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Fiscal Year 1981 MONROE COUNTY- FLORIDA ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTFJ4BELR 30, 1981.. 8 F2-4::�� KEMP & ROSASCO CERTIFIED PUBLIC ACCOUNTANTS Ty KEMP & ROSASCO Certified Public Accountants ORVIS M.KEMP,C.P.A. 615—A LJNrFED ST, ® P.O.BOX 309 PALM EACH COLINTY WM.0.KEMP,C.P.A. KEY WEST,FL 33040 P.Oo BOX 3756 PETER L.ROSASCO JR.,C.P.A. LANTANA,FL 33462 PH.(305)586-3552 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Honorable Members of the Board of County Commissioners Monroe County, Florida: We have examined the general purpose financial statements of Monroe County (the "County") as of September 30, 1981 and for the year then ended, listed in the accompanying table of contents. our examination was made in accordance w1th generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinlon, such general purpose financial statements present fairly the financial position oft combined funds and account groups of the County at September 30, 1981 and the results of operations of such combined funds and changes In financial position of the proprietary fund types for the year then ended, In conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Our examination was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The supplemental schedules listed In the accompanying table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements. Such information has been subjected to the auditing procedures applied In the examination of the general purpose fin- ancial statements and, In our opinion, Is fairly stated In all material respects In relation to the general purpose financial statements taken as a whole. February 25, 1982 MONROE COUNTY., FLORIDA ANNUAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER, 30, 1981. TABLE OF CONTENTS EXFI I BIT GENERAL PURPOSE FINANCIAL swrEMENTS: Combined Balance Sheet - All Fund Types and Account Croups...... A-1 Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types................ A-2 Combined Statement of Revenues, Expenditures, and Changes In Fund Balances - Budget and Actual - General and Special Revenue Fund A-3 Combined Statement of Revenues, Expenses and Changes in Fund Equity - All Proprietary Fund A-4- Combined Statement of Changes in Financial Position - All Proprietary Fund A-5 Notes to Combined Financial B SUPPLEME14TAL SCHEDULES: Clerk of the Circuit Court: Supplemental Balance C-1 Supplemental Schedule of Revenues and Expenditures - Governmental Fund Type and Receipts and Disbursements - Fiduciary Fund C----2 Property Appraiser: Supplemental Balance Sheet. C-3 Supplemental Schedule of Revenues and Expenditures............ C-4 Supervisor of Elections: Supplemental Schedule of Revenues and Expenditures..... C-5 Sheriff: Supplemental Balance Sheets - All I:°'und Types. ...... 0.0 C-6 Supplemental Schedule of Revenues and Expenditures Governmental Fund Types and Receipts and Disbursements Fiduciary Fund C-7 Tax Collector: Supplemental Balance Sheets - All Fund Types................ C-8 Supplemental Schedule of Revenues and Expenditures Governmental Fund Type and Receipts and Disbursements Fiduciary Fund C-9 MA19AGEMENT LETTERS D r N O1 O O w W u M h N 00 00 10 10 CO 1 N N M M N N h 0p r N N N N 00 O I- OI al -T v u\ N N N CO N Ln ^ W N N � S Ot Z O M h M `fl W 0- tng d' J W Qom M Ol W 00 OD O h L(l O\LA h 00 N Ol M In W-� l0 l0 - M O 0..00 O\ N M �' -'M N 00 LO �' Ol M'- O h LO N �W m �O 10 00 Ol Ol 10 N c'00 M N h W w r co Lh LO e- O N co O N 00 M �5.. -t 00 M v •- N I M vs aD O m n C2 Q W K 1-F m L(l M d Z U W N W C O 00O � M K J N N Z 01 01 O � � QW X N h h LL q N N C) N N O1 O `O N P 0 N N L0 � U W Itl � z< _ V] M O M a ¢w a o Y z U - 1- Z Z W a LL 00 O 00 N O 10-t-7 O N >. } W CO O � h h LO W N m p _:r ? C Q N Ol O Lfl LO N ' M 00lO 1�Mll h M O W LL m OO Ol N N�'00�•- ID (n 00 ul 00 Z N O n W v Ol LO O O Z' U w W f/Y fM U O_ Z F UI Ol C O1 Q W N O N W U s a eo a F''', us us LL C 0 h M Y O M q v1 M C� O F- Z M z h W 0 p W N Ln h N J L] Z a Q W H � Q f. 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K Q N O LL 1 W W N 1 W., Z Q w o w' w w F ¢I O } u v E w z 0 o � z - O Z i' LL � O] (A N E W O U U Q m S U u C N m O C z c a) C O v m v w v a L x a N w vwwi L c z W O d r v u w O v to 0. m c a m m E 3 O w Q Q M u -c c 3 V 4! N 4- 7 U W w N 41 m C 0 C C to v W Z m N m m a N W C Uf 9 f O , O C) W c C L W �+ Q1 C f I- O N cn L c'O E u v a E m z u •- c.- w•- In m m m c O z E C N LL LL O N 1>+1 3 a7 m C it X L E C U V Z C.D U 0. a) Z z rl' L v X in O N w v m'O O m - Z c X O_ O C) } } m O u m ul•- L ul c c•-v- L -._ v O w - - F- H 2 c� u• c♦+ m a+ m (� O m u O N u Fz c f L _ a) 0- - m �._ o - A N c U m m a a u I-- m m m F- C VI L U G w W U ¢ O v._ Lv ma) YL O Qz[L pQO Lvc LvC Lv¢ Ez.T/ L c u m W • W ZL Om - c a u" W L O_ 1 1 1, O aa 1, wL va O 0 HU mma) 1- O d d z OQ.01- o z--00 h z O U LL LL N EXHIBIT A-5 MONROE COUNTY_, FLORIDA COMBINED STATEMENT OF CHANGES IN FINANCIAL POSITION - ALL PROPRIETARY FUNDS .......... SEPTEMBER 1981 PROPRIETARY TOTALS FUND 'TYPES (MEMORANDUM ONLY) INTERNAL YEAR ENDED SEPTEMBER 30 - 9i" - ENTERPR V-!SE SERVICE 1 0 SOURCES OF WORKING CAPITAL: Operations: Net Inc e $ 1 ,854,107 $ 99,526 $ 1 ,953,633 $ 230,066 Items not requiring working cape tal : Depreciation and depletion 177,362 177,362 176,670 Amortization of Bonds discount 4,971 4,971 1 ,813 Tax Anticipation Notes sold 28,16o 28,160 Gain on cede jnption of Bonds 4,328 4,328 Loss on disposal of equipment 22L283 221 83 -- Working capital provided by Operations 2,091 ,,211 99,526 2,190,737 408,5j79- Proceeds from Bonds Anticipation Notes 3,971 ,840 3,971 ,840 Proceeds from Revenue Bonds 7,800,000 7,800,000 Contributions from other funds 2 780 416 Total Sources of Working Capital 1-3,�83',-�6-51 —§§--,3-26 —1379�-2—,57� 3,1 9 USES OF WORKING CAPITAL: Retirement of Bonds payable 4,100,000 4,100,000 150,000 Net Increase in Restricted Assets 1 ,736,231 1 ,736,231 10,802 Additions to Property, Plant & Equipment 5 712 3�60 5 712 360 1 992 606 Total Uses of Working Capital 48 591 -0- 11 548z591 21153,408 Net Increase in Working Capital $ 2,314,460 99,-52-6 -$-!-2�,413,986 1 ,035,557 ELEMENTS OF NET INCREASE (DECREASE) IN WORKING CAPITAL: Cash 1 ,062,406 113,065 1 ,175,471 385,160 Certificates of Deposit (100,000) (100,000) 995,000 Investments 2,583,548 2,583,548 Accounts Receivable 2,454 2,454 Other Current Assets (9,107) (9,107) 9,493 Current Liabilities (774,031) (13,539) (787,570) (354,096) Accrued Interest Payable --(4L5�081 0) (450,810)_ Net Increase in Working Capital $ 2,314,460 $ 99,526 $ 2,413,986 $ 1 ,035,557 .................... See accompanying notes to combined financial statement. EXHIBIT B MONROE COUNTY9 FLORIDA NOTES TO COMBINED FINANCIAL STATEMENTS SEPTEMBER, 30, 1981 GENERAL .Description - Monroe County (the "County") is a non-chartered political subdivision of the State of Florida and is authorized the power of self-government by the Constitution of the State of Florida and Florida Statutes. The Board of County Commissioners the "Board") is the legislative and governing body of the County. A County Administrator is appointed by the Board and is responsi- ble for administrative and budgetary control of the resources of the County maintained in the funds and account groups listed below. The Constitution of the State of Florida also provides for five Constitutional Officers with specific duties and reporting responsibilities prescribed by Statute. These Officers are: Clerk of the Circuit Court Supervisor of Elections County Property Appraiser County Tax Collector County Sheriff Annual operating budgets of these officers are submitted to the Board for approval . Funding for the operations of these Officers is provided primarily from general revenues of the County and supplemented by fees charged by the officers pursuant to Statute. The financial statements included in this Annual Report represent all of the funds and account groups of the County as a single unit of local government over which the Board exercises fiscal control . Basis of Presentation - The County's accounting system is organized and operated on a fund and account group basis. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts which is segregated for the purpose of carrying on specific activities or attaining certain objectives. Account groups are used to establish accounting control and accountability for the County's general fixed assets and the unmatured principal of its general long-term debt. -9- EXHIBIT Under Statues of the State of Florida, the five Constitutional Officers report their annual receipts and disbursements to the appropriate division of State Government. For reporting purposes herein, the operations of the Constitutional fficers have been combined with the appropriate funds and account groups and the individual operations and financial positions of the Clerk of the Circuit Court, the Supervisor of Elections, the County Property Appraiser, County Sheriff and Tax Collector and have been reflected in separate supplemental schedules to the financial statements. The accounting policies of the County conform to generally accepted account- ing principles as applicable to governmental units. This report, the accounting systems and classificationof accounts con-form to standards of the National Council on Governmental Accounting (NCGA) and the Municipal Finance Officers Association a United States and Canada, (MFOA) , published in "Statement 1 , Governmental Accounting, Auditing and Financial Reporting Principles" which is a restatement o "Governmental Accounting, Auditing and Financial Reporting" (G FR) . The County maintains the three categories of fund types and certain account groups recommended in Statement 1 as described below® Governmental Fund Types® General Fund - Used to account for general operations of the County and all transactions which aret accounted for in other funds or account groups. The General Fund includes the operations of the five Constitutional officers. S ecia1 Revenue Funds - Used account for the proceeds of specific revenue sources (other than special assessments) or to finance specified activities as required by law. Debt Service Funds - Used to account forte payment of interest and principal our outstanding general obligation debt. Debt of the Enterprise Funds are reported under that fund heading. S ecial Assessment Funds - Used to account for the construction of improvements or provision of services which are to be paid for wholly or in part from special assessments levied against benefited property. ,Capital Proyect Fuinds - Used to account for the purchase or construction of mayor capital facilities which re not financed by proprietary funds. Proprietary Fund Types® Enter rise Funds used to account for the financing of services to the general public where all or most of the costs involved are paid in the form of charges by users of such services. Enterprise operations of the County are the operations of the Card Sound Road and Bridge Toll Facility (the "Bridge") and the Municipal Services District (the '' ") . -1 - EXHIBIT B Internal Service Fund - Used to account for services and commodities -furnished by a designated activity of the County to other departments of the County® Internal service operations are those of the County's Workman's Compensation Self-insurance Fund® Fiduciary Fund Types: A222Sy Funds - Used to account for assets held in a trustee or agency capacity for other funds, governmental units and individuals. These funds include certain fiduciary operations of the Clerk of the Circuit Court, Tax Collector and Sheriff® A summary of the cash transactions of such fiduciary operations for the year is as follows: Collections pending future distribution: Taxes $ 28,241 ,069 Licenses and permits 1 ,931 ,402 State jury and witness fees 80,607 Charges for services 357,042 Fines and forfeits 859,124 Interest 130,995 Bonds, collections pursuant to court order and other 3 262 731 Total _i�2'.5—7 0 Distribution of collections ........34 038 6�02 Net (distributions) collections 824,368 Cash and certificates of deposit, October 1 ,1980 746 79'O Cash and certificates of deposit, September 30, 1981 $ 1 ,571 ,158 Account Groups: General Fixed Asset-, Grou of accounts - Used to account for -fixed assets owned by the County which are not accounted for in the Enterprise Funds. L General I Lone-Term Debt Grou of Accounts - Used to account for the long-term indebtedness of the County other than those which are obligations of the Enterprise or special assessment funds® Dud et r ants - Pursuant to Florida Statutes, the County is required to establish budgetary systems and approve annual budgets® The County's budgeting process, is complies with State Statutes, is based on estimates of cash receipts, cash disbursements and encumbrances which are approved by the Board, Beginning funds, available for financing current appropriations, are considered in the budgetary process but are not included in the financial statements of the governmental fund types as budgeted revenues. Adjustments _11- EXHIBIT B necessary to convert the estimated cash receipts and disbursements basis of budgeting to the accrual or modified accrual basis of accounting are immaterial and have not been reflected in the budget amounts in the accompanying finan- cial statenlients® Unencumbered appropriations lapse at year-end® For comparative purposes, portions of the budget in the financial statements have been reclassified to conform with reporting classifications of actual revenues and expenditures. 2® SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the Couinty's significant accounting policies: Basis of ACCOUntinq - The Governmental Fund and Fiduciary Fund types use the _rnodlfied accrual basis of accounting. Under the modified accrual basis, revenues are recorded as received in cash except for revenues susceptible to accrual and revenues of a material amount that have not been received at the normal time of receipt® Expenditures are recorded when obligations are incurred or when benefits are received, except for interest on general obligation bonds which is recorded in the accounting period in which payment becomes due. The Proprietary Fund Types use the accrual basis of accounting wherek)y revenues are recorded when earned and expenditures are recorded when obligations are incurred or when benefits are received® The County does not accrue vacation pay benefits when such benefits are earned. Costs of such benefits are reported as expenditures in the accounting period in which vacation benefits are paid® Investments - The County's investments include certificates of deposit, U. S. Ti:;asu"riy bills and U. S. Government obligations. Investments are recorded at cost which approximates market value. Restricted Assets and Reserves - Assets required to be segregated pursuant to a I,aWd-inIenture are identified as restricted assets and off-setting reserves are established by charges to retained earnings® Grants from Goverm°ient AaSnSLIes - Certain grants under various Federal and State programs are included in the General Fund. Grant monies received are disbursed for goods and services as prescribed under the respective grant program or transferred to other County funds or government entities for ultimate distribution under the terms of the grants® In addition, the County receives certain monies under revenue sharing and other Federal and State programs® These programs, as well as those grant programs discussed above, are dependent on financial assistance by the Federal and State Government® Pension Costs - The County participates in the noncontributory Florida Retire_nient System (the "System") which covers substantially all of the County's full-time employees, without contribution from them® The County's rate of contribution, based upon total salaries, is defined by the System and pension costs are recorded in the period that salaries are earned® See Note 6.' -12- EXHIBIT B Property and Depreciation - All property of the County is recorded in the General Fixed Assets Group of Accounts, with the exception of property of the Enterprise Funds which are recorded in those funds' accounts. Improve- ments, other than buildings, including roads, bridges, curbs, gutters, streets and sidewalks are not reported in the General Fixed Assets Group of Accounts since these assets are normally immovable and of value only to the County. Property is recorded at cost, except for contributed property which is recorded at fair market value at the date of contribution. 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 recorded in the Enterprise Funds using the straight-line method over the estimated useful lives of the assets. Depreciation is not provided on the General Fixed Assets Group of Accounts. Ranges of depreciable lives are as follows: Years Sanitary landfill sites 1-10 Buildings and other improvements 10-20 Bridges and improvements other than buildings 50 Machinery and equipment 3-10 When property is disposed of, the related cost and accumulated depreciation are removed from the accounts with gains or losses on disposition being reflected in net income. Discounts on Bonds Discounts on bonds payable are amortized using the straight-line method over the maturities of the related bonds. Combined Financial informal-ion - Total columns in combined financial .......... statements which are noted ''Memorandum Only" aggregate the columnar amounts presented by fund type and account group. These total columns do not present consolidated financial information. 3. PROPERTY Property balances for the year ended September 30, 1981 are as follows: EXHIBIT B 3. PROPERTY (Continued) General Fixed Enterprise Assets Group Funds of Accounts Land $ 173,700 $ 6,347,668 Buildings and other Improvements 65,504 9,915,518 Roads and lbridges 2,512,491 Equipment 898,140 6,377,758 Construction in progress 6 788 054 99 748 Total 1 O,43 .......... Less accumulated depreciation 1 ,1683149 Property - net $ 9,269,7140 $22,740,692 4® LONG-TERM DEBT Long term debt of the County consists of: (a) general obligation bonds payable from property tax levies which represent obligations of the County as a whole and not its individual constituent funds; (b) improvement revenue bonds payable from Race Track and Jai Alia Fronton Revenues re- ceived by the County under Florida Statutes; (c) revenue bonds payable from revenues of the Bridge which are obligations solely of that fund; (d) improvement bonds payable from revenues of the MSD which are obligations solely of that fund; (e) tax anticipation notes payable solely from special tax assessments levied against the benefiting property owners; (f) lease obligations arising from the acquisition of computer equipment with a purchiase cost of $281 ,482. After the remaining three years of the lease, the County has the option to purchase the equipment at a nominal price® Such ]eased equipment has been capitalized and recorded in the General Fixed Assets Group of Accounts; (g) note payable to a bank secured by Sheriff's patrol cars® A summary of the debt and related maturities is as follows: _i4- EXHIBIT B GeneEtl_kong-T, m Debt General Improvement Maturing obligation Revenue Lease Note September 3500 Bonds Bonds P 0 abble, 6 1912 $ 600 10,000 $ 57,173 1983 45,000 10,000 57,173 1984 50,000 15,000 57,174 1985 50,000 15,000 1986 50,000 15,000 Thereafter 590,000 1L790�000 - Total $ 830,000 $ 1 ,855,000 $ 171 ,520 $ 206,668 Interest rate or range 3.50%P-4.25% 8.757d-11 .70% 9.83% 7.5% Improvement Revenue Tax Maturing Bonds Bonds Anticipation Lnbej r_lp _ JkRIDGEJ Notes 19 N2 0,,000 T3-T517,000 _2 1983 45,000 79,000 1984 50,000 1985 55,000 1986 65,000 Thereafter 7j 745 LOOO -1 590 000 Total 8,000,000 1 ,590,000 433,000 Less unamortized discount 196j_686 24 44 Net $ 7, 03,314 $ 1 ,,565,156 $ 433,000 Interest rate or range 9.80'Yd-1 1 .25% 5.75% 6.50'Ye-6.90% Under the terms of the revenue bond issue, the Bridge is required, among other things, to establish rates and collect fees and charges which will be sufficient at all times to (a) pay the cost of maintaining and operating related assets, (b) pay the principal and interest requirements of the out- standing revenue bonds and (c) create and maintain specified reseg-ves for such purposes. 5. SELF- INSURANCE PROGRAM The County is self-insured for Workman' s Compensation claims 1.9P to $150,000 for each occurrence, and maintains coverage for claims in excess of those amounts to a limit of $1 ,000,000 per occurrence with independent insurance carriers® The liability for Workman's Compensation claims, which is con- sidered adequate by manageinent, represents the estimate for all claims® -15- EXHIBIT B 6. 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 1oyees® Pension costs for County employees for the year ended September 30, 1981 , as required and defined by the System, approximated $683,000. Contributions of all participating agencies througl'rlout the State of Florida are pooled to fund accrued benefits under the System. Systean officials have reported that the System has an actuarially computed unfunded past service liability of approximately ® billion as of July 1 , 1977, the latest valuation date of the plan. This amount represents an obligation of the System and not of the participating agencies. 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 30 years. 7. CONTINGENCIES AND COMMITMENTS All expenditures finainced by Federal and State of Florida grants are subject to audit by the gi anting agencies to determine if such expenditures comply with conditions of the grant. The County believes that no material liability will arise from any such audits. A number of claims and lawsuits are pending against the County, however, based on knowledge of facts and advice of the County attorney and outside counsel , County officials believe that the outcome of these actions will not have a material adverse effect on the County's financial position or results of operations. EXHIBIT C-1 MOoNRO1 COUNTY, FLORIDA CLERK OF THE CIRCUIT COURT SUPPLEMENTAL BALANCE SHEET = AGENCY FUNDS SEPTEMBER 30, 1981 ASSETS: Cash 679,042 Accounts receivable 5,269 Due from other governments 600 TOTAL 684,911 LIABILITIES: Accounts payable $ 210 Due to other governments 146,187 Other 5 TOTAL $ 684,911 -17- EXHIBITC-2 MONROE COUNTY FLORIDA CLERK OF THE CIRCUIT COURT SUPPLEMENTAL SCHEDULE OF REVENUES AND EXPENDITURES GOVERNMENTAL FUND TYPE AND RECEIPT'S AND DISBURSEMENTS - FIDUCIARY FUND TYPE FOR THE YEAR ENDED SEPTEMB ER 3O.L 1981 GOVERNMENTAL FIDUCIARY FUND E FUND TYPE GENERAL FUND FUNDS REVENUES OR RE I State of Florida ,607 Board of County Commissioners 1 ,146,616 Taxes 2,631 .992 Licenses 18,760 Fine and forfeitures 859,124 Charges for services 352,347 Other 2 07 847 Total revenues 1 ,146�616 Total receipts 6,030.677 EXPENDITURES OR DISBURSEMENTS: Personal services 785,069 Data processing services 60,524 Equipment rental ,449 Operating expentlitures 149,689 Capital outlay 117,885 Trust and agency distributions 5 611 61 Total expenditures 1 ,146 616 Total isburs ents 5,611j617 EXCESS OF REVENUES D EXPENDITURES -0- NET COLLECTIONS , -1 8- EXHIBIT C-3 MONROE COUNTY, FLORIDA PROPERTY APPRAISER SUPPLEMENTAL BALANCE SHEET - GENERAL FUND SEPTEMBER 30, 1981 ASSETS: Cash 21 .293 LIABILITIES & FUND BALANCE: Due to other governments 1 846 TOTAL LIABILITIES 1 ,846 FUND BALANCE 19,447 TOTAL $ 21 .293 -19- EXHIBIT .-4 MO":ROE COUNTY FLORIDA PROPERTY APPRAISER SUPPLEMENTAL SCHEDULE OF REVENUES AND EXPENDITURES - GENERAL FUND FOR THE YEAR ENDED SEPTEMDER 30, 191 REVENUES: Board of County Commissioners 553,19 Other taxing districts 1 296 Total revenues 687,117 EXPENDITURES: Personal services 485,742 Data processing services 82,975 Rental 2,124 Operating expenditures 119,792 Capital outlay __L8jj06 Total expenditures 7O8L939 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 1 ) - 0- EXHIBIT C- MONROE COUNTY FLORID SUPERVISOR OF ELECTIONS SUPPLEMENTAL SCHEDULE OF REVENUES AND EXPENDITURES - GENERAL FUND FOR THE .-YEAR ENDED SEPTEMBER 30, 191 REVENUES: Board of County Co issioners1-1192365 EXPENDITURES: Personal services 113,221 Operating expenditures 19,631 Capital outlay 251 Total expenditures 139L365 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES -0- NOTE: All assets and liabilities are accounted for by the Board of County Commissioners within the General Fund. Accordingly, a balance sheet is not presented. -21- EXHIBIT MONROE COUNTY, FLORIDA MONROE COUNTY SHERIFF SUPPLEMENTAL BALANCE SHEETS ® ALL FUND TYPES SEPTEMBER 30 1 81 ACCOUNT FIDUCIARY GROUPS GOVERNMENTAL FUND TYPES FUND GENERAL SPECIAL TYPES FIXED GENERAL REVENUE AGENCY ASSETS ASSETS: Calla $ 3,655 $ 14,318 $ 267,609 $ Property 1 .126.177 TOTAL 3,655 14,318 267,60977 LIABILITIES: Due to others 7,60 Total liabilities _ 26 6 FUND EQUITY: Investment in general fixed assets 1026,177 FUND BALANCES: Unreserved 11,655 14,318 Total 3,655 lh 3,18 TOTAL $ 3,655 $ 14,318 $ 267,609 $ 1 ,126,177 -22 EXHIBIT MIONROE COUNTY, FLORIDA MONROE COUNTY SHERIFF SUPPLEMENTAL SCHEDULE OF REVENUES AND EXPENDITURES GOVERNMENTAL FUND TYPES AND RECEIPTS SAND DISBURSEMENTS - FIDUCIARY FUND TYPE SEPTEMBER 30 1981 GOVERNMENTAL FUND TYPES FIDUCIARY SPECIAL FUND TYPE GENERAL REVENUE AGENCY REVENUES OR RECEIPTS: Board of County Commissioners , 190,770 Cash Sands 724, Other 141 � Total revenues , , 1 0 0 Total receipts 724 ?T2 EXPENDITURES OR DISBURSEMENTS: Personal services 2,428,316 Operating expeniditures 1,539,064176,452 Capital outlay 110,000 Trust and agency distributions 644,o73 Total expenditures 4 077 380 —jj§44L2 Total disbursements 644473 EXCESS OF REVENUESE ( EXPENDITURES L.L89 .290) NET COLLECTIONS - HI - MONROE COUNTY,_ FLORIDA TAX COLLECTOR SUPPLE74ENTAL BALANCE SHEETS - ALL FUND TYPES SEPT EER 0931 GOVERNMENTAL FIDUCIARY FUND TYPE FUND TYPE GENERAL AGENCY FUND FUNDS ASSETS Cash 137,, 72 505 LIABILITIES BALANCE: Due to other governments 10,966 615,535 Sher 8,970 Fund balance 1261106 TOTAL,,. 137 072 624,505 - EXHIBIT C-9 MONROE COUNTY FLORIDA .L.� TAX COLLECTOR SUPPLEMENTAL SCHEDULE OF REVENUES AND EXPENDITURES -GOVERNMENTAL FUND TYPE AND RECEIPTS AND DISBURSEMENTS FIDUCIARY FUND TYPE SEPTEMBER. 30,_ 1981 GOVERNMENTAL FIDUCIARY FUND TYPE FUND TYPE GENERAL AGENCY FUND FUNDS REVENUES OR RECEIPTS: io'ara—of County Eoawnissioners $ 497,930 $ Taxes 25,609,076 Licenses and permits 1 ,912,642 Charges for services 174,282 4,695 Other _1'ZL551 j81 r 10 Total revenues 845t765 Total receipts EXPENDITURES OR DISBURSEMENTS: Personal services 517.373 Contractual services 10,350 Equipment rental 3,174 Capital outlay 26,727 Operating expenditures 195,164 Trust and agency distributions 27.782.912 Total expenditures L5 2 LZ88 Total disbursements _ 2z,z§21212, EXCESS OF REVENUES OVER EXPENDITURES NET COLLECTIONS _25- KEMP & ROSASCO Certified Public Accountants ORVIS M. KEMP,C.P.A. 615-A UNITED ST. • P.O.BOX 309 PALM BEACH COUNTY W . O. KEMP,C.P.A. KEY WEST, FL 33040 P.O.BOX 3756 PETER L.ROSASCO JR.,C.P.A. LANTANA,FL 33462 PH.(305)586-3552 February 25, 1982 Mr. Ralph White 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 for the year ended September 30, 1981 , and have issued our report thereon dated February 25, 1982. As part of our examination, we made a study and evaluation of the County'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 study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for expressing an opinion on the County'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 responsibility 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 Monroe County, Florida taken as a whole, however, our study and evaluation 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. —26— MMMU Q UNTY BOARD OF COUNTY I ON= I . Purchasing Procedures: Observation . " :here presently is no formal or written policy for the purchasing function. Under the present system, purchases are approved by department heads and purchase orders are used to control payments. However, there are no requirements for specific approvals of the Board for purchases over a given minimum or for obtaining competitive bids. During our examination we noted various instances where bids were obtained and approval for purchases was made by the Board. However, the implementation of such procedures appears to be at the discretion of the department heads under the present system, as there is no formal requirement for such procedures. Recommendation We recommend that a formal written policy be adopted which will require competitive bids and Board approval for all purchases over a given minimum. Property Control : Observation During our examination we noted that certain items on the detailed property ledger could not be located due to unrecorded transfers or other disposition. BackSL2L.,nd Under the present property control system, an inventory clerk is responsible for maintaining property ledgers and performing periodic inventories for each department. After periodic inventories are made the clerk notifies the department head as to any items not located or any items noted which appear obsolete. The difficulty experienced in locating certain items appeared to be due to trans- fers which were not recorded on the detail property ledgers, and secondly due to the fact that certain items noted as missing during periodic inventories had not appropriately been resolved or disposed of by department heads. Recommendation We recommend that property control procedures be modified to give greater assurance that the inventory clerk will be notified of all property transfers and that items noted as missing during periodic inventory will be appropriately researched and resolved. -27- Observation The cumulative deficiency in toll requirements for the Card Sound Road and Bridge Toll Facility (the "Bridge") continues to increase. The deficiency for the years ended September 30, 1981 and 1980 was $9,524 and $10,605, respectively, and the cumulative deficiency was $873,368 as of September 30, 1981 . Background This item was mentioned in the previous years management letter with a recommendation that the Consulting Engineers review the existing toll structure of the bridge. In the latest engineering report on the Bridge, the Consulting Engineers recommended increasing the tolls at the bridge, however, as of the date of this report no in- crease in tolls had been made. Recommendation We recommend that the toll structure at the bridge be revised in accordance with the recommendation of the Consulting Engineers. REGULATORY REPORTING REQUIREMENTS We have reviewed the financial report filed with the Department of Banking and Finance for the year ended September 30, 1981 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 25, 1982. The Rules of the Auditor General , State of Florida, require that this letter be filed with the Auditor General along with audited financi.al statements. This report is intended solely for the use of management and the Auditor General and should not be used for any other purpose. We appreciate the cooperation extended us during the course of our examination. We would be pleased to discuss these matters further with you at your convenience. Sincerely, 411,f t a4e� KEMP & ROSASCO -28- 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 responsi- bility, estimates and Judgments 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 reason- able, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transac- tions 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. 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 becuase of changes in conditions or that the degree of compliance with the 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 judgment) 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 func- tions. These criteria may be broader than those that may be appro- priate for evaluating weaknesses in accounting control for manage- ment or other purposes. -29- KEMP & ROSASCO Certified Public Accountants ORRIS M.KEMP,C.P.A. 615-A UNITTiD ST. * P.O.BOX 309 PALM BEACH COUNTY WM.0.KEMP,C.P.A. KEY WEST,FL 33040 P.O.BOX 3756 PETERR L.ROSASCO JR.,C.P.A. LANTANA,FL 33462 PH.(305)586-3552 February 25, 1982 Mr. Ralph W. White Clerk of the Circuit Court Monroe County, Florida Key West, Florida 33040 Dear Sir: We have examined the financial statements of Monroe County,, Florida for the year ended September 30, 1981 , and have issued our report thereon dated February 25, 1982. As part of our examination, we made a study and evaluation of the County'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 study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for express- ing an opinion on the County'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 responsibility 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 Monroe County, Florida taken as a whole, however, our study and evaluation disclosed no condition that we believe is a material weakness. -30- REGULATORY REPORTING REQUIREMENTS We have reviewed the financial report filed with the Department of Banking and Finance for the year ended September 30, 1981 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 25, 1982. 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. We appreciate the cooperation extended us during the course of our examination. We would be pleased to discuss these matters further with you at your convenience. Sincerely, I"f KEMP & ROSASCO -31- 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 responsi- bility, estimates and judgments 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 reason- able, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transac- tions 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. 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 the 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 judgment) 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 func- tions. These criteria may be broader than those that may be appro- priate for evaluating weaknesses in accounting control for manage- ment or other purposes. -32- KEMP & ROSASCO Certified Public Accountants ORVIS M.KEMP,C.P.A. 615-A UNITED ST. • P.O.BOX 309 PALM BEACH COUNTY WM.O.KEMP,C.P.A. KEY WEST,FL 33040 P.O.BOX 3756 PETER L.ROSASCO JR.,C.P.A. LANTANA,FL 33462 PH.(305)586-3552 February 25, 1982 Mr. Harry F. Knight Tax Collector Monroe County, Florida Key West, Florida 33040 Dear Sir: We have examined the financial statements of Monroe County, Florida for the year ended September 30, 1981 , and have issued our report thereon dated February 25, 1982. As part of our examination, we made a study and evaluation of the County'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 study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for express- ing an opinion on the County'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 responsibility 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 Monroe County, Florida taken as a whole, however, our study and evaluation disclosed no condition that we believe is a material weakness. -33- AEGULA ORY REPORTING REOUiR.- We have reviewed the financial report filed with the Department of Banking and Finance for the year ended September 30, 1981 pursuant to Section 21 .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 25, 1982. 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. We appreciate the cooperation extended us during the course of our examination. We would be pleased to discuss these matters further with you at your convenience. Sincerely, KEMP & ROSASCO -34- 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 responsi- bility, estimates and judgments 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 reason- able, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transac- tions 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. 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 the 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 judgment) 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 func- tions. These criteria may be broader than those that may be appro- priate for evaluating weaknesses in accounting control for manage- ment or other purposes. -35- KEMP & ROSASCO Certified Public Accountants ORVIS M.KEMP,C.P.A. 615-A UNITED ST. a P.O.BOX 309 PALM BEACH COUNTY WM.O.KEMP,C.P.A. KEY WEST,FL 33040 P.O.BOX 3756 PETER L.ROSASCO JR.,C.P.A. LANTANA,FL 33462 PH.(305)586-3552 February 25, 1982 Honorable William A. Freeman, Jr. Sheriff Monroe County, Florida Key West, Florida 33040 Dear Sir: We have examined the financial statements of Monroe County, Florida for the year ended September 30, 1981 , and have Issued our report thereon dated February 25, 1982. As part of our examination, we made a study and evaluation of the County'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 study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for expressing an opinion on the County'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 responsibility 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 Monroe County, Florida taken as a whole, however, our study and evaluation 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. -36- DR PROPERTY CARDS Observation Individual property cards are not filled out completely for all property items acquired. Descriptions are often incomplete or missing. Cards have not been prepared for certain items transferred from the Board of County Commissioners. Background Individual property cards are required to be prepared for each asset acquired, noting the description of item, identification number (vehicles and weapons, for example) vendor, price, property tag number, location, and the individual having custodial responsibility. R ecome n-da, ILI i on Inventory cards should be filled out completely, noting all significant information to facilitate specific identification of each item. Standardized procedures should be developed for inventory of all items, whether through purchase, transfer or donation of the asset. PROPERTY LOCATION AND INVENTORY Observations Property sub-ledgers, listing items by substation location, cannot be completed because of inadequate information on the property cards. The Sheriff's Department does not take a physical Inventory of property. ReconTnenda t ion A physical inventory of all assets should be taken, noting location and custodian, if applicable. This information should be used to complete and update all property records. Thereafter, an annual physical inventory of property Items should be conducted. Overall Recommendation Consideration should be given to appointing a permanent inventory clerk who would be responsible for property control for the Sheriff. The clerk would be responsible for maintaining current inventory ledgers and subsidiary ledgers, as well as performing ongoing periodic inventories. -37- REGULATORY REPORTING RQUIREMEMTS reviewedWe have i ncia report filed withDepartment Bankingi c ended September 30, 1981 pursuant Sectionto .03.E Florida Statutes, and have found the amounts reported therein in agreement i amounts included the financial statements on whichissued our report dated February 25, 1982. The Rules of the Auditor General, State of Florida, require t this letter be filed with Auditor General along with audited financial to nts. This report is intended solely for the use of management and the Auditor General and should any other purpose. We appreciate cooperation extended us during course of our examination. We would be pleased to discuss these matters further with you at your convenience. Sincerely, re4lf f "/Jco KEMP & ROSASCO APPENDIX MANAGE14ENTIS 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 responsi- bility, estimates and judgments 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 reason- able, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transac- tions 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. 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 the 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 judgment) 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 func- tions. These criteria may be broader than those that may be appro, priate for evaluating weaknesses in accounting control formonage- ment or other purposes. -39- wr Certified Public Accountants ORVIS M.KEMP,C.P.A. 615-A UNITED ST. • P.O.BOX 309 PALM BEACH COUNTY WM.O.KEMP,C.P.A. KEY WEST, FL 33040 P.O.BOX 3756 PETER L. ROSASCO JR.,C.P.A. LANTANA,FL 33462 PH.(305)586-3552 February 25, 1982 Mr. Ervin A. Higgs Property Appraiser Monroe County, Florida Key West, Florida 33040 Dear Sir: We have examined the financial statements of Monroe County, Florida for the year ended September 30, 1981 , and have issued our report thereon dated February 25, 1982. As part of our examination, we made a study and evaluation of the County'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 study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for express- ing 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 responsibility 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 Monroe County, Florida taken as a whole, however, our study and evaluation disclosed no condition that we believe is a material weakness. -40- We have reviewed the financial report filed with the Department of Banking and Finance for the year ended September 30, 1981 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 25, 1982. 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. We appreciate the cooperation extended us during the course of our examination. We would be pleased to discuss these matters further with you at your convenience. Sincerely, A-' KEMP & ROSASCO 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 responsi - bility, estimates and judgments 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 reason- able, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transac- tions 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. 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 the 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 judgment) 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 func- tions. These criteria may be broader than those that may be appro- priate for evaluating weaknesses in accounting control for manage- ment or other purposes. -42- KEMP & ROSASCO Cerfifted Public Accounlanis ORVIS M.KEMP,C.P.A. 615-A UNITED ST. e P.O.BOX 309 PALM BEACH,COUNTY WM.0.KEMP,C.P.A. KEY WEST,FL 33040 P.O.BOX 3756 PETER L.ROSASCO JR.,C.P.A. LANTANA,FL 33462 PH.(305)586-3552 February 25, 1982 Mr. William (Bill) Freeman Supervisor of Elections Monroe County, Florida Key West, Florida 33040 Dear Sir: We have examined the financial statements of Monroe County, Florida for the year ended September 30, 1981 , and have issued our report thereon dated February 25, 1982. As part of our examination, we made a study and evaluation of the County'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 study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for express- ing an opinion on the County'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 responsibility 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, is 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 Monroe County, Florida taken as a whole, however, our study and evaluation disclosed no condition that we believe is a material weakness. _43- ag"ATV RPPnRT! We have reviewed the financial report filed with the Department of Banking and Finance for the year ended September 30, 1981 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 25, 1982. 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. We appreciate the cooperation extended us during the course of our examination. We would be pleased to discuss these matters further with you at your convenience. Sincerely, KEMP & ROSASCO -44- 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 excerts 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 responsi- bility, estimates and judgments 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 reason- able, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transac- tions 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. 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 the 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 judgment) 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 func- tions. These criteria may be broader than those that may be appro- priate for evaluating weaknesses in accounting control for manage- ment or other purposes. -45-