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I I II. PRIOR YEAR FINDINGS AND RECOMMENDATIONS (Continued) Golf Course AccountinQ (Continued) I I Manaqement Response: Management concurs. Current Status: No items will be repeated in the current year. III. COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA I I I I I I I I I I I I I I I 1. Unless otherwise required to be reported in the auditor's report on compliance and on internal controls, the management letter shall include, but not be limited to a statement as to whether or not corrective actions have been taken to address significant findings and recommendations made in the preceding annual financial audit report. There were no significant findings and recommendations made in the preceding annual financial audit report for the fiscal year ended September 30,2004, except as disclosed above. 2. The XXX XXX complied with Section 218.415, Florida Statutes, regarding the investment of public funds. 3. There were no violations of laws, rules, 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 above. 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 above. 5. There were no deficiencies in internal control that are not reportable conditions, including but not lim ited 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 as disclosed above. 6. The name and legal authority for the XXXXXX are disclosed in the notes to the financial statements. 7. 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. 8. In connection with our audit, we determined that the XXXXXX met a condition described in Section 218.503(1), Florida Statutes. For the fiscal year ended September 30, 2005, the XXXXXX reported accumulated deficit in its enterprise fund of $(5,736,254). We applied financial condition assessment procedures pursuant to Rule 10.556 (8) and determined that a deteriorating financial condition was noted. See I above for recommendation related to financial condition. It is management's responsibility to monitor financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. The enterprise fund is used to account for the operations of the golf course recreational facilities of the XXXXXX. The recreational facilities include a championship eighteen-hole golf course, a pro shop, putting green and a driving range, a clubhouse and other recreational facilities. The accumulated deficits arose from depreciation expense, which is a non-cash item, and the treatment of Developer advances as Due to Developer and Developer loans. The XXXXXX is dependent on the Developer and ultimate repayment of advances and loans totaling $7,662,652 is uncertain at this time. It should be noted that the prior deficits did not result in any failure to meet current obligations, including scheduled bond principal maturities and interest payments.