Fort Walton Beach Council agenda — 03-27-12 regular — reading text

basis, UL a evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the 0N accounting principles used and significant estimates made by management, as well as evaluating the overall financial U statement presentation. We believe that our audit provides a reasonable basis for our opinions. mZ In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial 0 position 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, as of September 30, 2011, and the respective changes in financial 3R position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund and Community Redevelopment Special Revenue Fund for the year then ended in conformity with accounting principles LLt0 generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated March 9, 2012, on our CEv u consideration of the City of Fort Walton Beach, Florida's internal control over financial reporting and our tests of its r 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. Packet Pg. 39  6. 1. a Honorable Mayor and City Council Members City of Fort Walton Beach, Florida Independent Auditor' s Report ( Continued) Accounting principles generally accepted in the United States of America require that the Management' s Discussion and Analysis on pages 3 - 13, the Schedule of Funding Progress on page 77, and the Schedule of Contributions from the Employer and Other Contributing Entities on page 78 be presented to supplement the basic financial 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 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 in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the 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 0 opinion or provide any assurance. caN 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 financial statements as a whole. The introductory section, combining and individual a`K nonmajor fund financial statements, and statistical section, are presented for purposes of additional analysis and are not a Q required part of the financial statements. The combining and individual nonmajor fund financial statements are the U 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 NNn 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 UL a financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing 0N procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or U provide any assurance on them. mvc A" 11 wf L' 6 March 9, 2012 is0L CaVrEN Packet Pg. 40  6. 1. a 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, 2011. 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 $ 66.4 million (net assets). Of this amount, $ 19. 5 million represents unrestricted net assets that are available to meet the City' s ongoing obligations to citizens and creditors. c The government' s net assets decreased by $ 673, 480, primarily due to a change in estimate of the e useful life, which caused an increase in depreciation on the previously purchased force main and the re -use water filtration system. mc As of the close of the fiscal year, the City of Fort Walton Beach' s governmental funds reported nm combined ending fund balances of $17. 7 million, an increase of $2. 1M in comparison with the prior w year. Approximately 55. 7% of this amount, or $ 9. 9 million, is available for spending at the discretion of City Council At the end of the fiscal year, unrestricted fund balance for the General Fund was S7. 9 million, or n 46. 4% of total General Fund expenditures. The City of Fort Walton Beach' s total debt decreased by $ 2. 8 million, or 15. 1 %, during the fiscal year. The key factor in this decrease was the dcfeasement of the 1999 Golf Revenue Bond. 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 ( govemment -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 Packet Pg. 41  6. 1. a 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