :for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental information listed in the accompanying table of contents is presented for purposes of additional -1- f� analysis and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit 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. In accordance with Government Auditing Standards, we have also issued a report dated March 10, ,1999 on our consideration of the Clerk's internal control over financial reporting, and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants.. OA Kemp & Green, P.A. Certified Public Accountants March 10, 1999 -2- MONROE COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT BALANCE SHEET SEPTEMBER 30, 1998 Governmental Fiduciary Fund Type Fund Type iGeneral Agency Assets: Cash and Investments $ - $ 1,433,222 Accounts Receivable 11,250 Due from Other Governments - 21,567 Total Assets $ - 1,466,039 Liabilities: Due to Others $ - $ 727,831 Due to Other Governments - 738,208 Total Liabilities $ - $ 1. 66.03 The accompanyingnotes are an integral art P of these financial statements. -3- MONROE COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT STATEMENT OF REVENUES AND EXPENDITURES - BUDGET AND ACTUAL - GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 1998 Variance Favorable Budget Actual (Unfavorable) Revenues: Board of County Commissioners $ 2,885,815 $ 2,331,585 $ (554,230) Charges for Services 1,115,000 1,538,434 423,434 Interest Income - 25.409 25,409 Total Revenues 4,000,815 3,895.428 (105,387) Expenditures: Current: General Government: Personal Services 3,268,259 3,231,887 36,372 Operating Expenses 579,518 509:638 69,880- Capital Outlay -153,038 153,903 (865) Total Expenditures 4,000,815 3,895,428 105,387 Excess of Revenues Over Expenditures $ - $ - $ The accompanying notes are an integral part of these financial statements. -4- MONROE COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30. 1998 i NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The followingis a summary of the significant accounting rinciples and Y 9 P ® policies used in the preparation of these financial statements. ■ Reporting Entity - The Monroe County Clerk of the Circuit Court is a separate i Constitutional Officer as provided by the laws of the State of Florida. For financial reporting purposes, it is deemed to be part of the County's primary government and therefore is included within the County's funds in the Monroe i County Comprehensive Annual Financial Report. The Monroe County Finance Department maintains the accounting system for the Clerk's general fund, which is included in the General Fund of the Monroe County, Florida Board of County iCommissioners. Basis of Presentation - These financial statements have been prepared in conformity with the accounting principles and reporting guidelines established by the Governmental Accounting Standards Board. The Clerk of the Circuit Court utilizes the following fund types and account groups: iGovernmental Fund Type: The General Fund - is used to account for all revenue and expenditures applicable to the general operations of the Clerk of the Circuit Court that are not required either legally or by generally accepted accounting principles to be accounted for in another fund. Fiduciary Fund Type: The Agency Fund - is custodial in nature and does not involve measurement of results of operations (assets equal liabilities). The Agency Fund is merely a clearing account for assets held by the Clerk of the Circuit Court as an agent for individuals, private organizations, other governments or other funds. Basis of Accounting - The modified accrual basis of accounting is followed by the General Fund. Under the modified accrual basis of accounting, revenues are recorded when received or when susceptible to accrual, that is measurable and available to finance the Clerk of the Circuit Court's operations. -5- MONROE COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 ■ NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) is incurred except for Expenditures are recorded .when the liability p accumulated sick and vacation pay which is not recorded as an expenditure. Budgets are prepared on the modified accrual basis.- Budgetary Requirement - Expenditures are controlled by appropriations in accordance with. the budget requirements set forth in the Florida Statutes. During the year, the Office of Management and Budget acts on intradepartmental budget changes that do not alter the total revenue or expenditures budgeted to a cost center. A cost center represents,a particular area of operations or a department. All other budget changes (whether they are transfers between cost centers or alterations of total revenues and expenditures -in a fund) are approved by the Board. Supplemental appropriations were necessary and the budgetary data presented herein was amended by the Clerk during the_year in a. legally permissible manner. General Fixed Assets - The tangible personal property used by the Clerk of the Circuit Court in its operations is shown in the General Fixed Assets Account Group of the Board of County Commissioners. In addition, the 'office space, payroll processing services, and certain other expenditure items used in the Clerk of the Circuit Court's operations are provided at no cost by the Board of County Commissioners. Compensated Absences The Clerk's accrued compensated absences are included in the Long Term Debt Group of the Board of County Commissioners. The amount of the Clerk's accrued compensated absences as of September 30, 1998 was $365,479. NOTE 2 - CASH AND INVESTMENTS Cash at September 30, 1998 consists of, interest bearing deposits. Demand deposits are fully insured in accordance with Florida Statute 280, which established the multiple financial institution collateral pool. Legally permissible investments are defined by Florida Statue 125.31 and primarily consist of Federal and State Securities. -6- MONROE COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 NOTE 2 - CASH AND INVESTMENTS (Continued) Demand Deposits 922,495 Amount Invested In Florida State Board of Administration Pooled Cash 510.727 1,433.222 The Clerk invests funds throughout the year with the Local Government Surplus Funds Trust Fund (SBA), an investment pool administered by the State Board of Administration, under the, regulatory oversight of the State of Florida. Throughout the year and as of September 30, 1998, the SBA contained certain floating and adjustable rate securities which were indexed based on the prime rate and/or one and three month LIBOR rates. These investments represented 11% of the SBA's portfolio at September 30; 1998. The SBA met the criteria to be "2A-7Like" as defined in GASB 31 at September 30, 1998. Therefore, the investment was valued at amortized cost and the fair value at September 30, 1998 was the account balance at that time. NOTE 3 - RETIREMENT PLAN Substantially all full-time Clerk employees are participants in the Florida Retirement System "the System", a multiple -employer, cost -sharing public retirement system. The System, which is controlled by the State Legislature and administered by the State of Florida, Department of. Administration, Division of Retirement, covers approximately 600,400 full-time employees of various governmental units within the State of Florida. The System provides for vesting of benefits after 10 years of creditable service. Normal retirement benefits are available to employees who retire at or after age 62 with 10 or more years of service. Early retirement is available after. 10 years of service with a 5% reduction of benefits for each year prior to the normal retirement age. Retirement benefits are based upon age, average compensation and years -of -service credit where average compensation is computed as the average of an individual's five highest years of earnings. Employees are not required to contribute to the System. -7- MONROE COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30 1998 NOTE 3 - RETIREMENT PLAN (Continued) The Clerk has no responsibility to the System other than to make the periodic payments required by state statutes. The .Florida Division of Retirement i issues a publicly available financial report that includes financial statements and required supplementary information for the System. The report may be obtained by writing to Florida Division of Retirement, 2639 Monroe Street, Building C, Tallahassee, FL 32399-1560. Participating employer contributions are based upon state-wide - rates established by the State of Florida. These rates are applied to employee salaries as follows: regular employees, 16.45X, special risk employees 25.32Z and elected officials, 27.93%. The Clerk's contributions made during the 1 years ended September 30, 1998, 1997 and 1996 were $453,000, $443,000 and $430,000, respectfully, equal to the actuarially determined contribution requirements for each year. NOTE 4 - LEASE COMMITMENTS The Clerk pays rent under cancelable operating leases for office equipment. Rental expense for the current year was approximately $34,200. NOTE 5 - RISK MANAGEMENT The Clerk 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 Clerk participates in the coverage provided by the Board of County Commissioners of Monroe County for Worker's Compensation, Group Insurance, and Risk Management internal service funds. Under these programs, the Worker's Compensation Fund provides $250,000 coverage per claim for regular employees. The Group Insurance _Fund provides coverage up to $85,000 for each medical claim. Risk -Management provides $100,`000 for each general liability claim and $100,000 for most property damage claims. Windstorm, flood and Property Damage insurance excess coverage varies by individual property: The 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 Clerk makes payments to the Worker's Compensation, Group Insurance and Risk Management Funds based on estimates of the amounts needed to pay prior and current year claims. -8 r 11 U MONROE COUNTY, FLORIDA CLERK OF`THE CIRCUIT COURT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1998 NOTE 6 - DEFERRED COMPENSATION PLAN The Clerk of the Circuit Court offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all Clerk of the Circuit Court employees, permits them'to defer a portion of their salary until future years. Participation in the Plan is optional. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergencies. Effective January 1, 1997, Federal legislation converted the Section 457 deferred compensation assets from the Clerk of.the Circuit Court assets to employee assets. As a result 'of these changes, plan assets are no longer subject to the claims of the Clerk of the Circuit Court, general creditors. The Clerk of the Circuit Court has previously reported the assets and associated liabilities of the deferred compensation plan in. the Board of County Commission's financial statements as an agency fund. Effective with the change in legislation these assets are no longer the Clerk of the Circuit Court assets and fiduciary responsibility has been transferred to the third party plan administrator. Consequently, these assets are no longer reported in any County financial statements, in compliance with Governmental Standards Board Statement No. 32. NOTE 7 - IMPACT OF YEAR 2000 The Year 2000 issue is the ,result of shortcomings in "many electronic processing systems and other electronic equipment that may adversely affect the Clerk of the Circuit Court's operations as early as fiscal year 1999. The Clerk of the Circuit Court, is in the process of taking a thorough inventory of computer systems and other electronic equipment that may be affected by the year 2000 issue and that are necessary to conducting Clerk of the Circuit Court operations. It is unknown as of September 30, 1998, what effects, if any, failing to remediate such systems will have.upon the Clerk of the Circuit Court operations and financial reporting. Because of the unprecedented nature.of the Year 2000 issues, its effects and the success of related remediation efforts will not be fully determinable until the year 2000 and thereafter. Management cannot assure that the Clerk of the Circuit Court is or will be Year 2000 ready, that the Clerk of the Circuit Court's remediation efforts will be successful in whole or in part, or that parties with whom the Clerk of the Circuit Court does business will be 2000 ready. -9- MONROE COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - AGENCY FUND FOR THE YEAR ENDED SEPTEMBER 30, 1998 Balance Balance 1997 Additions Deductions 1998 Assets. Cash and Investments $ 1,841,176 $ 28.947,867 E 29,355,821 $ 1,433,222 Accounts. Receivable 200 38,753 27,703 11,250 Due from Other. Governments 1,183 25,993 5,609 21,567 $1,8424559 $ 29,012,613 $ 29,389,133 $ 1466,039 Liabilities: Due to Others $ 908,503 $-.9,223,474 $ 9,404,146 $ 727,831 Due to Other Governments 934,056 19,789,139 19,984,987 738,208 29,389,133 1,466,039 $ 1,842,559 $ 29,012,613 $ E -10- n C' n 11 11 1E 13IWA WM. O. KEMP, C.P.A. MARVA E. GREEN, C.P.A. KEMP !& GREEN, P.A. Certified Public Accountants 1438 KENNEDY DRIVE P. O. BOX 1529 KEY WEST, FLORIDA'33041-1529 (305) 294-2581 FAX * (305) 294-4778 MEMBER OF AMERICAN INSTITUTE AND FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING Mr. Danny L. Kolhage Clerk of the Circuit Court Monroe County, Florida We have audited the financial. statements of the Clerk of the Circuit Court of Monroe County, Florida ("the Clerk") as of and for the year ended September 30, 1998, and have issued our report_ thereon dated LMarch 10, 1999. We conducted our audit in accordance with 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. Compliance As part of obtaining reasonable assurance about whether the Clerk's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws; regulations contracts and grants, 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 that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reaorting In planning and performing our audit, we considered the Clerk'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 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 in amounts that would be material in relation.to the financial -11- 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 operation that we consider to be material weaknesses. However, we noted certain other matters involving the internal control over financial.reporting that we have reported to the management of the Clerk in a separate letter dated March 10, 1999. This report is intended for the information of management, federal awarding agencies and pass -through entities. However, this report is a matter of public record and its distribution is not limited. �-P Kemp & Green, P.A. Certified Public Accountants March 10, 1999 -12- KEMP £S GREEN, P.A. Certified Public Accountants 1438 KENNEDY DRIVE P. O. BOX 1529 KEY WEST, FLORIDA 33041-1529 WM. O. KEMP, C.P.A. (305) 294-2581 MARVA E. GREEN, C.P.A. FAX * (305) 294-4778 INDEPENDENT AUDITORS' MANAGEMENT LETTER Mr. Danny L. Kolhage Clerk of the Circuit Court Monroe County, Florida MEMBER OF . AMERICAN INSTITUTE AND FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS In planning and performing our audit of the financial statements of the Clerk of the Circuit Court of Monroe County, Florida ("the Clerk") for the year ended September 30, 1998, we considered the Clerk's internal control in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements. Although our audit was not designed to provide assurance on internal control, we noted certain matters involving internal control and its operation, and are submitting for your consideration related recommendation designed to help the Clerk make improvements and achieve operational efficiencies. Our comments reflect our Idesire to be of continuing assistance to the Clerk. Reported in Prior Year's Management Letter, Not Implemented as of September 30, 1998 Returned Checks Observation: Appropriate follow-up on checks which have been dishonored is monitored by a worksheet which is designed to document the date on which "thirty day notices" were sent and the date on which the State Attorney was notified of the returned check. Five instances were noted wherein the "thirty day notices" were not mailed. Some instances were noted wherein the. State Attorney was not notified of the dishonored check. Recommendation: Established policies and procedures should be followed. The appropriate level of management should review the monitoring worksheet for appropriate action and accuracy. Other Required Disclosures Marva Green was the auditor in charge for the audit of the Clerk. We attest that the auditor ,in charge met the educational requirements pursuant to Chapter 11.45, Florida Statutes. -13- The Clerk was not in a state of financial emergency as described in Florida Statutes, Section 218.503(1). We have reviewed the annual report filed with the Department of Banking and Finance for Monroe County. Florida pursuant to Section 218.32, Florida Statutes. This report is in agreement with. the annual audit report which incorporates the financial statements of the Clerk of the Circuit Court of Monroe County, Florida. The Clerk has complied with Section 28.24(15)(d), Florida Statutes, regarding the collection and use of Public Records Modernization Trust Fund.moneys. This report is intended solely for the information of the Clerk, management and others within the County, and officials of applicable federal and state agencies. This restriction is not intended to limit the distribution of this report which is a matter of public record. �--�-� Kemp & Green, P.A. Certified Public Accountants March 10, 1999 -14