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• • • MARCUM • • ACCOUNTANTS S ADVISORS • • March 28. 2014 • • • To the Board of Trustees and Plan Administrator Village of Key Biscayne Police & Firefighters Retirement Plan • Key Biscayne. Florida • • In planning and performing our audit of the financial statements of the Village of Key Biscayne. • Florida (the Village), which includes the Village of Key Biscayne Police & Firefighters Retirement • Plan's (the Plan) financial statements as of and for the year ended September 30, 2013, in • accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States, we • considered the Village's and Plan's internal control over financial reporting (internal control) as a • basis for designing auditing procedures that are appropriate in the circumstances for the purpose of • expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Village's or Plan's internal control. Accordingly, we do not • express an opinion on the effectiveness of the Village's or Plan's internal control. • However, during our audit we became aware of several matters that are opportunities for • strengthening internal controls and operating efficiency. The matters identified below • summarize our observations and recommendations. This letter does not affect our report dated • March 28. 2014. on the financial statements of Village. • MLC 2013—I:Authorized Plan Investments • • Observation: During our audit we tested compliance with the types of investments allowed by the Plan's investment policy. We noted that the Plan was invested in a private equity • investment (alternative investment) which was listed as a prohibited investment type in the • Plan's investment policy. • Recommendation: In order to maintain compliance with their investment policy, we • recommend that the Board only invest in investments explicitly allowed by the investment • policy, or revise the investment policy accordingly in a timely manner to accommodate the • types of investment vehicles the Board would like to invest in. • MLC 2013—2: Valuation of Alternative Investments Observation: Currently, the Board invests a small percentage of the portfolio in a private • equity instrument (alternative investment) that does not have actively traded market value. • During our audit we noted administration relies solely on the fair value reported by the • • • • Eine Ern LF • Marcum LLP • One Southeast Third Avenue • 16th Floor • Miami,Florida 33131 • Phone 305.995.9600 • Fax 305.995.9601 • www.marcumllp.com • •