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Fiscal Year 1995 i 1 1 1 1 1 MONROE COUNTY, FLORIDA 1 TOURIST DEVELOPMENT TRUST FUNDS FINANCIAL STATEMENTS 1 SEPTEMBER 30, 1995 1 i 1 1 1 1 1 1 1 1 KEMP & GREEN, P.A. CERTIFIED PUBLIC ACCOUNTANTS 1 I I I CONTENTS I ' Page Independent Auditors' Report 1 IFinancial Statements: Balance Sheets 2-3 IStatements of Revenues, Expenditures and Changes in Fund Balance 4-5 IStatements of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual 6-12 Notes to Financial Statements 13-19 Other Reports: tReport on the Internal Control Structure 20-21 ' Report on Compliance with Laws and Regulations 22 I I I I I 1 ' KEMP £ GREEN, P.A. Certified Public Accountants 1438 KENNEDY DRIVE P. O. BOX 1529 KEY WEST, FLORIDA 3304 1-1 5 2 9 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 Clerk Ex Officio ' Board of County Commissioners Monroe County, Florida ' We have audited the financial statements of the Monroe County, Florida Tourist Development Trust Funds ("TDTF") as of September 30, 1995 and for the year then ended, as listed in the table of contents. These financial statements are the ' responsibility of the County's management. 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. These 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. t As discussed in Note 1, the financial statements present only the Monroe County Tourist Development Trust Funds and are not intended to present fairly the financial position of Monroe County, Florida and the results of operations 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 Monroe County, Florida Tourist ' Development Trust Funds as of September 30. 1995, and the results of its operations for the year then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated March 4, 1996 on our consideration of the TDTF's internal control structure and a report dated March 4. 1996 on its compliance with laws and regulations. Kemp & Green, P.A. 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FLORIDA I TOURIST DEVELOPMENT TRUST FUNDS ALL DISTRICTS, TWO CENT SPECIAL REVENUE FUND I STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 1995 I Variance Favorable Budget Actual (Unfavorable) ' Revenues: Taxes $ 1,562,400 $ 1,731,709 $ 169,309 Charges for Services _ 20,711 20,711 Investment Income 59,435 59,435 Total Revenues 1,562,400 1,811,855 249,455 IExpenditures: Current: I Economic Environment: Administration 1,153,823 770,156 383,667 Cultural Umbrella 347,000 258,689 88,311 Fishing Umbrella 406,000 352,363 53,637 Diving Umbrella 100,000 99,683 317 Total Expenditures 2,006,823 1.480,891 525,932 IExcess of Revenues Over/(Under) Expenditures (444.423) 330,964 775,387 I Other Financing Sources/(Uses) : Reserve for Contingencies (162.750) - 162,750 IExcess of Revenues and Other Sources Over/(Under) Expenditures and Other Uses (607,173) 330,964 938,137 Fund Balance, 1994 - I Residual Equity Transfer In - 949,541 949,541 I Fund Balance, 1995 $ (607,173) b 1 280 505 $ 1.887 678 ' The accompanying notes are an integral part of these financial statements. I -6- I I MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS TWO CENT, ADMINISTRATIVE & PROMOTION I STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 1995 I Variance Favorable Budget Actual _ (Unfavorable) IRevenues: Taxes $ 3,237,600 $ 3,588,441 $ 350,841 Charges for Services _ 42,918 42,918 IInvestment Income 65,840 65,840 Miscellaneous Revenue 73,976 73,976 I Total Revenues 3,237,600 3,771,175 533,575 Expenditures: I Current Economic Environment: Advertising and Promotion 3,252,159 2,926,846 325,313 Administrative Services 378.293 270.991 107,302 I Total Expenditures 3.630.452 3,197,837 432,615 IExcess of Revenues Over/(Under) Expenditures (392,852) 573,338 966,190 IOther Financing Sources/(Uses) Reserved for Contingencies (337.250) - 337.250 I Excess of Revenues and Other Sources Over/(Under) Expenditures and Other Uses (730,102) 573,338 1,303,440 I Fund Balance, 1994 1,154,353 1,154,353 - ' Fund Balance, 1995 $ 424,251 $ 1.727.691 $ 1 303.440 I ' The accompanying notes are an integral part of these financial statements. I 7- I MONROE COUNTY, FLORIDA I TOURIST DEVELOPMENT TRUST FUNDS THREE CENT, DISTRICT ONE I STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ' FOR THE YEAR ENDED SEPTEMBER 30. 1995 IVariance Favorable Budget Actual (Unfavorable) ' Revenues: Taxes $ 1,320,000 $ 1,437,593 $ 117,593 I Charges for Services - 16,977 16,977 Investment Income72,927 72,927 Total Revenues 1,320,000 1.527,497 207,497 IExpenditures: Current I Economic Environment: Third Cent Program 19,942 19,942 TDC Administrative 42,018 28,801 13,217 Tourist Information Services 205,000 200,670 4,330 I Bricks and Mortar 225,641 160,799 64,842 Special Events 291,615 197,043 94,572 Promotion and Advertising 686,433 544,666 141,767 ' Beaches 1.128,723 779.140 349,583 Total Expenditures 2,599,372 1,911,119 688,253 ' Excess of Revenues Over/(Under) Expenditures (1,279,372) (383,622) 895,750 IOther Financing Sources/(Uses) : Reserve for Contingencies (146.291) - 146,291 IExcess of Revenues and Other Sources Over/(Under) Expenditures and Other Uses (1,425,663) (383,622) 1,042,041 Fund Balance, 1994 1,491,663 1,491,663 - I Fund Balance, 1995 $ 66 000 $1 108 041 $ 1,042 041 ' The accompanying notes are an integral part of these financial statements. I B_ I I MONROE COUNTY, FLORIDA I TOURIST DEVELOPMENT TRUST FUNDS THREE CENT, DISTRICT TWO I STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ' FOR THE YEAR ENDED SEPTEMBER 30, 1995 IVariance Favorable Budget Actual (Unfavorable) IRevenues: Taxes $ 144,000 $ 145,023 $ 1,023 ICharges for Services - 1,180 1,180 Investment Income 7,806 7,806 Total Revenues 144,000 154,009 10,009 IExpenditures: Current I Economic Environment: TDC Administrative 7,907 4,743 3,164 Tourist Information Services 47,000 47,000 - I Bricks and Mortar 41,382 17,153 24.229 Special Events 8,990 3,406 5,584 Promotion and Advertising 162,276 124.761 37,515 ' Total Expenditures 267,555 197,063 70,492 ' Excess of Revenues Over/(Under) Expenditures (123,555) (43,054) 80,501 Other Financing Sources/(Uses) : IReserve for Contingencies (24,907) - 24,907 Excess of Revenues and Other I Sources Over/(Under) Expenditures and Other Uses (148,462) (43,054) 105,408 IFund Balance, 1994 155,662 155,662 - ' Fund Balance, 1995 $ 7,200 $ 112 608 $ 105 408 ' The accompanying notes are an integral part of these financial statements. I -9- I I I MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS THREE CENT, DISTRICT THREE I STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL tFOR THE YEAR ENDED SEPTEMBER 30, 1995 I Variance Favorable Budget Actual (Unfavorable) 1 Revenues: Taxes $ 264,000 $ 326,769 $ 62,769 ICharges for Services - 2,345 2,345 Investment Income 8.612 8,612 Total Revenues 264,000 337,726 73,726 IExpenditures: Current I Economic Environment: Third Cent Program 14,000 14,000 TDC Administrative 10.277 6,633 3.644 Tourist Information Services 70,000 70,000 I Bricks and Mortar 51,330 20,365 30,965 Special Events 10,128 10,128 Promotion and Advertising 186.830 176,993 9,837 ' Total Expenditures 342.565 273,991 68.574 ' Excess of Revenues Over/(Under) Expenditures (78,565) 63,735 142.300 I Other Financing Sources/(Uses) : Reserve for Contingencies (35.476) - 35.476 I Excess of Revenues and Other Sources Over/(Under) Expenditures and Other Uses (114,041) 63,735 177,776 ' Fund Balance, 1994 127,241 127.241 - IFund Balance, 1995 $ 13.200 $ 190 976 $ 177.776 ' The accompanying notes are an integral part of these financial statements. I -10- I I I MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS THREE CENT, DISTRICT FOUR I STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL ' FOR THE YEAR ENDED SEPTEMBER 30, 1995 I Variance Favorable Budget Actual (Unfavorable) IRevenues: Taxes $ 288,000 $ 333,354 $ 45,354 I Charges for Services - 8,772 8,772 Investment Income 7,317 7,317 Total Revenues 288,000 349,443 61,443 IExpenditures: Current I Economic Environment: TDC Administrative 9,957 6,522 3,435 Tourist Information Services 84,000 70,750 13,250 Bricks and Mortar 33,619 9,424 24,195 I Special Events 9,425 - 9,425 Promotion and Advertising 194,886 151,390 43,496 ' Total Expenditures 331.887 238,086 93,801 Excess of Revenues Over/(Under) ' Expenditures (43,887) 111,357 155,244 Other Financing Sources/(Uses) : IReserve for Contingencies (36,808) - 36,808 Excess of Revenues and Other I Sources Over/(Under) Expenditures and Other Uses (80,695) 111,357 192,052 IFund Balance, 1994 95,095 95,095 - ' Fund Balance, 1995 $ 14,400 $ 206,452 $ 192,052 ' The accompanying notes are an integral part of these financial statements. I -11- I I I MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS THREE CENT. DISTRICT FIVE I STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED SEPTEMBER 30, 1995 I Variance Favorable Budget Actual (Unfavorable) IRevenues: Taxes $ 384,000 $ 417,335 $ 33,335 I Charges for Services - 2,540 2,540 Investment Income 7,587 7,587 Total Revenues 384,000 427,462 43,462 IExpenditures: Current ' Economic Environment: TDC Administrative 12,466 8,883 3,583 Tourist Information Services 93,000 74,136 18,864 Bricks and Mortar 51,542 22,535 29,007 IPromotion and Advertising 258,480 214,261 44,219 Total Expenditures 415,488 319,815 95.673 I Excess of Revenues Over/(Under) I Expenditures (31,488) 107,647 139,135 Other Financing Sources/(Uses) : Reserve for Contingencies (45,994) - 45,994 IExcess of Revenues and Other Sources Over/(Under) Expenditures ' and Other Uses (77,482) 107,647 185,129 Fund Balance, 1994 96.682 96,682 I Fund Balance, 1995 $ 19.200 $ 204,329 $ 185 129 I The accompanying notes are an integral part of these financial statements. I -12- I 1 MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30. 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity - The Monroe County, Florida Tourist Development Trust Funds ' (TDTF) are special revenue funds of Monroe County, Florida, administered by the County Tourist Development Council . The TDTF is considered a part of the primary government of Monroe County as the funds are accountable to the Board of County ' Commissioners and it is neither legally separate or fiscally independent of the County. The sole purpose of the TDTF is to promote tourism in Monroe County. The TDTF receives its principal funding from the local option tourist development tax collected by the State of Florida. 1 Basis of Accounting - The accounting and financial reporting treatment applied ' to a fund is determined by its measurement focus. The TDTF Special Revenue Funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are ' included on the balance sheet. Operating statements of these funds present increases (i .e. , revenues and other financing sources) and decreases (i .e. , expenditures and other financing uses) in net current assets. Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made regardless of the measurement focus applied. ' The modified accrual basis of accounting is followed in the TDTF Special Revenue Funds. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become susceptible to accrual - that is, when they become both measurable and available to finance expenditures of the ' current period. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Primary revenues, which include taxes, intergovernmental revenues, charges for services, ' and interest are treated as susceptible to accrual under the modified accrual basis. Receivables related to these revenues are not recognized unless they are collectible within 60 days after the fiscal year end. Expenditures and transfers out_are recorded when the related fund liability is incurred. Exceptions to this ' general rule include: (1) accumulated sick pay, vacation pay, and compensatory time, which are not recorded as expenditures; (2) prepaid items, which are reported only on the Balance Sheet and do not affect expenditures; and (3) principal and interest on long-term debt, which are recognized when due. Budgets for the TDTF Special Revenue Funds are also prepared on the modified accrual basis. In applying the susceptibility-to-accrual concept to intergovernmental revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. There are, however, essentially two types of these revenues. 1 -13- 1 I MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) In one, monies must be expended on the specific purpose or project before any ' amounts will be paid to the TDTF; therefore, revenues are recognized based on the expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and substantially irrevocable; i .e. , revocable only for ' failure to comply with prescribed compliance requirements, such as equal employment opportunity. These resources are reflected as revenues at the time of receipt or earlier if they meet the availability criterion. ' Charges for services, and miscellaneous revenues (except investment earnings) are recorded as revenues when received in cash, because they are generally not measurable until actually received. Investment earnings and most fines and forfeitures are recorded as earned since they are measurable and available. Accounts Receivable - Accounts receivable are recorded at their collectible amount. Budgets and Budgetary Data - The following are the statutory procedures followed by the Board of County Commissioners in establishing the budget for TDTF. (1) Within fifteen days after certification of the ad valorem tax roll by the Property Appraiser, the County Budget Officer submits to the Monroe County Board of Commissioners a proposed budget for the fiscal year commencing the following October 1. The budget includes proposed expenditures and the means of financing them. ' (2) By Board resolution, a tentative budget is submitted to the public. Public hearings are held to obtain taxpayer comments. ' (3) Fifteen days after adoption of the tentative budget, a final budget is submitted for review and adoption at a final public hearing. (41 __ Prior to, or on September 30, the TDTF's budgets are legally enacted through passage of a resolution. (5) 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. All other budget changes (whether they are transfers between departments or alterations of total revenues or ' expenditures in a fund) are approved by the Board of County Commissioners. Supplemental appropriations were necessary and the budgetary data presented herein was amended by the Board of County Commissioners during the year in a legally permissible manner. -14- I MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (6) Florida Statute 129, Section 7, as amended in 1978, provides that only ' expenditures in excess of total fund budgets are unlawful . However, because the Board acts on all budget changes between cost centers, this becomes the level of control . ' (7) Budgeted to Actual Expenditure reports are employed as a management control device during the year. (8) Budgets for all funds are adopted on a basis consistent with generally accepted accounting principles (GAAP) . ' (9) All appropriations lapse at year end. Investments - Investments are stated at cost, which approximates market. The Monroe County Board of County Commissioners pools cash and investments of the County, excluding those requiring or benefiting by separate investment. This gives the County the ability to maximize its yield on the short-term investment of cash,- increasing its income accordingly. Interest earned on pooled investments is allocated to the participating funds ' based on their average daily balance. Individual fund deficits are ignored in the allocation of interest. Encumbrances - Encumbrance accounting, under which purchase orders are recorded to reserve that portion of the applicable appropriation, is employed in the Tourist Development Trust Funds. Encumbrances are not the equivalent of expenditures; therefore, the encumbrances are reported as reservations of fund ' balances at year end. Compensated Absences - County policy grants employees annual leave and sick leave ' in varying amounts. Upon termination of employment, employees with six months or more of credited service can receive payment for accumulated annual leave. In general , sick leave payments are granted upon termination of employment to employees with five years of more of credited service. The maximum payment is ' subject to percentage and maximum hour limitations. Accumulated annual leave, sick leave, and related benefits are accrued in the TDTF to the extent that such amounts would normally be liquidated with expendable available financial resources. The remaining liability is reflected in the County's General Long- Term Debt Account Group. ' Total Columns on Combined Statements - Total columns on the statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial -15- I MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 ' NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ' position or results of operation in conformity with generally accepted accounting principles, and such data is not comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. NOTE 2 - CASH, CASH EQUIVALENTS AND INVESTMENTS Cash and Investments consist of the following: Demand Deposits $ 676,052 ' Local Government Surplus Funds Trust Fund Investments 4,803.179 $ 5.479,231 Florida Statute 125.31 authorizes the County to invest surplus funds in the following: a) the State of Florida Local Government Surplus Funds Trust Fund under the ' management of the State Board of Administration b) the Florida Counties Investment Trust Fund under the sponsorship of the ' Florida Association of Counties and the Florida Association of Court Clerks Comptrollers c) negotiable direct obligations of, or obligations of which the principal and interest are unconditionally guaranteed by. the U.S. Government d) interest bearing time deposits or savings accounts in banks and savings ' and loans organized under state laws or doing business and situated in the state, provided collateral requirements are met. e)- —obligations of the Federal Home Loan Mortgage Corporation f) obligations of the Federal National Mortgage Association ' g) commercial paper of U.S. corporations having a rating of at least two of the following three ratings: A-1, P-1, and F-1, as rated by Standard & Poors, Moody's and Fitch Investors Service rating services h) Bankers' acceptances that are eligible for purchase by the Federal Reserve Banks and have a letter of credit rating of AA or better -16- I MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS NOTES TO FINANCIAL STATEMENTS ' SEPTEMBER 30, 1995 ' NOTE 2 - CASH, CASH EQUIVALENTS AND INVESTMENTS (Continued) i) Tax-exempt obligations of the State of Florida and its various local ' governments, including Monroe County. Tax exempt obligation with a rating of A or less, must be an insured issue through MBIA or an equivalent company. Issues rated A+ or higher may or may not carry an insurance ' backing. Deposits - Demand and time deposits are fully insured by Federal Depository Insurance and the multiple financial institution collateral pool required by Sections 280.07 and 280.08, Florida Section. Investments - Investments at year end are shown as follows. The U.S. Treasury obligations and other bonds are held by the County's agent in the County's name. Carrying Market Amount Value 1 Local Government Surplus Funds Trust Fund $ 4,803,179 $ 4,803,179 NOTE 3 - LEASE OBLIGATIONS Rental expense under cancelable operating leases for the current year amounted to $3,723. ' NOTE 4 - RETIREMENT PLAN ' Substantially all full -time County 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 573.000 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. -17- I MONROE COUNTY, FLORIDA TOURIST DEVELOPMENT TRUST FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 ' NOTE 4 - RETIREMENT PLAN (Continued) The County has no responsibility to the System other than to make the periodic payments required by state statutes. Ten-year historical trend information showing the System's progress in accumulating sufficient assets to pay benefits when due is presented in the System's June 30, 1995 Comprehensive Annual Financial Report. The amount reported below as "pension benefit obligation" is a standardized ' disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases estimated to be payable in the future as a result of employee service to date. The measure is the actuarial present value of credited projected benefits and is intended to assist users in assessing the ' plan's funding status on a going-concern basis, assess progress made in accumulating sufficient assets to pay benefits when due, and make comparisons among government pension plans and employers. The System does not conduct separate measurements of assets and pension benefit obligations for individual employers. The pension benefits obligation at June 30. 1995 for the System as a whole, determined through an actuarial valuation performed as of that date, was $47.3 billion. The System's net assets available for benefits on that date ' (valued at amortized cost) were $41.6 billion, resulting in an unfunded pension benefit obligation of $5.7 billion. ' 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, 16.91%, special risk employees, 26.83X, and elected ' officials, 27.48%. There are no employee contributions to the plan. The TDTF's contributions of approximately $12,000 made during the year ended September 30. 1995 were made in accordance with contribution requirements determined by the actuarial valuation of the System as of June 30, 1995. These contributions ' represented approximately 0.0004% of total contributions required of all participating employers during the fiscal year of the System ended June 30, 1995. t Total payroll for TDTF employees during the fiscal year ended September 30, 1995 was approximately $61,200, with the portion attributed to employees covered by the System being $61,200. The contribution to the System for the year was ' approximately 19.7% of total covered payroll . There were no changes in actuarial assumptions, benefit provisions, actuarial funding methods or any other significant factors that affected the County's ' contribution during the fiscal year ended September 30, 1995. 1 NOTE 5 - DEFERRED COMPENSATION PLAN The County offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all -18- 1 I MONROE COUNTY, FLORIDA ' TOURIST DEVELOPMENT TRUST FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1995 NOTE 5 - DEFERRED COMPENSATION PLAN (Continued) 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 County (without being ■ restricted to the provisions of benefits under the plan) , subject only to the i claims of the County's general creditors. Participants' rights under the plan are equal to those of general creditors of the County in an amount equal to the ' fair market value of the deferred account for each participant. The County 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 County believes that it is unlikely that it will use the assets to satisfy the claims of general creditors in the future. NOTE 6 - RISK MANAGEMENT TDTF 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. During the fiscal years ended 1976, 1984 and 1988, the County established the Worker's Compensation, Group Insurance, and Risk Management Funds, respectively, as internal service funds to account for and finance its uninsured risks of loss. Under these programs, the Worker's Compensation provides $450,000 coverage per claim for regular employees and $500,00 coverage per claim for police and firemen. The Group Insurance Fund provides coverage up to $75,000 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. TDTF participates in the programs and make 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. 1 -19- I KEMP IS GREEN, P.A. Certified Public Accountants 1438 KENNEDY DRIVE P. O. BOX 1529 KEY WEST, FLORIDA 33041-1529 MEMBER OF AMERICAN INSTITUTE I 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 THE INTERNAL CONTROL STRUCTURE Clerk Ex Officio Board of County Commissioners Monroe County, Florida We have audited the financial statements of the Monroe County, Florida Tourist Development Trust Funds (the "TDTF") for the year ended September 30, 1995, and have issued our report thereon dated March 4, 1996. 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 TDTF is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgements by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of ' an internal control structure 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 internal control structure, errors or ' irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure 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 TDTF for ' the year ended September 30, 1995, we obtained an understanding of the internal control structure. With respect to the internal control structure, 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 in order to t determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control structure. Accordingly, we do not express such an opinion. ' Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure 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 the specific internal control structure elements does not reduce to a -20- I relatively low level the risk that errors or irregularities in amounts that would E 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 structure and its operation that we consider to be material weaknesses as defined above. ' We also noted other matters involving the internal control structure and its operation that we have reported to the management of the County in a separate letter dated March 4, 1996. ' This report is intended for the information of the Board of County Commissioners 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. is Kemp & Green, P.A. Certified Public Accountants March 4, 1996 I -21- i KEMP F3 GREEN, P.A. Certified Public Accountants 1438 KENNEDY DRIVE P. O. BOX 1529 KEY WEST, FLORIDA 3304L1529 MEMBER OF AMERICAN INSTITUTE I 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 COMPLIANCE WITH LAWS AND REGULATIONS Clerk Ex Officio Board of County Commissioners ' Monroe County, Florida We have audited the financial statements of the Monroe County, Florida Tourist ' Development Trust Funds (the "TDTF") as of and for the year ended September 30, 1995, and have issued our report thereon dated March 4, 1996. ' 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 TDTF ' is the responsibility of the TDTF's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the TDTF'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 Board of County Commissioners, management 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 March 4, 1996 • 1 -22-