Fort Walton Beach — Annual Comprehensive Financial Report, September 30, 2025 — reading text

10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we identified no recommendations to improve financial management other than those discussed in the schedule of findings and responses. Property Assessed Clean Energy (PACE) Programs As required by Section 10.554(1)(i)6.a., Rules of the Auditor General, the City did not operate within its geographical boundaries, a PACE program authorized pursuant to Section 163.081 or Section 163.082, Florida Statutes, during the fiscal year under audit. As required by Section 10.554(1)(i)6.b., Rules of the Auditor General, there were no program administrators or third-party administrators for a PACE program operating within the City’s geographical boundaries. Therefore, no contact information has been provided for each such program administrator or third-party administrator, as there were no applicable PACE programs. Special District Component Units Section 10.554(1)(i)5.c., Rules of the Auditor General, requires, if appropriate, that we communicate the failure of a special district that is a component unit of a county, municipality, or special district, to provide the financial information necessary for proper reporting of the component unit within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we did not note any special district component units that failed to provide the necessary information for proper reporting in accordance with Section 218.39(3)(b), Florida Statutes. Specific Information As required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)6, Rules of the Auditor General, the Fort Walton Beach Community Redevelopment Agency (the CRA) reported: a) The total number of CRA employees compensated in the last pay period of the CRA’s fiscal year as 4. b) The total number of independent contractors to whom nonemployee compensation was paid in the last month of the CRA’s fiscal year as 3. c) All compensation earned by or awarded to employees, whether paid or accrued, regardless of contingency as $520,280. d) All compensation earned by or awarded to nonemployee independent contractors, whether paid or accrued, regardless of contingency as $2,714,784. e) Each construction project with a total cost of at least $65,000 approved by the CRA that is scheduled to being on or after October 1 of the fiscal year being reported, together with the total expenditures for such project as:  Crime Prevention Through Environmental Design (CPTED) improvements – $75,000  Wayfinding Signage System - $75,000  Brooks Street Lighting Upgrades - $175,000 f) A budget variance based on the budget adopted under Section 189.016(4), Florida Statutes, before the beginning of the fiscal year being reported if the CRA amends a final adopted budget under Section 189.016(6), as $4,717,788. 134 The specific information reported in the previous paragraph has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Additional Matters Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material, but which warrants the attention of those charged with governance. In connection with our audit, we did not note any such findings. Purpose of this Letter 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, Federal and other granting agencies, the City Council, 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 to us during our audit. Fort Walton Beach, Florida March 27, 2026 135