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I I APPENDIX III - MANAGEMENT LETTERS DEVELOPED AND ISSUED IN CONNECTION WITH LOCAL GOVERNMENT AUDITS I III. COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA I 1. Recommendations, except for those addressed in the Schedule of Findings and Recommendations, made in the preceding annual report have been addressed. I 2. The City of Lauderhill complied with Section 218.415, Florida Statutes, regarding the investment of public funds. I 3. There were no violations of laws, regulations, and contractual provisions or abuse, that were not clearly inconsequential, that have occurred, or were likely to have occurred, that were discovered within the scope of the audit except as disclosed in the Schedule of Findings and Recommendations. I 4. There were no illegal or improper expenditures that were not clearly inconsequential, discovered within the scope of the audit that may not materially affect the financial statements except as disclosed in the schedule of findings and recommendations. I 5. There were no deficiencies in internal control that are not reportable conditions, including, but not limited to, improper or inadequate accounting procedures, failure to properly record financial transactions or other inaccuracies, shortages, defalcations, or instances of fraud discovered by, or that came to the attention of the auditor except for finding 05-1, 05-2, 05-4, 05-5, 05-6 and 05- 7. I 6. The City of Lauderhill, Florida, was incorporated in accordance with the laws of the State of Florida Chapter 61-2650. The City has two (2) component units namely Lauderhill Community Redevelopment Agency incorporated in accordance with Section 163 of the Florida Statutes and Lauderhill Housing Authority incorporated in accordance with Section 421 of the Florida Statutes. I I 7. The City of Lauderhill has not met one or more of the conditions described in Section 218.503(1 )(a), Florida Statutes. I 8. The financial report filed with the Florida Department of Financial Services pursuant to Section 218.32(1) (a), Florida Statutes agrees with the September 30,2005 financial audit report. 9. We applied financial condition assessment procedures pursuant to Rule 10.556 (8) to assess the financial condition of the City. While the City is not currently in a state of financial emergency as defined in Section 218.503, Florida Statutes, we believe that the results of the financial indicators shows that the City's overall financial condition is showing signs of deterioration which, if not corrected, could result in a future financial emergency. Eighteen (18) financial ratios are applicable to the City, of which eight (8) were unfavorable, seven (7) were inconclusive and three (3) were favorable. Two significant factors that contributed to the deteriorating financial condition are the excess of expenditures over revenues for the total governmental funds in the current and previous years and significant increase in the debt service due to issuance of general obligation and several revenue bonds during the year. This increase in debt service increased both the debt service expenditure and ratio of debt service to the City's population. During the year ended 2005, eleven of the financial indicators are beginning to show a favorable trend, however, it is only for one year and it is not sufficient to determine if this is the beginning of a favorable trend for the City or a change for the current year only. I I I I I I 12 I