Okaloosa County BOCC — June 2, 2015 — Balent - Presentation

 Required Communication During and at the Conclusion of the Audit Process Our Responsibilities • To express an opinions about whether the financial statements, prepared by management with your oversight are fairly presented, in all material respects, in conformity with GAAP. • Our audit includes understanding Okaloosa County and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design nature, timing and extent of audit procedures. Material misstatements can result from error, fraudulent financial reporting, and misappropriation of assets or violations of laws or governmental regulations.  Required Communication During and at the Conclusion of the Audit Process To Conclude the 2014 Audit Process • Key estimates in the financial statements that are particularly sensitive because of their significance to the financial statements and because the possibility they may change, possibly significantly in the near term, include: • Estimate for allowance for bad debt in the Water and Sewer, Airport, and EMS Funds. • Estimate of landfill closure and post closure costs in the Solid Waste Fund. • Estimate of accrued liability for post employment benefits other than pensions (healthcare) applicable to BCC and all Constitutional Officers. • Estimate of accrued liability for general, automobile and workers’ compensation claims applicable to BCC and all Constitutional Officers except Sheriff under the self‐insurance program. Sheriff uses commercial insurance for these types of claims. • Estimate of accrued liability for medical claims applicable to the Sheriff under the self‐insurance program. BCC and other Constitutional Officers use commercial insurance for these types of claims. • No difficulties encountered in the performance of the audit. • No disagreements with Management. • We received representations from the management of the BCC and all Constitutional Officers in relation to the 2014 audit in letters dated April 30, 2015.  Summary of Auditors’ Results Summary of Auditors’ Results • Unmodified opinions issued with respect to the financial statements and with respect to compliance for major federal and state programs. • There was a material weakness and significant deficiencies in internal control over financial reporting identified, two significant deficiencies relating to compliance that were identified, and no instances of material weaknesses in internal control over major Federal awards and State projects. • Recommendations for management can be found in the management letter.  Summary of Auditors’ Results Matters to bring to the attention of governance as it relates to the system of internal control over financial reporting • Capital asset accounting for the County was not performed timely during FY 2014. • Bank reconciliation preparation and review for BCC and Clerk bank accounts were not consistently performed in a timely manner during FY 2014. Certain accounting duties were also not properly segregated during FY 2014; however compensating controls were initiated until staffing levels were returned to the proper level. • Vendor master file maintenance is performed by accounts payable clerks in the Clerk Finance function. To compensate for the lack of segregation of duties a compensating control has been established; however it may not be effective based on the volume of activity. • Custody and record keeping responsibilities surrounding inventory at the Water and Sewer operation and Fleet operation were not properly segregated during FY2014. • A material adjustment to the Water and Sewer Fund of $1.48 million was proposed by the auditors and accepted by management to correct revenue recognition in the water and sewer fund. Revenues reported were understated until corrected by audit adjustment.