Fort Walton Beach Council agenda — 03-22-11 regular — reading text

remaining fund information of the City of Fort Walton Beach, Florida, as of and for the year ended September 30, 2010, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Fort Walton Beach, Florida's management. 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 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business -type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Fort Walton Beach, Florida, as of September 30, 2010, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the general for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 1, 2011, on our consideration of the City of Fort Walton Beach, Florida's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Honorable Mayor and City Council Members City of Fort Walton Beach, Florida Independent Auditor's Report ( Continued) The Management' s Discussion and Analysis on pages 3 - 14, the Schedule of Funding Progress on page 77, and Schedule of Contributions From the Employer and Other Contributing Entities on page 78 are not a required part of the basic financial statements, but are supplementary information required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Fort Walton Beach, Florida's basic financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A -133, Audits of States, Local Governments, and Non -Profit Organizations, and is also not a required part of the basic financial statements of the City of Fort Walton Beach, Florida. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the 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 financial statements as a whole. The accompanying introductory and statistical sections, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. This information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. March 1, 2011 2  MANAGEMENT' S DISCUSSION AND ANALYSIS As management of the City of Fort Walton Beach, Florida, we offer readers of the City of Fort Walton Beach' s financial statements this narrative overview and analysis of the financial activities of the City of Fort Walton Beach for the fiscal year ended September 30, 2010. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages iv -viii of this report. FINANCIAL HIGHLIGHTS The assets of the City of Fort Walton Beach exceeded its liabilities by $ 58. 6 million (net assets). Of this amount, $ 15. 8 million represents unrestricted net assets that are available to meet the City' s ongoing obligations to citizens and creditors. The government' s net assets decreased by $ 392, 317, primarily due to early retirement incentives offered to employees, the sale of land, and a change in estimate for the depreciation on previously purchased water meters. As of the close of the fiscal year, the City of Fort Walton Beach' s governmental funds reported combined ending fund balances of $12. 1 million, a decrease of $337, 745 in comparison with the prior year. Approximately 74.5% of this amount, or $ 9. 0 million, is available for spending at the discretion of City Council. At the end of the fiscal year, unreserved fund balance for the General Fund was $ 9. 3 million, or 49% percent of total General Fund expenditures. The City of Fort Walton Beach' s total debt decreased by $ 965, 332, or 4. 9 %, during the fiscal year. The key factor in this decrease was the payoff of an equipment lease, and several obligations nearing maturity in near -future fiscal years within the City' s enterprise funds. 00 OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis intends to serve as an introduction to the City of Fort Walton Beach' s basic financial statements, which are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. The focus of financial statements prepared in accordance with the Governmental Accounting Standards Board ( GASB) Statement 34 is on both the City as a whole ( government -wide) and on major individual funds. Both perspectives ( government -wide and major funds) allow the user to address relevant questions, broaden a basis for comparison ( year -to -year or government -to- government), and enhance the City' s accountability. Government -Wide Financial Statements Designed to be corporate -like, the government -wide financial statements consolidate governmental and business -type activities into two columns, which sum to a total for Primary Government. This provides readers with a broad overview of the City of Fort Walton Beach' s finances in a manner similar to a private- sector business. Two statements, the statement of net assets and the statement of activities, are utilized to provide information on a government -wide basis. The statement of net assets presents information on all of the City of Fort Walton Beach' s assets and liabilities, with the difference between the two reported as net assets. This statement combines and consolidates the governmental funds' current financial resources ( short- term available resources) with capital assets and long -term obligations. Over time, increases or decreases in net assets may serve as a useful indicator of the financial position of the City of Fort Walton Beach.  The statement of activities presents information showing how the government' s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flow in future fiscal periods. Both of the government -wide financial statements distinguish functions of the City of Fort Walton Beach that are principally supported by taxes and intergovernmental revenues ( governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges ( business -type activities). The governmental activities of the City of Fort Walton Beach include general government ( city clerk, city council, city manager, human resources, finance, purchasing, fleet maintenance, service maintenance, and non -departmental expenses), public safety ( police, fire, and code enforcement services), physical environment ( cemetery), transportation ( engineering, streets, public - ay), economic development ( Community Development Block Grant Program), works, and right -of w culture and recreation ( parks, library, and museum), and debt service interest. The business -type activities of the City of Fort Walton Beach include utilities ( water, sewer, and storm water), sanitation, and golf. The government -wide financial statements include not only the City of Fort Walton Beach itself (known as the primary government), but a component unit, the Community Redevelopment Agency ( CRA), which is a legally separate entity for which the City of Fort Walton Beach is financially accountable. Reported separately from the financial information presented for the primary government itself, is the financial information for the component unit. The government -wide financial statements are found on pages 15 - 16 of this report. Fund Financial Statements