city of vernon annual financial report … rpts/2013 vernon.pdf · balance sheet - governmental...

CITY OF VERNON

ANNUAL FINANCIAL REPORT

SEPTEMBER 30, 2013

CITY OF VERNON, FLORIDA

AT SEPTEMBER 30, 2013

MAYOR

Michelle Cook

COUNCIL MEMBERS .

Tina Sloan Shawn Sanders

Joey Brock John W. Hawkins, II Gwendolyn V. March

.

CITY CLERK

Dian Hendrix

AUDITORS

Grimsley, Cavin & Company, P.A. Certified Public Accountants

TABLE OF CONTENTS

i

PAGE

INDEPENDENT AUDITOR'S REPORT 1

FINANCIAL STATEMENTS

STATEMENT OF NET ASSETS 4

STATEMENT OF ACTIVITIES 5

BALANCE SHEET - GOVERNMENTAL FUNDS 6

RECONCILATION OF THE BALANCE SHEET TO THE STATEMENT

OF NET POSITION 7

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN

FUND BALANCE - GOVERNMENTAL FUNDS 8

RECONCILATION OF THE STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES 9

STATEMENT OF NET POSITION - PROPRIETARY FUND 10

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET

ASSETS - PROPRIETARY FUND 11

STATEMENT OF CASH FLOWS - PROPRIETARY FUND 12

NOTES TO THE FINANCIAL STATEMENTS 13

REQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE - GENERAL FUND 28

BUDGETARY COMPARISON SCHEDULE - CITY HALL FUND 29

SUPPLEMENTARY INFORMATION

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 30

TABLE OF CONTENTS

ii

INDEPENDENT AUDITOR'S REPORT REQUIRED BY

GOVERNMENTAL AUDITING STANDARDS

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS IN ACCORDANCE WITH

GOVERNMENT AUDITING STANDARDS 31

INDEPENDENT AUDITOR'S REPORT TO MANAGEMENT REQUIRED BY

OMB CIRCULAR A-133

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS

THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR

PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN

ACCORDANCE WITH OMB CIRCULAR A-133 33

SCHEDULE OF FINDINGS AND QUESTIONED COSTS 36

CORRECTIVE ACTION PLAN 41

INDEPENDENT AUDITORS REPORT TO MANAGEMENT REQUIRED

BY THE STATE OF FLORIDA 42

RESPONSE TO AUDIT FINDINGS 45

INDEPENDENT AUDITOR’S REPORT

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Honorable Mayor and City Council MembersCity of VernonVernon, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, thebusiness-type activities, each major fund, and the aggregate remaining fund information ofthe City of Vernon, Florida as of and for the year ended September 30, 2013, and the relatednotes to the financial statements, which collectively comprise the City's basic financialstatements as listed in the table of contents.

Managemenf's Responsrb ility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financialstatements in accordance with accounting principles generally accepted in the United Statesof America; this includes the design, implementation, and maintenance of internal controlrelevant to the preparation and fair presentation of financial statements that are free frommaterial misstatements, whether due to fraud or error.

Auditor's Res pon si bil ity

Our responsibility is to express opinions on these financial statements based on our audit.We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment, including the assessment of the risks of material mísstatement of the financialstatements, whether due to fraud or error. ln making those risk assessments, the auditorconsiders internal control relevant to the entity's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity's internal control. Accordingly, we express no such opinion. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness ofsignificant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

Post Office 8ox220,4243 Lafayette Street. Marianna, Florida 32447-0220.850-526-3910'FAX 850-482-6019Post Office Box 475.983 Sixth Avenue . Graceville, Florida 32440-0475. 850-263-3636

City of VernonPage 2

We believe that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinions.

Basis for Adverse Opinion on Governmental Activities

As discussed in Note 1 to the financial statements, management has not recorded certaingeneral infrastructure assets in governmental activities and, accordingly, has not recordeddepreciation expense on those assets. Accounting principles generally accepted in theUnited States of America require that those general infrastructure assets be capitalized anddepreciated, which would increase the assets, net position, and expenses of thegovernmental activities. The amount by which this depafture would affect the assets, netposition, and expenses of the government activities has not been determined.

Adverse Opinion

ln our opinion, because of the significance of the matter discussed in the "Basis for AdverseOpinion on Governmental Activities" paragraph, the financial statements referred to abovedo not present fairly the financial position of the governmental activities of the City of Vernon,Florida as of September 30,2013, or the changes in financial position thereof for the yearthen ended in accordance with accounting principles generally accepted in the United Statesof America.

Unmodified Opinion

ln our opinion, the financial statements referred to above present fairly, in all materialrespects, the respective financial position of the business-type activities, each major fund,and the aggregate remaining fund information of the City of Vernon, Florida as of September30,2013, and the respective changes in financial position and, where applicable, cash flowsthereof for the year then ended in accordance with accounting principles generally acceptedin the United State of America.

Other Matters

Required Su pplementary I nformation

Accounting principles generally accepted in the United States of America require thebudgetary comparison information on pages 28-29 be presented to supplement the basicfinancial statements. Such information, although not a part of the basic financial statements,is required by the Governmental Accounting Standards Board, who considers it to be anessential part of financial reporting for placing the basic financial statements in anappropriate operational, economic, or historical context. We have applied certain limitedprocedures to the required supplementary information in accordance with auditing standardsgenerally accepted in the United States of America, which consisted of inquiries ofmanagement about the methods of preparing the information and comparing the informationfor consistency with management's responses to our inquiries, the basic financialstatements, and other knowledge we obtained during our audit of the basic financialstatements. We do not express an opinion or provide any assurance on the informationbecause the limited procedures do not provide us with sufficient evidence to express anopinion or provide any assurance.

2

City Of VernonPage 3

Other lnformation

Our audit was conducted for the purpose of forming opinion on the financial statements thatcollectively comprise the City of Vernon, Florida's basic financial statements. Theaccompanying schedule of expenditures of federal awards is presented for purposes ofadditional analysis as required by U.S. Office of Management and Budget CircularA-133,Audits of Sfafes, Local Governments, and Non-Profit Organizations, and is not a requiredpart of the basic financial statements. Such information is the responsibility of managementand was derived from and relates directly to the underlying accounting and other recordsused to prepare the basic financial statements. The information has been subjected to theauditing procedures applied in the audit of the basic financial statements and certainadditional procedures, including comparing and reconciling such information directly to theunderlying accounting and other records used to prepare the basic financial statements orto the basic financial statements themselves, and other additional procedures in accordancewith auditing standards generally accepted in the United States of America. In our opinion,the schedule of expenditures of federal awards is fairly stated, in all material respects, inrelation to the basic financial statements as a whole.

The City of Vernon, Florida has not presented the management discussion and analysis thataccounting principles generally accepted in the United States of America require tosupplement, although not required to be a part of the basic financial statements.

Other Reporting Required by Government Auditing Standards

ln accordance with Government Auditing Standards, we have also issued our report datedDecember 15, 2014, on our consideration of the City of Vernon, Florida's internal controlover financial reporting and on our tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements and other matters. The purpose of that reportis to describe the scope of our testing of internal control over financial reporting andcompliance and the results of that testing, and not to provide an opinion on internal controlover financial reporting or on compliance. That report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the City ofVernon, Florida's internal control over financial reporting and compliance.

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December 15,2014 Grimsley, Cavin & Company, P.ACertified Public Accountants

3

FINANCIAL STATEMENTS

City of Vernon, Florida Statement of Net Position

September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

4

Governmental Business-type

Activities Activities Total

ASSETS

Cash and Cash Equivalents 200,302$ 115,051$ 315,353$

Restricted Assets 2,835 36,237 39,072

Accounts Receivable - 43,231 43,231

Due from other Governments 18,983 104,973 123,956

Internal Balances 52,518 (52,518) -

Capital Assets:

Land, Improvements, and Construction In Progress 249,112 1,657,209 1,906,321

Other Capital Assets, Net of Depreciation 4,458,999 7,800,814 12,259,813

Total Capital Assets 4,708,111 9,458,023 14,166,134

Total Assets 4,982,749 9,704,997 14,687,746

LIABILITIES

Accounts Payable and Accrued Expenses 23,217 119,480 142,697

Customer Deposits - 28,285 28,285

Long Term Liabilities:

Due within one year 12,413 167,623 180,036

Due in more than one year 230,794 2,027,470 2,258,264

Total Liabilities 266,424 2,342,858 2,609,282

NET POSITION

Invested in Capital Assets, Net of Related Debt 4,464,904 7,157,956 11,622,860

Restricted for:

Debt Service 2,835 - 2,835

Other Purposes - 36,237 36,237

Unrestricted 248,586 167,946 416,532

Total Net Position 4,716,325$ 7,362,139$ 12,078,464$

Primary Government

The notes to the financial statements are an integral part of this statement.

City of Vernon, Florida Statement of Activities

For the Year Ending September 30, 2013 ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

5

Fees, Fines Operating Capital

and Charges Grants and Grants and Governmental Business-type

Expenses for Services Contributions Contributions Activities Activities Total

Functions/Programs

Governmental Activities:

General Government 294,856$ 41,048$ -$ -$ (253,808)$ (253,808)$

Public Safety 100,380 3,247 44,631 - (52,502) (52,502)

Transportation 131,626 6,850 - - (124,776) (124,776)

Culture/Recreation 68,855 33,949 - - (34,906) (34,906)

Interest on Long-Term Debt 23,551 - - - (23,551) (23,551)

Total governmental activities 619,268 85,094 44,631 - (489,543) (489,543)

Business-type Activities:

Water & Sewer 546,437 401,388 - 567,000 - 421,951 421,951

Total primary government 1,165,705$ 486,482$ 44,631$ 567,000$ (489,543) 421,951 (67,592)

General Revenues:

Taxes:

Property taxes, levied for general purposes 40,795 - 40,795

Taxes - Other 111,470 - 111,470

Miscellaneous 245,222 23,244 268,466

Transfers (96,422) 96,422 -

Total General Revenues and Transfers 301,065 119,666 420,731

Change in Net Assets (188,478) 541,617 353,139

Net Position - beginning 4,904,803 6,820,522 11,725,325

Net Position - ending 4,716,325$ 7,362,139$ 12,078,464$

Program Revenues Net (Expense) Revenue and Changes in Net Assets

Primary Government


City of Vernon, Florida Balance Sheet

Governmental Funds September 30, 2013

--------------------------------------------------------------------------------------------------------------------------

6

Total

General City Hall Governmental

Fund Fund Other Funds

ASSETS

Cash 91,770$ 108,532$ -$ 200,302$

Restricted Assets - - 2,835 2,835

Due from other Governments 18,983 - - 18,983

Due from other Funds 58,316 - - 58,316

Total Assets 169,069$ 108,532$ 2,835$ 280,436$

LIABILITIES AND FUND BALANCES

Liabilities:

Accounts Payable and Accrued Expenses 21,262$ 1,955$ -$ 23,217$

Due to Other Funds 5,798 - - 5,798

Total Liabilities 27,060 1,955 - 29,015

Fund Balances:

Restricted For:

Debt Service - - 2,835 2,835

Unassigned 142,009 106,577 - 248,586

Total Fund Balances 142,009 106,577 2,835 251,421

Total Liabilities & Fund Balances 169,069$ 108,532$ 2,835$ 280,436$


City of Vernon, Florida Reconciliation of Balance Sheet To the Statement of Net Position

September 30, 2013 --------------------------------------------------------------------------------------------------------------------------

7

Total Fund Balances - Total Governmental Fund 251,421$

Amounts reported for governmental activities in

the Statement of Net Assets are different

because:

Capital assets used in governmental activities

are not financial resources and therefore are

not reported in the funds 4,708,111

Some liabilities, including bonds payable and

loans payable, are not due and payable in

the current period and, therefore, are not reported

in the funds. (243,207)

Total net position 4,716,325$


City of Vernon, Florida Statement of Revenues, Expenditures and Changes in Fund Balances

Governmental Funds For the Year Ending September 30, 2013

--------------------------------------------------------------------------------------------------------------------------

8

Total

General City Hall Governmental

Fund Fund Other Funds

REVENUES

Taxes 152,265$ -$ -$ 152,265$

Permits, Fees and Licenses 31,098 - - 31,098

Intergovernmental Revenues 108,048 - - 108,048

Charges for Services 44,465 9,530 - 53,995

Miscellaneous Revenues 22,157 1,143 5 23,305

Total Revenues 358,033 10,673 5 368,711

EXPENDITURES

Current:

General Government 148,185 72,369 - 220,554

Public Safety 38,240 - - 38,240

Transportation 123,249 - - 123,249

Culture/Recreation 48,578 - - 48,578

Debt Service:

Principal 267,534 - 3,500 271,034

Interest 18,556 - 4,995 23,551

Capital Outlay - - - -

Total Expenditures 644,342 72,369 8,495 725,206

Excess (deficiency) of revenues over expenditures (286,309) (61,696) (8,490) (356,495)

OTHER FINANCING

SOURCES (USES)

Transfers In 9,992 - 18,321 28,313

Transfers Out (23,142) (93,797) (7,796) (124,735)

Sale of General Capital Assets - 158,500 - 158,500

Total Other Financing

Sources (Uses) (13,150) 64,703 10,525 62,078

Net Change in

Fund Balances (299,459) 3,007 2,035 (294,417)

Fund Balances - beginning 441,468 103,570 800 545,838

Fund Balances - ending 142,009$ 106,577$ 2,835$ 251,421$


City of Vernon, Florida Reconciliation of the Statement of Revenues,

Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities

For the Year Ending September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

9

Net change in fund balances - total governmental funds (294,417)$

Amounts reported for governmental activities in the Statement

of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement

of activities the cost of those assets is allocated over their estimated useful lives and

reported as depreciation expense. This is the amount by which depreciation ($165,095)

exceeded capital outlay $0 in the current period. (165,095)

Debt proceeds provide current financial resources to governmental funds, but issuing

debt increase long-term liabilities in the statement of net assets. Repayment of debt

principal is an expenditure in the governmental funds, but the repayment reduces

long-term liabilities in the statement of net assets. This is the amount by which

repayments $271,034 exceeded proceeds ($0). 271,034

Change in net position of governmental activities (188,478)$


City of Vernon, Florida Statement of Net Position – Proprietary Fund

September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

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Water &

Sewer

ASSETS

Current Assets:

Cash and Cash Equivalents 115,051$

Accounts Receivable 43,231

Due From Other Governments 104,973

Total Current Assets 263,255

Noncurrent Assets:

Restricted Assets (Cash and Cash Equivalents) 36,237

Due From Other Funds 5,797

Capital Assets:

Land and Construction in Process 1,657,209

Improvements Other than Buildings 9,866,920

Machinery and Equipment 64,410

Less Accumulated Depreciation (2,130,516)

Total Noncurrent Assets 9,500,057

Total Assets 9,763,312

LIABILITIES

Current Liabilities:

Bonds and Notes Payable 167,623

Accounts Payable and Accrued Expenses 119,480

Total Current Liabilities 287,103

Noncurrent Liabilities:

Customer Deposits 28,285

Bonds and Notes Payable after One Year 2,027,470

Due To Other Funds 58,315

Total Noncurrent Liabilities 2,114,070

Total Liabilities 2,401,173

NET POSITION

Invested in Capital Assets, Net of Related Debt 7,157,956

Restricted:

Other Purposes 36,237

Unrestricted 167,946

Total Net Position 7,362,139$


City of Vernon, Florida Statement of Revenues, Expenses and Changes in Net Position

Proprietary Fund For the Year Ending September 30, 2013

------------------------------------------------------------------------------------------------------------------------

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Water &

Sewer

OPERATING REVENUES:

Charges for Services 401,388$

Miscellaneous Revenue 22,983

Total Operating Revenue 424,371

OPERATING EXPENSES:

Salaries and Benefits 50,848

Legal and Professional 39,345

Insurance 24,383

Utility Service 127,672

Repairs and Maintenance 29,202

Operating Supplies and Miscellaneous 68,698

Depreciation 197,028

Total Operating Expenditures 537,176

Operating Loss (112,805)

Nonoperating Revenues (Expenses):

Interest Income 261

Interest Expense (9,261)

Total Nonoperating Revenue (Expenses) (9,000)

Income (Loss) before Contributions and Transfers (121,805)

Transfer In 104,422

Transfer Out (8,000)

Contributed Capital 567,000

Change in Net Assets 541,617

Net Position, beginning of year 6,820,522

Net Position, end of year 7,362,139$

The notes to the financial statements are an integral part of this statement

City of Vernon, Florida Statement of Cash Flows – Proprietary Fund

For the Year Ending September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

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The notes to the financial statements are an integral part of this statement

Water &

Sewer

Cash Flows from Operating Activities:

Receipts from Customers 424,094$

Payments to Suppliers (316,365)

Payments to Employees (50,848)

Net Cash used in Operating Activities 56,881

Cash Flows from Noncapital Financing Activities:

Transfers from other funds 96,422

Loans to other funds (91,615)

Net Cash provided by noncapital financing activities: 4,807

Cash Flows from Capital and

Related Financing Activities:

Proceeds from Capital Debt 1,008,654

Capital Contributions 462,027

Purchases of Capital Assets (1,471,590)

Interest paid on capital debt (9,261)

Principal paid on capital debt (46,932)

Net Cash Provided by Capital and

Related Financing Activities (57,102)

Cash Flows from Investing Activities:

Interest Income 261

Net Increase in Cash and Cash Equivalents 4,847

Cash and Cash Equivalents, beginning of year 146,441

Cash and Cash Equivalents, end of year 151,288$

Reconciliation of Operating Loss to

Net Cash Used in Operating Activities

Operating Loss (112,805)$

Adjustments to Reconcile Operating Loss to

Net Cash Used in Operating Activities:

Depreciation 197,028

Change in Assets and Liabilities:

Accounts Receivable (477)

Accounts Payable (27,065)

Customer Deposits 200

Net Cash used in Operating Activities 56,881$

NOTES TO FINANCIAL STATEMENTS

City of Vernon, Florida Notes to Financial Statements

September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES Introduction The financial statements of the City of Vernon, Florida have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to state and local governments. The Governmental Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting and reporting policies and practices used by the City are described below. Reporting Entity The City of Vernon, Florida was incorporated under Chapter 11778 (No. 443) Laws of Florida, Extraordinary Legislative Session in 1925. The City operates under a Mayor-Council form of Government and provides such services as are allowed under Florida law, including public safety (fire), culture, recreation, streets, water and sewer utilities and general administrative services. Government-wide Financial Statements The government-wide financial statements include the statement of net assets and the statement of activities. These statements report financial information for the City of Vernon, Florida, as a whole excluding fiduciary activities. Individual funds are not displayed but the statements distinguish governmental activities, generally supported by taxes and City general revenues, from business-type activities, generally financed in whole or in part with fees charged to external customers. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include: (1) charges for services which report fees, fines and forfeitures, and other charges to users of the City’s services; (2) operating grants and contributions which finance annual operating activities including restricted investment income; and (3) capital grants and contributions which fund the acquisition, construction, or rehabilitation of capital assets and include fees to developers. These revenues are subject to externally imposed restrictions to these program uses. Taxes and other revenue sources not properly included with program revenues are reported as general revenues.

Fund Financial Statements Fund financial statements are provided for the governmental and proprietary funds. Non-major governmental funds are reported in separate columns.


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES – Continued

Basis of Accounting The government-wide statements and fund financial statements for proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting generally including the reclassification or elimination of internal activity (between or within funds). However, internal eliminations do not include utility services provided to City departments. Reimbursements are reported as reductions to expenses. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property tax revenues are recognized in the year for which they are levied while grants are recognized when grantor eligibility requirements are met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to pay current liabilities. The City considers revenues to be available if they are collected within 60 days of the end of the fiscal year. Expenditures are recorded when the related fund liability is incurred, except for debt principal and interest which are recorded as expenditures in the year due. Major revenue sources susceptible to accrual include: sales and use taxes, property taxes, intergovernmental revenues, and investment income. In general, other revenues are recognized when cash is received. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as needed. Fund Types and Major Funds

Governmental Funds The City reports the following major governmental funds: General Fund – reports as the primary fund of the City. This fund is used to account for all financial resources not reported in other funds. City Hall Fund – This account is used to report activity with funds set aside for expenses of City Hall Property. Proprietary Funds The City reports the following major proprietary funds: Water/Sewer – accounts for the revenues and expenses, capital assets and debt for the utility department of the City.


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES – Continued Proprietary Funds - Continued Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. Operating expenses for the proprietary funds include the cost of personnel and contractual services, supplies and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as non-operating revenues and expenses. Cash and Investments Amounts shows as cash include cash in checking accounts, cash on hand, cash in savings accounts and certificates of deposits. Capital Assets and Depreciation The City’s property, plant, equipment, and infrastructure of the business-type activities with useful lives of more than one year are stated at historical cost or estimated historical cost and comprehensively reported in the government-wide financial statements. Donated fixed assets are recorded at their estimated fair value at the date of donation. However, the property, plant and equipment of the governmental-type activities purchased prior to July 1, 2003 lack sufficient detail (i.e. date purchased, value and estimated useful lives) to support the amounts recorded in the financial statement. As a result, depreciation has not been recorded on these assets in accordance with generally accepted accounting standards. The City is not required to report on infrastructure prior to July 1, 2003, however subsequent infrastructure purchases will be recorded. All assets with useful lives of more than one year are stated at historical cost or estimated historical. The City’s capital asset records are not in compliance with Chapter 274, Florida Statutes due to lack of sufficient detail required by Florida law. The costs of normal maintenance and repairs that do not add to the asset value or materially extend useful lives are not capitalized. Capital assets are depreciated using the straight-line method. Estimated useful lives, in years, for depreciable assets are as follows: Buildings 5-50 Improvements, other than buildings 2-50 Furniture, machinery, and equipment 3-30 Property Taxes The City votes a local millage rate for the assessment of ad valorem property taxes. This rate was set at 2.4141 mills for the October 2012 through September 2013 budget year. The Washington County Property Appraiser’s office includes this assessment with countywide property tax assessments. The Washington County Tax Collector is charged with collecting these revenues and distributing to the City its share of these collections.


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES – Continued Property Taxes - continued All taxes are generally due and payable on November 1 of each year. Discounts are allowed of four, three, two and one percent for payments in November through February, respectively. Delinquent taxes at April 1 are converted, by the County, into Tax Certificates. Therefore, there are no significant taxes receivable at year-end. Long-Term Debt In the government-wide financial statements, outstanding debt is reported as liabilities. The governmental fund financial statements recognize the proceeds of debt as other financial sources of the current period. Fund Equity The following fund balance classifications describe the relative strength of the spending constraints placed on the purpose for which resources can be used:

• Nonspendable fund balance – amounts that are not in a spendable form (such as inventory) or are required to be maintained intact;

• Restricted fund balance – amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation;

• Committed fund balance – amounts constrained to specific purposes by a government itself, using its highest level of decision-making authority; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest level action to remove or change the

• Assigned fund balance – amounts the government intends to use for a specific purpose; intent can be expressed by the governing by or by an official or body to which the governing body delegates the authority;

• Unassigned fund balance – amounts that are available for any purpose; positive amounts are reported on in the general fund.

City Council establishes (and modified or rescinds) fund balance commitments by passage of an ordinance or resolution. This is typically done through adoption and amendment of the budget. A fund balance commitment is further indicated in the budget document as a designation or commitment of the fund (such as for special incentives). At September 30, 2013 the City of Vernon, Florida, did not have any committed fund balances. Assigned fund balance is established by City council through adoption of amendment of the budget as intended for specific purpose (such as the purchase of fined assets, construction, debt service, or for other purposes). Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). When fund balances resources are available for a specific purpose in more than one classification, it is the City’s Policy to use the most restrictive funds first in the following order: restricted, committed, assigned, and unassigned as they are needed.


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES – Continued Risk Management and Insurance The City insures itself against losses from casualty, accident and dishonesty by purchasing municipal insurance through the Florida League of Cities, Inc. The City believes the level of insurance purchased is adequate to protect against material loss. No significant changes in coverage or claims have been made in the last year. Estimates The preparation of financial statements in conformity with general accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Inventory The cost of materials and supplies on hand are not material to the financial statements, and the City has therefore chosen to report these items and expenditures/expenses at the time of purchase. Budgets and Budgetary Accounting The City uses the following procedures in establishing the budgetary data reflected in the financial statements.

1. The City adopts its budget in accordance with Chapter 166.241 Florida Statutes.

a. The City follows an internal hearing process to set the proposed tentative budget and millage.

b. Public hearings are than held to adopt both a tentative budget and millage,

and a final budget and millage, in accordance with Chapter 166.241, Florida Statutes.

c. Budget amendments are made in accordance with applicable Florida

Statutes.

2. Budgets are reported for the General Fund, and major Special Revenue Funds.

3. All budgets are adopted in accordance with Generally Accepted Accounting Principles. 4. Florida Statutes do not require adoption of budgets for Debt Service Funds

5. Level of Control – Expenditures may not exceed appropriations and are controlled in

the following manner:

a. The budget is controlled according to Chapter 166.241, Florida Statutes, at the total fund level.

b. Any budget amendments or transfer of funds must be approved by the City.


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

18

NOTE 2 – CASH AND INVESTMENTS The City, in accordance with state and local regulations, deposits its cash funds in approved financial institutions. The financial institutions are required to pledge U.S. Government Securities as collateral for such funds. All deposits are in checking accounts, bank money market accounts, or certificates of deposit. At September 30, 2013 the City has the following cash deposits:

Amount insured by FDIC 379,727$

Amount Subject to Custodial Risk (Risk of loss due to bank failure)

Collateralized with securities pledged by the financial institution and

held in trust, but not in the City's name 29,569

Total Deposits with Financial Institutions 409,296$

The carrying value on the financial statements was $354,425. NOTE 3 – RECEIVABLES The City reported receivables as follows:

General Fund

Due from Other Governments 18,983$

Enterprise Fund

Water Fees, Refuse Fees and Sewer Fees 43,231$

Due from Other Governments 104,973$

No allowances for uncollectible accounts are considered necessary.

NOTE 4 – INTERNAL BALANCES At September 30, 2013, the City had interfund receivables and payables that resulted from various interfund transactions as follows:

Receivable Payable Purpose

General Fund

Receivable from Water & Sewer Fund 58,316$ -$ Operations

Payable to Water & Sewer Fund - 5,798 Operations

Water & Sewer Fund

Receivable from General Fund 5,798 - Operations

Payable to General Fund - 58,316 Operations

64,114$ 64,114$


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

19

NOTE 5 – INTERFUND TRANSFERS

Transfer In Transfer Out Purpose

General Fund

City Hall 2,196$

Fire - Debt Service 821$ Debt Service

FRDAP 9,500 Operations

Water & Sewer 12,821 Operations

Water & Sewer Fund

City Hall 91,601 Operations

General Fund 12,821 Operations

FRDAP 8,000 Operations

Fire - Debt Service

General 821 - Debt Service

FRDAP

Water & Sewer 8,000 - Operations

General 9,500 - Operations

City Hall

General 2,196 Operations

Water & Sewer - 91,601 Operations

124,939$ 124,939$

NOTE 6 – RESTRICTED ASSETS The amounts recorded in the Governmental Fund is restricted for debt services associated with the payment of the firehouse bonds and for capital improvement projects.

Cash - Debt Service 2,835$

Total Restricted Assets 2,835$

Certain Enterprise Fund assets are restricted for debt service (Water Fund). Restricted net assets includes the excess of assets over certain liabilities restricted for the debt service on revenue bonds.

Water Fund

Cash - Debt Service 7,952$

Cash - Customer Deposits 28,285

Total Restricted Assets 36,237$


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

20

NOTE 7 – CAPITAL ASSETS Governmental asset activity for the year ending September 30, 2013 was as follows:

Beginning Ending

Balance Increases Deletions Balances

Governmental Activities:

Capital assets not being depreciated

Land and improvements 249,112$ -$ -$ 249,112$

Construction In process - - - -

Total capital assets not being depreciated 249,112 - - 249,112

Other capital assets:

Buildings and Improvements 4,257,043 - - 4,257,043

Equipment 1,046,553 - - 1,046,553

Total other capital assets at Historical cost: 5,303,596 - - 5,303,596

Less accumulated depreciation for:

Building and improvements (429,209) (94,578) - (523,787)

Equipment (250,293) (70,517) - (320,810)

Total accumulated depreciation (679,502) (165,095) - (844,597)

Total Governmental Capital Assets 4,873,206$ (165,095)$ -$ 4,708,111$

Depreciation expense on assets acquired after October 1, 2004 was charged to governmental activities as follows:

General government 74,302$

Public safety 62,140

Transportation 8,377

Physical Environment 20,276

Total governmental depreciation expense 165,095$


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

21

NOTE 7 – CAPITAL ASSETS - Continued Business Type asset activity for the year ending September 30, 2013 was as follows:

Beginning Ending

Balance Increases Deletions Balances

Business Type Activities:

Capital assets not being depreciated

Land and improvements 86,988$ -$ -$ 86,988$

Construction in Process 673,833 1,570,221 673,833 1,570,221

Total capital assest not being depreciated 760,821 1,570,221 673,833 1,657,209

Other capital assets:

Buildings and Improvements 9,186,746 680,174 - 9,866,920

Equipment 64,410 - - 64,410

Total other capital assets at Historical cost: 9,251,156 680,174 - 9,931,330

Less accumulated depreciation for:

Building and Improvements (1,873,511) (195,173) - (2,068,684)

Equipment (59,977) (1,855) - (61,832)

Total accumulated depreciation (1,933,488) (197,028) - (2,130,516)

Tota Business-Type Capital Assets 8,078,489$ 2,053,367$ 673,833$ 9,458,023$

NOTE 8 - LONG TERM DEBT

GOVERNMENTAL FUND

Revenue Bond:

$125,500 Capital Improvement Revenue Bond,

payable in annual installments at 5%.

Secured by pledged revenue - Local Government

Infrastructure Surtax Revenue. 96,400$


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

22

NOTE 8 - LONG TERM DEBT – Continued

Lease Purchase:

$197,898 payable in quarterly payment of $4,845

at 5.30%, secured by Pierce Contender 2 Door Dry Side Tanker.

The following is a schedule of future minimum lease

payments under capital leases, together with the net

present value of the minimum lease payments as of

September 30, 2013:

2014 14,535$

2015 19,380

2016 19,380

2017 19,380

2018 19,380

2019-2023 96,901

Total 188,956

Less amount Representing Interest (42,149)

Present Value of Minimum Lease Payments 146,807

Total Governmental Type Activities Obligations 243,207$

Debt Service requirements to maturity on the City’s revenue bond and lease purchase at September 30, 2013, are as follows:

Due Date Principal Interest Totals

2014 12,413$ 10,542$ 22,955$

2015 16,106 11,714 27,820

2016 16,971 10,859 27,830

2017 17,873 9,957 27,830

2018 18,812 9,008 27,820

2019-2023 110,232 28,934 139,166

2024-2028 32,600 9,600 42,200

2029-2030 18,200 1,445 19,645

243,207$ 92,059$ 335,266$


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

23

NOTE 8 - LONG TERM DEBT – Continued ENTERPRISE FUND

$3,057,193 Clean Water State Revolving Fund Loan payable in

40 semi-annual payments at 1.87% - secured by pledged

revenues - Water and Sewer operations. 548,578$

DEP Note Payable:

$391,868 Wastewater Treatment Facility Construction Loan

payable in semiannual payments at .915% - secured by pledged

revenues - Water & Sewer operations. 391,868

Note Payable:

$47,307 installment loan (refinanced from line of credit), payable

in monthly installments of $ 884 for sixty months; interest payable

at 4.167% 26,705

DOT Promissory Note:

$619,882 promissory note, reimbursement of costs incurred for

utility relocation work located on HWY 79, payable in annual

installments of $20,663, non-interest bearing note with imputed

interest of 2%; total draws to date total $ 578,556. 578,556

DOT Promissory Note:

$2,885,136 promissory note, reimbursement of costs incurred for

utility relocation work located on HWY 79, payable in annual

installments of $96,172, non-interest bearing note with imputed

interest of 2%; total draws to date total $ 649,386. 649,386

Total Business Type Activities Obligation 2,195,093$


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

24

NOTE 8 - LONG TERM DEBT – Continued The following is the debt service requirements for the business type activities note payable and line of credit at September 30, 2013:

Due Date Principal Interest Totals

2014 167,623$ 44,290$ 211,913$

2015 171,114 40,799 211,913

2016 171,108 37,248 208,356

2017 167,373 33,934 201,307

2018 170,642 30,665 201,307

2019-2023 597,541 107,980 705,521

2024-2028 348,720 63,134 411,854

2029-2033 239,578 32,791 272,369

2034-2038 132,872 10,896 143,768

2039-2043 28,522 564 29,086

2,195,093$ 402,301$ 2,597,394$

Long-term liability activity for the year ended September 30, 2013 was as follows:

Amounts

Beginning Ending Due Within

Balance Additions Reductions Balances One Year

GOVERNMENTAL ACTIVITIES

Revenue Bond 99,900$ -$ 3,500$ 96,400$ 3,600$

Notes Payable 253,598 253,598 - -

Lease Purchases 160,743 - 13,936 146,807 8,813

Governmental activities

long-term liabilities 514,241$ -$ 271,034$ 243,207$ 12,413$

BUSINESS TYPE ACTIVITIES

Notes Payable 1,233,371$ 1,008,654$ 46,932$ 2,195,093$ 167,623$

Business type activities

long term liabilities 1,233,371$ 1,008,654$ 46,932$ 2,195,093$ 167,623$

Payments on the City’s governmental activities are made by the debt service funds. Compensated absences have not been recorded in the governmental activities and business type activities because it is not material to the financial statements.


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

25

NOTE 9 – DEBT SERVICE REQUIREMENTS General Government Fund Type – Capital Improvement Revenue Bonds – Fire Station The Bond Ordinance adopted November 22, 2000, requires the establishment of certain “trust funds” to ensure repayment of the Capital Improvement Revenue Bonds – Fire Station. A summary of these requirements is as follows:

A. All cash income derived from the ownership and operation of the project shall be deposited into the “Revenue Fund” on or before the 15th day of each month. Transfers are to be made to certain accounts.

B. The “Sinking Fund” is to be used exclusively for the purpose of paying principal and

interest on the bonds and is to be funded by transferring each month from the “Revenue Fund” one-twelfth of the next annual interest and principal requirements.

C. The “Reserve Account” is to be established by transferring each month from the

“Revenue Fund” the sum of one-twelfth of one-tenth of the Maximum Bond Service Requirement until such time as the funds and investments therein shall equal the Maximum Bond Service Requirements. The funds in this account shall be used only for (1) paying the principal of and interest on the bonds in the event that the moneys in the “Sinking Fund” shall ever be insufficient to meet such payments, (2) paying the cost of repairing or replacing any damage to the project which shall be caused by an unforeseen catastrophe, (3) construction improvements, and (4) repaying governmental balances.

DEP State Revolving Loan Agreement The City is required to deposit monthly at least one-sixth of the semiannual loan payment in the loan debt service account per the DEP State Revolving Loan Agreement. No reserve funding is required. NOTE 10 - RETIREMENT PLAN The City of Vernon participates in the Florida Retirement System (System), a defined benefit cost-sharing, multiple-employer public retirement system, which is controlled by the State Legislature and administered by the State of Florida, Department of Management Services, Division of Retirement. Benefit provisions are established under Chapter 121, Florida Statutes. Amendments and adjustments to the plan and plan provisions may be made by the Florida Legislature. The plan covers full-time employees of various governmental units within the State of Florida.


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

26

NOTE 10 - RETIREMENT PLAN – Continued For employees initially enrolled prior to July 1, 2011, normal retirement benefits are available to regular class employees who retire with at least 6 years of service and have reached age 62; the age after 62 the member become vested; or with 30 years of service at any age. Special risk class employees may receive normal retirement benefits with at least 6 years of special risk service after reaching age 55; the age after age 55 the member become vested; after 25 year of service, consisting of both special risk service and up to 4 years of wartime military service, and age 52; after 25 years special risk service regardless of age; or with 30 year any creditable service regardless of age. For employees enrolled after July 1, 2011 regular class employees receive benefits with eight year of service and age 65 or 33 years of service, regardless of age. Special risk class employees are vested with eight years of special risk service and age 60; 30 years of service, consisting of both special risk service and up to four years of wartime military service, and age 57; 30 years of special risk service, regardless of age; or 33 years of any creditable service, regardless of age. Service retirement benefits are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For employees initially enrolled prior to July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for employees initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement plan and/or class to which the employee belonged when the service credit was earned. The System provides for several benefit options, disability benefits and survivor benefits. The cost-of-living adjustment for retirements effective before August 1, 2011 is 3% per year. The cost-of-living adjustment formula for retirees with an effective retirement date on or after August 1, 2011, will be the sum of the pre-July 2011 service credit divided by the total service credit earned multiplied by 3 percent. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement. Applicable contribution rates effective July 1, 2012 were:

Employee Employer Total

Contribution Contribution Contribution

Class Rate Rate Rate

Regular 3.00% 5.18% 8.18%

Special Risk 3.00% 14.90% 17.90%

DROP N/A 5.44% 5.44%


September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

27

The above rate included a 1.11% health insurance subsidy contribution to the Retiree Health Insurance Subsidy Program, a separate pay as you go cost sharing multi-employer defined benefit plan. Total payroll for the City’s employees was $ 171,847 for the year ended September 30, 2013. The City’s contribution to the plan for the year ended September 30 and the percentage of the City’s covered payroll is as follows:

Per Cent of

Employer Required

Year Contribution Contribution

2013 9,344$ 100%

2012 7,773$ 100%

2011 16,109$ 100% Plan financial statements and additional information related to the Florida Retirement System can be obtained from the Florida Department of Management Services, Division of Retirement, Tallahassee, Florida. NOTE 11 – COMMITMENTS AND CONTINGENCIES The City entered into a Promissory Note with the Department of Transportation in 2008 for the purpose of utility relocation on the Hwy 79 road project. The promissory note was amended several times and the agreement in effect as of September 30, 2013 was in the amount of $619,882. As of September 30, 2013 the project was estimated to be substantially completed. The City entered into a Promissory Note with the Department of Transportation in 2012 for the purpose of utility relocation that is the result of multilane improvements from North of Mill Branch Bridge to SR 8 (I-10). The amount of the agreement is $2,885,136, at September 30, 2013 the project was estimated to be 25% completed. There is also an ongoing civil case regarding former employees, and the City is vigorously contesting the matter and the outcome remains unknown.

REQUIRED SUPPLEMENTARY INFORMATION

Required Supplementary Information City of Vernon, Florida

Budgetary Comparison Schedule – General Fund For the Year Ending September 30, 2013

------------------------------------------------------------------------------------------------------------------------

28

Actual Amounts

Original Final (GAAP Basis)

REVENUES

Taxes 158,852$ 158,852$ 152,265$

Licenses & Permits 28,250 28,250 31,098

Intergovernmental Revenues 108,895 108,895 108,048

Charges for Services 42,500 42,500 44,465

Miscellaneous Revenues 9,700 9,700 22,157

Total Revenues 348,197 348,197 358,033

EXPENDITURES

Current:

General Government 124,364 124,364 148,185

Public Safety 44,360 44,360 38,240

Transportation 120,289 120,289 123,249

Culture/Recreation 64,950 64,950 48,578

Debt Service:

Principal 19,381 19,381 267,534

Interest - - 18,556

Capital Outlay - - -

Total Expenditures 373,344 373,344 644,342

Excess (deficiency) of

revenues over expenditures (25,147) (25,147) (286,309)

OTHER FINANCING

SOURCES (USES)

Transfers In - - 9,992

Transfers Out - - (23,142)


Sources (Uses) - - (13,150)

Net Change in

Fund Balances (25,147) (25,147) (299,459)

Fund Balances - beginning 441,468 441,468 441,468

Fund Balances - ending 416,321$ 416,321$ 142,009$

Budgeted Amounts

Note: This schedule is prepared on the modified accrual basis of accounting.


Required Supplementary Information City of Vernon, Florida

Budgetary Comparison Schedule – City Hall Fund For the Year Ending September 30, 2013

------------------------------------------------------------------------------------------------------------------------

29

Actual Amounts

Original Final (GAAP Basis)

REVENUES

Charges for Services 20,000 20,000 9,530

Miscellaneous Revenues 1,400 1,400 1,143

Total Revenues 21,400 21,400 10,673

EXPENDITURES

Current:

General Government 54,516 54,516 72,369

Public Safety - - -

Transportation - - -

Culture/Recreation - - -

Debt Service:

Principal - - -

Interest - - -

Capital Outlay - - -

Total Expenditures 54,516 54,516 72,369

Excess (deficiency) of

revenues over expenditures (33,116) (33,116) (61,696)

OTHER FINANCING

SOURCES (USES)

Transfer Out - - (93,797)

Sale of General Capital Assets - - 158,500


Sources (Uses) - - 64,703

Net Change in

Fund Balances (33,116) (33,116) 3,007

Fund Balances - beginning 103,570 103,570 103,570

Fund Balances - ending 70,454$ 70,454$ 106,577$

Budgeted Amounts

Note: This schedule is prepared on the modified accrual basis of accounting.


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

City of Vernon, Florida Schedule of Expenditures of Federal Awards

For the Year Ended September 30, 2013 ------------------------------------------------------------------------------------------------------------------------

30

FEDERAL PROGRAMS

Grantor/Pass Through Grantor/ CFDA Identifying Federal

Program Title Number Number Expenditures

Department of Housing and Urban Development

through the Florida Department of Community

Affairs

Community Development Block Grants 14.228 12DB-OH-02-41-02-N35 567,000$

Total expenditures of federal financial assistance 567,000$

Note: This Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of Vernon, Florida, under programs of the federal government for the year ended September 30, 2013. The information in this Schedule is presented in accordance with the requirements of OMB Circular A-133, Audits

of States, Local Governments, and Non-Profit Organizations. Because the Schedule presents only a selected portions of the operations of the City of Vernon, Florida, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the City of Vernon, Florida. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained on OMB Circular A-122, Cost Principles for Non-Profit

Organizations, wherein certain types of expenditures are not allowable or are limited as to reimbursement.

INDEPENDENT AUDITOR’S REPORT REQUIRED BY

GOVERNMENTAL AUDITING STANDARDS

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

Gnrusmv, Cnvm & CovtPA\IY, P.A.Cenrtrteo PuaLlc Accoulr¡t¡¡¡rs

Orueru W, Gnruslev, C.P.A.

D¡le L. Cnvn, C.P,A.

MEMBERS

FLoRIDA INSTITUTE AND

AueRrcr¡r lNSTtfurE oF

CERT|FtED PueLrc AccouNtrrurs

INDEPENDENTAUDITOR'S REPORT ON I.NTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITHG OV ERN M ENT AU D IT I N G SIANDARDS

Honorable Mayor and City Council MembersCity of VernonVernon, Florida

We have audited, in accordance with the auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards issued by the Comptroller General of the United States, the financialstatements of the governmental activities, the business-type activities, each major fund, andthe aggregate remaining fund information of the City of Vernon, Florida, as of and for the yearended September 30, 2013, and the related notes to the financial statements, whichcollectively comprise the City of Vernon, Florida's basic financial statements and have issuedour report thereon dated December 15,2014.

lnternal Gontrol Over Financial Reporting

ln planning and performing our audit of the financial statements, we considered the City ofVernon, Florida's internal control over financial reporting (internal control) to determine theaudit procedures that are appropriate in the circumstances for the purpose of expressing ouropinions on the financial statements, but not for the purpose of expressing an opinion on theeffectiveness of the City of Vernon, Florida's internal control. Accordingly, we do not expressan opinion on the effectiveness of the City of Vernon, Florida's internal control.

Our consideration of internal control was for the limited purpose described in the precedingparagraph and was not designed to identify all deficiencies in internal control that might bematerial weaknesses or significant deficiencies and therefore, material weaknesses orsignificant deficiencies may exist that were not identified. However, as described in theaccompanying schedule of findings and questioned costs, we identified certain deficienciesin internal control that we considered to be material weaknesses and significant deficiencies.

Post Office Box220.4243 Lafayette Street. Marianna, Florida 32447-0220.850-526-3910'FAX 850-482-6019Post Office Box 475. 983 Sixth Avenue . Graceville, Florida 32440-0475. 850-263-3636

31

City Of VernonPage 2

A deficiency in internal controlexists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, toprevent, or detect and correct, misstatements on a timely basis. A material weakness is adeficiency, or a combination of deficiencies, in internal control such that there is a reasonablepossibility that a material misstatement of the entity's financial statements will not beprevented, or detected and corrected on a timely basis. We consider the deficienciesdescribed in the accompanying schedule of findings as items 2003-02 and 2007-01 to bematerial weaknesses.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal control thatis less severe than a material weakness, yet important enough to merit attention by thosecharged with governance. We consider the deficiency described in the accompanyingschedule of findings as item 2012-01 to be a significant deficiency.

Gompliance and Other Matters

As part of obtaining reasonable assurance about whether the City of Vernon, Florida'sfinancial statements are free from material misstatement, we performed tests of itscompliance with certain provisions of laws, regulations, contracts, and grant agreements,noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit, and accordingly, we do not express such anopinion. The results of our tests disclosed instances of noncompliance or other matters thatare required to be reported under Government Auditing Standards and which are describedin the accompanying schedule of findings and questioned costs as items 2003-01 and 2013-01.

Gity of Vernon, Florida's Response to Findings

The City of Vernon, Florida's response to the findings identified in our audit is described inthe accompanying section titled Response to Findings. The City of Vernon, Florida'sresponse was not subjected to the auditing procedures applied in the audit of the financialstatements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control andcompliance and the results of that testing, and not to provide an opinion on the effectivenessof the entity's internal control or on compliance. This report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the entity'sinternal control and compliance. Accordingly, this communication is not suitable for any otherpurpose.

çrinsb, Cavin &Conpant

Grimsley, Cavin & Company, P.ACertified Public Accountants

December 15,2014

32

INDEPENDENT AUDITOR’S REPORT TO MANAGEMENT REQUIRED BY OMB CIRCULAR A-133

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL

EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

GnrusleS CnvIN & CoUPA\IY, P.A.CEnrrrEo PuaLlc Accoururlrurs

Orueu W. Gnr¡¡smv, C.P.A.

D¡re L. Cnvln, C,P.A.

MEMBEBS

FLoFTDA INSITUTE AND

AueRrc¡r.r INSTITUTE oF

CERTtFtEo Pueuc Accout'lt¡Nrs

INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAMAND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY

OMB CIRCULAR A-133

Honorable Mayor and City Council MembersCity of VernonMalone, Florida 32445

Report on Compliance for Each Major Federal Program

We have audited the City of Vernon, Florida's compliance with the types of compliancerequirement described in the OMB Circular A-133 Compliance Supplemenf that could have adirect and material effect on each of the City of Vernon, Florida's major federal programs forthe year ended September 30,2013. The City of Vernon, Florida's major federal programsare identified in the summary of auditor's results section of the accompanying schedule offindings and questioned costs',

Management's Responsibil ity

Management is responsible for compliance with the requirements of laws, regulations,contracts, and grants applicable to its federal programs.

Auditor's Responsibil ity

Our responsibility is to express an opinion on compliance for each of the City of Vernon,Florida's major federal programs based on our audit of the types of complíance requirementsreferred to above. We conducted our audit of compliance in accordance with auditingstandards generally accepted in the United States of America; the standards applicable tofinancial audits contained in Government Auditing Standards, issued by the ComptrollerGeneral of the United States; and OMB Circular A-133 require that we plan and perform theaudit to obtain reasonable assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on amajorfederal program occurred. An audit includes examining, on a test basis, evidence aboutthe City of Vernon, Florida's compliance with those requirements and performing such otherprocedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for eachmajor federal program. However, our audit does not provide a legal determination of the Cityof Vernon, Florida's compliance.

Post Office Box220.4243 Lafayette Street. Marianna, Florida 32447-0220.850-526-3910'FAX 850-482-6019Post Office Box 475 .983 Sixth Avenue. Graceville, Florida 32440-0475'850-263-3636


Opinion on Each Major Federal Program

ln our opinion, the City of Vernon, Florida complied, in all material respect, with the types ofcompliance requirements referred to above that could have a direct and material effect oneach of its major federal programs for the year ended September 30, 2013.

Other Matters

The results of our auditing procedures disclosed instances of noncompliance, which arerequired to be reported in accordance with OMB Circular A-133 and which are described inthe accompanying schedule of findings and questioned costs as item 2013-02. Our opinionon each major federal program is not modified with respect to these matters.

The City of Vernon, Florida's response to the noncompliance findings identified in our auditis described in the accompanying schedule of findings and questioned costs. The City ofVernon, Florida's response was not subjected to the auditing procedures applied in the auditof compliance and, accordingly, we express no opinion on the response.

Report on lnternal Control Over Compliance

Management of the City of Vernon, Florida, is responsible for establishing and maintainingeffective internal control over compliance with the types of compliance requirements referredto above. ln planning and performing our audit of compliance, we considered the City ofVernon, Florida's internal control over compliance with the types of requirements that couldhave a direct and material effect on each major federal program to determine the auditingprocedures that are appropriate in the circumstances for the purpose of expressing anopinion on compliance for each major federal program and to test and report on internalcontrol over compliance in accordance with OMB Circular A-133, but not for the purpose ofexpressing an opinion on the effectiveness of internal control over compliance. Accordingly,we do not express an opinion on the effectiveness of the City of Vernon, Florida's internalcontrol over compliance.

A deficiency in internal control over compliance exists when the design or operation of acontrol over compliance does not allow management or employees, in the normal course ofperforming their assigned functions, to prevent, or detect and correct, noncompliance with atype of compliance requirement of a federal program on a timely basis. A materialweaknessin internal control over compliance is a deficiency, or combination of deficiencies, in internalcontrol over compliance, such that there is a reasonable possibility that materialnoncompliance with a type of compliance requirement of a federal program will not beprevented, or detected and corrected, on a timely basis. A significant deficiency in internalcontrol over compliance is a deficiency, or a combination of deficiencies, in internal controlover compliance with a type of compliance requirement of a federal program that is lesssevere than a material weakness in internal control over compliance, yet important enoughto merit attention by those charged with governance.

34


Our consideration of internal control over compliance was for a limited purpose described inthe first paragraph of this section and was not designed to identify all deficiencies in internalcontrol over compliance that might be material weaknesses or significant deficiencies. Wedid not identify any deficiencies in internal control over compliance that we considered to bematerial weaknesses. However, material weaknesses may exist that have not beenidentified.

The purpose of this repoft on internal control over compliance is solely to describe the scopeof our testing of internal control over compliance and the results of that testing based on therequirements of OMB Circular A-133. Accordingly, this report is not suitable for any otherpurpose.

ÇrùntftJ, Cavin te ConpanX

December 15,2014 Grimsley, Cavin & Company, P.A.Cedified Public Accountants

35

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

City of Vernon, Florida Schedule of Findings and Questioned Costs

For the Year Ended September 30, 2013 --------------------------------------------------------------------------------------------------------------------------

36

Section I – Summary of Auditor’s Results

1. The auditor’s report expresses an adverse opinion on the Governmental Activities due to an omission of general infrastructure assets, and an unqualified opinion in the Business-Type Activities and all other Funds of the City of Vernon, Florida, as of September 30, 2013.

2. Two deficiencies in internal control were identified in relation to the financial statements

that were considered to be material weaknesses, and one deficiency was identified that was considered to be a significant deficiency.

3. There were two instances of noncompliance material to the financial statements of the

City of Vernon, Florida, which is required to be reported in accordance with Government Auditing Standards disclosed during the audit.

4. No significant deficiencies relating to the audit of the major federal award programs

are reported in the audit of the City of Vernon, Florida.

5. The auditor’s report on compliance for the major federal awards programs for the City of Vernon, Florida expressed an unqualified opinion on all major federal programs.

6. Audit findings that are required to be reported in accordance with Section 510(a) of

OMB Circular A-133 are reported in the Schedule of Findings and Questioned Costs as item 2013-02.

7. The projects tested as major programs were:

Federal Programs Federal CFDA No.

Community Development Block Grant 14.228

8. The threshold used for distinguishing between Type A or Type B programs was $300,000.

9. The City of Vernon, Florida was determined to not be a low-risk auditee.



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Findings – Financial Statement Audit 2003-01 Criteria – Capital asset records are required to be maintained by the City Condition – We noted property and equipment not recorded on the capital asset listing of the governmental activities fund. Effect – Because of lack of sufficient detail of the capital asset records, the capital asset listing is unauditable. Cause – The property records do not have a complete listing of buildings and land owned by the City. Recommendation – The City should undertake a project to ensure all assets are recorded on the capital asset listing at cost or estimated historical cost. A formal policy should be established regarding acquisition and disposition of all capital assets and a physical inventory be taken at least annually. Views of Responsible Officials and Planned Corrective Action – The employee assigned to the task of recording capital assets has completed as much of the project as records will allow. Since some of the building and land owned by the City does not have an original cost, the City will need to hire a professional property appraiser. This is a cost the City cannot afford at this time. The City will continue to research this issue in an effort to resolve it. An employee is assigned the task of inventory control. 2003-02 Criteria – Custody of assets, record keeping and recording of assets should have adequate separation. Condition – Due to the size of the organization, proper separation of duties may not be feasible. Effect – Controls should be implemented to help compensate for these weaknesses. Cause – This is a small one-person bookkeeping system. Recommendation – Management should remain very active and involved in the day-to-day operations. It is essential that records be maintained current and up-to-date. Controls should be established to provide checks and balances. Views of Responsible Officials and Planned Corrective Action – Separation of duties will continue to be a problem due to the small size of the operation. The Mayor and Council are very active in the affairs of the City and review information relative to the day-to-day activities. Controls have been implemented to assure that all funds received are recorded and deposited as directed by the mayor/council.



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2007-01 Criteria – An entity’s system of internal control over financial reporting should include controls over the prevention, detection and correction of misstatements in the audited financial statements. Condition – The City relies on the external auditor to assist with preparing and explaining financial statements in conformity with generally accepted accounting principles. Effect – Since the auditor cannot be a part of an entity’s system of internal accounting control, the City’s system of internal accounting control over the financial reporting is not sufficient by itself to prevent, detect or correct misstatements in the audited financial statements. Cause – The City has a small accounting staff necessitated by the overall small size of the entity. They do not consider it cost effective to develop and maintain a system of internal accounting control sufficient to prepare financial statements in accordance with generally accepted accounting principles, nor to maintain internal staff with sufficient knowledge to develop and maintain controls to prevent, detect or correct misstatements in audited financial statements. Recommendation – The City should continue to consider the effects of the cost of developing and benefits of implementing such a system as compared with understanding that due to the size of their accounting department, they will continue to need external assistance with the preparation and understanding of financial statements in accordance with generally accepted accounting principles. Views of Responsible Officials and Planned Corrective Action – Again due to small staff and limited funds the City is aware of the need to implement a system to develop and maintain controls. The Office Policies and Procedures are updated as needed to assure control. The council will review the policies and procedures and make necessary changes.



39

2012-01 Criteria – Detail subsidiary records should be reconciled to the general ledger accounts on a regular basis. Condition – The City uses a separate computer program to record and track its utility revenues and billings. The data from this program is not entered into the general ledger program, only cash receipts are recorded. The amounts recorded in the general ledger are not reconciled to the utility billing records. Effect – The ending balances of accounts receivable and customer deposits at year end could not be reconciled to subsidiary reports. Cause – The City policies do not require reconciliation of the general ledger accounts to detail records. Insufficient training and supervision also appear to be a significant issue. Recommendation – Policies should be instituted requiring that general ledger totals be reconciled to detail records where applicable. Additional training and supervision in this area would be helpful. 2013-01 Criteria – Per Florida Statute, Chapter 166, the adopted budget including amendments shall not be exceeded. Condition – The City over-expended their general fund budget. Effect – The City is in technical violation of Florida Statute, Chapter 166. Cause – The City did not amend the general fund budget to properly reflect all required expenditures of the City. Recommendation – The City should amend the budget to ensure compliance with Florida Statute, Chapter 166.



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Findings and Questioned Costs – Major Federal Award Programs Audit DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 2013-02 Community Development Block Grant – CFDA 14.228; Grant Number 12DB-OH-02-77-02-N02; Grant period – Year Ended September 30, 2013. Criteria – The City of Vernon, Florida is required to deliver their audit report and data collection form to the Office of Management and Budget (OMB) within nine months after the end of the audit period. Condition – The City of Vernon, Florida did not file their audit report and data collection form with the Office of Management and Budget (OMB) within nine months after the end of the audit period as required by Circular A-133, Subpart C – Auditees section .320. Effect – The City of Vernon, Florida is in violation of OMB Circular A-133. Cause – Records were not made available in a timely manner in order to facilitate the completion of the audit within nine months after the end of the audit period. Recommendation – The City of Vernon, Florida should have controls in place to have their financial records available for audit in a timely manner after the fiscal year end. All reports are due nine months after the end of the audit period. Therefore, time should be allowed for the audit process to occur within the required parameters. Views of Responsible Officials and Planned Corrective Action – Due to changes in City Staff the Audit Report was unable to be completed within a timely manner. City officials are aware of the problem and are working to prevent further occurrences.

CORRECTIVE ACTION PLAN

Michelle Côôlç MãYor

Gary owens, Shaun Sanders, Joey Broc.h, çwen March, Tina Slga¡, Gouhcil membèrs

CORRECTIVE ACTION PLAN

January 12,2Q15

Gognizant or Oversight Agency for Audit

The city of vernon, Flörida respectfully sqbm¡tE the follqwing cgrrêct¡ve aolion plan for the year ended september 30,

201 3.

Name and address of indepgndent publig accounting:firrn:

GrimsleY,Gavin'& GomPanY, P.A'Certified Pu bliQ AccountantsP.O. Box 220Marianna, FL32447

Audit Period: October 1,2019 through Seplember 30, 2013'

Flnding-MaJorFederal"AwardPiogfårns-ahd,mai.qr:st¿¡tè]awe¡dprôJeçtsaud¡tg::

DEPARTÍVIENT OF ECONOüIIC' DEVELOPMENT

Community De-velopment Block Grant - CFDA 14;228:i'Grant Numberl2DB:OH-02'NO2; Gfant peiiod - Yêar ending

September 30, 2013.

criteria - The cíty of vetnon, Flotida is. requirèd to deliver their audit rqport and data collection form to the otfiee of

Management:and 'Budget

(OM'B) withlrt nine rnonths a'fter the r nd of the audit period

condition - The city of vernon, Florida did, not file their. audit report and .data collection form with the offioe of

Management and Budget (oMB) within ninË months after the eno of the audit period as required by circufar A:133,

Sub-parf C - Auditees seetion .320.

Effect - The City of Ve¡'non, Florida is in violation of OMB Gircular A-133.

cause - Records were not rnade readily available in a timely maRner Ín order to faoilitatê the completion of the audit

within nine'months after the end of the audit period',

Recömmendation - The city of Vernon, Florida should have controls in place to have their financial records ava:ilâb'te.for

audit in a timely manner after the fiscal year end. All reports are due nine months after the ehd of the audit period'

Tlletefore, time should be allowed for the audit process to occur with the requlred pararneters-

corrective Action - MANAGEMENT will be better prepared to cornplete audit re.quirements at fiscal yearend due to

Adequate statfing levels in Administration-

Sloan, P

"The Heart otthe Unspoiled Panharrdl e

p.o. Box 340 2B0B yeltow Jacket Drive vernon, Floricla 32,!ç2 850-535-2444 FAX 850-535-4286

41

INDEPENDENT AUDITOR’S REPORT TO MANAGEMENT REQUIRED BY THE STATE OF FLORIDA

Gnruslrv, CevlN & CoUPANIY' P.A.Cenlrreo PueLtc Accourur¡rurs

Oryeru W. Gnrusuv, C.P.A.

D¡r-e L. C¡v1ru, C.P,A.

MEMBERS

FLORIDA INSTITUTE AND

Aupnrc¡¡r lNSTtrurE oF

CERTtFtED PuaLlc Accour,¡r¡r'rrs

INDEPENDENT AUDITOR'S REPORT TO MANAGEMENTREQUIRED BY THE STATE OF FLORIDA

Honorable Mayor and City Council MembersCity of VernonMalone, Florida 32445

We have audited the financial statements of the City of Vernon, Florida, as of and for the fiscalyear ended September 30, 2013, and have issued our report thereon dated December 15,2014.

We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America; the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States;OMB CircularA-133, Audits of Sfafes, Local Governments, and Non-Profit Organizafions,'andChapter 10.550, Rules of the Florida Auditor General. We have issued our lndependentAuditor's Report on lnternal Control over Financial Reporting and Compliance and OtherMatters Based on an Audit of the Financial Statements Performed in Accordance withGovernment Auditing Standards. lndependent Auditors Report on Compliance withRequirements That Could Have a Direct and Material Effect on Each Major Federal Programand on lnternal Control over Compliance in Accordance with OMB Circular A-133 and Chapter10.550 Rules of the Florida Auditor General and Schedule of Findings and Questioned Costs.Disclosures in those reports and schedule, which are dated December 15,2014, should beconsidered in conjunction with this management letter.

Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the AuditorGeneral, which governs the conduct of localgovernmental entity audits performed in the Stateof Florida. This letter includes the following information, which is not included in theaforementioned auditor's reports or schedule:

whether or not corrective actions have been taken to address findings andrecommendations made in the preceding annual financial audit report. Correctiveactions have been taken to address findings and recommendations made in thepreceding annual financial audit report except as noted below under the heading PriorYear Findings and Recommendations.

Post Office Box220.4243 Lafayette Street. Marianna, Florida 32447-0220.850-526-3910'FAX 850-482-6019Post Office Box 475 .983 Sixth Avenue. Graceville, Florida 32440-0475'850-263-3636

42


The management letter findings are as follows:

Tabulation of Uncorrected Audit FindingsCurrent

YearFindinq #

2011-12 FYFindinq #

2010-11 FYFindinq #

2013-12008-1 2008-1 2008-12009-1 2009-1 2009-1

review of the provisions of Section 218.415, Florida Statutes, regarding the investmentof public funds. ln connection with our audit, we determined that the City of Vernon,Florida, complied with Section 218.415, Florida Statutes.

management letter any recommendations to improve financial management. lnconnection with our audit, our recommendations are included in the section of thisreport titled Prior Year Findings.

noncompliance with provisions of contracts or grant agreements, or abuse, that haveoccurred, or are likely to have occurred, that have an effect on the financial statementsthat is less than material but which warrants the attention of those charged withgovernance. ln connection with out audit, our recommendation are included in thesection of this report titled Current Year Findings.

included as to whether or not the local government entity has met one or more of theconditions described in Section 218.503(1), Florida Statutes, and identification of thespecific condition(s) met. ln connection with our audit, we determined that the City ofVernon, Florida did not meet any of the conditions described in Section 218.503(1),Florida Statutes.

whether the annual financial report for the City of Vernon, Florida, for the fiscal yearended September 30,2013, filed with the Florida Department of Financial Servicespursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annualfinancial audit report for the fiscal year ended September 30, 2013. ln connection withour audit, we determined that these two reports were in agreement.

43


applied financial condition assessment procedures. lt is management's responsibilityto monitor the City of Vernon, Florida's financial condition, and our financial conditionassessment was based in paft on representations made by management and thereview of financial information plovided by same.

Our management letter is intended solely for the information and use of the LegislativeAuditing Committee, members of the Florida Senate and the Florida House ofRepresentatives, the Florida Auditor General, Federal and other granting agencies, andapplicable management, and is not intended to be and should not be used by anyone otherthan these specified parties.

Prior Year Findinqs

2008-1: lt was noted during the audit that the recreation department lacked adequate internalcontrols for reporting purposes. We recommend the council review the policies andprocedures as it relates to the recreation department included, but not limited to, collectionpractices and disbursement of funds for control purposes. This item continues to remain.

2009-1: lt was noted that there are several old items on the bank account reconciliations. ltis recommended that the City review these items and determine their ultimate resolution. Thisitem continues to remain.

Current Year Findinqs

2013-1: The City did not adequately fund the Debt Reserve Account for the Firehouse Bondwhich resulted with the account becoming overdrawn when the payment was made. The Cityshould insure that the Debt Reserve Account is adequately funded.

çrir fE, Cavin {e Com.panl

December 15,2014 Grimsley, Cavin & Company, P.ACertified Public Accountants

44

RESPONSE TO AUDIT FINDINGS

January 12,24.75

Office of :the.Auditor GeneralState of FloridaClaude Pèpper Building, Room 401

Tallahassêe, FL 32399

RE: CÌty of Vernon, FL, Ahnual tinancial Rèport O9/3OIL3

Gentlemen:

The City of Vernon is in reeeipt of the above report. On the Schedule of findings and questiöned cÒSts,

we: will add r:ess the following:

Finding.O3.l - Since some of the buildings and lBnd oWned by:tþg Çity;dses not havé an prlgin co5t, lheCity wili negd to híre a prqfessional property AÞpra¡ser. 'ûiÌs:is a- coSt that the City cannot afford at thistime. Ths:Cìty witl cont¡nue to research this issue in an effort to resolve.

:Finding p3-2 - $eparêtion of dutieq w¡ll 'co:ntinue toT'he Mayor and Gouncil are very active in the affalrsday-to-.day, activities,

ue .t9..t¡e jsma.fl size of'the qpe ratio.n

. .

roviews inforrnation relatiVe to the

Findlng:07-0i -Again, due to smàìl staff and limlted awareof'the need to implement asysÌe.m tÞ develop,ând ina¡nta¡n'cÒntrols. The Pioced¡lre.s are uplated qs needed toassure control. The councif wif I reviewthe policies and proceduresarid.rnake ñecessary changês.The' iterns under Prior Year Findings ahii Recomn¡endation!; afe as follows:

1. (Remaining from fìscal year ending 09-30{.8) The C,iW. has put in some lnternal controls forreporting purposes for the recreation departments. The coungil is stíll teviewini the procddu.r.es

and mgre controls ar.e going to be implemented.2. (remaínihg from fiscal year ending ogl3o/2oo9) The City,will review and resolve the old items on

the bank account reconçiliations.Findings 7z-O1. - Due to chariges in City Staff, the City officials are aware of the need to reconcile all thegeneral ledger accounts on a regular basis. The City will put forth a policy for regular reconciliatíon of allgeneral ledger account balances.

Fresident City Council

"T'he I'{eart of the Unspoilcd Panhanlh"l'j.C). Uox 340 2808 \'ellori,.lacket [)rivr-- Vcrnon, Floricli¡ 32462 tì50--5]-5-2444 EAX tì50-51-5-,12S6

,45,

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