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Keefe, McCullough & Co., LLP
Certified Public Accountants
EXAMPLES
OF
GOVERNMENTAL
MANAGEMENT LETTERS
6550 N. Federal Highway Suite 410 Fort Lauderdale, FL 33308 954.771.0896 954.938.9353 (F) www.kmccpa.com
CITY OF WESTON, FLORIDA
COMPLIANCE SECTION
For the Fiscal Year Ended September 30, 2009
CITY OF WESTON, FLORIDA
COMPLIANCE SECTION
For the Year Ended September 30, 2009
TABLE OF CONTENTS
PAGES
Independent Auditors' Report on Internal Control over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards
Independent Auditors' Report on Compliance with Requirements Applicable
to Each Major Federal Program and State Project and on Internal Control
Over Compliance in Accordance with OMB Circular A-133 and Chapter
10.550, Rules of the Auditor General
Independent Auditors' Report to City Management
Schedule of Expenditures of Federal Awards and State Financial Assistance
Schedule of Findings and Questioned Costs -
Federal Programs and State Projects
1-2
3-4
5-6
7-8
9
KEEFE, McCULLOUGH & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
JOHN R. KEEFE. C.P.A.
STEVEN H. WOODS, C.P.A.
DAVID T. WILLIAMS. C.P.A.
JOSEPH D. LEO. C.P.A.
WILLIAM G. BENSON, C.PA
KENNETH G. SMITH. C.P.A.
LOUIS R. PROIETTO, C.PA.
CYNTHIA L. CALVERT, C.PA
ISRAEL J. GOMEZ. C.PA
JAMES R. LARAWAY, C.P.A.
JOHN E. McCULLOUGH, C.P.A. (RETIRED)
THOMAS T. CARPENTER, C.P.A.(RETIRED)
PAUL B. SNEIDER, C.PA (RETIRED)
BRIAN D. PINNELL, C.P.A. (RETIRED)
6550 NORTH FEDERAL HIGHWAY
SUITE 410
FORT LAUDERDALE, FLORIDA 33308
(954) 771-0896
FAX: (954) 938-9353
E-MAIL: kmc@kmccpa.com
ROSS S. GOTTHOFFER, C.P.A.
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor, City Commissioners and City Manager
City of Weston, Florida
Weston, Florida
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of City of Weston, Florida
(the "City") as of and for the year ended September 30, 2009, which collectively comprise the City of
Weston, Florida's basic financial statements and have issued our report thereon dated March 25, 2010.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered City of Weston, Florida's internal control
over financial reporting as a basis for designing our auditing procedures for the purpose of expressing
an opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of City of Weston, Florida's internal control over financial reporting. Accordingly, we do
not express an opinion on the effectiveness of City of Weston, Florida's internal control over financial
reporting.
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects City of Weston, Florida's ability to initiate, authorize,
record, process or report financial data reliably in accordance with generally accepted accounting
principles such that there is more than a remote likelihood that a misstatement of City of Weston,
Florida's financial statements that is more than inconsequential will not be prevented or detected by
City of Weston, Florida's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements will
not be prevented or detected by City of Weston, Florida's internal control.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragrafh of this section and would not necessarily identify all deficiencies in
internal control over financia reporting that might be significant deficiencies or material weaknesses.
We did not identify any deficiencies in internal control over financial reporting that we consider to be
material weaknesses, as defined above.
City of Weston, Florida
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Weston, Florida's financial
statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts and grant agreements, noncompliance with which could
have a direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit and,
accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
This report is intended solely for the information and use of City management, members of the
City Commission, Federal and state awarding agencies and the Florida Auditor General, and is not
intended to be and should not be used by anyone other than these specified parties.
KEEFE, McCULLOUGH & CO., LLP
Fort Lauderdale, Florida
March 25, 2010
2
KEEFE, McCULLOUGH & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
JOHN R. KEEFE, C.P.A.
STEVEN H. WOODS, C.P.A.
DAVID T. WILLIAMS. C.PA
JOSEPH D. LEO. C.PA
WILLIAM G. BENSON, C.P.A.
KENNETH G. SMITH, C.PA
LOUIS R. PROIETTO, C.P.A.
CYNTHIA L. CALVERT, C.P.A.
ISRAEL J. GOMEZ, C.P.A.
JAMES R. LARAWAY, C.P.A.
JOHN E. McCULLOUGH, C.P.A. (RETIRED)
THOMAS T. CARPENTER. C.PA(RETIRED)
PAUL B. SNEIDER, C.P.A. (RETIRED)
BRIAN D. PINNELL, C.P.A. (RETIRED)
6550 NORTH FEDERAL HIGHWAY
SUITE 410
FORT LAUDERDALE, FLORIDA 33308
(954) 771-0896
FAX: (954) 938-9353
E-MAIL: kmc@kmccpa.com
ROSS S. GOTTHOFFER, C.P.A.
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL
PROGRAM AND STATE PROJECT AND ON INTERNAL CONTROL
OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
AND CHAPTER 10.550, RULES OF THE AUDITOR GENERAL
To the Honorable Mayor, City Commissioners and City Manager
City of Weston, Florida
Weston, Florida
Compliance
We have audited the compliance of City of Weston, Florida with the types of compliance
requirements described in the United States Office of Mana ement and Bud et (OM B) Circular A-133
Compliance Supplement and t e requirements escri e in t e Department 0 Financia Services'
State Projects Compliance Supplement, that are applicable to its major Federal program and state
project for the year ended September 30, 2009. City of Weston, Florida's major Federal program and
state project are identified in the summary of auditors' results section of the accompanying Schedule
of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts,
and grants applicable to its major Federal program and state project are the responsibility of City of
Weston, Florida's management. Our responsibility is to express an opinion on City of Weston,
Florida's compliance based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States of America; OMB Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations; and Chapter 10.550, Rules of the
Auditor General. Those standards, OMB Circular A-133 and Chapter 10.550, Rules of the Auditor
General, require that we plan and perform the audit to obtain reasonable assurance about whether
non-compliance with the types of compliance requirements referred to above that could have a direct
and material effect on a major Federal program or state project occurred. An audit includes
examining, on a test basis, evidence about City of Weston, Florida's compliance with those
requirements and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a
legal determination of City of Weston, Florida's compliance with those requirements.
In our opinion, City of Weston, Florida complied, in all material respects, with the requirements
referred to above that are appl icable to its major Federal program and state project for the year ended
September 30, 2009.
Internal Control over Compliance
The management of City of Weston, Florida is responsible for establishing and maintaining
effective internal control over compliance with requirements of laws, regulations, contracts, and grants
applicable to Federal programs and state projects. In planning and performing our audit, we
considered City of Weston, Florida's internal control over compliance with the requirements that
could have a direct and material effect on a major Federal program or state project in order to
determine our auditing procedures for the purpose of expressing our opinion on compliance, but not
for the purpose of expressing an opinion on the effectiveness of internal control over compliance.
Accordingly, we do not express an opinion on the effectiveness of City of Weston, Florida's internal
control over compliance.
3
City of Weston, Florida
A control deficiency in an entity's internal control over compliance exists when the design or
operation of a control does not allow management or employees, in the normal course of performing
their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of
a Federal program or state project on a timely basis. A significant deficiency is a control deficiency, or
combination of control deficiencies, that adversely affects the entity's ability to administer a Federal
program or state project such that there is more than a remote likelihood that noncompliance with a
type of compliance requirement of a Federal program or state project that is more than
inconsequential will not be prevented or detected by the entity's internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that material noncompliance with a type of compliance
requirement of a Federal program or state project will not be prevented or detected by the entity's
i nterna I contro I.
Our consideration of internal control over compliance was for the limited purpose described
in the first paragraph of this section and would not necessarily identify all deficiencies in internal
control that might be significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses, as
defined above.
Schedule of Expenditures of Federal Awards and State Financial Assistance
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of City of Weston, Florida, as
of and for the year ended September 30, 2009, and have issued our report thereon dated March 25,
2010. Our audit was performed for the purpose of forming our opinions on the financial statements
that collectively comprise the City of Weston, Florida's basic financial statements. The accompanying
schedule of expenditures of federal awards and state financial assistance is presented for purposes of
additional analysis as required by OMB Circular A-133 and Chapter 10.550, Rules of the Auditor
General and is not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a
whole.
This report is intended solely for the information and use of the City management, members of
the City Commission, the Auditor General of the State of Florida and other Federal and State awarding
agencies and is not intended to be and should not be used by anyone other than these specified
parties.
KEEFE, McCULLOUGH & CO., LLP
Fort Lauderdale, Florida
March 25, 2010
4
KEEFE, McCULLOUGH & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
JOHN R. KEEFE. C.P.A.
STEVEN H. WOODS, C.P.A.
DAVID T. WILLIAMS, C.P.A.
JOSEPH D. LEO, C.P.A.
WILLIAM G. BENSON, C.P.A.
KENNETH G. SMITH, C.P.A.
LOUIS R. PROIETTO, C.P.A.
CYNTHIA L. CALVERT, C.P.A.
ISRAEL J. GOMEZ, C.PA
JAMES R. LARAWAY, C.PA
JOHN E. McCULLOUGH. C.PA (RETIRED)
THOMAS T. CARPENTER. C.P.A.(RETIREDl
PAUL B. SNEIDER. C.P.A. (RETIRED)
BRIAN D. PINNELL, C.P.A. (RETIRED)
6550 NORTH FEDERAL HIGHWAY
SUITE 410
FORT LAUDERDALE, FLORIDA 33308
(954) 771-0896
FAX: (954) 938-9353
E-MAIL: kme@kmeepa.eom
ROSS S. GOTTHOFFER, C.P.A.
INDEPENDENT AUDITORS' REPORT TO CITY MANAGEMENT
To the Honorable Mayor, City Commissioners and City Manager
City of Weston, Florida
Weston, Florida
We have audited the financial statements of City of Weston, Florida (the "City"), as of and for the
year ended September 30,2009, and have issued our report thereon dated March 25, 2010.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditin~
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits 0
States, Local Governments and Non-Profit Organizations. We have issued our Independent Auditors'
Report on Internal Control over Financial Reporting and on Compliance and Other Matters;
Independent Auditors' Report on Compliance with Requirements Applicable to Each Major Federal
Program and State Project and on Internal Control Over Compliance; and Schedule of Findings and
Questioned Costs. Disclosures in those reports and schedule, which are dated March 25, 2010,
should be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules
of the Auditor General, which govern the conduct of local governmental entity audits performed in the
State of Florida. This letter includes the following information, which is not included in the
aforementioned auditors' reports or schedule:
Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not
corrective actions have been taken to address findings and recommendations made in the preceding
annual financial audit report. Corrective actions have been taken to address findings and
recommendations made in the preceding annual financial audit report.
Section 10.554(1 )(i)2., Rules of the Auditor General, requires our audit to include a review of the
provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In
connection with our audit, we determined that City of Weston complied with Section 218.415, Florida
Statues.
Section 10.554(1 )(i)3., Rules of the Auditor General, requires that we address in the management
letter any recommendations to improve financial management. In connection with our audit, we did
not have any such recommendations.
Section 10.554(1 )(i)4., Rules of the Auditor General, requires that we address violations of
provisions of contracts or grant agreements, or abuse that have an effect on the financial statements
that is less than material but more than inconsequential. In connection with our audit, we did not
have any such findings.
Section 10.554(1 Hi)5., Rules of the Auditor General, provides that the auditor may, based on
professional judgment, report the following matters that have an inconsequential effect on financial
statements, considering both quantitative and qualitative factors: (1) violations of provisions of
contracts or grant agreements, fraud, illegal acts or abuse and; (2) control deficiencies that are not
significant deficiencies. In connection with our audit, we did not have any such findings.
5
City of Weston, Florida
Section 10.554(1 )(i)6., Rules of the Auditor General, requires that the name or official title and
legal authority for the primary government and each component unit of the reporting entity be
disclosed in this management letter, unless disclosed in the notes to the financial statements. City of
Weston, Florida was established pursuant to Chapter 96-472, Laws of Florida. Indian Trace
Community Development District, a blended component unit of City of Weston, Florida, was
established by Chapter 80-407, Laws of Florida. Bonaventure Development District, a blended
component unit of City of Weston Florida, was established by City of Weston Ordinance No. 98-61,
Chapter 2001-303, Laws of Florida. Town Foundation, a blended component unit of City of Weston,
Florida, was established by City of Weston Resolution No. 2003-25.
Section 10.554(1 )(i)7.a., Rules of the Auditor General, requires a statement be included as to
whether or not the local governmental entity has met one or more of the conditions described in
Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection
with our audit, we determined that the City did not meet any of the conditions described in Section
218.503(1), Florida Statutes.
Section 10.554(1 )(i)7.b., Rules of the Auditor General, requires that we determine whether the
annual financial report for the City for the fiscal year ended September 30,2009, filed with the Florida
Department of Financial Services pursuant to Section 218.32(1 )(a), Florida Statutes, is in agreement
with the annual financial audit report for the fiscal year ended September 30, 2009. In connection
with our audit, we determined that these two reports were in agreement.
Pursuant to Sections 10.554(1 )(i)7.c. and 10.556(7), Rules of the Auditor General, we applied
financial condition assessment procedures. It is management's responsibility to monitor the entity's
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.
Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its
distribution is not limited. Auditing standards generally accepted in the United States of America
require us to indicate that this letter is intended solely for the information and use of management, and
the Florida Auditor General, and is not intended to be and should not be used by anyone other than
these specified parties.
KEEFE, McCULLOUGH & CO., LLP
Fort Lauderdale, Florida
March 25, 2010
6
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CITY OF WESTON, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS -
FEDERAL PROGRAMS AND STATE PROJECTS
For the Year Ended September 30, 2009
A. SUMMARY OF AUDITORS' RESULTS
1. The auditors' report expresses an unqualified opinion on the financial statements of City of Weston,
Florida.
2. No material weaknesses relating to the audit of the basic financial statements are reported in the
Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance and
Other Matters based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards.
3. No instances of noncompliance material to the financial statements of City of Weston, Florida were
disclosed during the audit.
4. No material weaknesses relating to the audit of the major Federal program or state project are
reported in the Independent Auditors' Report on Compliance with Requirements Applicable to
Each Major Federal Program and State Project and on Internal Control Over Compliance in
Accordance with OMB Ci rcular A-133 and Chapter 10.550 Rules of the Auditor General.
5. The auditors' report on compliance with requirements applicable to the major Federal program and
state project for City of Weston, Florida expresses an unqualified opinion.
6. There are no findings relative to the major Federal program or state project for City of Weston,
Florida reported in Part C of this schedule.
7. The program / project tested as a major program / project is as follows:
Federal Program
Department of Homeland Security -
Hazard Mitigation Grant
State Project
Department of Environmental Protection
Statewide Surface Water Restoration
and Wastewater Projects
Federal CFDA Number
97.039
State CSFA Number
37.039
8. The threshold for distinguishing Type A and Type B projects was $ 300,000 for major Federal
programs and state projects.
9. City of Weston, Florida was not determined to be a low-risk auditee pursuant to OMB Circular A-
133.
B. FINDINGS - FINANCIAL STATEMENT AUDIT
NONE
C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL PROGRAMS OR STATE FINANCIAL
ASSISTANCE PROJECTS
NONE
D. OTHER ISSUES
1. No summary schedule of prior audit findings is required because there were no prior audit findings
related to Federal Programs or state financial assistance projects.
2. No corrective action plan is required because there were no findings required to be reported
under the Federal or Florida Single Audit Act.
3. A separate management letter has not been issued.
9
CITY OF KEY WEST, FLORIDA
COMPLIANCE SECTION
For the Fiscal Year Ended September 30, 2009
CITY OF KEY WEST, FLORIDA
COMPLIANCE SECTION
For the Year Ended September 30, 2009
TABLE OF CONTENTS
PAGES
Independent Auditors' Report on Internal Control over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards
1-2
Independent Auditors' Report on Compliance with Requirements Applicable
to Each Major Federal Program and State Project and on Internal Control
Over Compliance in Accordance with OMB Circular A-133 and Chapter
10.550, Rules of the Auditor General
3-4
5-10
11-12
13-14
Independent Auditors' Report to City Management
Schedule of Expenditures of Federal A wards and State Financial Assistance
Schedule of Findings and Questioned Costs - Federal Programs and State Projects
KEEFE, McCULLOUGH & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
JOHN R. KEEFE, C.P.A.
STEVEN H. WOODS, C.P.A.
DAVID T. WILLIAMS. C.P.A.
JOSEPH D. LEO, C.P.A.
WILLIAM G. BENSON, C.P.A.
KENNETH G. SMITH, C.P.A.
LOUIS R. PROIETTO, C.P.A.
CYNTHIA L. CALVERT, C.P.A.
ISRAEL 1. GOMEZ. C.P.A.
JAMES R. LARAWAY, C.P.A.
JOHN E. McCULLOUGH, C.P.A. (RETIRED)
THOMAS T. CARPENTER, C.P.A.(RETIRED)
PAUL B. SNEIDER, C.P.A. (RETIRED)
BRIAN D. PINNELL, C.P.A. (RETIRED)
6550 NORTH FEDERAL HIGHWAY
SUITE 410
FORT LAUDERDALE, FLORIDA 33308
(954) 771-0896
FAX: (954) 938-9353
E-MAIL: kme@kmeepa.eom
ROSS S. GOTTHOFFER, C.P.A.
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor, City Commissioners and City Manager
City of Key West, Florida
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the City of Key West,
Florida (the "City") as of and for the year ended September 30, 2009, which collectively comprise
the City's basic financial statements and have issued our report thereon dated March 31, 2010.
We did not audit the financial statements of the Pension Trust Fund for Police Officers and
Firefighters. Also, we did not audit the financial statements of The Housing Authority of the City
of Key West, which is the sole discretely presented component unit. Those financial statements
were audited by other auditors. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United
States. The financial statements of the Pension Trust Fund for Police Officers and Firefighters
were not audited in accordance with Government Auditing Standards.
Our consideration of internal control over financial reporting and our tests of compliance with
certain provision of laws, regulations, contracts and grant agreements did not include entities
audited by other auditors referred to in the previous paragraph. The findings, if any, of those
other auditors are not included herein.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing an
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency,
or combination of control deficiencies, that adversely affects the City's ability to initiate,
authorize, record, process or report financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a misstatement of the
City's financial statements that is more than inconsequential will not be prevented or detected by
the City's internal control.
City of Key West, Florida
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by the City's internal control.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in internal control over financial reporting that might be significant deficiencies or material
weaknesses. We did not identify any deficiencies in internal control over financial reporting that
we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts and grant agreements, noncompliance with which could have a direct
and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit and, accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards.
We noted certain matters that we have reported to the management of the City of Key West,
Florida in our Independent Auditors' Report to City Management included on pages 5 through 10.
The City of Key West, Florida's written responses to the matters identified in our audit have
not been subjected to the audit procedures applied in the audit of the financial statements and,
accordingly, we express no opinion on them.
This report is intended solely for the information and use of City management, members of
the City Commission, the State of Florida Auditor General, Federal and state awarding agencies
and other grantor agencies, and is not intended to be and should not be used by anyone other than
these specified parties.
~,lYJdu~~ ( t.s., uP
KEEFE, McCULLOUGH & CO., LLP
Fort Lauderdale, Florida
March 31, 2010
2
KEEFE, McCULLOUGH & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
JOHN R. KEEFE, C.P.A.
STEVEN H. WOODS, C.P.A.
DAVID T. WILLIAMS, C.PA
JOSEPH D. LEO, C.P.A.
WILLIAM G. BENSON, C.P.A.
KENNETH G. SMITH, C.P.A.
LOUIS R. PROIETTO, C.P.A.
CYNTHIA L. CALVERT. C.P.A.
ISRAEL J. GOMEZ, C.PA
JAMES R. LARAWAY, C.P.A.
JOHN E. McCULLOUGH, C.PA (RETIRED)
THOMAS T. CARPENTER, C.P.A.(RETIRED)
PAUL B. SNEIDER. C.P.A. (RETIRED)
BRIAN D. PINNELL, C.PA (RETIRED)
6550 NORTH FEDERAL HIGHWAY
SUITE 410
FORT LAUDERDALE, FLORIDA 33308
(954) 771-0896
FAX: (954) 938-9353
E-MAIL: kme@kmeepa.eom
ROSS S. GOTTHOFFER, C.PA
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT
AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH
OMB CIRCULAR A-133 AND CHAPTER 10.550, RULES OF THE AUDITOR GENERAL
To the Honorable Mayor, City Commissioners and City Manager
City of Key West, Florida
Compliance
We have audited the compliance of the City of Key West, Florida (the "City") with the types
of compliance requirements described in United States Office of Management and Budget (OMB)
Circular A -133 Compliance Supplement, and the requirements described in the Department of
Financial Services' State Projects Compliance Supplement, that are applicable to each of its major
Federal programs and state projects for the year ended September 30, 2009. The City's major
Federal programs and state projects are identified in the summary of auditors' results section of
the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements
of laws, regulations, contracts and grant agreements applicable to each of its major Federal
programs and state projects is the responsibility of the City's management. Our responsibility is
to express an opinion on the City's compliance based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States of America; OMB
Circular A-133, Audits of States, Local Governments, and Nonprofit Organizations; and Chapter
10.550, Rules of the Auditor General. Those standards, OMB Circular A-133, and Chapter
10.550, Rules of the Auditor General, require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements
referred to above that could have a direct and material effect on a major Federal program or state
project occurred. An audit includes examining, on a test basis, evidence about the City's
compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion. Our audit does not provide a legal determination on the City's compliance with those
requirements.
In our opinion, the City of Key West, Florida complied, in all material respects, with the
requirements referred to above that are applicable to each of its major Federal programs and state
projects for the year ended September 30, 2009.
3
City of Key West, Florida
Internal Control over Compliance
The management of the City is responsible for establishing and maintaining effective internal
control over compliance with requirements of laws, regulations, contracts, and grants applicable
to Federal programs and state projects. In planning and performing our audit, we considered the
City's internal control over compliance with the requirements that could have a direct and
material effect on a major Federal program or state project in order to determine our auditing
procedures for the purpose of expressing our opinion on compliance, but not for the purpose of
expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we
do not express an opinion on the effectiveness of the City's internal control over compliance.
A control deficiency in an entity's internal control over compliance exists when the design or
operation of a control does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect noncompliance with a type of compliance
requirement of a Federal program or a state project on a timely basis. A significant deficiency is
a control deficiency, or combination of control deficiencies, that adversely affects the entity's
ability to administer a Federal program or a state project such that there is more than a remote
likelihood that noncompliance with a type of compliance requirement of a Federal program or
state project that is more than inconsequential will not be prevented or detected by the entity's
internal control.
A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that material noncompliance with a type of compliance
requirement of a Federal program or state project will not be prevented or detected by the entity's
internal control.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and would not necessarily identify all deficiencies in internal
control that might be significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses, as
defined above.
Schedule of Expenditures of Federal A wards and State Financial Assistance
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of City of Key West,
Florida, as of and for the year ended September 30, 2009, and have issued our report thereon
dated March 31, 2010. Our audit was performed for the purpose of forming our opinions on the
financial statements that collectively comprise the City of Key West, Florida's basic financial
statements. The accompanying schedule of expenditures of federal awards and state financial
assistance is presented for purposes of additional analysis as required by OMB Circular A-133
and Chapter 10.550, Rules of the Auditor General and is not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures applied in the audit of
the basic financial statements and, in our opinion, is fairly stated, in all material respects, in
relation to the basic financial statements taken as a whole.
This report is intended solely for the information and use of City management, members of
the City Commission, the State of Florida Auditor General, Federal and state awarding agencies
and other grantor agencies, and is not intended to be and should not be used by anyone other than
these specified parties.
Fort Lauderdale, Florida
March 31, 2010
~1~~dte.)LLP
KEEFE, McCULLOUGH & CO., LLP
4
KEEFE, McCULLOUGH & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
JOHN R. KEEFE, C.P.A.
STEVEN H. WOODS, C.P.A.
DAVID T. WILLIAMS, C.PA
JOSEPH D. LEO, C.PA
WILLIAM G. BENSON, C.P.A.
KENNETH G. SMITH, C.PA
LOUIS R. PROlETTO, C.P.A.
CYNTHIA L. CALVERT, C.P.A.
ISRAEL J. GOMEZ, C.P.A.
JAMES R. LARAWAY, C.P.A.
JOHN E. McCULLOUGH, C.P.A. (RETIRED)
THOMAS T. CARPENTER, C.P.A.(RETIRED)
PAUL B. SNEIDER, C.P.A. (RETIRED)
BRIAN D. PINNELL, C.P.A. (RETIRED)
6550 NORTH FEDERAL HIGHWAY
SUITE 410
FORT LAUDERDALE, FLORIDA 33308
(954) 771-0896
FAX: (954) 938-9353
E-MAIL: kme@kmeepa.eom
ROSS S. GOTTHOFFER. C.P.A.
INDEPENDENT AUDITORS' REPORT TO CITY MANAGEMENT
To the Honorable Mayor, City Commissioners and City Manager
City of Key West, Florida
We have audited the financial statements of the City of Key West, Florida (the "City"), as of
and for the fiscal year ended September 30, 2009, and have issued our report thereon dated
March 31, 2010.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular
A-133, Audits of State, Local Governments, and Non-Profit Organizations. We have issued our
Independent Auditors' Report on Internal Control over Financial Reporting and on Compliance
and Other Matters, Independent Auditors' Report on Compliance with Requirements Applicable
to each Major Federal Program and State Project and on Internal Control over Compliance, and
Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are
dated March 31, 2010, should be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with the Chapter 10.550, Rules of the
Auditor General, which governs the conduct of local governmental entity audits performed in the
State of Florida. This letter includes the following information, which is not included in the
aforementioned auditors' reports or schedule:
Section 1O.554(1)(i) 1., Rules of the Auditor General, requires that we determine whether or
not corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report. Corrective actions have been taken to address findings
and recommendations made in the preceding annual financial audit report, except as noted on
pages 6 through 8 under the heading Prior Year Findings and Recommendations.
Section 1O.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of
the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In
connection with our audit, we determined that the City of Key West, Florida complied with
Section 218.415, Florida Statutes.
Section 1O.554(1)(i)3., Rules of the Auditor General, requires that we address in the
management letter any recommendations to improve financial management. In connection with
our audit, we have the following findings and recommendations:
5
City of Key West, Florida
PRIOR YEAR FINDINGS AND RECOMMENDATIONS:
2007-02: Establish a City-Wide Schedule of
Fees and a Cash Receipts Procedures Manual
2007 -03: Improve Segregation of Duties -
Marinas and Utility
2007-06: Review and Adjust the Penalty
Calculation for Stormwater
2007 -07: Unmatched Water Meters
2007-09: Capital Assets Acquired With Grant
Funding and City-Wide Inventory Controls
2008-01: Unclaimed Wages and Payables
2008-02: Request Taxpayer Identification
Number and Certification, W-9 Form
2008-03: Adjust the Calculation of Fees
Payable to Department of the Navy Under the
"Mole Pier at Truman Annex" Agreement
2008-04: Building Permits - Fee for Services
2008-05: Implement an Automated Billing
System for General Fund Leases
2008-06: Consider Hiring the Assistance of a
Full-Time Grant Specialist
2008-07: Review Collection Procedures
Sewer, Stormwater and Solid Waste Services
IMPLEMENTED
OR NO
STILL PARTIALL Y LONGER
APPLICABLE IMPLEMENTED RELEV ANT
X
X
X
X
X
X
X
X
X
X
X
X
2007-02: Establish a City-Wide Schedule of Fees and a Cash Receipts Procedures Manual
The City has diverse revenue sources ranging from parking meters/lots, rentals, fines, bus
fares, advertising, building permits, sales and utilities services, etc. These revenues are collected
at various locations and processed by the Revenue Department. The City should consider the
implementation of a City- Wide Schedule of Fees. In addition, management should review current
practices used to account for each revenue source and establish written processing guidelines (e.g.
policy manuals, flowcharts). This additional documentation can be used in assessing the
effectiveness of current practices, evaluating performance, ensuring accuracy and completeness of
revenue, and training new hires to perform the process.
6
City of Key West, Florida
PRIOR YEAR FINDINGS AND RECOMMENDATIONS: (continued)
Management's Response:
The City of Key West clearly recognizes the value to both internal and external customers in
the codification of a centralized fee and charges schedule. The City of Key West has begun
accumulating documentation necessary to assemble a City-Wide Schedule of Fees and hopes to
have it completed in the near future.
The City of Key West has begun to develop written guidelines that will help support the
revenue collection and recognition processes.
2007-03: Improve Segregation of Duties - Marinas and Utility
Marinas: In prior year audits, it was recommended the City improve its segregation of duties
over the billing, collection and account adjustment process at the marinas. During our current
year audit, we observed additional steps taken by the port staff at the marinas to ensure that
additional segregation of duties are in place. We discussed, the current procedures with the
marina staff and the Finance Department and have determined that the additional segregation of
duties implemented during the year are reasonable with the current staffing levels.
Utility: Account adjustments are made to the utility billing system for several allowable
reasons. Controls should be established to ensure that only approved adjustments, initiated by the.
customer service department, are entered in the system. During our audit, we noted and were
notified that some individuals have system access to both initiate and approve adjustments. We
recommend that the City assess its current practices, establish written guidelines and set-up the
proper segregation of duties over sewer, stormwater and solid waste receivables.
Management's Response:
The City of Key West understands the necessity of segregating certain functions that an
individual may have access to perform. Staff reductions have caused this to occur in some areas.
In most instances the City of Key has implemented certain other mitigating controls and systems
in an attempt to minimize exposures from "complete" segregation. The City of Key West will
review these areas and make necessary changes to minimize these instances.
2007-06: Review and Adjust the Penalty Calculation for Stormwater
The penalty calculation for stormwater is not in compliance with the City's code. The City's
code reads as follows: "user fees shall be subject to a five percent per month (not to exceed 25 %
late fee)". Our review revealed that the billing system is assessing a "one-time" five percent
penalty charge. We recommend that the City brings the penalty calculation in compliance with
the code. This could be achieved by either modifying the code or the billing system.
Management's Response:
The City of Key West's Code will be modified to conform to the systems ability to apply
penalty charges.
2007-07: Unmatched Water Meters
During our audit, City staff disclosed that unmatched water meters to the sewer billing system
continues to be an issue faced by the City. The City should continue its on-going commitment to
evaluate and correct these exception reports, prepared by the Revenue Department, and increase
its possible additional billing opportunities. We recommend that management quantifies the effect
of unmatched meters, and any other related exceptions, and thoroughly reviews the billing
process/system to ensure that revenues are being billed to all recipients of the sewer system.
7
City of Key West, Florida
PRIOR YEAR FINDINGS AND RECOMMENDATIONS: (continued)
Management's Response:
The City of Key West recognizes the unmatched meters issue and is working to resolve these
discrepancies. Recent matching efforts have demonstrated the process of matching can be
accomplished but requires a considerable level of effort from several departments to make even
the slightest gain on the issue. Under consideration by City Management is the use of several
contract employees on a limited basis to handle the field work and the use of available "in-place"
resources to update customer account files.
2007-09: Capital Assets Acquired with Grant Funding and City-Wide Inventory Controls
Strict guidelines are required for tracking and maintaining capital assets acquired with Federal
and State awards. The property control system must clearly identify the property and equipment
acquired with grant funding and contain specific information. Current controls do not ensure that
proper identification requirements are being adhered to in all cases. As previously recommended
to the City, in September 2009, the City conducted a physical inventory of its capital assets in
conjunction with the Finance Department and the Assistant City Manager's Office.
Written procedures need to be designed, implemented and monitored to ensure the continued
compliance with inventory controls and the proper identification of acquisitions and disposals of
property and equipment.
Management's Response:
The City's fixed asset reporting system has been updated to clearly identify those fixed assets
acquired wholly or partially with grant proceeds. The final step, which will be completed by
September 30, 2010, is to identify the source and percentage of grant contribution for those fixed
assets acquired wholly or partially with grant proceeds.
2008-07: Review Collection Procedures - Sewer, Stormwater and Solid Waster Services
During our audit, we noted that delinquent accounts receivable balances related to sewer,
stormwater and solid waste services increased significantly. Upon inquiry, staff cited that the
Revenue Department may be understaffed, which may cause delays in collection efforts. We
recommend that the City assess the cost -benefit of hiring additional staff or outsourcing the
services of a collection agency,
Management's Response:
The City of Key West has struggled with collection of outstanding utility charges for many
years. The ability to "shut off" stormwater services is impossible, the ability to "shut off" refuse
collections is undesirable, and the ability to "shut off" sewer services is not practical.
Subsequently, the City of Key West has been left with only the ability to file liens against the
property which insures eventual collection, but not on a timely basis.
More aggressive collection efforts are planned. Any and all delinquency improvement efforts
are under consideration. A working group, to be headed by the City Manager, will be formed to
address the issue on a continual basis. It should be noted the extraordinary high stormwater
delinquency rate is attributable in large part to a handful of customers - primarily other
governmental entities who contest the applicability of a stormwater fee or contest the manner of
calculation. Those few accounts are currently in litigation or under review for possible legal
action.
8
City of Key West, Florida
CURRENT YEAR FINDINGS AND RECOMMENDATIONS:
2009-01: Adopt a Formal Cost Allocation Plan
The City has not adopted a formal cost allocation plan that details the various methodologies
used to support expenditure allocations such as: 1) payments in lieu of taxes (PILOT) from each
enterprise fund to the general fund and 2) charges from the internal service fund to every
fund/department for various insurances. This situation has caused and may cause future delays in
the approval and payment process of grant funding to the City. We recommend that the
management of the City develops a formal cost allocation plan, reviewed annually, that reflects a
measurement of costs charged to the individual funds/departments.
Management's Response:
The City strongly endorses the need for a formal cost allocation plan. The City has requested
cost proposals from its financial consultants. Proposals have been received and are under review.
The goal is to award a task order and complete the cost allocation plan by September 30, 2010.
2009-02: Adopt a Formal Fund Balance Policy
We recommend that the City establish a formal fund balance policy. This policy should be
tailored to the needs of the City to insure against unanticipated events that would adversely affect
the financial condition of the City and jeopardize the continuation of necessary public services.
This policy should ensure that the City monitors and maintains adequate fund balance/net assets
and reserves in the City's various operating funds to provide: I) sufficient cash flow for daily
financial needs, 2) secure and maintain investment grade bond ratings, 3) offset significant
economic downturns or revenue shortfalls, and 4) provide funds for unforeseen expenditures
related to emergencies. As the policy is developed, the City should consider the new Government
Accounting Standards Board (GASB) pronouncement No. 54, "Fund Balance Reporting and
Governmental Fund Type Definitions" that will become effective for the fiscal year ending
September 30, 2011.
Management's Response:
The City's policy has always been to maintain between 90 to 120 days of unreserved fund
balance in each fund, The City fully supports the need to formalize this policy and will prepare a
resolution for adoption by the City Commission. Such policy should not only establish a sound
unreserved fund balance level but establish an action plan required when balances fall below
acceptable levels.
Section 1O.554(1)(i)4., Rules of the Auditor General, requires that we address violations of
provisions of contracts or grant agreements, or abuse, that have an effect on the financial
statements that is less than material but more than inconsequential. In connection with our audit,
we did not have any such findings.
Section 1O.554(1)(i)5., Rules of the Auditor General, provides that the auditor may, based on
professional judgment, report the following matters that have an inconsequential effect on
financial statement, considering both quantitative and qualitative factors: (1) violations of
provisions of contracts or grant agreements, fraud, illegal acts, or abuse, and; (2) control
deficiencies that are not significant deficiencies. In connection with our audit, we did not have
any such findings.
9
City of Key West, Florida
Section 1O.554(1)(i)6., Rules of the Auditor General, requires that the name or official title
and legal authority for the primary government and each component unit of the reporting entity be
disclosed in this management letter, unless disclosed in the notes to the financial statements. The
City of Key West, Florida was established under the provisions of Chapter 23374, Laws of
Florida (1945), as amended. The City of Key West, Florida, includes as its component units: 1)
The Housing Authority of the City of Key West, Florida, created by Florida Statute Chapter 421
and by resolution in 1938; and 2) the Key West Local Redevelopment Agency created under
Florida Statute 163 and Section 2-446 of the Code of Ordinances of the City of Key West,
Florida.
Section 1O.554(1)(i)7 .a., Rules of the Auditor General, requires a statement be included as to
whether or not the local governmental entity has met one or more of the conditions described in
Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In
connection with our audit, we determined that the City did not meet any of the conditions
described in Section 218.503(1), Florida Statutes.
Section 1O.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether
the annual financial report for the City for the fiscal year ended September 30, 2009, filed with
the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is
in agreement with the annual financial audit report for the fiscal year ended September 30, 2009.
In connection with our audit, we determined that these two reports were in agreement.
Pursuant to Sections 1O.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, we applied
financial condition assessment procedures. It is management's responsibility to monitor the City's
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.
Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its
distribution is not limited. Auditing standards generally accepted in the United States of America
require us to indicate that this letter is intended solely for the information and use of management,
and the Florida Auditor General, and is not intended to be and should not be used by anyone other
than these specified parties.
~ /11e.. ~~I tJt-., U..P
KEEFE, McCULLOUGH & CO., LLP
Fort Lauderdale, Florida
March 31,2010
10
CITY OF KEY WEST, FLORIDA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AND STATE FINANCIAL ASSISTANCE
For the Year Ended September 30,2009
Federal or State Grantor/Pass-Through CFDA CSFA Federal or State
Grantor/Program Title Number Number Grant Contract Number Expenditures
FEDERAL AWARDS
U.S. DEPARTMENT OF HOUSING & URBAN DEVELOPMENT
Direct Program:
Housing Opportunities for Persons with AIDS 14.241 N/A FLH070008 $ 453,399
Pass-through Florida Department of Community Affairs:
Community Development Block Grant - State Program 14.228 N/A 07DB-3V-II-54-02-Z03 4,4<i7.655
Community Development Block Grant - State Program 14.228 N/A 08DB-D3-11-54-02-All 4.384.073
Community Development Block Grant - State Program 14.228 N/A 08DB-T3-11-54-02-H05 237.419
U.S. DEPARTMENT OF JUSTICE
Direct Programs:
Public Safety Partnership and Community Policing Grants 16.710 N/A 2006CKWX0295 124,132
Organized Crime Drug Enforcement Task Forces 16.XXX N/A FC/FLS-1591 21.326
Bullet Proof Vest Partnership Program 16.607 N/A 2009BUBX08044212 3.780
Pass-through Florida Department of Law Enforcement:
Edward Byrne Memorial Justice Assistance Grant Program 16.738 N/A 2009-J AGD- MONR-2- T8-098 5,035
U.S. DEPARTMENT OF TRANSPORTATION
Direct Programs:
Federal Transit-Capital Investment Grants 20.500 N/A FL-03-0316-00 255.444
Job Access-Reverse Commute 20.516 N/A FL- 37 - XO 19-00 176.333
Capital Assistance Program for Elderly Persons
and Persons with Disabilities 20.513 N/A FL-03-0299-00 7.754
Pass-through Florida Department of Transportation:
Highway Planning and Construction 20.205 N/A AP724 259.448
Highway Planning and Construction 20.205 N/A AP728 238.211
Highway Planning and Construction 20.205 N/A ANT08 8.438
Formula Grants for Other Than Urbanized Areas 20.509 N/A AP290 161.988
U.S. DEPARTMENT OF ENVIRONMENTAL PROTECTION
Direct Program:
Nonpoint Source Implementation 66.460 N/A G0218 310.84<i
Pass-through the Department of The Army:
Construction Grants for Wastewater Treatment Works 66.418 N/A 443.831
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Pass-through the Monroe County Coalition, Inc.:
Substance Abuse and Mental Health Services-Projects of
of Regional and National Significance 93.243 N/A 25.800
U.S. DEPARTMENT OF HOMELAND SECURITY
Pass-through Florida Division of Emergency Management:
Disaster Grants - Public Assistance 97.036 N/A 06-WL-&K-II-54-OO-539 1.766.142
Disaster Grants - Public Assistance 97.036 N/A 08-PA-B9-11-54-13-714 333.024
Disaster Grants - Public Assistance 97.036 N/A 06-KF-B&-11-54-00-592 3.437
Hazard Mitigation Grant 97.039 N/A 09HM-37-11-54-02-031 108.871
Hazard Mitigation Gram 97.039 N/A 09HM-37-11-54-02-030 83,175
Total Federal Awards Expenditures $ 13.874.561
11
CITY OF KEY WEST, FLORIDA
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
AND STATE FINANCIAL ASSISTANCE
(continued)
For the Year Ended September 30, 2009
Federal or State Grantor/Pass- Through CFDA CSFA Federal or State
Grantor/Program Title Number Number Grant Contract Number Expendi tures
STATE FINANCIAL ASSISTANCE
EXECUTIVE OFFICE OF THE GOVERNOR
Economic Development Transportation Fund N/A 31. 002 OT09-077 $ 1,569,737
Enterprise Florida, Inc. N/A 31. 003 DIG-06-11 149,567
Enterprise Florida, Inc. N/A 31.003 DIG-07-04 14,228
Enterprise Florida. Inc. N/A 3 1 .003 DIG-05-05 12,874
DEPARTMENT OF STATE AND SECRETARY OF STATE
Acquisition, Restoration of Historic Properties N/A 45.032 SC726 25,625
DEPARTMENT OF TRANSPORTATION
Seaport Grants N/A 55.005 ANS44 708,349
FISH AND WILDLIFE CONSERVATION COMMISSION
Artiticial Reef Grants Program N/A 77.007 FWC-08247 1,000,000
Total State Financial Assistance Expenditures $ 3,480,380
NOTES:
(1) The Schedule of Expenditures of Federal A wards and State Financial Assistance was prepared on the full accrual basis
of accounting.
(2) Total amount paid to subrecipients with federal funds was $ 453,399 from the Housing Opportunities for Persons with
AIDS federal program. Other federal programs did not utilize subrecipients. There were no subrecipients from the state
financial assistance programs.
(3) Adjustments were made in current year expenditures to include costs incurred in prior fiscal years related to various
hurricane grants. These additional expenditures are reflected in the current year's Schedule of Expenditures of Federal
Awards.
12
CITY OF KEY WEST, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the Year Ended September 30, 2009
A. SUMMARY OF AUDITORS' RESULTS
1. The auditors' report expresses an unqualified opinion on the financial statements of the City of
Key West, Florida.
2, No material weaknesses relating to the audit of the financial statements are reported in the
Independent Auditors' Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards.
3. No instances of noncompliance material to the financial statements of City of Key West,
Florida were disclosed during the audit.
4. No material weaknesses relating to the audit of the major Federal programs and state projects
are reported in the Independent Auditors' Report on Compliance with Requirements Applicable
to Each Major Federal Program and State Project and on Internal Control over Compliance in
Accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General.
5. The auditors' report on compliance for the major Federal programs and state projects for the
City of Key West, Florida expresses an unqualified opinion.
6. No audit findings relative to the major Federal programs and state projects for the City of Key
West, Florida are reported in Part C of this schedule.
7. The programs/projects tested as a major programs/projects include the following:
Federal Program Federal CFDA No.
U.S. Department of Housing and
Urban Development - Community
Development Block Grants/State's Program
and Non-Entitlement Grants in Hawaii 14.228
U.S. Department of Transportation - Highway
Planning and Construction 20.205
U.S. Environmental Protection Agency -
Construction Grants for Wastewater Treatment
Works 66.418
U.S. Department of Homeland Security - Disaster
Grants - Public Assistance (Presidentially
Declared Disasters) 97.036
State Project State CSF A No.
Executive Office of the Governor - Economic
Development Transportation Fund 31.002
Department of Transportation -
Seaport Grants 55,005
Fish and Wildlife Conservation Commission -
Artificial Reef Grants Program 77.007
13
CITY OF KEY WEST, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
(continued)
For the Year Ended September 30, 2009
A..SUMMARY OF AUDITORS' RESULTS (continued)
8. The threshold for distinguishing Type A and Type B for Federal programs was $ 416,237.
The threshold for distinguishing Type A and Type B for state projects was $ 300,000.
9. The City of Key West, Florida was not determined to be a low-risk auditee pursuant to OMB
Circular A-133.
B. FINDINGS - FINANCIAL STATEMENT AUDIT
NONE
C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARDS PROGRAMS AND
STATE FINANCIAL ASSISTANCE PROJECTS AUDITS
NONE
D. OTHER ISSUES
1. We noted certain matters that we have reported to the management of the City of Key West,
Florida in our Independent Auditors' Report to City Management included on pages 5 through
10.
2. No summary schedule of prior audit findings is required because there were no prior audit
findings related to Federal program or State projects.
3. No corrective action plan is required because there were no findings required to be reported
under the Federal and the Florida Single Audit Act.
14
CITY OF PLANTATION, FLORIDA
COMPLIANCE SECTION
For the Fiscal Year Ended September 30, 2009
CITY OF PLANTATION, FLORIDA
COMPLIANCE SECTION
For the Year Ended September 30, 2009
TABLE OF CONTENTS
PAGES
Independent Auditors' Report on Internal Control over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards
Independent Auditors' Report on Compliance with Requirements Applicable
to Each Major Federal Program and State Project and on Internal Control
Over Compliance in Accordance with OMB Circular A-133 and Chapter
10.550, Rules of the Auditor General
1-2
Independent Auditors' Report to City Management
Schedule of Expenditures of Federal A wards and State Financial Assistance
Schedule of Findings and Questioned Costs - Federal Programs and State Projects
Summary Schedule of Prior Audit Findings
3-4
5-6
7-9
10-12
13-14
KEEFE, McCULLOUGH & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
JOHN R. KEEFE, C.PA
STEVEN H. WOODS, C.P.A.
DAVID T. WILLIAMS, C.P.A.
JOSEPH D. LEO, C.P.A.
WILLIAM G. BENSON, C.PA
KENNETH G. SMITH. C.P.A.
LOUIS R. PROIETTO, C.P.A.
CYNTHIA L. CALVERT, C.PA
ISRAEL J. GOMEZ. C.P.A.
JAMES R. LARAWAY, C.P.A.
JOHN E. McCULLOUGH, C.P.A. (RETIRED)
THOMAS T. CARPENTER, C.P.A.(RETIRED)
PAUL B. SNEIDER, C.P.A. (RETIRED)
BRIAN D. PINNELL, C.P.A. (RETIRED)
6550 NORTH FEDERAL HIGHWAY
SUITE 410
FORT LAUDERDALE, FLORIDA 33308
(954) 771-0896
FAX: (954) 938-9353
E-MAIL: kme@kmeepa.eom
ROSS S. GOTTHOFFER, C.P.A.
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor
and Members of the City Council
City of Plantation, Florida
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of the City of
Plantation, Florida (the "City") as of and for the year ended September 30, 2009, which
collectively comprise the City's basic financial statements and have issued our report thereon
dated May 19, 2010. We conducted our audit in accordance with auditing standards generally
accepted in the United States of America and the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing an
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and would not necessarily identify all deficiencies in internal
control over financial reporting that might be significant deficiencies or material weaknesses and
therefore, there can be no assurance that all deficiencies, significant deficiencies, or material
weaknesses have been identified. However, as discussed in the Schedule of Findings and
Questioned Costs, Part B, we identified certain deficiencies in internal control over financial
reporting that we consider to be material weaknesses as 2009-1 and 2009-2.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies in internal controls such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented,
or detected and corrected on a timely basis. We consider the deficiencies described as 2009-1 and
2009-2 in the accompanying Schedule of Findings and Questioned Costs, Part B to be material
weaknesses.
City of Plantation, Florida
A significant deficiency is a deficiency or a combination of deficiencies in internal control that
is less severe than a material weakness, yet important enough to merit attention by those charged
with governance. We consider the deficiency described as 2009-3 in the accompanying Schedule
of Findings and Questioned Costs, Part B to be a significant deficiency.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts and grant agreements, noncompliance with which could have a direct
and material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit and, accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Government Auditing
Standards,
The City of Plantation, Florida's written responses to the matters identified in our audit have
not been subjected to the audit procedures applied in the audit of the financial statements and,
accordingly, we express no opinion on them.
This report is intended solely for the information and use of City management, members of
the City Council, the State of Florida Auditor General, Federal and state awarding agencies and
other grantor agencies, and is not intended to be and should not be used by anyone other than
these specified parties.
~tt~, \Ylt ~ ~()~ ~ Co, ,Ll,P
KEEFE, McCULLdUGH & CO., LLP
Fort Lauderdale, Florida
May 19,2010
2
KEEFE, McCULLOUGH & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
JOHN R. KEEFE, C.P.A.
STEVEN H. WOODS, C.PA
DAVID T. WILLIAMS. C.PA
JOSEPH D. LEO, C.PA
WILLIAM G. BENSON, C.PA
KENNETH G. SMITH, C.P.A.
LOUIS R. PROIETTO, C.P.A.
CYNTHIA L. CALVERT. C.P.A.
ISRAEL J. GOMEZ, C.P.A.
JAMES R. LARAWAY, C.P.A.
JOHN E. McCULLOUGH, C.P.A. (RETIRED)
THOMAS T. CARPENTER, C.P.A.(RETIRED)
PAUL B. SNEIDER, C.P.A. (RETIRED)
BRIAN D. PINNELL. C.P.A. (RETIRED)
6550 NORTH FEDERAL HIGHWAY
SUITE 410
FORT LAUDERDALE, FLORIDA 33308
(954) 771-0896
FAX: (954) 938-9353
E-MAIL: kme@kmeepa.eom
ROSS S. GOTTHOFFER, C.P.A.
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT
AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH
OMB CIRCULAR A-133 AND CHAPTER 10.550, RULES OF THE AUDITOR GENERAL
To the Honorable Mayor
and Members of the City Council
City of Plantation, Florida
Compliance
We have audited the compliance of the City of Plantation, Florida (the "City") with the types
of compliance requirements described in United States Office of Mana ement and Bud et OMB
Circular A-133 Compliance Supplement, an t e reqUIrements escn e In t e epartment 0
Financial Services' State Projects ComplIance Supplement, that are applicable to each of its major
Federal programs and state projects for the year ended September 30, 2009. The City's major
Federal program and state project are identified in the summary of auditors' results sectIOn of the
accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of
laws, regulatIOns, contracts and grants applicable to each of its major Federal programs and state
projects is the resvonsibility of the City's management. Our responsibility is to express an
opinion on the City s compliance based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; OMB CIrcular A-
133, Audits of States, Local Governments, and Non rofit Or anizations; and Chapter 10.550,
Rules 0 t e u Itor enera, ose stan ar s, lfCU ar - ,and Chapter 10.550,
Rules of the Auditor General, require that we plan and perform the audit to obtain reasonable
assurance about whether noncompliance with the types of compliance requirements referred to
above that could have a direct and material effect on a major Federal program or state project
occurred. An audit includes examining, on a test basis, evidence about the City's compliance
with those requirements and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit
does not provide a legal determination on the City's compliance with those requIrements.
In our opinion, the City of Plantation, Florida complied, in all material respects, with the
requirements referred to above that are applicable to each of its major Federal programs and state
projects for the year ended September 30, 2009.
Internal Control over Compliance
The management of the City is responsible for establishing and maintaining effective internal
control over compliance with requirements of laws, regulations, contracts, and grants applicable
to Federal programs and state projects. In planning and performing our audit, we considered the
City's internal control over compliance with the reqUIrements that could have a direct and
material effect on a major Federal program or state project in order to determine our auditing
procedures for the purpose of expressing our opinion on compliance and to test and report on
Internal control over compliance In accordance with OMB Circular A-133 and Chapter 10.550,
Rules of the Auditor General, but not for the purpose of expressing an opinion on the
effectiveness of internal control over compliance. Accordingly, we do not express an opinion on
the effectiveness of the City's internal control over compliance.
3
City of Plantation, Florida
A deficiency in internal control over compliance exists when the design or operation of a
control over compliance does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect and correct noncompliance with a type of
compliance requirement of a Federal program or a state project on a timely basis. A material
weakness in internal control over compliance, is a deficiency or combination of deficiencies in
internal control over compliance, such that there is a reasonable possibility that material
noncompliance with a type of compliance requirement of a federal program or state project will
not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal
control over compliance that might be deficiencies, significant deficiencies or material
weaknesses. We did not identify any deficiencies in internal control over compliance that we
consider to be material weaknesses, as defined above.
Schedule of Expenditures of Federal A wards and State Financial Assistance
We have audited the financial statements of the governmental activities, the business-type
activities, each major fund and the aggregate remaining fund information of City of Plantation,
Florida, as of and for the year ended September 30, 2009, and have issued our report thereon
dated May 19, 2010, which contained unqualified opinions on those financial statements. Our
audit was performed for the purpose of forming opinions on the financial statements as a whole.
The accompanying schedule of expenditures of federal awards and state financial assistance is
presented for purposes of additional analysis as required by OMB Circular A-133 and Chapter
10.550, Rules of the Auditor General and is not a required part of the basic financial statements.
Such information is the responsibility of management and was derived from and relates directly to
the underlying accounting and other records used to prepare the basic financial statements. The
information has been subjected to the auditing procedures applied in the audit of the basic
financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the information is fairly stated in all material respects in relation to the
basic financial statements as a whole.
This report is intended solely for the information and use of City management, members of
the City Council, the State of Florida Auditor General, Federal and state awarding agencies and
other grantor agencies, and is not intended to be and should not be used by anyone other than
these specified parties.
\{etk. rt)~~\lao ~ ~. Co.. LLf
KEEFE, McCULLOUGH & CO., LLP
Fort Lauderdale, Florida
May 19, 2010
4
KEEFE, McCULLOUGH & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
JOHN R. KEEFE, C.P.A.
STEVEN H. WOODS, C.P.A.
DAVID T. WILLIAMS, C.P.A.
JOSEPH D. LEO, C.P.A.
WILLIAM G. BENSON, C.P.A.
KENNETH G. SMITH, C.P.A.
LOUIS R. PROIETTO, C.P.A.
CYNTHIA L. CALVERT, C.P.A.
ISRAEL J. GOMEZ, C.PA
JAMES R. LARAWAY, C.PA
JOHN E. McCULLOUGH. C.PA (RETIRED)
THOMAS T. CARPENTER, C.P.A.(RETIRED)
PAUL B. SNEIDER, C.P.A. (RETIRED)
BRIAN D. PINNELL, C.P.A. (RETIRED)
6550 NORTH FEDERAL HIGHWAY
SUITE 410
FORT LAUDERDALE, FLORIDA 33308
(954) 771-0896
FAX: (954) 938-9353
E-MAIL: kme@kmeepa.eom
ROSS S. GOTTHOFFER, C.P.A.
INDEPENDENT AUDITORS' REPORT TO CITY MANAGEMENT
To the Honorable Mayor
and Members of the City Council
City of Plantation, Florida
We have audited the financial statements of the City of Plantation, Florida (the "City"), as of
and for the fiscal year ended September 30, 2009, and have issued our report thereon dated May
19, 2010.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular
A-133, Audits of State, Local Governments, and Non-Profit Organizations. We have issued our
Independent Auditors I Report on Internal Control over Financial Reporting and Compliance and
Other Matters, Independent Auditors' Report on Compliance with Requirements Applicable to
each Major Federal Program and State Project and on Internal Control over Compliance, and
Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are
dated May 19, 2010, should be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with the Chapter 10.550, Rules of the
Auditor General, which govern the conduct of local governmental entity audits performed in the
State of Florida. This letter includes the following information, which is not included in the
aforementioned auditors' reports or schedule:
Section 1O.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or
not corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report. Corrective actions have been taken to address significant
findings and recommendations made in the preceding annual financial audit report, except as
noted in the Summary Schedule of Prior Audit Findings on pages 13 and 14.
Section 1O.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of
the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In
connection with our audit, we determined that the City of Plantation, Florida complied with
Section 218.415, Florida Statutes.
Section 1O.554(1)(i)3., Rules of the Auditor General, requires that we address in the
management letter any recommendations to improve financial management. In connection with
our audit, our recommendations to improve financial management are included in the Schedule of
Findings and Questioned Costs, Part B.
5
City of Plantation, Florida
Section 1O.554(1)(i)4., Rules of the Auditor General, requires that we address violations of
provisions of contracts or grant agreements, or abuse that have an effect on the financial
statements that is less than material but more than inconsequential. In connection with our audit,
we did not have any such findings.
Section 1O.554(1)(i)5., Rules of the Auditor General, provides that the auditor may, based on
professional judgment, report the following matters that have an inconsequential effect on
financial statements, considering both quantitative and qualitative factors: (1) violations of
provisions of contracts or grant agreements, fraud, illegal acts, or abuse and (2) control
deficiencies that are not significant deficiencies. In connection with our audit, we did not have
any such findings.
Section 1O.554(1)(i)6., Rules of the Auditor General, requires that the name or official title
and legal authority for the primary government and each component unit of the reporting entity be
disclosed in this management letter, unless disclosed in the notes to the financial statements. The
City of Plantation, Florida was established as authorized in Chapter 29446 of Special Acts of
Florida, as amended.
Section 1O.554(1)(i)7 .a., Rules of the Auditor General, requires a statement be included as to
whether or not the local governmental entity has met one or more of the conditions described in
Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In
connection with our audit, we determined that the City did not meet any of the conditions
described in Section 218.503(1), Florida Statutes.
Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether
the annual financial report for the City for the fiscal year ended September 30, 2009, filed with
the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is
in agreement with the annual financial audit report for the fiscal year ended September 30, 2009.
In connection with our audit, we determined that these two reports were in agreement.
Pursuant to Sections 1O.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, we applied
financial condition assessment procedures. It is management's responsibility to monitor the City's
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.
Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its
distribution is not limited. Auditing standards generally accepted in the United States of America
require us to indicate that this letter is intended solely for the information and use of management,
and the Florida Auditor General, and is not intended to be and should not be used by anyone other
than these specified parties.
\~{C ~ . fvt~.Cvlku "'" .~ ~.. LL-f
KEEFE, McCULLOUGH & CO., LLP
Fort Lauderdale, Florida
May 19, 2010
6
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* Z
CITY OF PLANTATION, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FEDERAL PROGRAMS AND STATE PROJECTS
For the Year Ended September 30, 2009
A. SUMMARY OF AUDITORS' RESULTS
1. The auditors' report expresses an unqualified opinion on the basic financial statements.
2. The material weakness and significant deficiency relating to the audit of the basic
financial statements are reported in the Independent Auditors' Report on Internal
Control over Financial Reporting and on Compliance and Other Matters based on an
Audit of Financial Statements Performed in Accordance with Government Auditing
Standards are listed as 2009-19, 2009-3 and 2009-3, and are discussed in Part B.
3. No instances of noncompliance material to the basic financial statements of City of
Plantation, Florida, were disclosed during the audit.
4. No material weaknesses relating to the audit of the major Federal program and state
project are reported in the Independent Auditors' Report on Compliance with
Requirements Applicable to Each Major Federal Program and State Project and on
Internal Control over Compliance in Accordance with OMB Circular A-133 and
Chapter 10.550, Rules of the Auditor General.
5. The auditors' report on compliance for the major program and state project for City of
Plantation, Florida expresses an unqualified opinion.
6. No audit fmdings relative to the major federal program or state project for City of
Plantation, Florida are reported in Part C of this schedule.
7. The programs/projects tested as a major program/project are as follows:
Federal Program
United States Department of
Housing and Development -
Community Development Block Grants/
Entitlement Grants
Federal CFDA No.
14.218
State Project
State CSFA No.
Florida Housing Finance Corporation -
State Housing Initiatives Partnership Program
52.901
8. The threshold for distinguishing Types A and B programs was $ 300,000 for the major
programs and state projects.
9. City of Plantation, Florida was determined to be a low-risk auditee pursuant to OMB
Circular A-133.
10
CITY OF PLANTATION, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FEDERAL PROGRAMS AND STATE PROJECTS
For the Year Ended September 30, 2009
B. FINDINGS - FINANCIAL STATEMENT AUDIT
Material Weaknesses
2009-1: Reconcile accounts on a timely basis
During the performance of our audit procedures we noted that certain normal routine
account reconciliations were not performed in a timely manner.
In order to make the financial reports generated by the accounting system as meaningful as
possible, the City should reconcile the general ledger accounts for cash, accounts payable, and
accounts receivable to supporting documentation on a monthly basis. A cash reconciliation that
reconciles from the bank balance to the general ledger balance should be prepared to determine
that all cash transactions have been recorded properly and to discover bank errors. A reconciliation
of accounts payable from the general ledger to the outstanding accounts payable register should be
prepared to determine that all additions to and payments of accounts payable are correctly recorded
and to determine whether there are any disputed items. A reconciliation of accounts receivable
from the general ledger to the accounts receIvable detail ledger should be prepared to check that
the recording of transactions is accurate and proper and that any adjustments to or write-offs of
accounts receivable have been approved. Also, timely reconciliations prevent errors from
accumulating which would allow the city to properly identIfy issues and correct them in the correct
period facilitating future reconciliations.
Management's Response:
This is the flISt full year that the Microsoft Dynamics GP system was in use for all areas
within the Finance Department. During our last audit, there was only one month in which
information was compiled into the generaf ledger system prior to the audit. Staff had the daunting
task of learning how to properly record information into this system in a manner which was
conducive to not only the recordmg of receipts and disbursements but also that of the end use to
the bank reconciliation. Staff turnover caused a hardship on the timely completion of daily work
and subsystem reconciliations. Many trial and errors were made in the first six months after
implementation and then fine tuned to a more usable fashion over the last year. Besides
procedurally, receipts that were combined into one cash account have now been isolated and are
being deposited into a separate account for ease of reconciliation.
Restructuring within the department has led to higher efficiency and accuracy of work with
defined accountabilIty for all aspects within the department. With the appointment of a new
Finance Operations Manager in April 2010 both areas, accounts payable and accounts receivable,
will report to one supervisor whereas in the past these areas were segregated. Review processes
are being refined and a general sense of teamwork has been instilled amongst staff to create a more
efficient work environment. As these areas improve and become more efficient, this allows for
the reconciliations of the cash accounts to be more streamlined and less cumbersome as these
subsystems directly affect the reconciliation process.
Processes and procedures set in place last fiscal year for reconciling the bank balances to
the general ledger have proven to be viable methods for reconciling activity. As the department
moves forward with all the various changes now in place additional areas will be reviewed for
timely completion and accuracy of reconciliations.
2009-2: Accrual of Assets and Liabilities
Necessary adjusting journal entries were presented by the auditor and recorded by
management to account for retainage payable amounts that were not accounted for. As a result of
this omission prior year's assets and liabilities were restated and an additional accrual was
recorded during the current year.
11
CITY OF PLANTATION, FLORIDA
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FEDERAL PROGRAMS AND STATE PROJECTS
For the Year Ended September 30, 2009
B. FINDINGS - FINANCIAL STATEMENT AUDIT (continued)
We recommend that the process for determining accruals during the closing process be
improved with a more thorough supervisory review of accruals so that accounting for such items is
consistent. Review of construction invoices should be incorporated into the fmancial close and
reporting procedures to ensure all applicable retainage amounts have been recorded.
Mana~ement' s Response:
During the audit, it was discovered that the construction retainage accruals were not recorded
at the beginning of the fiscal year. A prior period adjustment was recorded to capitalize the
construction costs and accrue the related construction payable. In addition, a process has been put
in place where the Accounts Payable Junior Accountant will monitor all construction projects and
accrue the retainage amount outstanding as part of the month end closing procedures. The Finance
Operations Manger will review the construction contracts to verify all retainage is captured and
accrued at each period end.
Significant Deficiency
2009-3: Grant Accountin~
The fmancial reporting process for grants needs improvement. As a result of our audit
procedures, several audit adjustments were required at year end to adjust receivables, deferred
revenue, revenue and expenditures related to grants.
We recommend that the City develop an ongoing monitoring program that will track each
grant's compliance requirements, reporting requirements, revenue recognition and expenditures.
Mana~ement' s Response:
Currently the process of recording and tracking grants is difficult. Communication city wide is
essential to facilitate accurate monitoring and tracking of grants. Unfortunately, during the current
year end, pertinent grant information was not disclosed to the Junior Accountant. This caused
some items not to be recorded on the grant schedules, resulting in audit adjustments. A process
will be put in place to foster better communication, by contacting departments directly to obtain
status information for grants listed on the grant schedule as well as inquiring about new grants.
The Junior Accountant will work with the Fixed Asset Accountant to obtain any CIP project sheets
pertaining to grants. The Finance Operations Manager will provide minutes from the construction
meetings, when discussions relate to grant projects. With the above items in place, we are
confident that the recording and tracking of grants will be a new and improved process for the next
year end audit.
C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARDS PROGRAMS AND
ST A TE FINANCIAL ASSISTANCE PROJECTS AUDITS
NONE
D. OTHER ISSUES
No correction action plan is required because there were no findings required to be
reported under the Federal and the Florida Single Audit Acts.
12
CITY OF PLANTATION, FLORIDA
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the Year Ended September 30, 2009
PRIOR YEAR FINDINGS AND STATUS
2008-1 : Account and System Reconciliations
On September 2, 2008, the City implemented a new accounting software package, which
involved the conversion of data, changes in processes and a significant commitment of time and
resources to accomplish. In connection with this implementation project, certain normal routine
account reconciliations and other activities were not performed in a timely manner.
One major area affected by the conversion was accounts receivable. The 8eneral ledger
control account did not agree with the subsidiary ledger balances. Upon investIgation it was
determined that certain payables were being processed through the accounts receivable control
account due to the staff using the accounts receIvable subsidiary ledger as a customer listing which
also tracks payable items. It was also determined that the staff were not posting invoices before
posting cash receipts which resulted in the subsidiary ledger improperly reflecting significant credit
balances. In addition, the City staff was unable to produce separate reports for the various items
included in the accounts receivable aging report. This condition resulted in the City staff having to
estimate the accounts receivable for certain departments. We recommend that account
reconciliations be prepared and reviewed montWy, and that identified adjustments be posted timely
to the general ledger. We also recommend that management evaluate the current staffing levels of
its fmance function to ensure staffing and experience levels are appropriate given the significant
commitment of personnel resources that will no doubt be required to correct these areas. In
addition, we recommend that the software consultants provide the necessary additional training to
the accounts receivable staff.
Current Status:
During the current year it was determined that the payable activity mentioned above did not
affect the receivable reconciliation however, in the Golf Fund the reconciliation of the receivable
account was not performed timely. See current year fmding 2009-1.
2008-2: Accrual of Assets and Liabilities
During the performance of our audit procedures, we noted that a materially significant
invoice relating to the 2009 fiscal year should have been recorded as a prepaid expense rather than
being expensed in the 2008 fiscal year. We recommend that the process for determining accruals
during the close process be improved with a more thorough supervisory review of accruals so that
accounting for such items is consistent.
It was also noted that the new software did not allocate accounts payable to the proper
funds. This resulted in the City staff having to manually allocate each payable to its respective
fund. We recommend that the City have the software consultants address the current software
system limitation issues.
Current Status:
For the fiscal year ended September 30, 2009 prepaid expenses appeared fairly stated. The
software appeared to properly allocate accounts payable to the correct funds. See current year
finding 2009-2 for accrual of assets and liabilities.
13
CITY OF PLANTATION, FLORIDA
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the Year Ended September 30, 2009
PRIOR YEAR FINDINGS AND STATUS (continued)
2008-3: Reconcile Bank Accounts on a Timely Basis
Timely preparation of complete and accurate bank reconciliations is a key to maintaining
adequate control over both cash receipts and disbursements. For the month of September, the City
was unable to complete the bank reconciliations in a timely manner due to not having the
knowledge base of which reports to utilize from the new software system and not being able to
obtain necessary reconciliations from the cash receipt process in order to complete the task in a
timely manner. We believe that developing new policies and procedures on obtaining the
necessary information be developed and maintained in order to produce more timely
reconciliations.
Current Status:
Subsequent to year end, management acquired the knowledge base to utilize the system to
obtain the necessary reports to prepare the bank reconciliations; however, during the fiscal year,
the City did not complete timely bank reconciliations. See current year fmding 2009-1.
OTHER COMMENTS
Business License Cycle:
We performed certain procedures on the business license cycle to gain an understanding of
how the system functions. During our procedures, we noted the lack of internal controls over the
process. Files are not being maintained in accordance with the current policy in place. We
recommend that a review process be developed and implemented to ensure that all the necessary
documentation has been obtained.
Current Status:
During the year ended September 30, 2009, we found the business license files being
maintained in accordance with the policy in place.
14