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Fiscal Year 1997KEMP & GREEN, P.A. CERTIFIED PUBLICACCOUNTANTS CONTENTS Independent Auditors' Report Financial Statements: Balance Sheet Revenues and Expenditures - Bud - Statement of Reve et and Actual p g General Fund Notes to Financial Statements Supplemental Schedule: Statement of Changes in Assets and Liabilities Agency Fund Other Reports: Independent Auditors' Report on.Internal Control Independent Auditors' Management Letter p 9 t Independent Auditors' Report on Compliance - Paqes 1-2 3 4 5-9 10 11-12 13-14 15 KEMP & 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' 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, 1997 and for the year then ended, listed in the accompanying table of contents. These'financial statements are the responsibility of the Clerk of the Circuit Court. 0ur responsibility is to express an opinion on these financial statements based,on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial 'statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1, 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 expendabl-e 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, 1997 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- 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 February 6, 1998 on our consideration of the Clerk's internal control and a report dated February 6, 1998 on its compliance with laws and regulations. VN Kemp & Green, P.A. Certified Public Accountants February 6, 1998 MONROE COUNTY,.FLORIDA CLERK OF.THE CIRCUIT COURT BALANCE SHEET SEPTEMBER 30, 1997 Governmental Fiduciary Fund Type Fund jM General Agency t Assets: Cash and Investments $ - $ 1,841,176 Accounts Receivable - 200 Due from Other Governments 1,183 Total Assets - $ 1,842.559 Liabilities: ' Due to Others $ - $ 908,503 Due to Other. Governments - 934,056 1,842,559 Total Liabilities - The accompanying notes are an integral part 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 SEPTEMB.ER 30, 1997 Variance Favorable ' Budget Actual (Unfavorable) Revenues: ' Board of County Commissioners $ 2,699,518 2,490,330 $ (209,188) Charges for Services 1,117,287 1,257,659 140,372 Interest Income - 22.369 22,369 Total Revenues 3,816,805 3.770,358 (46,447) Expenditures: Current: General.Government: -Personal Services 3,176,020 3,166,311 9,769 Operating Expenses 457,241 435,781 21,460 Capital OutTay 183,,544 168,266 15,278 ' Total Expenditures 3,816,805 3 770 358 46,447 Excess of Revenues Over Expenditures. E - # $ i 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'. 1997 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the significant. accounting principles and policies used in the preparation of these financial statements. Reporting Entit - The Monroe Count Clerk of the Circuit Court is a separate p Q v Y P 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 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 Commissioners. 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: Governmental 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 Fu 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- 7 In I MONROE COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Expenditures are recorded when the liability is .incurred except for 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, 1997 was $349,017. ' NOTE 2 - CASH AND INVESTMENTS Cash at. September 30, 1997 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 L permissible investments are defined by Florida Statue 125.31 and primarily consist of Federal and State Securities. MONROE COUNTY. FLORIDA CLERK OF THE CIRCUIT COURT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 2 - CASH AND INVESTMENTS (Continued) Demand Deposits $ 1,322,932 Amount Invested in Florida State Board of Administration Pooled Cash 518,244 $ 1.841.176 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 587,000 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. The Clerk has no responsibility to the System other than to make the periodic payments required by state statutes. The Florida Division of Retirement 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, 17.43%, special risk employees 27.10% and elected officials, 27.99%. The Clerk's contributions made during the 7 MONROE COUNTY,, FLORIDA CLERK OF THE CIRCUIT COURT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 3 - RETIREMENT PLAN (Continued) years ended'September 30, 1997, 1996 and 1995 were $443,000, $430,000 and $413,000, respectfully, equal to the actuarially determined contribution requirements for each year. The Clerk has determined, in accordance with GASB Statement No. 27, that there was no pension liability before or at transition. NOTE 4 - LEASE COMMITMENTS The Clerk pays rent under cancelable operating leases for office equipment Rentalexpensefor the current year was approximately $27,200. NOTE 5 - DEFERRED COMPENSATION PLAN The Clerk offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all 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. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the Clerk (without being restricted to the provisions of benefits under the plan), subject only to the claims of the Clerk's general creditors. Participants' rights under the plan are equal to those,of general creditors of the Clerk,in an amount equal to the fair market value of the deferred.account.for each participant. The Clerk has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. The Clerk believes that it is unlikely that it will use the assets to satisfy the. claims of general creditors in the future. In August, 1996, Internal Revenue Service Code Section 457 was amended to require that amounts deferred under a deferred compensation plan maintained by a state or local government be held in trust for the exclusive benefit of plan participants and their beneficiaries. Amounts deferred under existing plans need not comply with the new trust requirements until January 1, 1999. LA MONROE COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 NOTE 6 - 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 $450,000 coverage per claim for regular employees. The Group Insurance Fund provides coverage up to .$751-000 for each medical claim. Risk Management; provides $100;000 for each general liability claim and $25,000 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. -9- MONROE COUNTY, FLORIDA CLERK OF.THE CIRCUIT COURT STATEMENT OF CHANGES IN ASSETS AND LIABILITIES= AGENCY FUND FOR THE YEAR ENDED SEPTEMBER 30, 1997 Balance Balance 1996 Additions Deductions 1997 Assets: Cash and Investments $ 1.958,057 $ 30,010,375 $ 30,127,256 $ 1,841,176 Accounts Receivable 11,159 45,037 55,996 200 Due from Other Governments 1,075 5,108 5,000 1.183 $ 1.970,291 $ 30,060,520 S 30.188.252 $ 1,842.559 Liabilities: Due to Others $ 809,257 $ 12,652,900 $ 12,553,654 $ 908,503 Due to Other Governments 1,161,034 17,407,620 17,634,598 934,056 $ 1,970,291 $ 30,060,520 $ 30.188.252 S 1.842.559 -10- �J KEMP £4 GREEN. P.A. Certified Public Accountants 1438 KENNEDY DRIVE P. O. BOX 1529 KEY WEST, FLORIDA 33041-1529 MEMBER OF AMERICAN INSTITUTE WM. O. KEMP, C.P.A. (305) 294=2581 AND FLORIDA INSTITUTE OF MARVA E. GREEN, C.P.A. FAX # (305) 294-4778 CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL 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, for the year ended September 30, 1997, and have issued our report thereon dated February 6, 1998-. 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. The management of the Clerk is responsible for establishing and maintaining internal control. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control policies and procedures. The objectives of internal control are to provide management with reasonable, but not absolute, assurance that'assets'are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance. with generally accepted accounting principles. Because of inherent limitations in any system of internal control,, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of internal control to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. In planning and performing our audit of the financial statements of the Clerk for the year ended September 30, 1997, we obtained an understanding of internal control. With respect to internal control, we obtained, an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk i'n order to determine our auditing procedures for the purpose of expressing our opinion -li- on the financial statements and not to provide an opinion on internal control. Accordingly, we do not express such an opinion. Our consideration of internal control would not necessarily disclose all matters of internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of specific internal control elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and, not. be detected within a timely. period .by employees in the normal course of performing their assigned functions. We noted no matters involving internal control and its operations that we consider to be material weaknesses as defined above. We also noted other matters involving internal control and its operation that we have reported to the management of the Clerk in the -Auditor's Management Letter dated'February 6, 1998 included at page 13. This report is'intended for the information of the Clerk and others within the County and officials of applicable federal and state agencies. However, this report is a matter of public record, and its distribution is not limited. Kemp & Green, P.A, Certified Public Accountants February 6, 1998 KEMP & GREEN, P.A. Certified Public Accountants 1438 KENNEDY DRIVE P. 0. 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 1 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, 1997, 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 desire to be of continuing assistance to the Clerk. Reported in Prior Year's Management Letter, Not Implemented ' as of September 30, 1997 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. Three instances were noted wherein the "thirty day notices" were not mailed. Thirty-six instances were noted wherein the State Attorney was not notified or not notified timely. ' should be followed. The Recommendation: .Established polices and procedures appropriate level of management should review the monitoring worksheet for appropriate action and accuracy. ' Bank Reconciliations Observation: The "registry of the court"- bank reconciliation contains an unresolved reconciling item. -13. Recommendation: Reconciling items should be resolved within a reasonable period of time. 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. 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. OL Kemp & Green, P.A. Certified Public Accountants February 6, 1998 -14- ' 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 1 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE Mr. Danny L. Kol.hage 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 and for the year ended September 30, 1997 and have issued our report thereon dated February 6, 1998. 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. Compliance with laws, regulations: contracts, and grants applicable to the Clerk of Monroe County, .Florida, is the responsibility of the Clerk's . management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Clerk's compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our ,audit of the financial statements was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported herein under Government Auditing Standards. This report is intended for the information of the Clerk, management and others within the County, and officials of applicable federal and state agencies. This report is a matter of public record and its distribution is not limited. n Kemp & Green, P.A. Certified Public Accountants February 6, 1998 -15-