Fort Walton Beach Council agenda — 03-19-12--special--audit — reading text

program a that is customized to the City of Fort Walton Beach. NCN 2012- MC -04: ENTERPRISE RISK MANAGEMENT Observation da E The City of Fort Walton Beach, Florida has not formally documented management' s identification of U strategic, operational and financial risks and the related monitoring of the risks identified. Like many n organizations, the City assesses risk routinely but the risk assessment process is not documented or H formalized. >- m Recommendation Documenting enterprise risk assessments will provide additional assurances that key business processes have appropriate control activities in place. The assessment and documentation will help management identify control gaps, strengthen existing controls, and remove redundancies where applicable. The risk assessment process involves: Determining the objectives /goals of significant business processes Identifying what can go wrong ( risks) Prioritizing what can go wrong ( risk ranking) Once the risk assessment process in completed, related control activities must be evaluated based on the priority of the greatest risks and tested. Management's Response The City is currently proactive in assessing the City' s resources and adopting plans to address continuity of operations in times of emergencies or crises. The City currently is reviewing and revising a Hurricane Response Plan and a Continuity of Operations Plan to update them to current standards. The City is also evaluating the requirements and costs for an overall Facilities Assessment Plan due to aging facilities. As part of the FY 2013 -14 budget cycle, Staff is also developing a comprehensive Fleet and IT assessment to address five- and ten -year replacement programs to increase the reliability and safety of these items in the workforce. While these types of assessments take time and funding, there are internal Staff who are experienced in conducting facility assessments and vulnerability assessments of City resources. 128 Packet Pg. 166 `!  3. 1. a Honorable Mayor and City Council Members City of Fort Walton Beach, Florida Management Letter (Continued) Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. We greatly appreciate the assistance and cooperation extended us during our audit. I A March 5, 2013 129 Packet Pg.? 67  3. 1. b USULLWAN CUR 45 Egl, n Pla, N. e. A Business of Warren Averett, LLC I CPAs & Consultants Suite 301 For( Walton Scam. 85024451121 rtOnY0 Fe,, 850. 6647562 www warrenaverettcom To the Mayor and Council 0 City of Fort Walton Beach, Florida c LmcL We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Fort Walton Beach, Florida for the year ended September 30, QCN7 i 2012. Professional standards require that we provide you with information about our responsibilities under generally c accepted auditing standards, Government Auditing Standards, and Chapter 10. 550, Rides of the Auditor General, as well 2 as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to you dated January 29, 2013. Professional standards also require that we communicate to you the following information related to our audit Significant Audit Findings UNE0to 0N Qualitative Aspects of Accounting Practices rLL Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Fort Walton Beach, Florida are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2012. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management' s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. There were no sensitive estimates significant to the financial noted. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was the disclosure related to the investments in the Florida Small Business Administration Pooled Cash Fund B. The funds in that account are currently frozen by the state and are liquidated periodically when the underlying investments of the pool mature. Pool B assets consist of those that are either in default on a payment, have paid more slowly than expected, and /or have significant credit risk. The balance of shares owned by the City of Fort Walton Beach, Florida in the Pool as of September 30, 2012, was 5229, 675 with a fair value of 217, 954. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit.  3. t. b Mayor and Council City of Fort Walton Beach, Florida Pagetwo Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to each opinion unit' s financial statements taken as a r whole. a Ca Disagreements with Management m For purposes of this letter, a disagreement with management as a financial accounting, reporting, or auditing ( natter, c whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor' s report. We c are pleased to report that no such disagreements arose during the course of our audit. LL N Management Representations We have requested certain representations from management that are included in the management representation letter dated March 5, 2013. Qv Management Consultations with Other Independent Accountants NCa a In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar n to obtaining a " second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit' s financial statements or a determination of the type of auditor' s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the UNE0 consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues