Fiscal Year 1982 & 1983 MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
FINANCIAL STATEMENTS
SEPTEMBER 30, 1983 AND 1982
rItI_
I
KEMP 8 ROSASCO
CERTIFIED PUBLIC ACCOUNTANTS
i -
CONTENTS
Page
Independent Auditors' Opinion 1
Financial Statements:
balance Sheets 2
Statements of Revenue, Expenses and Fund Equity 3
Statements of Changes in Financial Position 4
Notes to Financial Statements 5-7
Supplemental Schedules:
Restricted Assets 8
Residential Waste Fees Assessed and Uncollected 9
Schedule of Insurance In Force 10
Management Letter 11-14
bond Compliance Letter 15
KEMP £4 ROSASCO
Certified Public Accountants
1438 KENNEDY DR. MEMBER OF AMERICAN INSTITUTE
ORVIS M. KEMP, C.P.A. #12 LUANI PLAZA • P. O. BOX 309
WM. O. KEMP, C.P.A. KEY WEST, FL 33041-0309 AND FLORIDA INSTITUTE OF
PETER L. ROSASCO, Jr., C.P.A. (305) 294-2581 CERTIFIED PUBLIC ACCOUNTANTS
MARVA E. GREEN, C.P.A.
Honorable Members of the
Board of County Commissioners
Monroe County, Florida
We have examined the Balance Sheet of the Monroe County, Florida Municipal
Service District as of September 30, 1983 and 1982 and the related State-
ments of Revenues, Expenses, and Fund Equity, and Changes in Financial
Position for the year then ended. Our examination was made in accordance
with generally accepted auditing standards and, accordingly, included such
tests of accounting records and such other auditing procedures as we con-
sidered necessary In the circumstances.
In our opinion, the financial statements referred to above present fairly the
financial position of the Monroe County, Florida Municipal Service District at
September 30, 1983 and 1982 and the results of its operations and the changes
in financial position for the years then ended in conformity with generally
accepted accounting principles applied on a consistent basis.
Our examination was made for the purpose of forming an opinion on the finan-
cial statements taken as a whole. The supplemental schedules of Restricted
Assets, Residential Waste Fees Assessed and Uncollected, and Insurance in
Force are presented for purposes of additional analysis and are not a required
part of the financial statements. Such information has been subjected to the
auditing procedures applied in the examination of the financial statements
and, in our opinion, are fairly stated in all material respects in relation to
the financial statements taken as a whole.
PAreti
Kemp & Rosasco
Certified Public Accountants
-February 10, 1984
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MONROE COUNTY, &LORIDA
MUNICIPAL SERVICE DISTRICT
STATEMENTS OF REVENUES, EXPENSES AND FUND EQUITY
FOR THE YEARS ENDED SEPTEMUER 30, 1983 AND 1982
1983 1982
Operating Revenues:
Special assessments 8 2,292,622 $ 1 ,588,221
General taxes 956,750 1 ,773,892
Waste collection fees 256,991 183, 157
Franchise fees 248,446 238, 537
Miscellaneous 21,806 3,290
Payments from other governments 5,900 5,717
Total Operating Revenues 3,782,515 3,792,814
Operating Expenses:
Professional services 1,460,777 1 , 138,929
Personal services 1, 108, 175 841,925
Depreciation and depletion 653,825 370,285
Operations 650,810 706,245
Repairs and maintenance 308,067 189,314
Total Operating Expenses 4, 181,654 3,246,669
Operating Income ( Loss) (399, 139) 546,145
Nonoperating Revenue (Expense) :
Interest income 528,735 731,546
Other - 920
Interest expense & paying agent fees (903,468) (404,665)
Total Nonoperating Revenue (Expense) (374,733) 327,801
Income (Loss) Before Operating Transfers (773,872) 873,946
Operating Transfers (Out) (214,998) (227,895)
Net income (Loss) (988,870) 646,051
Fund Equity, October 1 5,259,981 4,613,930
Fund Equity, September 30 $ 4,271, 111 $ 5,259,981
The accompanying notes are an integral
part of these financial statements.
_3_
MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
STATEMENTS OF CHANGES IN FINANCIAL POSITION
FOR THE YEARS ENDED SEPTEMBER 30, 1983 AND 1982
1983 1982
Sources Of Working Capital :
Operations:
Net income ( loss) $ (988,870) $ 646,051
Items not requiring working capital :
Depreciation and depletion 653,825 370,286
Amortization of bonds discount 10,314 3,373
Working capital provided (used) by
operations (324,731) 1 ,019,710
Decrease in restricted assets 399,943 648,368
Proceeds from long-term note 114,660 -
Decrease ( Increase) in working capital 653,453 (303,231)
Total Sources of Working Capital $ 843,325 $ 1,364,847
Uses Of Working Capital :
Decrease in liabilities payable from
restricted assets:
Retainage payable $ - $ 584,055
Accrued interest 2,299 -
Revenue bonds 40,000 -
Total Decrease in Liabilities
Payable from Restricted Assets 42,299 584,055
Retirement of long-term debt and
portions becoming current 104,288 -
Additions to property, plant 8 equipment 696,738 780,792
Total Uses of. Working Capital $ 843,325 $ 1,364,847
Increase (Decrease) In Components of
Working Capital :
Cash $ (494,336) $ (592,090)
Investments (90,679) 714,951
Accounts receivable 115,859 87,403
Accounts payable ( 109,833) 94,902
Other current liabilities (74,464) ( 1 ,935)
Increase (Decrease) In
Working Capital $ (653,453) $ 303,231
The accompanying notes are an integral
part of these financial statements.
-4-
MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1983 AND 1982
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General - The Monroe County, Florida Municipal Service District (the
"MSD") is an instrumentality of Monroe County (the "County") authorized to
own and operated solid waste collection facilities of the County.
Basis of Accounting - The MSD follows the accrual basis of accounting.
Investments - Investments consist primarily of U.S. Treasury obligations,
carried at amortized cost which approximates market value.
Property and Depreciation - Property is recorded at cost. Expenditures
for maintenance, repairs and minor renewals and betterments are expensed
as incurred. Major renewals and betterments are treated as property
acquisitions. Depreciation and depletion expense is provided on property
and sanitary landfill sites using the straight-line method over the esti-
mated useful lives of the assets as follows:
Description Years
Sanitary landfill sites 1 - 10
Buildings and other improvements 10 - 20
Machinery and equipment 3 - 10
The cost and accumulated depreciation of property dispositions are removed
from the accounts with the related gain or loss on disposition reflected
in net income.
Discount on Bonds Payable - The discount on Revenue Bonds Payable is amor-
tized using the straight-line method over the maturity of the bonds.
Interest Expense - Interest on tax anticipation notes and Revenue Bonds
(see Note 2) , the proceeds of which were used in the acquisition and
the construction of solid waste Incinerators, was capitalized during the
construction period. Capitalized interest for the year ended September 30,
1982 was approximately $468,000. No interest was capitalized during the
year ended September 30, 1983, as the construction period ended during
1982.
-5-
MONROE COUNTY, FLORIDA
MUNCIPAL SERVICE DISTRICT
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1983 AND 1982
NOTE 2 - LONG-TERM DEBT
• Long-term debt consists of the following:
Improvement Bonds, secured by revenues of 1983 1982
M50 which are obligations solely of MSD
payable in installments of various amounts
each October 1 until 2001 , the remainder
due October I, 2011, bearing interest at
9.80 to 11.25% $ 7,960,000 $ 8,000,000
Unamortized discount 182,999 193,313
Net Improvements Bonds 7,777,001 7,806,687
Lease obligations, secured by equipment
with a purchase cost of $ 114,660, pay-
able In monthly installments of $ 5,283,
including interest at 10.75%. 72,604 -
Total long-term debt 7,849,605 7,806,687
Less current portion 107,232 40,000
Net long-term debt $ 7,742,373 $ 7,766,687
Long-term debt matures as follows:
September
30
1984 $ 107,232
1985 60,372
1986 55,000
1987 65,000
- - --- 1988 70,000
Thereafter 7,675,000
$ 8,032,604
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
-6-
MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1983 AND 1982
NOTE 2 - LONG-TERM DEBT (Continued)
collectors with respect to commercial property in the MSD, all other non-
ad valorem funds received by the MSD in connection with furnishing solid
waste disposal services by the MSD, excluding any Federal and State funds
received, and interest earned on funds received from providing such ser-
vices. The improvement bonds are payable solely from the revenues
generated by the MSD and do not constitute a general obligation of the
County.
NOTE 3 - PENSION PLAN
The County participates in the Florida Retirement System (the °System")
which covers substantially all of the County 's full-time employees.
Presently , the System does not require contributions from covered
employees. Pension costs for MSD employees for the years ended
September 30, 1983 and 1982 as required and defined by the System,
approximated $ 95,662 and $ 71,047 respectively.
Contributions of all part icipatiny agencies throughout the State of
Florida are pooled to fund accrued benefits under the System. System
officials have reported that the System has an actuarially computed
unfunded past service liability of approximately $4.3 billion as of
July 1 , 1980, the latest valuation date of the plan. This amount repre-
sents an obligation of the System and not of the participating agencies.
The most recent actuarial study indicates that, it certain actuarial
assumptions are realized and certain increases to the contribution rates
are made, this unfunded past service liability will be liquidated within
30 years.
-7-
MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
RESTRICTED ASSETS
SEPTEMBER 30, 1983 AND 1982
1983 1982
Fund Description:
Construction Fund:
Cash $ - $ 1 ,542
Investments - 201,684
Interest Receivable - -
203,226
Sinking Fund:
Cash 484,905 503,482
Investments - 290,456
Interest Receivable - 18,861
484,905 812,799
Reserve Fund:
Cash 2,472 2,472
Investments 955,336 928,513
Interest Receivable 44,958 50, 127
1 ,002,766 981, 112
Renewal and Replacement Fund:
Cash 2,429 32,961
Investments 237,597 97,039
Interest Receivable - 503
240,026 130,503
Total Restricted Assets $ 1,727,697 $ 2, 127,640
-8-
MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
RESIDENTIAL WASTE FEES ASSESSED AND UNCOLLECTED
SEPTEMBER 30, 1983
Percentage Of
Year Of Total Fees Uncollected At Uncollected To
Assessment Assessed September 30, 1983 Original Roll
1978 $ 1 ,030,326 $ 34,863 3.4%
1979 1 , 155,744 27,921 2.4%
1980 1, 135,332 34,749 3. 1%
1981 1 ,516,547 31,457 2.1%
1982 1,553,913 35,705 2.3%
1983 2,217,262 145,638 6.6%
Sub-Total 310,333
Less Reserve for Uncollectibles 114,943
Net Residential Waste
•
Fees Uncollected 195,390
Net Delinquent Taxes Receivable 7, 129
Net Accounts Receivable $ 202,519
-9-
MONROE COUNTY, FLORIDA
MUNICIPAL SERVICE DISTRICT
SCHEDULE OF INSURANCE IN FORCE
SEPTEMBER 30, 1983
Amount
Description of Coverages Carrier Policy Period of Coverage
Comprehensive Business Policy The Fidelity and 4/1/83 -
Casualty Company 4/1/85
a. Fire, Windstorm, etc. of New York a. Major equipment-
replacement cost
buildings, personal
property A. tanks-
$ 437,700
b. Contractor's Equip. b. $ 442,600
c. Scheduled Property c. Rex Trash Master-
$ 114,600
d. Honesty Blanket Bond d. $ 50,000
oeneiar Liability The North-West 1/15/83 - $ 500,000 (CSL)
Ins. Company 1/15/85
Auto Liability The North-West 1/15/83 - $ 500,000 (CSL)
Ins. Company 1/15/85
•
Umbrella Liability Protective 1/15/83 - $ 500,000
National Ins. 1/15/85
Public Official International 4/19/83 - $ 1 ,000,000
Liability Surplus Lines 4/19/85
Worker's Compensation Self-Insured Continuing Statutory
and Employer's Liab.
Worker's compensation Safety Mutual 10/1/83 - $ 5,000,000
Specific Excess Casualty Corp. 10/1/84 $ 1,000,000
Aggregate Excess
-10-
•
KEMP 11 ROSASCO
Certified Public Accountants
1430 KENNEDY DR.
ORVIS M. KEMP, G.P.A. MEMBER OF AMERICAN INSTITUTE
KEYYPLAZA
WM. O. KEMP, C.P.A. ff 12 LUANI -0309 30% 309 AND FLORIDA INSTITUTE OF
•
(305) 29d
PETER L. ROSASCO, Jr., C.P.A. WEST, FL -250.25811 CERTIFIED PUBLIC ACCOUNTANTS
MARVA E. GREEN, C.P.A.
February 10, 1984
•
Mr. Danny L. Kolhage
Clerk Ex Officio
Board of County Commissioners
Monroe County, Florida
Key West, FLorida 33040
Dear Sir:
We have examined the financial statements of Monroe County, Florida, Municipal
Service District (MSD) for the years ended September 30, 1983 and 1982, and
have issued our report thereon dated February 10, 1984. As part of our exami-
nation, we made a study and evaluation of the MSD's system of internal
accounting control to the extent we considered necessary to evaluate the
system as required by generally accepted auditing standards. The purpose of
- ------- -- our studyand evaluation was to determine the nature, timing, and extent of
the auditing procedures necessary for expressing an opinion of the MSD's
financial statements. Our study and evaluation was more limited than would be
necessary to express an opinion on the system of internal accounting control
taken as a whole.
The observations reported herein should be considered In the context of the
reponsibility of management for establishing and maintaining a system of
internal accounting control , the objectives of and inherent limitations on
such a system, and the definition of a material weakness for purposes of this
report, which are described in the Appendix to this report.
Our study and evaluation made for the limited purpose described in the first
paragraph would not necessarily disclose all material weaknesses in the
system. Accordingly, we do not express an opinion on the system of internal
accounting control of the MSD taken as a whole. However, our study and eva-
luation disclosed no condition that we believe is a material weakness.
Our examination did, however, disclose the following conditions that, although
not considered by us to be material weaknesses, are weaknesses in internal
accounting control for which corrective action might be taken.
-11-
Mr. Danny L. Kolhage
Clerk Ex Officio, board of County Commissioners
Page 2
• Compliance with bond Covenants
Observation: We reviewed section 15E of Resolution No. 215 - 1980 which, as
o strictly interpreted, requires the MSD to make assessments at certain minimum
levels based on, among other things, the cost of operations and maintenance.
However, there appears to be a conflict between Section 15E, Resolution 215 -
1980 and Resolution 78 - 1981 which is an amendment to Resolution 215 - 1980.
Resolution 78 - 1981 allows pledged funds- remaining in the Revenue Fund to be
used for any lawful purpose, which includes operations.
Recommendation: The County should obtain an opinion from bond counsel in
order to resolve this apparent inconsistency. We further recommend that you
discuss this matter with the consulting engineers and take appropriate action.
Solid Waste Penalties
Observation: The management of the Municipal Service District will waive or
reduce solid waste penalties in circumstances such as an error in the tax
roll . The office of the Tax Collector is then notified in order that they may
collect the correct amount of taxes from the aprropriate taxpayer. However,
there is no documentation of the decision and the reasons therefore and it
appears That errors were made in the collection of solid waste fees.
Recommendation: We recommend that records of those taxpayers upon whom
penalties have been reduced or waived and the extent of the reduction or
waiver be documented. Such records should also Indicate approval of the
change in the assessment by the appropriate levels of management.
Regulatory Reporting Requirements
We have reviewed the financial report filed with the Department of Banking and
Finance for the year ended September 30, 1983, pursuant to Section 218.36,
Florida Statutes, and have found the amounts reported therein to be in
agreement with the amounts Included in the financial statements on which we
have issued our report dated February 10, 1984.
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.
-12-
Mr. Danny L. Kolhage
Clerk Ex Officio, Board of County Commissioners
Page 3
We appreciate the cooperation extended to us during the course of our examina-
tion. We would be pleased to discuss these matters further with you at your
convenience.
Sincerely,
ia V
Kemp 8 osa co
-13-
APPENDIX
MANAGEMENT'S RESPONSIBILITY FOR, AND THE OBJECTIVES AND LIMITATIONS OF,
INTERNAL ACCOUNTING CONTROL AND THE DEFINITION OF A MATERIAL WEAKNESS
The following comments concerning management's responsibility for internal
accounting control , the objectives of and the inherent limitations on a system
of internal accounting control , and the definition of a material weakness are
excerpts from Statements on Auditing Standards of the American Institute of
Certified Public Accountants.
' Management's Responsibility
Management .. . is responsible for establishing and maintaining a system of
internal accounting control . In fulfilling this responsibility, estimates and
judgements by management are required to assess the expected benefits and
related costs of control procedures.
Objectives
The objectives of a system are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss from unauthorized
use or disposition, and that transactions are executed in accordance with
management's authorization and recorded properly to permit the preparation of
financial statements in accordance with generally accepted accounting prin-
ciples.
Limitations
Because of inherent limitations in any system of internal accounting control ,
errors or irregularities nevertheless may occur and not be detected. Also,
• projection of any evaluation of the system to future periods is subject to the
risk that procedures may become inadequate because of changes In conditions or
that the degree of compliance with procedures may deteriorate.
Material Weakness
A material weakness (for the auditor's purpose) is a condition in which the
specific control procedures, or the degree of compliance with them, do not ( In
the auditor's judgement) reduce to a relatively low level the risk that errors
or irregularities in amounts that would be material in relation to the finan-
cial statements being audited may occur and not be detected within a timely
period by employees in the normal course of performing their assigned func-
tions. These criteria may be broader than those that may be appropriate for
evaluating weaknesses in accounting control for management or other purposes.
•
-14-
KEMP 1.4 ROSASCO
Certified Public Accountants
1438 KENNEDY DR.
ORVIS M. KEMP, C.P.A. #12 LUANI PLAZA • P. O. BOX 309 MEMBER OF AMERICAN INSTITUTE
WM. O. KEMP, C.P.A. KEY WEST, FL 33041.0309 AND FLORIDA INSTITUTE OF
PETER L. ROSASCO, Jr.,C.P.A. (305) 294-2581 CERTIFIED PUBLIC ACCOUNTANTS
MARVA E. GREEN, C.P.A.
Honorable Members of the
Board of County Commissioners
Monroe County, Florida
We have examined the Balance Sheet of the Monroe County, Florida Municipal
Service District as of September 30, 1983 and 1982 and the related statements
of Revenues, Expenses, and Fund Equity, and Changes in Financial Position for
the year then ended. Our examination was made in accordance with generally
accepted auditing standards and, accordingly, included such tests of
accounting records and such other auditing procedures as we considered
necessary in the circumstances.
In connection with our examination and with the exception of the item men-
tioned below, nothing came to our attention that caused us to believe that the
Monroe County, Florida Municipal Service District was not in compliance with
any of the terms, covenants, provisions, or conditions of Section 15 of
Resolution No. 215 which was adopted by the Board on August 26, 1980, as
amended and supplemented. However, it should be noted that our examination
was not directed primarily toward obtaining knowledge of such non-compliance.
Pursuant to Section 15E of Resolution No. 215, the MSO Is required to make
assessments at certain minimum levels based on, among other things, the cost
of operations and maintenance. Our computations for the year ended September
30, 1983 indicate a deficiency in the amount of solid waste tees assessed and
collected. However, there appears to be a conflict between Section 15E,
Resolution 215-1980 and Resolution 78-1981 which amends Resolution 215-1980.
Resolution 78-1981 allows pledged funds remaining in the Revenue Fund to be
used for any lawful purpose, which Includes operations. Computations made
based on Resolution 78-1981 indicate the MSD is assessing sufficient solid
waste fees. The County should obtain an opinion from bond counsel to resolve
this apparent inconsistency. We further recommend that you discuss this
matter with the consulting engineers and take appropriate action.AftFlaa
Kemp 8 Rosasco
Certified Public Accountants
February 10, 1984