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I I I SECTION 11- FINANCIAL STATEMENT FINDINGS AND RECOMMENDATIONS (CONTINUED) B. STATUS OF PRIOR YEAR FINDINGS (CONTINUED) Other Matters I I 2002-14 Financial Condition Assessment CONDITION: In connection with our audit of the City, we applied financial condition assessment procedures pursuant to Section 10.556(8), Rules of the Auditor General, to determine if deteriorating financial conditions exist that may cause a financial emergency to occur if actions are not taken to address such conditions. The results of our assessment indicated that the entity's overall financial condition is deteriorating. II I I I The City total unreserved fund balance/retained earnings has been declining over the past few years due to recurring losses in its Water and Sewer and Golf Course Operations Funds. Recurring losses indicate that revenues are not sufficient to cover expenditures or that expenditures are excessive. CURRENT YEAR STATUS/MANAGEMENT RESPONSE: The financial condition assessment for 2006 showed improvements from the 2004 and 2005 assessments and was favorable, Although the Golf Course Fund continued to recognize significant deficiencies in revenues over expenditures, these appear to be the result of one time expenditures caused by course renovations and Hurricane Wilma repairs. The course was closed for several months due to renovations and repairs. The water and sewer funds generated revenues in excess of expenses for 2006 due to rate increases; however, the sanitation funds continued to incur operating losses, This comment will not be repeated. I I I I I I No. 2001-01 Golf Course Fund CONDITION: We noted that the City operates a Golf Course Fund, which is very costly to the City and has been operating under a deficit since its inception during fiscal year 1998. It may be more cost effective for the City to sell or discontinue operations of the Golf Course Fund. CURRENT YEAR STATUS/MANAGEMENT RESPONSE: The management company was terminated on February 28, 2006. The golf course operation became a City department and a new department head was hired to oversee the operation, All financial activities are controlled by the City's finance department using the same policies, procedures, and controls in place for all City operations. The Golf Course continued to incur losses in 2006 due to one time expenditures for renovations and repairs due to the transition of the food and beverage operations to an outside contractor and due to damages caused by Hurricane Wilma. In 2007, the Golf Course will operate for a full year under the new management system and the City expects the Golf Course to generate enough revenue to cover its operations. This comment will be repeated. I I I I