Fiscal Year 1985 & 1986 1
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MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
■ FINANCIAL STATEMENTS
SEPTEMBER 30, 1986 AND 1985
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' KEW & ROSASCO
CERTIFIED PUBLIC ACCOUNTANTS
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CONTENTS
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Independent Auditors' Opinion 1
IFinancial Statements:
IBalance Sheets 2
Statements of Revenue, Expenses and Fund Equity 3
' Statements of Changes in Financial Position 4 — 5
Notes to Financial Statements 6 — 9
ISupplemental Schedules:
IRestricted Assets 10
Residential Waste Fees Assessed and Uncollected 11
ISchedule of Insurance in Force 12
Management Comments Letter 13 — 15
IBond Compliance Letter 16
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KEMP ft ROSASCO
Certified Public Accountants
' 1438 KENNEDY DR.
4t12 LUANI PLAZA • P. O. BOX 1529
KEY WEST, FL 33041-1529
ORVIS M. KEMP, C.P.A. (305) 294-2581 MEMBER Of AMERICAN INSTITUTE
' WM. O. KEMP. C.P.A. AND FLORIDA INSTITUTE OF
PETER L. RCSASCO, Jr., C.P.A. CERTIFIED PUBLIC ACCOUNTANTS
MARVA E. GREEN, C.P.A.
1
' 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, 1986 and 1985 and the Related Statements
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 considered
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, 1986 and 1985 and the results of Its operations and the changes
in financial position of the Monroe County, Florida Municipal Service District
at September 30, 1986 and 1985 and the results of its operations and the
changes In financial position for the years then ended in conformity with
generally accepted accounting principles appl led 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
t 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.
goy co-Vala
' Kemp 8 Rosasco
Certified Public Accountants
March 9, 1987
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MONROE COUNTY, FLORIDA
i MUNICIPAL SERVICE DISTRICT
■ STATEMENTS OF REVENUES, EXPENSES AND FUND EQUITY
1 FOR THE YEARS ENDED SEPTEMBER 30, 1986 AND 1985
1986 1985
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Operating Revenues:
Special assessments $ 4,556, 168 $ 4,887,893
I General taxes 361 ,841 245,936
Charges for services 733,185 401,432
Franchise fees 361,928 222,136
I Miscellaneous 186
15,5811 ,934
Payments from other governments 14,142
Total Operating Revenues 6,028,889 5,773,473
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Operating Expenses:
Professional services 1,984,200 1 ,944,759
I Personal services 1 ,263,867 1,195,016
Depreciation and depletion 812,316 778,071
Operations 702,939 503,419
I Repairs and maintenance 271,221 399,254
Total Operating Expenses 5,034,543 4,820,519
1 Operating Income 994,346 952,954
Nonoperating Revenue (Expense):
' Interest income 460,123 472,118
Loss on disposal of equipment (834) ( 10,087)
Interest expense A. paying agent fees (815, 160) (886,839)
' Total Nonoperating Revenue (Expense) (355,871 ) (424,808)
Income (Loss) Before Operating Transfers 638,475 528,146
Operating Transfers (Out) (287,696) (270,039)
IIncome before Extraordinary Item 350,779 258,107
Extraordinary Item - Loss on advance
—, refunding of Long-term debt (Note 4) 890,260 -
Net Income (Loss) (539,481) 258,107
' Fund Equity, October 1 4,111 ,479 3,853,372
Fund Equity, September 30 $ 3,571 ,998 $ 4,111 ,479
IThe accompanying notes are an integral
' part of these financial statements.
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I MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
ISTATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THE YEARS ENDED SEPTEMBER 30, 1986 AND 1985
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1986 1985
Sources Of Working Capital :
Operations:
I Net income before extraordinary item $ 350,779 $ 258,107
Items not requiring working capital :
Depreciation and depletion 812,316 778,071
I Amortization of bond discounts 21 ,690 6,778
Loss on disposal of fixed assets 834 10,087
Interest earned on capital
appreciation bonds 98,634 -
IWorking capital provided by
operations, exclusive of
Iextraordinary item 1 ,284,253 1 ,053,043
Working capital used by extraordinary
Item 890,260 -
IWording capital provided by
operations after extraordinary item 393,993 1 ,053,043
IUnamortized Issue costs on refunded bonds 167,754 -
Proceeds from long-term debt 9,211,774 -
' Decrease in restricted assets 1 ,312,513 2,962,124
Proceeds from long-term note 123,555
' Total Sources of Working Capital $ 11 ,086,034 $ 4,138,722
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IThe accompanying notes are an integral
I part of these financial statements.
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I MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
STATEMENTS OF CHANGES IN FINANCIAL POSITION (CONTINUED)
I FOR THE YEARS ENDED SEPTEMBER 30, 1986 AND 1985
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1986 1985
Uses Of Working Capital :
( Increase) Decrease In liabilities payable from
I restricted assets:
Current portion of long-term debt $ (430,000) $
Accounts payable (57,360)
I Accrued interest (317,278) -
Matured principal 105,000 3,945,000
Matured interest 1 ,884,862 (698,850)
I Total Decrease in Liabilities
Payable from Restricted Assets 1 ,185,224 3,246,150
Refunding of long-term debt 7,810,000 -
I Retirement of long-term debt and -
portions becoming current 430,000 178,555
Bond issue costs on new long-term debt 446,663
Additions to property, plant & equipment 528,780 390,555
IIncrease in working capital 685,367 323,462
Total Uses of Working Capital $ 11,086,034 $ 4,138,722
' Increase (Decrease) in Components of
Working Capital :
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Cash Investments $ ( 114,961) $ 261 ,421
799,670 657,359
Due from other governments 2,269 (36,789)
Accounts receivable (75,020) ( 165,688)
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Accounts payable 13,765 (26,510)
Other current liabilities 59,644 (366,331)
' Increase in Working Capital $ 685,367 $ 323,462
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I The accompanying notes are an integral
part of these financial statements.
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I MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
INOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1986 AND 1985
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I 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
Iown and operate solid waste collection facilities of the County.
Basis of Accounting - The MSD follows the accrual basis of accounting.
IInvestments - Restricted investments consist primarily of U.S. Treasury
obligations, carried at amortized cost which approximates market value.
I Temporary investments Included in current assets are Invested in cer-
tificates of deposit or the Local Government Investment Pool which is
administered by the State of Florida. Pooled funds are combined and
invested with all County funds to the extent available. Earnings from
I pooled funds are allocated monthly based on a weighted average balance of
investments. Temporary investments are carried at cost which approximates
market value.
IProperty and Depreciation - Property is recorded at cost. Expenditures
for maintenance, repairs and minor renewals and betterments are expensed
1 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:
IDescription Years
I Sanitary landfill sites 1 - 10
Buildings and other improvements 10 - 20
Machinery and equipment 3 - 10
I 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.
IDiscount 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
I employees. Pension costs for MSD employees for the years ended
September 30, 1986 and 1985 as required and defined by the System,
approximated $116, 119 and $114, 143 respectively.
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I MONROE COUNTY, FLORIDA
MUNCIPAL SERVICE DISTRICT
INOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1986 AND 1985
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NOTE 2 - PENSION PLAN (Continued)
IContributions of all participating agencies throughout the State of
Florida are pooled to fund accrued benefits under the System. System
I officials have reported that the System has an actuarially computed
unfunded past service liability of approximately $7.4 billion as of
July 1 , 1985, the latest valuation date of the plan. This amount repre-
sents an obligation of the System and not of the participating agencies.
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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
I30 years.
INOTE 3 - LONG-TERM DEBT
Long-term debt consists of the following:
I Refunding Improvement Bonds, secured by 1986 1985
revenues of MSD which are obligations
solely of MSD, payable in installments of
I various amounts from October 1, 1986
through October 1 , 2011, bearing interest
at 5.25% to 9.10% $ 11,870,000 $
IUnearned interest on capital
appreciation bonds 2,559,592
IUnamortized discount and issue costs 426,663
Net Refunding Improvement Bonds 8,883,745 -
IImprovement Bonds, secured by revenues of
MSD which are obligations solely of MSD,
I 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%, refunded by Refunding 7,810,000
IImprovement Bonds, Series 1985
Unamortized discount 169,444
' Net Improvements Bonds - 7,640,556
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MONROE COUNTY, FLORIDA
MUNCIPAL SERVICE DISTRICT
INOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1986 AND 1985
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NOTE 3 - LONG-TERM DEBT (Continued)
I 1986 1985
Balance Forward 8,883,745 7,640,556
I Lease obligation, secured by equipment
with a purchase cost of $ 123,555, pay-
able in monthly Installments of $ 7,284,
Iincluding interest at 8.50%. - 50,511
Total long-term debt 8,883,745 7,691,067
I Less current portion 430,000 50,511
Net long-term debt $ 8,453,745 $ 7,640,556
Long-term debt matures as follows:
I September
30
1986 $ 430,000
1987 280,000
1988 300,000
1 gg9 315,000
1990 335,000
IThereafter 10,210,000
' 11 ,870,000
Less:
Unearned interest on capital
appreciation bonds 2,559,592
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Unamortized discounts and
issue costs 426,663
ITotal long-term debt E 8,883,745
I 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, and interest earned. The improvement
I bonds are payable solely from the revenues generated by the MSD and do not
constitute a general obligation of the County.
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I MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
INOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1986 AND 1985
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INOTE 4 - EXTRAORDINARY ITEM, LOSS ON ADVANCE REFUNDING OF LONG-TERM DEBT
By resolution adopted December 6, 1985, the County provided for the
I advance refunding of the MSD Improvement Bonds In the aggregate principal
amount of $7,810,000 by the sale of Monroe County Municipal Service
District Refunding Improvement Bonds, Series 1985. All of the $9,211 ,774
principal amount of the Series 1985 Issue will be used to advance refund
Ithe refunded bonds.
The proceeds of the Series 1985 refunding bonds were Invested in United
I States obligations and placed in an irrevocable Deposit Trust Fund. Such
United States obligations will mature at such times and In such amounts so
as to provide sufficient funds for the payment of interest and maturing
I principal of the refunded bonds. The refunded bonds are considered
extinguished debt in the accompanying financial statements In accordance
with the defeasance provisions of the refunding bond agreement. As a
result of the advance refunding, a loss was recognized in accordance with
generally accepted accounting principles as follows:
Refunded Debt - MSD Improvement Bonds,
ISeries 1980 $ 7,810,000
Less Unamortized Discount and Issue
ICosts 167,754
Net Carrying Value of Refunded Debt 7,642,246
I Investment in Refunding:
Net Amount of Refunding Bonds Issued 9,211,774
Less Unamortized Financing Costs 446,663
I Interest on Refunded Bonds at
Refunding Date 232,605
I Net Reacquisition Price 8,532,506
Loss on Advance Refunding of
Long-Term Debt $ 890,260
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■ MONROE COUNTY, FLORIDA
■ MUNICIPAL SERVICE DISTRICT
e RESTRICTED ASSETS
SEPTEMBER 30, 1986 AND 1985
1986 1985
' Fund Description:
Sinking Fund:
Cash $ 752,262 $ 170,473
Reserve Fund:
Cash 2,031 53,499
Investments 964,447 994,734
Interest Receivable - 44,958
' 966,478 1 ,093,191
Renewal and Replacement Fund:
Cash 1 ,409
Investments 515,113 299,608
' Interest receivable 5,359 -
521,881 299,608
> ' Cash with Fiscal Agent 212,681 2,202,543
Total Restricted Assets $ 2,453,302 $ 3,765,815
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I MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
IRESIDENTIAL WASTE FEES ASSESSED AND UNCOLLECTED
SEPTEMBER 30, 1986
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I Percentage Of
Year Of Total Fees Uncollected At Uncollected To
Assessment Assessed September 30, 1986 Original Roll
I1978 $ 1,030,326 $ 16,380 1 .6%
1979 1 ,155,744 14,809 1.3%
I1980 1,135,332 20,108 1 .8%
'' 1981 1 ,516,547 23,974 1 .6%
' 1982 1 ,553,913 27,486 1 .8%
I1983 2,217,262 55,700 2.5%
1984 4,818,700 550,975 11.4%
1 1985 5,078,265 238,281 4.5%
1986 4,551 ,690 314,435 6.9%
Sub-Total 1 ,262,148
ILess Reserve for Uncol lectibles 753,004
' Net Residential Waste
Fees Uncollected 509,144
Other Receivables 34,813
INet Accounts Receivable $ 543,957
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MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
SCHEDULE OF INSURANCE IN FORCE
ISEPTEMBER 30, 1986
IAmount
I Description of Coverages Carrier Policy Period of Coverage
Property Damage, General
Liability SIGNA/INA 4/1/66 - Major equipment damage,
I 4/1/87 replacement cost
buildings, and personal
property - $ 7,497,000
I General liability
coverage - $ 500,000(CSL)
Contractor's Equip. Insurance Co. of 4/1/86 - $ 733,000
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North America 4/1/87
Scheduled Property Insurance Co. of 4/1/86 - Data Processing
' North America 4/1/87 Equipment - $ 133,715
Honesty Blanket Bond Insurance Co. of 4/1/86 - $ 100,000 4/86 - 12/86
I North America 4/1/87 250,000 1/87 - 3/87
Auto Liability SIGNA/INA 3/15/86 - $ 500,000 (CSL)
3/15/87
IPublic Official International 4/19/86 - $ 250,000
Liability Surplus Lines 4/19/87
IWorker's Compensation Self-Insured Continuing Statutory
and Employer's Liab.
' Worker's Compensation
Specific Excess Safety Mutual 10/1/85 - $ 5,000,000
Aggregate Excess Casualty Corp. 10/1/86 $ 1 ,000,000
IWindstorm Florida Windstorm 6/24/86 - Buildings and tanks -
Underwriting Assoc 6/24/87 $ 671,250
' Flood Insurance National Flood Ins. 7/5/86 - Buildings and contents -
Program 7/5/87 $ 1 ,365,000 - total for
all locations
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IKEMP � ROSASCO
Certified Public Accountants
1438 KENNEDY DR.
I #12 LUANI PLAZA • P. O. BOX 1529
KEY WEST, FL 33041-1529
ORVIS M. KEMP, C.P.A. (305) 294-2581 MEMBER OF AMERICAN INSTITUTE
AND FLORIDA INSTITUTE OF
' WM. O. KEMP, C.P.A.
PETER L. ROSASCO, Jr., C.P.A. CERTIFIED PUBLIC ACCOUNTANTS
MARVA E. GREEN, C.P.A.
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IMarch 9, 1987
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I Mr. Danny L. Kolhage
Clerk Ex Officio
Board of County Commissioners
• Monroe County, Florida
' Key West, FLorida 33040
IDear Sir:
We have examined the financial statements of Monroe County, Florida, Municipal
Service District (MSD) for the years ended September 30, 1986 and 1985, and
I have issued our report thereon dated March 9, 1987. As part of our examina-
tion, we made a study and evaluation of the MSD's system of Internal
accounting control to the extent we considered necessary to evaluate the
I 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
I
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.
I 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
I such a system, and the definition of a material weakness for purposes of this
report, which are described in the Appendix to this report.
I 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-
Iluatlon disclosed no condition that we believe is a material weakness.
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I Mr. Danny L. Kolhage
Clerk Ex Officio
Board of County Commissioners
I Page 2
IRegulatory Reporting Requirements
' We have reviewed the financial report filed with the Department of Banking and
Finance for the year ended September 30, 1986, pursuant to Section 218.36,
Florida Statutes, and have found the amounts reported therein to be in
I agreement with the amounts included in the financial statements on which we
have issued our report dated March 9, 1987.
I 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.
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I 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.
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Sincerely,
I irmAiff 44I-66r
Kemp 8 Rosasco
Certified Public Accountants
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' 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
trelated 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 compl lance 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.
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i. I KEMP E4 ROSASCO
Certified Public Accountants
I 1438 KENNEDY DR.
#12 LUANI PLAZA • P. O. BOX 1529
KEY WEST, FL 33041-1529
ORVIS M. KEMP, C.P.A. (305) 294-2581 MEMBER OF AMERICAN INSTITUTE
I WM. 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.
I
tHonorable Members of the
Board of County Commissioners
IMonroe County, Florida
I We have examined the Balance Sheet of the Monroe County, Florida Municipal
Service District as of September 30, 1986 and 1985 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
I
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
It not in compliance with any of the terms, covenants, provisions, or conditions
of section 16 of Resolution No. 341 which was adopted by the Board on December
6, 1985, as amended and supplemented. However, it should be noted that our
examination was not directed primarily toward obtaining knowledge of such non-
' compliance .
I _efr peaV
I Kemp 8 Rosasco
Certified Public Accountants
March 9, 1987
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