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NNFCRD Financial Statements 09/30/2003 0.1 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT GENERAL PURPOSE FINANCIAL STATEMENTS TOGETHER WITH REPORTS OF INDEPENDENT AUDITOR YEAR ENDED ^ SEPTEMBER 30,2003 TABLE OF CONTENTS Page(s) Independent Auditor's Report 1-3 General Purpose Financial Statements Combined Balance Sheet-All Fund Types and Account Groups 4 Combined Statement of Revenue, Expenditures and Changes in Fund Balance- Governmental Funds and Expendable Trust Fund 5 Combined Statement of Revenue, Expenditures and Changes in Fund Balance- ,� Budget and Actual-Governmental Funds and Expendable Trust Fund 6 Statement of Changes in Plan Net Assets -Pension Trust Fund 7 Statement of Changes in Assets and Liabilities -Agency Fund 8 Notes to the General Purpose Financial Statements 9-42 Supplementary Information Combining Detailed Statement of Revenue, Expenditures and Changes in Fund Balance-Budget and Actual- Governmental Funds and Expendable Trust Fund 43-45 Combining Balance Sheet- Special Revenue Funds 46 Combining Statement of Revenue, Expenditures and Changes in Fund Balance- Special Revenue Funds 47 Combining Statement of Revenue, Expenditures and Changes in Fund Balance-Budget and Actual- Special Revenue Funds 48-49 Additional Reports of Independent Auditor Independent Auditor's Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards 50-51 Independent Auditor's Report to Management 52-67 Management's Response to Independent Auditor's Report to Management Exhibit J.% Affiliations S1 ,\ 0 E M F R TUSCAN Florida Institute of Certified Public Accountants \\N� �/� American Institute of Certified Public Accountants 4. CO1 SPAN v P� Management Consulting Services Division Private Companies Practice Section CERTIFIED PUBLIC ACCOUNTANTS/CONSULTANTS Tax Division INDEPENDENT AUDITOR'S REPORT Board of Commissioners North Naples Fire Control and Rescue District 1885 Veterans Park Drive Naples, Florida 34110 We have audited the accompanying general purpose financial statements of North Naples Fire Control and Rescue District (the "District") as of September 30, 2003 and for the year then ended. These general purpose financial statements are the responsibility of the District's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We did not audit the financial statements of North Naples Fire Control and Rescue District Firefighters' Pension Fund, which represent 100% of the assets of the District's Fiduciary Fund Types and 100% of the revenue of the Pension Trust Funds. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for North Naples Fire Control and Rescue District Firefighters' Pension Trust Fund is based on the report of the other auditors. 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 general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, based on our audit and the report of other auditors, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of North Naples Fire Control and Rescue District as of September 30, 2003, and the results of its operations for the year then ended in conformity with accounting principles generally accepted in the United States of America. ^ INTEGRITY. . . . .KNOWLEDGE. . . . .SERVICE. . . . .COMMITMENT 8961 CONFERENCE DRIVE,SUITE 2•FORT MYERS,FL 33919 (239)433-1002•Fax(239)433-0249•Web Site:stcpas.biz ^ Board of Commissioners North Naples Fire Control and Rescue District Page 2 In accordance with Government Auditing Standards, we have also issued our report dated March 29, 2004, on our consideration of the District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations and contracts. That report is an integral part of an audit performed in accordance with Government Auditing Standards, and should be read in conjunction with this report in considering the results of our audit. As more fully described in our "Independent Auditor's Report to Management" we tested the District's financial condition and noted certain factors indicating a potential deteriorating financial condition. These factors result, in part, from the District's rapid growth, the historical practice of annually expending more than annual revenue and not establishing reserves or a five (5) year plan. These factors are mitigated by an increasing tax base, continued construction within the District resulting in a continuation of impact fee receipts and a renewed commitment from the Board and management to implement corrective action. The District has sustained a level millage rate assessment. For the year ended September 30, 2003, the District did monitor its expenditures and did not expend more than its General Fund approved budget. A five (5) year plan was adopted in January 2003 and strides were made to implement and then adhere to more comprehensive accounting and budgetary policies. The District has exerted great effort to ., control its expenditures and is starting to build its reserves as required. Its financial trends, in general, did turn in a positive direction and during the year ended September 30, 2003 timely and accurate financial information was being presented, routinely, to the Board. It is important for the District to continue to monitor its expenditures and manage its budget to improve its financial condition and continue this positive trend. During the year ended September 30, 2003 effective February 1, 2003, the District resigned its duty as the designated administrative District for the Code Enforcement Expendable Trust Fund (Fire Code Official) and Inspection Fees Collection Fund- an Agency Fund. As such all assets, liabilities and fund balances as well as the affected employees were transferred to another independent fire district now designated as the Administrative District. During the year ended September 30, 2003, the District also completed the distribution of all assets held by the General Employee's Pension Fund. As such, each of these accounting Funds were eliminated by the District. During the year ended September 30, 2003, the District also resolved to terminate four(4) of its remaining six (6)retirement plans. All affected active employees became participants in the FRS plan. Board of Commissioners North Naples Fire Control and Rescue District Page 3 During the year ended September 30, 2003, the District became aware of various investigations by certain law enforcement agencies. The investigations are ongoing as of the date of this report. The District is not privy to the investigations' intent nor the status of these investigations and therefore the outcome cannot be determined. Management believes the result of the investigation will not result in a material claim against the District. Our audit was made for the purpose of forming an opinion on the general purpose financial statements of North Naples Fire Control and Rescue District taken as a whole. The supplementary information included on pages 43 through 49 is presented for purposes of additional analysis and is not a required part of the general purpose financial statements of North Naples Fire Control and Rescue District. Such information has not been subjected to the �• auditing procedures applied in the audit of the general purpose financial statements, and, accordingly, we express no opinion on it. i C , STROEMER TUSCAN & COMPANY, P.A. Fort Myers, Florida March 29, 2004 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT COMBINED BALANCE SHEET-ALL FUND TYPES AND ACCOUNT GROUPS September 30, 2003 Governmental Fund Types Special General Revenue Fund Funds ASSETS AND OTHER DEBITS Cash and cash equivalents $ 2,203,913 $ 1,334,767 Investments Due from other governments 128,345 195,179 Due from other funds 84,886 9,203 Other receivables 14,975 - Other assets 206,256 Property and equipment - - Amount to be provided for retirement of general long-term debt - - TOTAL ASSETS AND OTHER DEBITS $ 2,638,375 $ 1,539,149 LIABILITIES,FUND EQUITY AND OTHER CREDIT LIABILITIES Accounts payable and accrued expenses $ 493,113 $ - Due to other governments - 938 Due to other funds 9,203 84,886• Contract deposits 6,000 - Deferred revenue - 1,272,565 Capital lease obligation Accrued compensated absences - - TOTAL LIABILITIES 508,316 1,358,389 FUND EQUITY AND OTHER CREDIT Investment in general fixed assets - - Fund balance Unreserved,undesignated 521,652 - —s Unreserved,designated 1,608,407 180,760 L3 Reserved TOTAL FUND EQUITY AND OTHER CREDIT 2,130,059 180,760 ,, TOTAL LIABILITIES,FUND — EQUITY AND OTHER CREDIT $ 2,638,375 $ 1,539,149 The accompanying notes are an integral part of this statement. -� Page 4 of 67 Fiduciary Fund Types Account Groups Totals .. Firefighters' Code Inspection Fees General General Pension Enforcement Collection Fixed Long-Term (Memorandum ^ Fund Fund Fund Assets Debt Only) $ 356,565 $ - $ - $ - $ - $ 3,895,245 2,600,263 - - - - 2,600,263 152,389 - - - - 475,913 - - - - - 94,089 - - - - 14,975 — 20,992 - - - -�.� - 227,248 - - - 17,113,574�y - 17,113,574 - - - - 635,305 635,305 $ 3,130,209 $ - $ - $ 17,113,574 $ 635,305 $ 25,056,612 $ 7,941 $ - $ - $ - $ - $ 501,054 - - - - 938 - - - - - 94,089 ,� - - - - - 6,000 - - - - - 1,272,565 .-. - - - - 201,714 201,714 - - - - 433,591 433,591 7,941 - - - 635,305 2,509,951 - - - 17,113,574 - 17,113,574 - - - - - 521,652 _ - - - - 1,789,167 .. 3,122,268 - - - - 3,122,268 3,122,268 - - 17,113,574 - 22,546,661 $ 3,130,209 $ - $ - $ 17,113,574 $ 635,305 $ 25,056,612 .. .. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 5 of 67 '-. COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS AND EXPENDABLE TRUST FUND Year Ended September 30, 2003 Expendable r-. Governmental Funds Trust Fund Totals 4,', Speciale Code General Revenue Enforcement (Memorandum REVENUE Fund Funds Fund Only) Ad Valorem taxes $ 14,373,739 $ - $ - $ 14,373,739 Fees: Inspection fees - 614,557 - 614,557 Impact fees - 1,492,267 - 1,492,267 .. Hydrant fees - 31,444 - 31,444 Plan review fees - - 331,944 331,944 Disposition of fixed assets 197,550 - - 197,550 Miscellaneous: Interest 88,725 14,791 1,336 104,852 Other 356,283 1,295 15,958 373,536 TOTAL REVENUE 15,016,297 2,154,354 349,238 17,519,889 EXPENDITURES Current Public safety Personal services 10,606,552 643,489 179,431 11,429,472 '� Operating expenditures 2,551,079 78,390 24,055 2,653,524 ,i,-) Capital outlay 192,686 1,450,027[91 - 1.,642,716Y Debt service Principal reduction 363,446 26,02617 - 389,472 ^ Interest and fiscal charges 7,270 13,86357 - 21,135 TOTAL EXPENDITURES 13,721,033 2,211,797 203,486 . 16,136,316 EXCESS OF REVENUE OVER(UNDER)EXPENDITURES 1,295,264 (57,443) 145,752 1,383,573 ,., OTHER FINANCING SOURCES(USES) Proceeds from debt 351,714 - - 351,714 .•. 351,714 - ___ _ 351,714 - EXCESS OF REVENUE&OTHER FINANCING SOURCES OVER i-. (UNDER)EXPENDITURES& OTHER FINANCING USES 1,646,978 (57,443) 145,752 1,735,287 i. FUND BALANCE,October 1,2002 483,081 238,203 997,743 1,719,027 Residual Equity Transfer - - (1,143,495) (1,143,495) FUND BALANCE,September 30,2003 $ 2,130,059 $ 180,760 $ - $ 2,310,819 • .. The accompanying notes are an integral part of this statement. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL- GOVERNMENTAL FUNDS IN AND EXPENDABLE TRUST FUND Year Ended September 30, 2003 IN Governmental Funds General Fund Special Revenue Funds Variance Variance " Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) REVENUE Ad Valorem taxes $ 14,045,016 $ 14,373,739 $ 328,723 $ - $ - $ - Fees: Inspection fees - - - 680,000 614,557 (65,443) Impact fees - - - 1,200,000 1,492,267 292,267 Hydrant fees - - - 43,000 31,444 (11,556) Plan review fees - - - - - Disposition of fixed assets - 197,550 197,550 - - - ,,\ Miscellaneous: Interest 50,000 88,725 38,725 10,000 14,791 4,791 . Other 450,830 356,283 (94,547) - 1,295 1,295 TOTAL REVENUE 14,545,846 15,016,297 470,451 1,933,000 2,154,354 221,354 EXPENDITURES Current Public safety " Personal services 11,081,032 10,606,552 474,480 659,344 643,489 15,855 ON Operating expenditures 2,622,585 2,551,079 71,506 114,017 78,390 35,627 Capital outlay 554,635 192,686 361,949 1,615,591 1,450,027 165,564 Debt service Principal reduction 16,635 363,446 (346,811) 42,660 26,026 16,634 - Interest and fiscal charges 10,000 7,270 2,730 13,865 13,865 - TOTAL EXPENDITURES 14,284,887 13,721,033 563,854 2,445,477 2,211,797 233,680 ON EXCESS OF REVENUE OVER (UNDER)EXPENDITURES 260,959 1,295,264 1,034,305 (512,477) (57,443) 455,034 OTHER FINANCING SOURCES(USES) Proceeds from debt - 351,714 351,714 - - - EXCESS OF REVENUE&OTHER ," FINANCING SOURCES OVER (UNDER)EXPENDITURES& .y OTHER FINANCING USES 260,959 1,646,978 1,386,019 (512,477) (57,443) 455,034 FUND BALANCE, October 1,2002 - 483,081 483,081 1,458,963 238,203 (1,220,760) Residual Equity Transfer - - - - _ - FUND BALANCE, September 30,2003 $ 260,959 $ 2,130,059 $ 1,869,100 $ 946,486 $ 180,760 $ (765,726) The accompanying notes are an integral part of this statement. -. Page 6 of 67 Expendable Trust Fund Code Enforcement Totals-Memorandum Only Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) r-� $ - $ - $ - $ 14,045,016 $ 14,373,739 $ 328,723 680,000 614,557 (65,443) - 1,200,000 1,492,267 292,267 43,000 31,444 (11,556) 745,000 331,944 (413,056) 745,000 331,944 (413,056) 197,550 197,550 1,336 1,336 60,000 104,852 44,852 15,958 15,958 450,830 373,536 (77,294) 745,000 349,238 (395,762) 17,223,846 17,519,889 296,043 573,572 179,431 394,141 12,313,948 11,429,472 884,476 135,989 24,055 111,934 2,872,591 2,653,524 219,067 35,000 - 35,000 2,205,226 1,642,713 562,513 59,295 389,472 (330,177) - - 23,865 21,135 2,730 744,561 203,486 541,075 17,474,925 16,136,316 1,338,609 439 145,752 145,313 (251,079) 1,383,573 1,634,652 351,714 351,714 439 145,752 145,313 (251,079) 1,735,287 1,986,366 935,000 997,743 62,743 2,393,963 1,719,027 (674,936) - (1,143,495) (1,143,495) - (1,143,495) (1,143,495) $ 935,439 $ - $ (935,439) $ 2,142,884 $ 2,310,819 $ 167,935 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 7 of 67 STATEMENT OF CHANGES IN PLAN NET ASSETS - PENSION TRUST FUND Year Ended September 30, 2003 Firefighters' Pension Fund ADDITIONS Contributions: • Employer $ 565,182 Plan members,made by employer on behalf of employee 24,138 State of Florida, insurance premiums 422,639 Total contributions 1,011,959 Investment income: Net appreciation in fair value of investments 213,432 Interest and dividends 69,885 283,317 Less: investment expenses (21,249) Net investment income 262,068 TOTAL ADDITIONS 1,274,027 DEDUCTIONS Refund of contributions 1,633 Administrative expenses 41,406 TOTAL DEDUCTIONS 43,039 NET INCREASE IN PLAN ASSETS 1,230,988 NET PLAN ASSETS, October 1,2002 1,891,280 NET PLAN ASSETS, September 30, 2003 $ 3,122,268 The accompanying notes are an integral part of this statement. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 8 of 67 STATEMENT OF CHANGES IN ASSETS AND LIABILITIES - AGENCY FUND Year Ended September 30, 2003 Balance Balance October 1, September 30, 2002 Additions Deletions 2003 Inspection Fees Collection Fund ASSETS Cash $ 2,584 $ 353,741 $ (356,325) $ - Due from other governments 79,381 274,071 (353,452) TOTAL ASSETS $ 81,965 $ 627,812 $ (709,777) $ - LIABILITIES Due to other governments $ 32,487 $ 122,233 $ (154,720) $ - Due to other funds 49,478 152,127 (201,605) - TOTAL LIABILITIES $ 81,965 $ 274,360 $ (356,325) $ - The accompanying notes are an integral part of this statement. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 9 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization North Naples Fire Control and Rescue District(the "District") is an independent special taxing district located in northern Collier County, Florida. The District was originally established by Laws of Florida, Chapter 61-2032 and Florida Statute 633.15, then reestablished by Laws of Florida Chapter 84-416, as amended. The District's governing legislation was recreated, reenacted and codified by Laws of Florida, Chapter 99-450 on July 13, 1999. The District is governed by a five (5) member elected Board of Commissioners. Commissioners serve on a staggered four(4)year term basis. The District provides fire control and protection services, fire safety, inspections, code enforcement, fire hydrant maintenance, firefighter training, and crash and fire rescue services as well as basic life support services. In providing these services, the District operates and maintains six(6) stations and the related equipment and employs approximately 120 full-time professional firefighters and administrative staff. Reporting entity The District has adopted Governmental Accounting Standards Board(GASB) Statement Number 14, "Financial Reporting Entity", as amended by GASB Statement Number 39, "Determining Whether Certain Organizations Are Component Units." These statements require the financial statements of the District(the primary government).to include its component units, if any. A component unit is a legally separate agency for which the primary government is financially accountable or organizations whose exclusion would cause the financial statements to be misleading because of the nature and significance of their relationship with the primary government. Financial accountability is determined by the primary government's ability to appoint the voting majority of the entity's Board, impose its .. will on the organization, the existence of a financial benefit/burden relationship or fiscal dependency. Based on this criteria, there are no component units required to be and there are no component units included in the District's financial statements. As noted in the Independent Auditor's Report, the District deleted two (2) funds the Code Enforcement Fund and the Inspection Fees Collection Fund. During the year ended September 30, 2003, in both cases the District transferred its administrative duties related to the funds to an unrelated third party district. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 10 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Fund accounting The accounts of the District are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of the rd wa eartng accounts that comprise its funassetsdsae, liabiaccountelities, for fund eqithuitys,pa datree set of andself-balanciexpenditures, asappropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped in the general purpose financial statements into generic fund types, as follows: Governmental Fund Types: General Fund- The General Fund is the general operating fund of the District. It is used to account for all District financial resources, except those required to be accounted for in another fund. Special Revenue Funds- Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. The District has three special revenue funds: an Impact Fee Fund, an Inspection Fee Fund and a Hydrant Fund. The Impact Fee Fund consists of fees collected by Collier County based on new construction within the District. The fees are restricted and can only be used for certain capital expenditures associated with growth within the District. The Inspection Fee Fund consists of building inspection fees earned by District Fire Inspectors through the inspection of construction projects within the District as part of the County building permitting process. Inspection fees were distributed to this fund by the District's agency fund through January 31, 2003. The District resigned its agency fund duties effective February 1, 2003. Hydrant fees are one-time fees collected from new construction for fire hydrant maintenance. Debt Service Fund- The Debt Service Fund is used to account for resources to be used for the payment of compensated absences accounted for in the General Long-Term Debt Account Group. During the year ended September 30, 2002, the Board resolved to close the Debt Service Fund. As such, the District transferred assets from the General Fund to fund the Debt Service Fund loss carryforward. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 11 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30,2003 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Fund accounting, continued Governmental Fund Types, continued: Fiduciary Funds- Fiduciary Funds account for assets held by the government in a trustee capacity or as an agent on behalf of others. Trust funds account for assets held by the government under the terms of a formal trust agreement. The District has three fiduciary funds: a Firefighters' Pension Fund used to account for all the assets of the pension plan; an Expendable Trust Fund- Code Enforcement, used to account for the financial activity of the code enforcement function of Collier County, which is monitored by a committee representing each fire district in the County; the Code Enforcement Fund retains a fifteen (15%) percent administrative fee to fund its operations,with excess revenues being retained until two (2) times the fund's annual budget is held in reserve; and an Agency Fund- Inspection Fees Collection Fund, used to collect building inspection fees from Collier County and distribute them to the fire districts within the County, of which North Naples Fire Control and Rescue District retains a one (1%) percent administrative fee. During the year ended September 30, 2003, the District resigned its duty as the designated administrative District for the Code Enforcement Expendable Trust Fund and the Inspection Fees Collection Fund. As such, all assets, liabilities, and fund balances, as well as the affected employees were transferred to another independent fire district now designated as the Administrative District. As such, both of these funds have been eliminated by the District. Account Groups: General Fixed Assets-This account group is used to account for all fixed assets of the District. General Long-Term Debt- This account group is used to account for long-term obligations of the District, including accrued compensated absences and a capital lease. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 12 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Measurement focus Governmental Fund Types- The General Fund and Special Revenue Funds are accounted for on a"spending" or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on the balance sheet. Accordingly, the reported unreserved fund balance (net current assets) is considered a measure of available, spendable or appropriable resources. Governmental Fund Type operating statements present increases (revenue and other financing sources, if any) and decreases (expenditures and other financing uses, if any) in net current assets. Fiduciary Fund Types- Pension Trust Funds are accounted for on an "economic resources" measurement focus. Accordingly, all assets and liabilities are included on their balance sheets, and the reported fund equities (total reported assets less total reported liabilities)provide an indication of the economic net worth of the funds. Operating statements for Pension Trust Funds report increases (additions) (revenues) and decreases (deductions) (expenses) in total economic net worth. The Expendable Trust Fund is accounted for in essentially the same manner as governmental funds. The Agency fund is custodial in nature (assets equal liabilities) and does not involve measurement of the results of operations. Account Groups -The General Fixed Assets Account Group and the General Long-Term Debt Account Group are concerned only with the measurement of financial position. Theyare not involved with the measurement of results of operations. Basis of accounting Basis of accounting refers to when revenue and expenditures are recognized in the accounts and reported in the general purpose financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. The Governmental Funds, Expendable Trust Fund and Agency Fund are accounted for using the modified accrual basis of accounting, whereby revenue is recognized when it becomes measurable and available as net current assets. Taxpayer assessed income and gross receipts are considered"measurable" when in the hands of intermediary collecting governments and are recognized as revenue at that time. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 13 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Basis of accounting, continued Anticipated refunds of such taxes are recorded as liabilities and reductions of revenue when they become measurable and their validity seems certain. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Exceptions to this general rule include: (1) principal and interest on general long-term debt, if any, which is recognized when due; and(2) expenditures are generally not divided between years by the recording of prepaid •• expenditures. Because of their spending measurement focus, expenditure recognition for Governmental Fund Types excludes amounts represented by noncurrent liabilities. Since they do not affect current assets, such long-term amounts are recognized as liabilities in the General Long-Term Debt Account Group. The Pension Trust Fund is accounted for using the accrual basis of accounting. -• Under this method, revenues are recognized when they are earned; expenses are recognized when they are incurred. Pursuant to Governmental Accounting Standards Board(GASB) Statement Number 20, "Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting," the District has elected not to apply accounting standards issued after November 30, 1989, by the Financial Accounting Standards Board. Investments The District adheres to Statement No. 31 of the Governmental Accounting Standards Board (GASB), "Accounting and Financial Reporting for Certain Investments and for External Investment Pools," in which all investments are reported at fair value. Investments, including restricted investments, consist of certificates of deposit, U.S. Government securities, corporate debt securities, and securities of government agencies unconditionally guaranteed by the U.S. Government. Fixed assets Fixed assets used in Governmental Fund Type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group, rather than in the governmental funds. No depreciation has been provided on general fixed assets. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 14 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Fixed assets, continued The District follows a capitalization policy which calls for capitalization of all fixed assets that have a cost or donated value of$750 or more and have a useful life in excess of one year. All fixed assets are valued at historical cost, or estimated historical cost if actual historical cost is not available. Donated fixed assets are valued at their estimated fair market value on the date donated. Public domain (infrastructure) general fixed assets consisting of certain improvements other than buildings, including curbs, gutters and drainage systems, are not capitalized, as the District generally does not acquire such assets. No debt-related interest expense is capitalized as part of general fixed assets. Budgets and budgetary accounting The District has adopted an annual budget for the General Fund, which included budgeted revenue over expenditures and other financing uses of$260,959. The District has adopted an annual budget for the Special Revenue Funds - Impact Fee, Inspection Fee and Hydrant Fund, which included budgeted expenditures over revenue of$480,116 in the Impact Fee Fund, budgeted expenditures over budgeted revenue of$23,891 in the Inspection Fee Fund, and $8,470 budgeted expenditures over revenue in the Hydrant Fund. The District has adopted an annual budget for the Expendable Trust Fund- Code Enforcement, which included budgeted revenue over expenditures of$439. The District follows these procedures in establishing budgetary data for the General Fund, the Impact Fee Fund, the Inspection Fee Fund, the Hydrant Fund and the Code Enforcement Fund: NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 15 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Budgets and budgetary accounting, continued 1. During the summer of each year, the District Fire Chief submits to the Board of Commissioners a proposed operating budget for the fiscal year commencing on the upcoming October 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is adopted by approval of the Board of Commissioners. 4. Budget amounts, as shown in these general purpose financial statements, are as originally adopted or as amended by the Board of Commissioners. 5. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America. 6. The level of control for appropriations is exercised at the fund level. 7. Appropriations lapse at year-end. Several budget amendments were approved by the Board of Commissioners during the fiscal year ended September 30, 2003, which increased the budgeted revenue in the General Fund by $185,830. The amendments also increased the budgeted expenditures in the General Fund, the Impact Fee Fund, the Inspection Fee Fund, and the Hydrant Fund by $237,053, $8,578, $23,891, and$15,750 respectively. No budgets were adopted for the Inspection Fee Collection Fund(an Agency fund),or the Pension Trust Funds. Impact fees/deferred revenue The District levies an impact fee on new construction within the District. The intent of the fee is for growth within the District to pay for capital improvements needed due to the growth. The fee is collected by Collier County and remitted to the District. The fee is refundable if not expended by the District within six (6) years from the date of collection. The District, therefore, records this fee as restricted cash and as deferred revenue. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 16 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED Due to/from other funds Interfund receivables and payables arise from interfund transactions and are recorded by funds affected in the period in which transactions are executed. Due from other governments No allowance for losses on uncollectible accounts has been recorded since the District considers all amounts to be fully collectible. Compensated absences The District's employees accumulate annual leave, based on the number of years of continuous service. Upon termination of employment, employees can receive payment of accumulated annual leave, if certain criteria are met. Accumulated annual leave at September 30, 2003 was recorded in the general purpose financial statements in the General Long-Term Debt Account Group, as these accounts would not normally be liquidated with expendable available financial resources. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the District because, at present, it is not necessary in order to assure effective budgetary control or to facilitate effective cash planning and control. Management estimates The preparation of financial statements in confoimity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. Fund equity Reservations of fund balance indicate amounts that are limited for a specific purpose, not appropriable for expenditure, or are legally segregated for a specific future use. Designations of fund balance represent tentative management plans. Unreserved, undesignated fund balance indicates funds that are available for current expenditure. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 17 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE A- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED ,01 Total columns on combined financial statements The total columns on the combined financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with accounting principles generally accepted in the United States of America. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Interfund transactions The District considers interfund receivables (due from other funds) and interfund liabilities (due to other funds) to be loan transactions to and from other funds to cover temporary (three months or less) cash needs. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursing funds and as reduction of expenditures/expenses in the fund that is reimbursed. NOTE B - CASH AND CASH EQUIVALENTS Cash and cash equivalents were $3,895,245, of which the total cash balance of $1,691,332 was restricted. Total cash and cash equivalents included cash on hand of $500 at September 30, 2003. Deposits The District's deposit policy allows deposits to be held in demand deposit and money market accounts. All District depositories are institutions designated as qualified depositories by the State Treasurer at September 30, 2003. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 18 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE B - CASH AND CASH EQUIVALENTS, CONTINUED District deposits consist of the following at September 30, 2003: Carrying Bank Amount Balance Unrestricted General Fund Depository Accounts $ 291,674 $ 547,873 Money Market 1,911,739 1,911,739 Total General Fund 2,203,413 2,459,612 Restricted Special Revenue Funds Impact Fee Depository 1,117,020 1,118,291 Inspection Fee Depository 143,821 143,821 Hydrant Money Market 73,926 73,926 Total Special Revenue Funds 1,334,767 1,336,038 Pension Trust Fund Firefighters' Pension Depository 356,565 Not Available Total Pension Trust Fund 356,565 Not Available Total Restricted Cash 1,691,332 1,336,038 TOTAL $ 3,894,745 $ 3,795,650 These deposits were entirely covered by federal depository insurance or by collateral pursuant to the Public Depository Security Act(Florida Statute 280) of the State of Florida. Bank balances approximate market value. a NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 19 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE B - CASH AND CASH EQUIVALENTS, CONTINUED Restricted cash and equivalents The following is a brief description of the restrictions on cash and cash equivalents: The Impact Fee account is used to account for the deposit of impact fees received and is restricted for certain capital asset acquisition associated with growth within the District. Impact fees are collected by Collier County for the District pursuant to County ordinance and District resolution. The Inspection Fee account is used to account for inspection fees collected by the District for performing fire inspections within the District. Such revenue is restricted for inspection service related costs. The Hydrant account is used to account for fees collected from new construction to fund future fire hydrant maintenance costs. The Pension Trust Fund accounts for resources held to fund the respective employee pension benefits. NOTE C - INVESTMENTS Investments were $2,600,263 at September 30, 2003. Investments held in the Firefighters' Pension Plan are controlled by Firefighters' Pension Board policy. This policy provides for investments in treasury notes, federal agency guaranteed securities, corporate bonds, notes and/or equities and real estate. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 20 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE C - INVESTMENTS, CONTINUED In accordance with GASB Statement No. 3, "Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reserve Purchase Agreements," the District's investments are categorized as follows to give an indication of the level of risk assumed by the District: Category 1 Includes investments that are insured or registered, or securities held by the District or its agents in the District's name, or held by the District's agents in a Depository Trust Company custodial account. Category 3 Includes uninsured and unregistered investments for which securities are held by a counterparty, its trust department or agent, but not in the District's name. There were no losses during the period due to default by counterparties to investment transactions, and the District had no other types of investments during the year other than those listed below. Bank Balance Carrying/ Category 1 Category 3 Fair Value Firefighters' Pension Trust Fund U.S. Federal Securities (Bonds) $ 477,331 $ - $ 477,331 Corporate Bonds - 784,416 784,416 Corporate Security Equities - 1,338,516 1,338,516 Total Firefighters' Pension Trust Fund 477,331 2,122,932 2,600,263 TOTAL INVESTMENTS $ 477,331 $ 2,122,932 $ 2,600,263 Investments held by the Firefighters' Pension Trust Fund cannot be comprised of greater than a 5% equity investment in any one company nor may the Fund's equity investment of any one company exceed 5% of the outstanding stock of that company. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 21 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE D - DUE TO/FROM OTHER FUNDS Interfund receivables and payables at September 30, 2003 are as follows: Due from Due to Fund other funds other funds General Fund: Impact Fee $ - $ 9,203 Inspection Fee 80,822 Hydrant 4,064 Total General Fund 84,886 9,203 Special Revenue Funds: Impact Fee General 9,203 Inspection Fee General - 80,822 Hydrant General - 4,064 Total Special Revenue Funds 9,203 84,886 Total $ 94,089 $ 94,089 a a a NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 22 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE E - CHANGES IN GENERAL FIXED ASSETS The following is a summary of changes in general fixed assets for the year ended September 30, 2003: Balance Balance October 1, Deletions/ September 30, 2002 Additions Adjustments 2003 Land $ 1,806,430 $ - $ - $ 1,806,430 Construction in progress 172,260 1,057,002 (472,929) 756,333 Buildings & improvements 6,527,950 - 472,929 7,000,879 Vehicles & equipment 4,390,143 396,754 (322,125) 4,464,772 Firefighter equipment 1,331,105 169,190 402,964 1,903,259 Furniture & fixtures 847,942 19,767 (4,304) 863,405 Fixed assets acquired under capital lease 318,496 - - 318,496 $ 15,394,326 $ 1,642,713 $ 76,535 $ 17,113,574 Adjustments were required to the fixed asset balances at September 30, 2003 as a result of the on-going fixed asset inventorying project for items located and/or donated/deleted in prior years. NOTE F - CHANGES IN GENERAL LONG-TERM DEBT The following is a summary of changes in general long-term debt for the year ended September 30, 2003: Amount General long-term debt payable, at October 1, 2002 $ 690,790 Proceeds - note payable (tax anticipation note) 150,000 Proceeds - capital lease (refinance) 201,714 Principal reduction - note payable (paid in full) (150,000) Principal reduction - capital lease (refinanced) (239,472) Decrease in accrued compensated absences (17,727) General long-term debt payable, at September 30, 2003 $ 635,305 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 23 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE F - CHANGES IN GENERAL LONGTERM DEBT, CONTINUED During the year ended September 30, 3003 the District refinanced its existing $318,496 capital lease in an effort to lower its interest costs. As such, a$201,714 capital lease was obtained and used to completely retire the existing capital lease. The interest rate was reduced from 5.79% to 3.8%. There was no gain or loss from the refinancing. During October 2002, the District borrowed $150,000 from a financial institution in anticipation of future ad valorem tax proceeds. The note was paid in full plus interest costs of$2,167 on November 27, 2002. The loan activity was recorded as part of the General Fund. The following is a summary of long-term payable obligations at September 30, 2003: Amount $201,714 capital lease payable annually to financial institution in the amount of$54,786 including interest at 3.8%, collateralized by the respective vehicle. Final payment due December 24, 2006. $ 201,714 Non-current portion of compensated absences. Employees of the District are entitled to paid leave based on length of service and job classification. 433,591 — $ 635,305 The annual debt service requirements for general long-term debt at September 30, 2003 were as follows: Year Ending Capital Lease September 30 Interest Principal 2004 $ 5,685 $ 49,101 2005 5,800 48,986 2006 3,938 50,848 2007 2,007 52,779 Total debt service $ 17,43.0 201,714 Accrued compensated absences 433,591 Total Long-Term Debt $ 635,305 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 24 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE G- RETIREMENT PLANS The following five retirement plans have been established by the District: Plan 1 - Florida Retirement System (FRS) Plan 2 - Firefighters' Pension Trust Fund(Florida Statute 175) Plan 3 - Governmental Money Purchase Plan- Executive Assistant(1) Plan 4 - Governmental Money Purchase Plan - Code Officers (2) Plan 5 - Governmental Money Purchase Plan - General Employees (3) (1) Plan was terminated as of July 24, 2003 effective July 24, 2003. (2) Plan was terminated on February 13, 2003 effective February 1, 2003. (3) Plan was terminated on June 12, 2003 effective June 1, 2003. Employee participation in a specific plan is based on the respective employee's original hire date. Plan 1 - Plan description and provisions - Florida Retirement System All District personnel employed prior to January 1, 1996 are participants in the statewide Florida Retirement System (FRS) under the Authority of Article X, Section 14 of the State Constitution and Florida Statutes, Chapters 112 and 121. The FRS is noncontributory and is totally administered by the State of Florida. The District contributed 100% of the required contributions for the years ended September 30, 2003, 2002 and 2001. The District's covered payroll for the years ended September 30, 2003, 2002 and 2001 was $3,962,046, $3,950,152, and $3,965,771 respectively. The District's contributions to the Plan were $609,833, $657,502, and $739,684 for the years ended September 30, 2003, 2002 and 2001, respectively, which represents 15%, 17%, and 19%, respectively, of covered payroll. Pension costs for the District ranged between 6% to 19% for the year ended September 30, 2003. There were no employee contributions to the Plan. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 25 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE G-RETIREMENT PLANS, CONTINUED Plan 1 - Plan description and provisions - Florida Retirement System, continued Employees who retire at or after age 62 with 6 years of creditable service , 6 years of senior management service and age 62, 6 years of special risk service and age 55, or 30 years of service (25 for special risk) regardless of age, are entitled to a retirement benefit, payable for life, equal to 1.5%to 3.3%per year of creditable service, depending on the class of employee (regular, special risk, etc.) based on average final compensation of the five (5) highest fiscal years' compensation. Benefits vest after six years (six years for senior management) of creditable service. Vested employees may retire anytime after vesting and incur a 5% benefit reduction for each year prior to normal retirement age. Early retirement, disability, death and survivor benefits are also offered. Benefits are established by State Statute. The plan provides for a constant 3% cost-of-living adjustment for retirees. The plan also provides several other plan and/or investment options that may be elected by the employee. Each offers specific contribution and benefit options. The Plan documents should be referenced for complete detail. Description of funding policy- This is a cost sharing, multi-employer plan available to governmental units within the State. Actuarial information with respect to an individual participating entity is not available. Participating employers are required, by Statute, to paymonthly contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are adequate to accumulate sufficient assets to pay benefits when due. Trend information-A copy of the FRS's June 30, 2003 annual report can be obtained by writing the Florida Division of Retirement, Cedars Executive Center, 2639-C North Monroe Street, Tallahassee, Florida 32399-1560, or by calling (850) 488-5706. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 26 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE G -RETIREMENT PLANS, CONTINUED Plan 2 - Plan description and provisions - Firefighters' Pension Trust Fund The following brief description of the North Naples Fire Control and Rescue District Firefighters' Pension Plan (the "Plan") is provided for general information purposes only. Participants should refer to the plan agreement for a more complete description of the Plan. On July 11, 1996, under the authority of Florida Statute 175 and Laws of Florida, Chapter 95-338, the District's Board of Commissioners passed Resolutions 96-004 and 96-005, providing for the establishment and funding of a single employer defined benefit retirement plan and trust for newly hired fire suppression personnel. The resolutions establish that certified firefighters employed on or after January 1, 1996 are to become participants in the District's Firefighters' Pension Trust Fund. The Plan is totally administered, including all investment management, by a third party administrator and the Plan's appointed Pension Board. There were no employee contributions to the Plan during the years ended September 30, 2003, 2002 or 2001. The employer contributed 100% of its required contributions, as well as those required of the participating firefighters (1% pick-up). The Plan provides for full-time firefighting personnel to become eligible to participate in the Plan immediately upon hire. Under District resolution 96-005, the District elected to pay the required 1% employee contribution on behalf of the employee. Effective July 1, 2001 (per resolution 01-01), benefits under the Plan vest after six years of creditable service. Employees who elect normal retirement at or after age 55 with 6 years of creditable service, or 25 years of service regardless of age, are entitled to a retirement benefit. Employees may elect early retirement after 6 years of creditable service and attainment of age 50 with a reduction in benefit not to exceed 3% for each year before noiiiial retirement. The Plan also includes certain disability and death benefits. Contributions - Contributions to the Plan are derived from three sources: employees ("1% pick-up" - 1% of compensation paid by the District on behalf of the employee pursuant to Resolution 96-005), State funds (fire [hazard] insurance premium tax per Florida Statute Chapter 175) and employer (remaining amount necessary to meet actuarial requirement). For the period from January 1, 1996 through September 30, 1996, no employer contributions were required. Employer contributions were required from October 1, 1996 through September 30, 2003. The State contributions NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 27 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE G -RETIREMENT PLANS, CONTINUED Plan 2 - Plan description and provisions- Firefighters' Pension Trust Fund, continued under Chapter 175 began in June 1997. This revenue is based on property fire insurance premiums paid within the District and is applied up to an approved "frozen" limit of$112,818. The District (employer) is required to fund the difference each year between the total contributions from all other sources for the year and the total cost for the year pursuant to the most recent actuarial valuation of the Plan. The total cost for any year equals total normal cost plus the additional amounts sufficient to amortize the unfunded past service liability over a 30 year period commencing the first year of the Plan's inception. Pursuant to the actuarial study dated October 1, 2002, the District's fiscal year 2003 contribution requirement and actual contribution was $565,182,which approximated •• 24% of covered payroll. Actual District contributions to the Plan for the year ended September 30, 2003 were $589,320 including $24,138 contributed by the District on behalf of the participating firefighters (1%pick-up). The State contributions for the year ended September 30, 2003 were$422,639. At September 30, 2003, $697,173 of the Plan's total net assets were restricted for future benefits increases. Pension benefits - Effective July 1, 2001, employees with 6 or more years of service are entitled to monthly pension benefits, beginning at the earlier of age 55 with 6 years of credited service or 25 years credited service, equal to 3% of their average final compensation(AFC) over the 5 highest years within the last 10 years of service multiplied by number of years of credited service. Maximum benefit is 100% of AFC. The plan permits early retirement at age 50 with 6 years of credited service. Employees may elect to receive their pension benefits in the form of a 10 year certain and life annuity. If employees terminate before rendering 6 years of credited service, they forfeit the right to receive the portion of their accumulated plan benefits. All retirement benefits are annually increased for cost of living at 3%. Death and Disability benefits -Upon the death of any vested member, whether or not still in active employment, a survivor benefit is payable to the beneficiary starting when the member would have reached retirement age. The benefit is equal to the vested pension benefit and is payable for 10 years. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 28 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE G -RETIREMENT PLANS, CONTINUED Plan 2 - Plan description and provisions - Firefighters' Pension Trust Fund, continued Employees who become totally disabled with at least 8 years of credited service receive the greater of the accrued pension benefit or 25% of AFC, if non-service incurred or 42% of AFC, if active service incurred. Income recognition - Interest income is recorded on the accrual basis. Investments are reported at market value. Short-term investments are reported at cost, which approximates market value. Actuarial present value of accumulated plan benefits -Accumulated plan benefits are those future periodic payments, including lump-sum distributions, that are attributable under the Plan's provisions to the service employees have rendered. Accumulated plan benefits include benefits expected to be paid to (a) retired or terminated employees or their beneficiaries, (b) beneficiaries of employees who have died, and(c) present employees or their beneficiaries. Benefits under the Plan are based on employees' age at entry to the Plan and is based upon the current starting salary for firefighters' at entry level. Benefits payable under all circumstances; retirement, death, disability and termination of employment, are included, to the extent they are deemed attributable to employee service rendered to the valuation date. The actuarial present value of accumulated plan benefits is determined by an actuary and is the amount that results from applying actuarial assumptions to adjust the accumulated plan benefits to reflect the time value of money (through discounts for interest) and the probability of payment(by means of decrements such as for death, disability, withdrawal, or retirement) between the valuation date and the expected date of payment. The significant actuarial assumptions used in the valuations as of September 30, 2002 were (a) life expectancy of participants (the 1983 Group Annuity Mortality Table was used) (b) retirement age assumptions (the assumed average retirement age was 55) and(c) investment return. The October 1, 2002 actuary valuation reflected assumed average rates of return of 8%. The foregoing actuarial assumptions are based on the presumption that the Plan will continue. If the Plan terminated, different actuarial assumptions and other factors might be applicable in determining the actuarial present value of accumulated plan benefits. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 29 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE G -RETIREMENT PLANS, CONTINUED Plan 2 - Plan description and provisions -Firefighters' Pension Trust Fund, continued Payment of benefits - Benefit payments to participants are recorded upon distribution. The District contributed 100% of the required contributions. A summary of certain Plan details and trend information is included below. A copy of the Plan and Plan audit for September 30, 2003 can be obtained by writing the District at 1885 Veterans Park Drive,Naples, Florida 34110, or by calling (239) 597-3222. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 30 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE G -RETIREMENT PLANS, CONTINUED The following is a summary of the Single Employer-Defined Benefits Plan, including funding policies, contribution methods, benefit provisions and trend information: Firefighters' Pension Trust Fund- Plan 2 Year established and District Resolution 96- governing authority 004 (July 11, 1996) Governing body Board of Trustees of Plan Determination of contribution requirements: Actuarially determined Employer(District) 23% to 33% of covered payroll,based upon age of employees. Contributions are required after the State Revenue under Chapter 175 (premium tax refunds) are received. Plan members 1% of Covered payroll- Note: The District adopted Resolution 96-005 to fund _ the contribution for the employees. (Pick-up) Funding of administrative costs Employer Period required to vest 6 years Post retirement benefit increase Cost of living increase of of 3% each year. Eligibility for distribution (Normal retirement) Earlier of 55 with 6 years of credited service or 25 years credited service regardless of age Provisions for: Disability benefits Yes Death benefits Yes NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 31 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE G -RETIREMENT PLANS, CONTINUED Memberships of the Plan consisted of the following at September 30, 2003: Firefighters'Pension Trust Fund-Plan2 Active plan participants Vested 11 Non-vested 51 Retirees and beneficiaries receiving benefits 0 Terminated Plan members entitled to but not yet receiving benefits 0 Total 62 Number of participating employers 1 Number of participating state agencies 1 Annual Pension Cost,Net Pension Obligation and Reserves Current year annual pension costs for the Firefighters' Pension Trust Fund are shown in the trend information provided. The Firefighters'Pension Trust Fund had a net unfunded actuarial accrued liability at September 30, 2003 of$917,879. The Plan assets are legally reserved for the payment of the respective plan member benefits within the Plan. There are no assets legally restricted for plan benefits other than these assets within the Plan. The Firefighters' Pension Trust Fund held certain investments at year end. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 32 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE H -RETIREMENT PLANS, CONTINUED Trend Intormation Firefighters'Pension Trust Fund(2) (3) Required Net Annual State (1) Pension Fiscal Pension District State Frozen Actual Percentage Obligation Year Contribution Contribution Contribution Contribution Contribution Contributed (NPO) 2003 $ 678,000 $ 565,182 $ 422,639 $ 112,818 $ 678,000 100% - 2002 $ 564,102 $ 451,284 $ 303,169 $ 112,818 $ 564,102 100% - 2001 $ 393,649 $ 305,603 $ 212,220 $ 112,818 $ 418,421 106% - ^ 2000 $ 266,823 $ 227,235 $ 182,204 $ 106,594 $ 333,829 125% - 1999 $ 159,203 $ 4,042 $ 128,582 $ 106,594 $ 110,636 69% - '� 1998 $ 79,718 $ 105,337 $ 106,594 $ 106,594 $ 211,931 266% - .. (1) Excludes employee 1%pick-up but includes employer and State frozen contributions. (2) An actuarial valuation was not prepared for October 1, 1998 (for FY 1999),per actuary's letter dated February 15,2000 addressed to the pension administrator. However,the actuary determined the required contribution for year ending September 30,1999 based on October 1, 1998 payroll of$627,482. In addition, actuarial valuation was prepared on October 1, 1999 for fiscal year 2000. Information regarding FY 1999 was extracted from such study. Valuations have been prepared annually thereafter. (3) The District considers its annual pension cost to be its actuarially determined required annual pension contribution. Pension Trusts Required Supplementary Information, September 30, 2003 Schedule of Funding Progress Firefighters' Pension Plan: Unfunded Actuarial Actuarial Actuarial UAAL as a Value of Accrued Accrued Annual Percentage of Actuarial Assets ..iability(AAL Liability Funded Covered Covered Valuation (AVA) -Entry Age (UAAL) Ratio Payroll Payroll Date (a) (b) (b-a) (a/b) (c) (b-a)/c 10/01/03 $2,420,236 $3,338,115 $ 917,879 72.5% $2,633,944 34.8% 10/01/02 $1,501,493 $2,220,582 $ 719,089 67.6% $2,318,319 31.0% 10/01/01 $1,355,012 $1,574,854 $ 219,842 86.0% $2,074,284 10.6% 10/01/00 $ 869,923 $ 681,940 $ (187,983) 127.6% $1,399,961 (13.4%) 10/01/99 $ 439,347 $ 361,015 $ (78,332) 121.7% $ 924,109 (8.5%) 10/01/97 $ 116,967 $ 31,423 $ (85,544) 372.2% $ 316,079 (27.1%) r1 .01 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 33 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE H -RETIREMENT PLANS, CONTINUED Firefighters' Pension Trust Fund Valuation date 10/01/02 Actuarial cost method Entry Age Amortization method Level dollar, closed Remaining amortization period 30 years Actuarial asset valuation method Market Actuarial assumptions: Investment rate 8% Projected salary 5% to 9.5% depending on age Post retirement 3% Cost of living adjustment 3% Inflation 4% NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 34 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 • NOTE G-RETIREMENT PLANS, CONTINUED Plan 3 - Governmental Money Purchase Plan The District established a Governmental Money Purchase Plan (401(a)), a defined contribution plan, on January 1, 2001, for certain of the District's Executive Assistants. The Plan is completely administered by the Plan custodian, ICMA Retirement Corporation. Participants vest in the Plan 100% immediately upon Plan entry (hire date). The Plan requires the District to make contributions equal to 5% of qualified employee compensation. Total contributions to the Plan for the year ended September 30, 2003, 2002 and 2001 by the District were $1,513, $2,698 and$4,955 respectively. The District contributed 100% of its required contributions for the years ended September 30, 2003, 2002 and 2001, and no employee contributions were permitted or paid. During the year ended September 30, 2003, effective July 24, 2003, via Resolution 03-040, the District terminated this Plan. Plan's participants vested immediately 100% in the Plan's assets. Plan 4 - Governmental Money Purchase Plan The District established a Governmental Money Purchase Plan (401(a)), a defined contribution plan, on October 1, 2000, for the District's Code Official personnel. These are employees who specifically work for the Code Official fund. The Plan is completely administered by the Plan custodian, ICMA Retirement Corporation. Participants vest in the Plan 100% immediately upon Plan entry (hire date). NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 35 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE G-RETIREMENT PLANS, CONTINUED Plan 4 - Governmental Money Purchase Plan, continued The Plan requires the District to make contributions equal to 20% of qualified employee compensation. Total contributions to the Plan for the ended September 30, 2003, 2002 and 2001 by the District were $22,049, $62,535 and$53,234, respectively. The District contributed 100% of its required contributions for the years ended September 30, 2003, 2002 and 2001, and no employee contributions were permitted or paid. During the year ended September 30, 2003, effective February 1, 2003 via Resolution 03-008, the District terminated the Plan simultaneously with its resignation as the designated administrative District for the Code Enforcement Fund-Fire Code Official. The affected Plan participants vested immediately in the Plan assets. Plan 5 - Governmental Money Purchase Plan The District established a Governmental Money Purchase Plan (401(a)), a defined contribution plan, on January 1, 2001, for the District's general employees,who are not certified firefighters and are not participants in any other District retirement plan. Eligible participants must have a hire date after December 31, 1995. The Plan is completely administered by the Plan custodian, ICMA Retirement Corporation. Participants vest in the Plan 100% after completion of six(6) years of credited service. The Plan requires the District to make contributions equal to 15% of the qualified employee's compensation. Total contributions to the Plan for the year ended September 30, 2003, 2002 and 2001 by the District were $39,067, $44,570 and $22,261, respectively. The District contributed 100% of its required contributions for the years ended September 30, 2003, 2002 and 2001, and no employee contributions were permitted or paid. During the year ended September 30, 2003, via Resolution 03-034, the District terminated this Plan. The Plan's participants, upon this Plan's termination, on June 1, 2003 immediately became participants in the FRS (Plan 1). The participants immediately vested 100% in the Plan's assets. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 36 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE H -POST-EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS The District provides insurance (health, dental and vision) benefits to its retired employees. All retired full-time employees are eligible for benefits if actively employed by the District immediately before retirement. As of September 30, 2003, there were eight(8) retirees receiving these benefits. The benefits are provided both with and without contractual or labor agreements. The benefits may require contribution from the retirees, depending on certain specified criteria and, in particular, length of creditable employment. The District pays up to 50% of retiree dependent coverage. The District finances the benefits on a pay-as-you-go basis and recognizes expenditures at the time premiums are due. The premiums for these benefits totaled$44,791 during the year ended September 30, 2003. NOTE I- SELF-INSURANCE The District adopted a self-insurance program for health insurance claims only, beginning October 1, 1992. The self-insurance program has stated annual individual and aggregate loss limits and retains third party excess coverage for claims in excess of the loss limits. The District incurred $1,843,466 in health insurance claims and third party administration costs during the fiscal year ending September 30, 2003. No accrual has been made as of September 30, 2003 for estimates of amounts to be paid for actual and incurred but not reported (IBNR) claims. It is thepotential pof ct phrisksolicy to whichthe itisDistriexposed.tourcase The District'scommercialrisk manageinsurancemforentother activitiesforms areof reported in the General Fund. No accrual has.been recorded for claims and incidents not reported to the insurer. The District had no significant reductions in insurance coverage from the prior year. Reported claims have not exceeded the insurance coverage for the years ended September 30, 1998 through September 30, 2003. The .-. District's total liability within any one year is limited to the annual loss limit, except for tail coverage estimated at approximately three (3) month's average claims in the year of Plan termination. The District has no plan to terminate coverage; therefore, no such accrual has been recorded in the financial statements. Subsequent to the year ended September 30, 2003, effective January 1, 2004, the District changed health insurance arrangements and is no longer self-insured. The benefits from the fully insured program differ slightly from those of the prior self-insurance program. The District has hired a third party administrator to calculate the difference in benefits which is refunded to the affected employee. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 37 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE J- PROPERTY TAXES Property taxes are levied after formal adoption of the District's budget and become due and payable on November 1 of each year and are delinquent on April 1 of the following year. Discounts on property taxes are allowed for payments made prior to the April 1 delinquent date. Tax certificates are sold to the public for the full amount of any unpaid taxes and must be sold not later than June 1 of each year. The billing, collection, and related record keeping of all property taxes is performed for the District by the Collier County Tax Collector. No accrual for the property tax levy becoming due in November 2003 is included in the accompanying financial statements, since such taxes are collected to finance expenditures of the subsequent period. Procedures for collecting delinquent taxes, including applicable tax certificate sales and tax deed sales, are provided for by Florida Statutes. The enforceable lien date is approximately two years after taxes become delinquent and occurs only upon request of a holder of a delinquent tax certificate. As of September 30, 2003, $128,345 was due from the Collier County Tax Collector to the District for ad valorem taxes and excess fees. Important dates in the property tax cycle are as follows: Assessment roll certified July 1 Millage resolution approved No later than 93 days following certification of assessment roll. Taxes due and payable (Levy date) November/with various discount provisions through March 31. Property taxes payable- maximum discount (4 percent) 30 days after levy date Beginning of fiscal year for which taxes have been levied October 1 Due date March 31 Taxes become delinquent (lien date) April 1 Tax certificates sold by the Collier County Tax Collector Prior to June 1 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 38 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE J - PROPERTY TAXES, CONTINUED For the year ended September 30, 2003, the Board of Commissioners of the District levied ad valorem taxes at a millage rate of$1.00 per $1,000 (1.00 mil) of the 2002 net taxable value of real property located within the District. NOTE K- DESIGNATED AND/OR RESERVED FUND BALANCE Fund balance was designated and/or reserved for the following purposes at September 30, 2003: Designated fund balance Amount General Fund-Emergency $ 246,451 General Fund-Vehicle replacement 246,451 General Fund-Building improvements 246,451 General Fund-Station#40 162,350 General Fund-Station#46 20,900 General Fund-Operating reserve 171,451 General Fund-Disaster preparedness 171,451 General Fund-Capital equipment 171,451 General Fund-Capital fire apparatus 171,451 Total General Fund 1,608,407 Special Revenue Fund-Inspection Fee Fund-building inspection fees 110,898 Special Revenue Fund-Hydrant Fund-fire hydrant maintenance 69,862 Total Special Revenue Funds 180,760 Total Designated Fund Balance $ 1,789,167 Reserved fund balance Amount Firefighters'Pension Fund-firefighters'retirement benefits $ 3,122,268 Total Reserved Fund Balance $ 3,122,268 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 39 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE L - IMPACT FEE FUND ACTIVITY During the year ended September 30, 2003, the Impact Fee Fund had the following activity: Amount Deferred revenue, October 1, 2002 $ 1,745,466 Impact fee receipts (1) 1,019,366 Interest income 12,361 Operating fees (14,710) Capital outlay (1,450,027) Debt service -principal (26,026) Debt service - interest (13,865) Deferred revenue, September 30, 2003 $ 1,272,565 (1) Impact fee receipts include a receivable of$147,280. NOTE M - COMMITMENTS AND CONTINGENCIES The District is involved from time to time in certain routine litigation, the substance of which either as liabilities or recoveries, would not materially affect the financial position of the District. Although the final outcome of the lawsuits, assertions and claims or the exact amount of costs and/or potential recovery is not presently determinable, in the opinion of the District's legal counsel, the resolution of these matters will not have a materially adverse affect on the financial condition of the District. As a general policy, the District plans to vigorously contest any such matters. The District is a defendant in a claim for a waiver of or reimbursement of impact fees. The outcome of such allegation could affect impact fee collection or require impact fee reimbursement for a specified area within the District. The District plans to vigorously defend the matter. No outcome can be predicted at this time. The District has agreed to build and share a facility (Station 47) with Collier County EMS and East Naples Fire Control and Rescue District. As of the date of this report, the District had paid a total of$803,030 to Collier County for its prorata share of this facility. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 40 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE M - COMMITMENTS AND CONTINGENCIES, CONTINUED During the year ended September 30, 2003, the District became aware of various investigations by certain law enforcement agencies. The investigations are ongoing as of the date of this report. The District is not privy to the investigation's intent nor the status of these investigations and therefore the outcome cannot be determined. Management believes the result of the investigations will not result in a material claim against the District. During the year ended September 30, 2003, the District became aware that a local industry group has expressed its intent to explore legal action against the District for the improper expenditure of impact fees. The District has extensively reviewed, including seeking the opinion of legal counsel, its impact fee expenditures from October 1, 1996 through September 30, 2003 and recorded a prior period entry as a result of the review. Should the claim be asserted, the District intends to vigorously defend its position. Subsequent to September 30, 2003, the industry group did file a lawsuit. The District's firefighters' pension plan has sued the City of Naples and its firefighters' pension plan to determine the amount of over payment of State collected insurance premium taxes paid to the City by the State in an effort to recover those overpayments more properly due the District's pension plan. NOTE N - PRIOR PERIOD ADJUSTMENT _ During the year ended September 30, 2003, the District determined a prior period adjustment was necessary due to a retroactive District Board of Commissioners' policy decision to disallow certain impact fee expenditures recorded for fiscal years 1996 through 2001. As such, certain capital outlay purchases made from the Impact Fee Fund for these years were disallowed and charged to the General Fund. As part of the same Board action, impact collection fees originally paid by the General Fund were charged to the Impact Fee Fund. The net effect of the Board's policy change resulted in a prior period adjustment which decreased the fund balance of the General Fund in the amount of$257,520 and increased the deferred revenue in the Impact Fee Fund in the same amount at September 30, 2002. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 41 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE O - SUBSEQUENT EVENTS During the year ended September 30, 2003, a State legislator contacted the Joint Legislative Audit Committee of the State of Florida asking them to instruct the Auditor General to perform an audit of the District. The Auditor General examined the facts surrounding the inquiry and, after reviewing the September 30, 2001 independent audit, recommended to the Joint Legislative Committee that an audit by the Office of the Auditor General was not warranted at the time. However, the Auditor General was asked to monitor the completion of the September 30, 2002 and 2003 independent audits. The recommendation was based on the extensive findings noted within the September 30, 2.001 audit report. The Auditor General was then directed to determine a schedule and monitor the implementation of the recommendations contained in the September 30, 2001 audit report. The Auditor General's office did monitor the September 30, 2002 audit report and the District's corrective action progress. In addition, the Auditor General's office intends to perform a similar review of the September 30, 2003 corrective action status. At the August 29, 2002 District Board of Commissioners meeting the Chief of the District agreed to relinquish his position in exchange for a final contract settlement in the amount of$300,000. The settlement was to be paid in the following manner: $150,000 payable on or before October 1, 2002 and $150,000 payable on or before October 1, 2003. Prior to the execution of the terms of the written agreement, a citizen filed for and was granted a temporary order to prevent the payment of the settlement. As of the date of this report, the former Chief was paid four months severance per his original employment contract based upon a Judge's order. On August 21, 2003, the District agreed to pay the former Chief an additional $215,000 immediately and to pay $15,000 to the citizen that filed for and was granted the temporary order. This settlement is intended to fully settle this issue. The District had originally budgeted a $150,000 payment in fiscal year 2003. The District also paid the former Chief salaries of$31,161. Total settlement costs paid by the District were $261,161, plus the costs of the District's defense. Effective February 1, 2003, the District resigned its duty as the designated administrative District for the Code Enforcement Expendable Trust Fund (Fire Code Official) and Inspection Fees Collection Fund - an Agency Fund. As such all assets, liabilities and fund balances as well as the affected employees were transferred to NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 42 of 67 NOTES TO THE GENERAL PURPOSE FINANCIAL STATEMENTS September 30, 2003 NOTE O - SUBSEQUENT EVENTS, CONTINUED another independent fire district now designated as the Administrative District. The transfer of assets in the Code Enforcement Expendable Trust Fund was recorded as a residual equity transfer in the amount of$1,143,495. The transfer in the Inspection Fees Collection Fund, an agency fund, was recorded by properly eliminating the assets and liabilities. On July 1, 2003, the District settled with a former employee for approximately $58,000 in exchange for a full release for any possible past or future claims against the District. The District is paying the settlement amount over a twelve (12) month period pursuant to the settlement agreement. SUPPLEMENTARY INFORMATION /1 Ilk NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT COMBINING DETAILED STATEMENT OF REVENUE, EXPENDITURES AND „-. CHANGES IN FUND BALANCE -BUDGET AND ACTUAL- GOVERNMENTAL ..., FUNDS AND EXPENDABLE TRUST FUND Year Ended September 30, 2003 --. Governmental Funds General Fund Special Revenue Funds Variance Variance Favorable Favorable �. Budget Actual (Unfavorable) Budget Actual (Unfavorable) REVENUE Ad Valorem taxes $ 14,045,016 $ 14,373,739 $ 328,723 $ - $ - $ - '..., Fees: Inspection fees - -- 680,000 614,557 (65,443) Impact fees - - - 1,200,000 1,492,267 292,267 Hydrant fees - - - 43,000 31,444 (11,556) Plan review fees - - - �1 Disposition of fixed assets - 197,550 197,550 - - - Miscellaneous: '.•., Interest 50,000 88,725 38,725 10,000 14,791 4,791 Other 450,830 356,283 (94,547) - 1,295 1,295 '...., TOTAL REVENUE 14,545,846 15,016,297 470,451 1,933,000 2,154,354 221,354 ^ EXPENDITURES Current Public safety Personal services: Salaries '-., Firefighters&Admin. 5,852,699 5,568,361 284,338 356,984 348,568 8,416 Commissioners 30,000 30,000 - - - - Overtime 513,454 341,146 172,308 33,545 18,508 15,037 Incentives and holiday pay 503,260 501,995 1,265 9,000 8,640 360 Payroll taxes Social Security 522,955 505,771 17,184 30,000 29,097 903 Benefits Retirement 1,355,748 1,177,544 178,204 54,928 62,189 (7,261) Health insurance 1,400,725 1,688,053 (287,328) 117,000 126,613 (9,613) ^ Disability insurance 76,978 75,131 1,847 4,100 5,071 (971) Vacation 50,000 1,343 48,657 - - Sick leave 233,529 227,380 6,149 16,471 4,682 11,789 ^ Unemployment compensation - 1,350 (1,350) - - - Workers compensation 541,684 488,478 53,206 37,316 40,121 (2,805) Subtotal-Personal services 11,081,032 10,606,552 474,480 659,344 643,489 15,855 The accompanying notes are an integral part of this statement. .. Page 43 of 67 Expendable Trust Fund Code Enforcement Fund Totals-Memorandum Only Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) $ - $ - $ - $ 14,045,016 $ 14,373,739 $ 328,723 - - - 680,000 614,557 (65,443) - - - 1,200,000 1,492,267 292,267 - - - 43,000 31,444 (11,556) 745,000 331,944 (413,056) 745,000 331,944 (413,056) - - 197,550 197,550 - 1,336 1,336 60,000 104,852 44,852 /'* - 15,958 15,958 450,830 373,536 (77,294) 745,000 349,238 (395,762) 17,223,846 17,519,889 296,043 441,394 107,267 334,127 6,651,077 6,024,196 626,881 /0%, - - 30,000 30,000 - 16,398 2,977 13,421 563,397 362,631 200,766 eN - - - 512,260 510,635 1,625 Oftk - 8,433 (8,433) 552,955 543,301 9,654 - 22,049 (22,049) 1,410,676 1,261,782 148,894 ", 96,000 28,800 67,200 1,613,725 1,843,466 (229,741) 4,265 1,380 2,885 85,343 81,582 3,761 - - - 50,000 1,343 48,657 15,515 - 15,515 265,515 232,062 33,453 - - - 1,350 (1,350) - 8,525 (8,525) 579,000 537,124 41,876 573,572 179,431 394,141 12,313,948 11,429,472 884,476 AN AN NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT COMBINING DETAILED STATEMENT OF REVENUE, EXPENDITURES AND 's CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GOVERNMENTAL ,, FUNDS AND EXPENDABLE TRUST FUND- (CONTINUED) Year Ended September 30, 2003 'N Governmental Funds General Fund Special Revenue Funds Variance Variance Favorable Favorable "1 Operating expenditures: Budget Actual (Unfavorable) Budget Actual (Unfavorable) Insurance 131,400 125,951 5,449 - - - Uniforms 49,837 44,719 5,118 953 285 668 Communications 24,233 31,966 (7,733) - - - Rent 16,142 24,299 (8,157) - - - Telephone 101,117 80,384 20,733 5,883 6,298 (415) Afts Utilities 111,184 107,888 3,296 6,263 6,822 (559) Maintenance Vehicle 209,799 261,230 (51,431) - - - Amos Equipment 12,240 15,039 (2,799) - - Computer 64,656 121,389 (56,733) - - - Medical Equipment 15,700 13,248 2,452 - - Contract labor - - - 17,414 16,041 1,373 Hydrant - - - 34,056 22,964 11,092 Building 114,350 87,620 26,730 - - - Supplies Office • 19,375 26,967 (7,592) 5,625 4,399 1,226 Protective gear 56,200 20,740 35,460 - - - Station 33,450 25,712 7,738 - - - Equipment Office 15,000 19,287 (4,287) - - - Portable - - - - - - Fire 30,488 22,556 7,932 - - - Professional and other fees Legal and professional 220,000 359,655 (139,655) - - - Property appraiser fees 170,570 151,177 19,393 - - - Tax collector fees 282,900 291,201 (8,301) - - - ', Special assessment fee 4,000 3,798 202 - - - Accounting 50,000 96,675 (46,675) - - - ,.\ Miscellaneous Travel 15,475 13,944 1,531 - - - Public information officer 53,403 14,232 39,171 - - - "1 Fuel and oil 96,000 102,776 (6,776) - - - Employee physicals 46,849 66,018 (19,169) 3,151 823 2,328 Impact fee collection - - - 18,000 14,683 3,317 Dues and subscriptions 19,117 14,259 4,858 - - - Prefire plan 5,000 7,036 (2,036) - - - Cert team 39,611 10,959 28,652 - - - Dive team 8,899 7,092 1,807 - - - Fire prevention 14,072 14,340 (268) 14,072 4,105 9,967 ', Training 100,175 45,836 54,339 8,600 1,943 6,657 Hazardous materials 27,201 27,277 (76) - - Technical rescue 20,124 1,478 18,646 - - - Boat team 8,350 935 7,415 - - - K-9 search and rescue 3,028 2,503 525 - - - ALS program 77,400 - 77,400 - - - SOS program 3,579 3,579 - - - Contract settlement 261,161 261,161 - - - - Refund 15,500 15,500 - - - - Miscellaneous 25,000 14,232 10,768 - 27 (27) Operational Reserves Contingency 50,000 - 50,000 - - - Subtotal-Operating expenditures 2,622,585 2,551,079 71,506 114,017 78,390 35,627 AN The accompanying notes are an integral part of this statement. '., Page 44 of 67 Expendable Trust Fund ^ Code Enforcement Fund Totals-Memorandum Only Variance Variance ^ Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) 3,000 989 2,011 134,400 126,940 7,460 3,000 1,440 1,560 53,790 46,444 7,346 - - 24,233 31,966 (7,733) 17;220 8,201 9,019 33,362 32,500 862 .... 11,400 2,575 8,825 118,400 89,257 29,143 1,200 207 993 118,647 114,917 3,730 ^ 3,000 394 2,606 212,799 261,624 (48,825) - - - 12,240 15,039 (2,799) ••-•, - - 64,656 121,389 (56,733) - - - 15,700 13,248 2,452 - - - 17,414 16,041 1,373 e. _ - - 34,056 22,964 11,092 500 68 432 114,850 87,688 27,162 /'� 3,720 572 3,148 28,720 31,938 (3,218) - - - 56,200 20,740 35,460 i'. - - - 33,450 25,712 7,738 3,000 2,310 690 18,000 . 21,597 (3,597) - - 30,488 22,556 7,932 17,800 1,875 15,925 237,800 361,530 (123,730) - - - 170,570 151,177 19,393 '-, - - 282,900 291,201 (8,301) - - 4,000 3,798 202 10,000 - 10,000 60,000 96,675 (36,675) 1,359 (1,359) 15,475 15,303 172 ,•-,. - - 53,403 14,232 39,171 14,400 1,004 13,396 110,400 103,780 6,620 5,250 859 4,391 55,250 67,700 (12,450) ^ - - 18,000 14,683 3,317 9,400 450 8,950 28,517 14,709 13,808 ... - - - 5,000 7,036 (2,036) - 39,611 10,959 28,652 - - 8,899 7,092 1,807 /1 -- - 28,144 18,445 9,699 13,500 1,016 12,484 122,275 48,795 73,480 ^ _ - - 27,201 27,277 (76) - - - 20,124 1,478 18,646 - - 8,350 935 7,415 I.\ - - 3,028 2,503 525 - - - 77,400 - 77,400 - - - 3,579 - 3,579 ^ - -- 261,161 261,161 - 15,500 15,500 5,000 736 4,264 30,000 14,995 15,005 14,599 - 14,599 64,599 - 64,599 /`. 135,989 24,055 111,934 2,872,591 2,653,524 219,067 ^ ^ NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT COMBINING DETAILED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GOVERNMENTAL FUNDS AND EXPENDABLE TRUST FUND- (CONTINUED) Year Ended September 30, 2003 Governmental Funds General Fund Special Revenue Funds ,^ Variance Variance Favorable Favorable Capital outlay: Budget Actual (Unfavorable) Budget Actual (Unfavorable) Station 47 building - - - 700,000 600,000 100,000 Station improvements 45,600 9,003 36,597 - - - Station 42 enlargement - - - 408,578 439,534 (30,956) Trucks&equipment - - - 400,000 393,979 6,021 ooN Vehicles - - - 22,013 - 22,013 Fire&rescue equipment 70,080 34,152 35,928 75,000 - 75,000 - Protective gear - 49,449 (49,449) - - - Communication equipment 48,752 7,784 40,968 - - - Office equipment 22,000 - 22,000 - - - ANN Hazardous materials equip. 67,220 29,454 37,766 - - - Station 48 engineering - - - 10,000 16,514 (6,514) Training equipment 35,200 12,244 22,956 - _ - Medical equipment 5,700 38,165 (32,465) - Technical rescue 11,400 - 11,400 - - _ r., Boat team - 2,775 (2,775) - - - Computers 207,067 9,660 197,407 - - - Dive equipment 1,616 - 1,616 - - - ALS equipment 40,000 - 40,000 - - Miscellaneous - - - _ - - Subtotal-Capital outlay 554,635 192,686 361,949 1,615,591 1,450,027 165,564 DEBT SERVICE Principal reduction 16,635 363,446 (346,811) 42,660 26,026 16,634 Interest and fiscal charges 10,000 7,270 2,730 13,865 13,865 - TOTAL EXPENDITURES 14,284,887 13,721,033 563,854 2,445,477 2,211,797 233,680 EXCESS OF REVENUE OVER EXPENDITURES 260,959 1,295,264 1,034,305 (512,477) (57,443) 455,034 OTHER FINANCING SOURCES AND USES Proceeds from debt 351,714 351,714 - - - EXCESS OF REVENUE AND OTHER FINANCING SOURCES OVER(UNDER) EXPENDITURES AND OTHER FINANCING SOURCES AND USES 260,959 1,646,978 1,386,019512,477 ( ) (57,443) 455,034 FUND BALANCE,October 1,2002 - 483,081 483,081 1,458,963 238,203 (1,220,760) ' .. Residual Equity Transfer - - - - - FUND BALANCE,September 30,2003$ 260,959 $ 2,130,059 $ 1,869,100 $ 946,486 $ 180,760 $ (765,726) The accompanying notes are an integral part of this statement. Page 45 of 67 .. Expendable Trust Fund Code Enforcement Fund Totals-Memorandum Only Variance Variance Favorable Favorable i. Budget Actual (Unfavorable) Budget Actual (Unfavorable) ^ - - - 700,000 600,000 100,000 - - - 45,600 9,003 36,597 - - - 408,578 439,534 (30,956) ^ - - - 400,000 393,979 6,021 - - - 22,013 - 22,013 - - 145,080 34,152 110,928 ^ - - - - 49,449 (49,449) - - 48,752 7,784 40,968 ,^ - - - 22,000 - 22,000 - - - 67,220 29,454 37,766 - - - 10,000 16,514 (6,514) ^ - - - 35,200 12,244 22,956 - - - 5,700 38,165 (32,465) ^ - - - 11,400 - 11,400 - - - 2,775 (2,775) - - - 207,067 9,660 197,407 0-. - - - 1,616 - 1,616 - - - 40,000 - 40,000 35,000 - 35,000 35,000 - 35,000 ^ 35,000 - _ 35,000 2,205,226 1,642,713 562,513 ^ - - - 59,295 389,472 (330,177) - - - 23,865 21,135 2,730 ^ 744,561 203,486 541,075 17,474,925 16,136,316 1,338,609 ^ ^ 439 145,752 145,313 (251,079) 1,383,573 1,634,652 ^ i. - - - - 351,714 351,714 r. ^ 439 145,752 145,313 (251,079) 1,735,287 1,986,366 .. 935,000 997,743 62,743 2,393,963 1,719,027 (674,936) - (1,143,495) (1,143,495) - (1,143,495) (1,143,495) $ 935,439 $ - $ (935,439) $ 2,142,884 $ 2,310,819 $ 167,935 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 46 of 67 COMBINING BALANCE SHEET - SPECIAL REVENUE FUNDS September 30, 2003 Impact Fee Inspection Fee Hydrant Fund Fund Fund Totals ASSETS Cash and cash equivalents $ 1,117,020 $ 143,821 $ 73,926 $ 1,334,767 Due from other governments 147,280 47,899 - 195,179 Due from other funds 9,203 - - 9,203 TOTAL ASSETS $ 1,273,503 $ 191,720 $ 73,926 $ 1,539,149 LIABILITIES.AND FUND EQUITY LIABILITIES Due to other governments $ 938 $ - $ - $ 938 Due to other funds - 80,822 4,064 84,886 Deferred revenue 1,272,565 - - 1,272,565 TOTAL LIABILITIES 1,273,503 80,822 4,064 1,358,389 ^ FUND EQUITY Fund balance Unreserved, designated - 110,898 69,862 180,760 TOTAL FUND EQUITY - 110,898 69,862 180,760 TOTAL LIABILITIES AND FUND EQUITY .$ 1,273,503 $ 191,720 $ 73,926 $ 1,539,149 The accompanying notes are an integral part of this statement. NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT Page 47 of 67 COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE - SPECIAL REVENUE FUNDS Year Ended September 30, 2003 Impact Fee Inspection Fee Hydrant Fund Fund Fund Totals REVENUE Fees: Inspection fees $ - $ 614,557 $ - $ 614,557 Impact fees 1,492,267 - - 1,492,267 Hydrant fees - - 31,444 31,444 Miscellaneous: Interest 12,361 1,604 826 14,791 Other - - 1,295 1,295 TOTAL REVENUE 1,504,628 616,161 33,565 2,154,354 EXPENDITURES Current Public safety Personal services - 643,489 - 643,489 Operating expenditures 14,710 24,675 39,005 78,390 Capital outlay 1,450,027 - - 1,450,027 Debt service Principal reduction 26,026 - - 26,026 Interest and fiscal charges 13,865 _ - 13,865 TOTAL EXPENDITURES 1,504,628 668,164 39,005 2,211,797 EXCESS OF REVENUE OVER(UNDER) EXPENDITURES - (52,003) (5,440) (57,443) FUND BALANCE, October 1, 2002 - 162,901 75,302 238,203 FUND BALANCE, September 30, 2003 S - $ 110,898 S 69,862 $ 180,760 The accompanying notes are an integral part of this statement. .1 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN •, FUND BALANCE - BUDGET AND ACTUAL- SPECIAL REVENUE FUNDS, CONTINUED ,1 Year Ended September 30, 2003 Impact Fee Fund Inspection Fee Fund Variance Variance Favorable . Favorable '1 Budget Actual (Unfavorable) Budget Actual (Unfavorable) REVENUE Fees: - Inspection fees $ - $ - $ - $ 680,000 $ 614,557 $ (65,443) Impact fees 1,200,000 1,492,267 292,267 - - - ../..., Hydrant fees - - - - - - Miscellaneous: " Interest 10,000 12,361 2,361 - 1,604 1,604 ^ Other - - - - - - TOTAL REVENUE 1,210,000 1,504,628 294,628 680,000 616,161 (63,839) EXPENDITURES - Current Public safety •'., Personal services: oft., Salaries Regular - - - 356,984 348,568 8,416 Overtime - - - 33,545 18,508 15,037 Incentives and holiday pay - - - 9,000 8,640 360 '� Payroll taxes Social Security - - - 30,000 29,097 903 Benefits Retirement - - - 54,928 62,189 (7,261) Health insurance - - - 117,000 126,613 (9,613) - Disability insurance - - - 4,100 5,071 (971) Sick leave - - - 16,471 4,682 11,789 Workers compensation - - - 37,316 40,121 (2,805) Subtotal-Personal services - - - 659,344 643,489 15,855 IN �-1 The accompanying notes are an integral part of this statement. ... Page 48 of 67 Hydrant Fund Totals-Memorandum Only Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) • $ - $ - $ - $ 680,000 $ 614,557 $ (65,443) - - - 1,200,000 1,492,267 292,267 43,000 31,444 (11,556) 43,000 31,444 (11,556) - 826 826 10,000 14,791 4,791 - 1,295 1,295 - 1,295 1,295 43,000 33,565 (9,435) 1,933,000 2,154,354 221,354 - - - 356,984 348,568 8,416 - - - 33,545 18,508 15,037 - - - 9,000 8,640 360 - - - 30,000 29,097 903 - - - 54,928 62,189 (7,261) - - - 117,000 126,613 (9,613) - - - 4,100 5,071 (971) .-� - - - 16,471 4,682 11,789 - - - 37,316 40,121 (2,805) - - 659,344 643,489 15,855 NORTH NAPLES FIRE CONTROL AND RESCUE DISTRICT COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCE -BUDGET AND ACTUAL- SPECIAL REVENUE FUNDS, CONTINUED ,1 Year Ended September 30, 2003 Impact Fee Fund Inspection Fee Fund Variance Variance Favorable Favorable Operating expenditures: Budget Actual (Unfavorable) Budget Actual (Unfavorable) Uniforms - - - 953 285 668 Telephone - - - 5,883 6,298 (415) Utilities - - - 6,263 6,822 (559) Maintenance " Contract labor - - - - - - Hydrant - - - - - • Supplies Office - - - 5,625 4,399 1,226 Miscellaneous Employee physicals - - - 3,151 823 2,328 Impact fee collection 18,000 14,683 3,317 - - - " • Fire prevention - - - 14,072 4,105 9,967 Training - - - 8,600 1,943 6,657 Miscellaneous - 27 (27) - - - Subtotal-Operating expenditures 18,000 14,710 3,290 44,547 24,675 19,872 Capital outlay: Station 47 building 700,000 600,000 100,000 - '..., Station 42 enlargement 408,578 439,534 (30,956) - - - Trucks&equipment 400,000 393,979 6,021 - - - Vehicles 22,013 - 22,013 - - - Fire&rescue equipment 75,000 - 75,000 - - - Station 48 engineering 10,000 16,514 (6,514) - - - Subtotal-Capital outlay 1,615,591 1,450,027 165,564 - - - DEBT SERVICE Principal reduction 42,660 26,026 16,634 - - - Interest and fiscal charges 13,865 13,865 -- TOTAL EXPENDITURES 1,690,116 1,504,628 185,488 703,891 668,164 35,727 "'N Ams EXCESS OF REVENUE • OVER(UNDER)EXPENDITURES (480,116) - 480,116 (23,891) (52,003) (28,112) FUND BALANCE,October 1,2002 1,386,566 - (1,386,566) - 162,901 162,901 FUND BALANCE, September 30,2003 $ 906,450 $ - $ (906,450) $ (23,891) $ 110,898 $ 134,789 '..‘ The accompanying notes are an integral part of this statement. Page 49 of 67 .-. Hydrant Fund Totals-Memorandum Only Variance Variance Favorable Favorable r Budget Actual (Unfavorable) Budget Actual (Unfavorable) - - 953 285 668 - - - 5,883 6,298 (415) - - - 6,263 6,822 (559) 17,414 16,041 1,373 17,414 16,041 1,373 34,056 22,964 11,092 34,056 22,964 11,092 - - - 5,625 4,399 1,226 - - - 3,151 823 2,328 - - - 18,000 14,683 3,31.7 - - - 14,072 4,105 9,967 A... - - 8,600 • 1,943 6,657 • i-. - - - - 27 (27) 51,470 39,005 12,465 114,017 78,390 35,627 - - 700,000 600,000 100,000 A.\ - - - 408,578 439,534 (30,956) - - - 400,000 393,979 6,021 - - - 22,013 - 22,013 - - 75,000 - 75,000 , - - - 10,000 16,514 (6,514) - - - 1,615,591 1,450,027 165,564 /'\ - - - 42,660 26,026 16,634 - - - 13,865 13,865 - 51,470 39,005 12,465 2,445,477 2,211,797 233,680 (8,470) (5,440) 3,030 (512,477) (57,443) 455,034 72,397 75,302 2,905 1,458,963 238,203 (1,220,760) $ 63,927 $ 69,862 $ 5,935 $ 946,486 $ 180,760 $ (765,726) ADDITIONAL REPORTS OF INDEPENDENT AUDITOR - Affiliations SII0ElEI TUSCAN Florida Institute of Certified Public Accountants ^ COMPANY,A American Institute of Certified Public Accountants �. �L. 1 ii. .t y 1P1‘,_ Management Consulting Services Division __ Private Companies Practice Section CERTIFIED PUBLIC ACCOUNTANTS/CONSULTANTS Tax Division ^ Page 50 of 67 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Board of Commissioners North Naples Fire Control and Rescue District 1885 Veterans Park Drive Naples, Florida 34110 We have audited the general purpose financial statements of North Naples Fire Control and Rescue District ("the District") as of and for the year ended September 30, 2003, and have issued our report thereon dated March 29, 2004. 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. Compliance As part of obtaining reasonable assurance about whether North Naples Fire Control and Rescue District's general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations and contracts, noncompliance with which could have a direct and material effect on the determination of general purpose financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. However, we noted certain other instances of noncompliance that we have reported to the management of North Naples Fire Control and Rescue District in our Report to Management dated March 29, 2004. INTEGRITY. . . . .RNOWLEDGE. . . . .SERVICE. . . . .COMMIT ENT 8961 CONFERENCE DRIVE,SUITE 2•FORT MYERS,FL 33919 ^ (239)433-1002•Fax(239)433-0249•Web Site:stcpas.biz Page 51 of 67 Internal Control Over Financial Reporting In planning and performing our audit, we considered North Naples Fire Control and Rescue District's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level of risk that misstatements in amounts that would be material in relation to the general purpose financial statements being _ audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we considered to be a material weakness. However, we noted other matters involving the internal control over financial reporting that we have reported to the management of North Naples Fire Control and Rescue District in our Report to Management dated March 29, 2004. This report is intended solely for the information and use of the Board of Commissioners, _ management, the Auditor General of the State of Florida and other federal and state audit agencies. This report is not intended to be used, and should not be used, by anyone other than these specified parties. /-1.AiLaos44,. /11'1 in 3 61, STROEMER TUSCAN & COMPANY, P.A. Fort Myers, Florida March 29, 2004 a Affiliations ST 0 EM ER TUSCAN Florida Institute of Certified Public Accountants �' —� t• y American Institute of Certified Public Accountants COMPANY PAS Management Consulting Services Division Private Companies Practice Section CERTIFIED PUBLIC ACCOUNTANTS/CONSULTANTS Tax Division Page 52 of 67 INDEPENDENT AUDITOR'S REPORT TO MANAGEMENT Board of Commissioners North Naples Fire Control and Rescue District 1885 Veterans Park Drive Naples, Florida 34110 We have audited the general purpose financial statements of the North Naples Fire Control and Rescue District (the "District"), as of and for the fiscal year ended September 30, 2003 and have issued our report thereon dated March 29, 2004. In connection with our audit,we are submitting the following comments and recommendations in accordance with Chapter 10.550 "Rules of the Auditor General - Local Governmental Entity Audits" (Revised September 30, 2003) Rule 10.557(3) and Section 218.39(4), of the Florida Statutes. PRIOR YEAR COMMENTS THAT CONTINUE TO APPLY: Note: The prior year comments listed below continue to apply in the current year. Certain prior year comments, however, have been revised and expanded to address the current year facts and circumstances. Each prior year comment listed below has a current year addendum to indicate the current year status of the prior year comment. Prior year comments not repeated below appear to have been addressed and/or resolved by the District. .• 1. Five Year Capital Plan Should be Adopted Florida Statute 189.415 requires the District to design a five year plan that addresses facilities, equipment,personnel and revenue and future construction and expansion plans. Such plan and its subsequent amendments are to be sent annually to the Collier County Clerk and the Department of Community Affairs. We recommend the District implement the criteria noted in Florida Statute 189.415 and revise its Plan as required. September 30, 2002 Addendum: We noted that the District adopted a five year capital plan subsequent to September 30,2002. INTEGRITY. . . . .KNOWLEDGE . . . .SERVICE. . . . .COMMITMENT 8961 CONFERENCE DRIVE,SUITE 2•FORT MYERS,FL 33919 (239)433-1002•Fax(239)433-0249•Web Site:stcpas.biz Page 53 of 67 1. Five Year Capital Plan Should be Adopted, continued Current Year Addendum: We noted that during the year ended September 30, 2003, the District completed a five-year plan and submitted it to the Department of Community Affairs and Collier County as required. The District is now expanding and revising this plan. 2. Fixed Asset Policy Should be Formally Expanded, Designed and Adopted, and Control Accounts Should be Reconciled During the audit, we noted the District needed to expand and adopt a formal comprehensive fixed asset policy. The policy should address inventory procedures, deletions, recordkeeping and correlate to procurement policies. During the audit, we noted that the District did not have a detailed list of fixed assets that was routinely reconciled to the fixed asset control account. Additionally, the District had capitalized assets costing less than its capitalization limit of$500 and was not grouping component assets by major asset (i.e.: components necessary to outfit a truck grouped by truck number). We also noted assets were capitalized when specifically designated by policy as noncapital. We understand the Board has adopted the capitalization amount of$500 and annually approves purchases through the budget process, in accordance with the requirements of Florida Statute 274 and Auditor General Rule 10.400. We recommend the District raise its capitalization limit to $750 to coincide with the threshold for recorded accountability of tangible personal property as established by Chapter 274 F.S. We also recommend the District expand, revise and adopt a comprehensive fixed asset policy in accordance with Florida Statute 274 and Auditor General Rule 10.400. Such policy should correlate to a procurement policy with bidding requirements stated. A complete physical inventory should be taken and input into appropriate software to meet the pending requirements of GASB #34. Assets should be tagged and/or marked and correlated to the annual physical inventory and reconciled to the general ledger control accounts. Smaller component assets which comprise a larger asset should be grouped together and accounted for as a single asset rather than individually. A detailed list of fixed asset additions and deletions should be maintained. Supporting Board approval should be attached. Individual asset records should be maintained in accordance with Auditor General Rule 10.400. Fixed asset records should be reconciled to impact fee disbursements and contain documentation of funding source. Page 54 of 67 2. Fixed Asset Policy Should be Formally Expanded, Designed and Adopted, and Control Accounts Should be Reconciled, Continued September 30, 2002 Addendum: We continue to recommend this corrective action. This issue resulted in the auditor's opinion being qualified. We did, subsequent to September 30, 2002, note that the District adopted a fixed asset policy which increased the capitalization limit to $750. The District also created the position of logistics officer responsible for the inventorying, tagging and management of the District's fixed assets. The logistics officer position was filled in June 2002 and progress is being made toward inventorying the District's fixed assets. We did note, however, at September 30, 2002 the inventory list was not complete and was not reconciled to the general ledger. We selected thirty (30) fixed assets for testing. Twenty (20) assets from the District's listing were selected and we attempted to physically locate them. Ten (10) assets were observed at the District's facilities, and we attempted to locate them on the District's listing. One (1) asset could not be located and one (1) asset was identified but not included on the list. Sixteen(16) of the thirty assets selected were not tagged. Current Year Addendum: During the year ended September 30, 2003, the District completed the fixed asset inventory process and adjusted its books and records to agree to the fixed asset inventory with its Board's approval. The District now routinely reconciles its fixed asset activity by funding source and intends to timely inventory its fixed assets on an annual basis. During the current year audit process, we tested fifty assets and noted one asset listed on the inventory that did not have a tag. We recommend the District continue its efforts to ensure all its assets are tagged. For the year ended September 30, 2003, the opinion qualification related to fixed assets was removed. 3. Travel Policy Should be Developed During the audit, we noted that certain travel vouchers did not contain the state approved forms or copies of detailed receipts/invoices and/or the traveler's signature as required by Florida Statute 112.061, as well as Article V, Section 4 of the Code Enforcement Interlocal Agreement. Due to the lack of detail it was not possible, in all cases, to ascertain the allowability of the expenditure and/or if state travel limits were complied with. Note: This issue was included as a reportable condition. Page 55 of 67 3. Travel Policy Should be Developed, continued September 30, 2002 Addendum: We did note the District adopted a new policy October 11, 2001. We selected ten travel disbursements for testing. Three forms did not include the hour of departure and return; therefore, the allowability of meals could not be determined. One travel reimbursement form had airline departure and arrival times that did not support the meals claimed. One travel disbursement packet of expenditures for nine travelers only included 8 travel forms, none of which were signed. One travel expenditure was not supported by a form. Finally, one travel voucher reimbursed by petty cash for a boat charter did not contain a detailed description to determine a business purpose. We continue to recommend adherence to the Florida Statutes and the policies approved by the Board. Current Year Addendum: We noted that during the year ended September 30, 2003, the District approved several revisions to its travel policy. During our testing of travel expenditures for the year ended September 30, 2003, no instances of noncompliance were noted. We no longer consider this issue to be a reportable condition. 4. Operating Policies Should be Formally Adopted We recommend the Board formally review and adopt comprehensive operating and personnel policies of the District. These policies should include, at a minimum, travel, investment, procurement including bidding requirements, check signing authority, personnel, and in-town meals and expenditures. Due to the size and nature of the District, such policies should be designed with the assistance of legal counsel. Note: This issue was included as a reportable condition. September 30, 2002 Addendum: We noted that the District has begun to develop and implement comprehensive operating and personnel policies. We continue to recommend the District develop the needed policies. We also recommend periodic review of existing policies and procedures to ensure that effective controls are in place to safeguard the District's assets. Current Year Addendum: We noted that during the year ended September 30, 2003, the District approved numerous operating and personnel policies. These policies included a fixed asset accounting and control policy, a revised purchasing policy, a cash management policy, revisions to the travel policy, an in-town meals and other costs reimbursement policy, several computer use policies, and a bidding policy. We no longer believe this issue to be a reportable condition. Page 56 of 67 5. Use of Impact Fees Should be More Closely Reviewed During our audit, we noted amounts charged to the impact fee account for items not sufficiently identified as meeting the criteria for impact fee use. We recommend development of a policy and procedure to document each impact fee use, as to purpose and amount. The fixed asset records then should note the item was purchased through impact fees, that it met the District's fixed asset policy requirements and that it was Board approved. The Board minutes should specifically document each approval by the Board of impact fees use as to purpose and amount. Items purchased as components of an approved use should be so noted. September 30, 2002 Addendum: We noted that the District now obtains an opinion from their attorney regarding the allowability of impact fee expenditures. Subsequent to the year ended September 30, 2002, the Board of Commissioners reviewed all impact fee expenditures from the year 1996 through 2001. Items totaling $363,460 were disallowed as impact fee expenditures. From the same period, expenditures in the amount of$105,940, which were originally paid from the General Fund were deemed to be allowable impact fee expenditures. These changes in policy resulted in a prior period adjustment in the amount of $257,520. We recommend obtaining a legal opinion prior to the expenditure of any impact fees to eliminate future adjustments to prior years and/or the current year. Current Year Addendum: We noted that during the year ended September 30, 2003, all impact fee expenditures were approved by the District's attorney or were related to unfinished projects which were approved by the District's attorney in prior years. We continue to recommend the District obtain a legal opinion prior to the expenditure of impact fees for any items not previously approved. 6. Credit Card and In-Town Meal/Other Costs Reimbursement Policy Should be Designed And Approved (As Revised for The Current Year) During the year ending September 30, 2000, we noted expenditures charged to credit and debit cards. Certain expenditures totaling approximately $33,000 lack proper documentation as to business purpose, allowability and compliance to policy and/or Florida Statute. September 30, 2001 Addendum: During the year ended September 30, 2001, we noted certain expenditures that appear unallowable and/or lack proper documentation (approximately$13,000). Page 57 of 67 6. Credit Card and In-Town Meal/Other Costs Reimbursement Policy Should be Designed And Approved (As Revised for The Current Year), continued We recommend the Board design and adopt policies for in-town meal/other cost reimbursement as well as travel and other operating policies recommended earlier. It appears that certain of these costs were approved for payment due to lack of policy, direction and/or previous practice and were potentially unallowable by Statute. Therefore, we emphasize the need for increased resources in the Finance Department. Note: This issue was included as a reportable condition and material noncompliance. September 30, 2002 Addendum: During the year ended September 30, 2002, we noted certain expenditures that appear unallowable (approximately $3,000). The reason the expenditures appear unallowable for the year being audited is isolated to a lack of policy for certain types of expenditures such as, in-town meals. We noted that the District has now adopted, on May 8, 2003, an in-town meals and other costs reimbursement policy to address the allowability of these types of expenditures. All disbursements selected for testing included documentation. We recommend the District monitor and adhere to its newly adopted policy. Current Year Addendum: We noted that during the year ended September 30, 2003, the District adopted an in-town meals and other costs reimbursement policy. In addition, we tested all (75) credit card expenditures for the year ended September 30, 2003 and noted no expenditures that appeared to be unallowable. We also noted that for credit card expenditures tested for the year ended September 30, 2003 all were supported by documentation. We no longer consider this issue to be a reportable condition. ^' 7. Payroll Process Should be Enhanced We noted the District's payroll system is complex due to union contracts and non-union pay methods, incentives, employee classifications and the number of employees. We also noted the payroll is processed by an outside vendor who does not routinely have its internal controls audited. The current system essentially requires the full-time efforts of an in-house accountant as well as the services of the outside vendor. We noted no formal reconciliation of the data submitted to the vendor to the resulting payroll reports or to the general ledger accounts was performed. In addition, we noted payroll related costs and adjustments were netted to salary and wage expenditures, which made year-end reconciliation an overly time- _ consuming process which required excessive research and effort. Page 58 of 67 7. Payroll Process Should be Enhanced, continued We recommend the Board consider enhancing the process by analyzing the payroll system, simplifying all facets possible and requiring routine reconciliation from the time records to the general ledger posting, including reconciliation to IRS reports. All payroll entries should be posted "gross"; no reimbursements on costs should be netted to the payroll accounts. This will simplify the reconciliation process. The Board should consider taking payroll in-house or moving to a vendor that annually has its internal controls audited (SAS 70 Report "Reports on the Processing of Transactions by Service Organizations") in an effort to reduce liability to the Board and District. Note: This issue was included as a reportable condition. September 30, 2002 Addendum: We noted that the District changed its accounting software on October 1, 2002, hired an in-house Chief Accountant/Controller on September 4, 2001 and has begun in-house payroll processing as of May 31, 2002. We, however, noted that the personnel files did not contain documentation supporting current pay rates and positions. We recommend that each personnel file contain updated information with regard to the respective employees' position and pay rates. Current Year Addendum: We noted that the District hired a payroll bookkeeper in February 2003. We also noted that all personnel files selected in our payroll testing procedures contained documentation to support current positions and pay rates as well as evidence of certifications for special pay. We no longer believe this issue to be a reportable condition. 8. Retirement Plans Should be Analyzed (as revised) During the audit, we noted the General Employees' Plan should have had an actuarial valuation performed. We, however, noted the Plan was terminated in the fiscal year 2001 and new Plans were instituted, therefore eliminating the need for such valuations. It should be noted since no timely valuation was performed contributions to the Plan were based on prior year amounts and not actuarially determined. We also noted that due to investment choices made by the Board of Trustees of the Firefighters' Pension Plan, the plan had a significant loss which caused the District to have to fund the difference. The adoption of the new Plans further complicates the District's payroll function. We recommend the District review its retirement plans to ensure its employee benefit goal is being met and that the cost of administration of the Plans is considered. Recent changes to the State FRS may make it an attractive alternative, that also saves administrative efforts. r• Page 59 of 67 8. Retirement Plans Should be Analyzed (as revised), continued September 30, 2001 Addendum: We noted the District instituted three (3) new retirement plans (plans 5-7) and terminated Plan 3. We continue to recommend the District monitor its retirement plans and consider moving all its plans into the State FRS. September 30, 2002 Addendum: We noted that General Employee's Retirement Plan (Plan 3) was terminated and that the District was in the process of distributing the Plan's assets. We, also, noted subsequent to September 30, 2002 the District terminated four of its other retirement plans (Plans 4-7) in an effort to consolidate and better manage its benefit plans. We continue to recommend the District consider moving its remaining F.S. 175 retirement plan into the State FRS. Current Year Addendum: We noted that during the year ended September 30, 2003 the District terminated four(4) of its six (6) remaining retirement plans. All affected employees were moved into the State FRS. The District now has two retirement plans. We continue to recommend the District consider moving its F.S. 175 retirement plan participants into the State FRS. 9. District Cell Phone Usage Policy Should Be Developed The District does not have a formal written policy on District owned cell phone usage with respect to personal calls. The District has noted some excessive personal usage on occasion and in certain instances employees are requested to reimburse the District for those calls. ,., The lack of a formal policy precludes the District from uniformly applying any collection efforts. We recommend the District adopt a formai written cell phone usage policy which addresses items such as personnel to be issued cell phones, necessity for long distance service, approved usages, monitoring procedures to ensure adherence to the policy, collection efforts, and consequences of the abuse of the cell phone privilege. September 30, 2002 Addendum: We noted that, subsequent to the year ended September 30, 2002, the District adopted a cellular phone usage policy. We continue to recommend the monitoring of cellular phones for unauthorized uses. Current Year Addendum: We noted that during the year ended September 30, 2003, the District adopted a cell phone usage policy and has made the Deputy Chief of Operations responsible for monitoring cell phone usage and applicable phone billing plans on a monthly basis. Page 60 of 67 10. Expenditures Should Be Consistently Recorded We noted that certain rental expenditures were not consistently coded to the proper expenditure accounts. At times, items such as contracted clerical help and telephone expenditures were included in rent expense in the Code Enforcement Fund. Expenditure coding should be consistently applied throughout the fiscal period. Consistent application of expenditure coding aids in review of financial data including comparison analysis. We recommend the District consistently apply expenditure coding throughout the fiscal period especially on expenditures of a recurring nature. September 30, 2002 Addendum: We noted, during a review of certain general ledger detail for the year ended September 30,2002,that several reclassifications had been made to various accounts throughout the year. We continue to recommend consistent coding of expenditures. Current Year Addendum: During our review of the general ledger detail for the year ended September 30, 2003, we noted only a limited number of reclassifications made by the District's staff that were due to miscoding. This decrease in miscodings is due to increased accounting resources, increased number of qualified accounting personnel, implementation and adherence to fiscal policies, greatly increased efforts toward fiscal responsibility, periodic reviews by the Director of Finance and concentrated efforts by the Board to ensure proper and timely reporting. We encourage the District to continue these efforts. 11. Investment Policy Should be Developed and Implemented During the year ended September 30, 2001, we noted the District had no written investment policy per Florida Statute 218.415. However, we noted the District had only invested in cash which complies with F.S. 218.415(17). Per Florida Statute 218.415, we recommend the District either elect to design and adopt a written investment policy or formally resolve to abide by F.S. 218.415(17). Such decision should be recorded in the minutes and a formal policy to abide by F.S. 218.415(17) should be adopted. September 30, 2002 Addendum: We noted that on November 14, 2002 the District's Board of Fire Commissioners adopted Resolution 02-013 to abide by the no written investment policy provision contained in Section 218.415(17) of the Florida Statutes. Current Year Addendum: On November 14, 2002, the District's Board of Fire Commissioners adopted Resolution 02-013 to abide by the no written investment policy provision in Section 218.415(17) of the Florida Statutes. Page 61 of 67 12. Firefighter Pension Plan Investment Policy Should be Reviewed Current (Plan-2) investment policy and actual selected investments performed below expectations and caused losses and under funding of the Plan. Such losses and under funding are actuarially recovered through increased required contributions by the District. We recommend the Plan's policy and investments be reviewed and adjusted to accommodate current economic times. Such review should minimize investment losses and reduce the requirement of the District to increase contributions to offset investment losses. September 30, 2002 Addendum: We continue to recommend these corrective actions as the Plan's performance was again well below expectations. In regards to the Firefighters' Retirement Plan (Plan 2), we noted that the Plan's actuary continues to project an investment return of eight (8) percent. Actual results (loss of $189,372) have historically been significantly less than the projected amount; therefore, the District continues to be required to fund the shortfall between projected and actual returns. This funding of the shortfall is in addition to the annual District contributions determined by the actuary. Current Year Addendum: We noted that during the year ended September 30, 2003, the Firefighters' Retirement Plan (Plan 2)performed significantly better than in the prior year. The contribution rate of 24% continues to be higher than the State FRS rate of 19% for the same class of employee. We continue to recommend the District consider moving its F.S. 175 retirement plan participants into the State FRS. 13. Potential Deteriorating Financial Condition-Declining Fund Balance Should be Monitored During the audit, we noted that the District again had adopted an annual budget having annual expenditures greater than annual revenue. This practice results in the planned use of prior year excess revenue (carryover). Specifically, the District budgeted the use of prior year excess revenue in the amounts of approximately $271,000 and $158,000, respectively, over the last two fiscal years. Actual use of prior year excess revenues was approximately $402,000 and $141,000, respectively, over the last two fiscal years. Therefore, actual use of prior year excess revenue was greater than the amounts budgeted due, in part, to a large number of required adjustments to the books and records at year-end. This practice has left the District with a small unreserved, undesignated fund balance relative to Districts of a similar size. No evidence was noted or submitted for our review of any Board approved target or planned fund balance amount, or planned use of any remaining fund balance. Page 62 of 67 13. Potential Deteriorating Financial Condition-Declining Fund Balance Should be Monitored, continued Although we do not believe the District to be in a state of financial emergency, the District did exhibit certain indications of a deteriorating financial condition, as defined by statute (F.S.218.503). Our financial condition assessment of the District included the use of many procedures, including the indicator testing criteria established by the Office of the Auditor General of the State of Florida(Rule 10.550). As noted earlier, the use of such criteria indicated factors contributing to the indicators related to a declining fund balance, annual budgetary increases, lack of timely and accurate financial reporting, general ledger and annual budget not being specifically correlated, lack of operational policies, no cash or budgetary reserve, annual operational costs in excess of revenue, and no five year plan which coordinates future operational and capital needs with projected tax, impact and other revenues. These factors and indicators resulted in part from the rapid growth of the District, and the lack of budget and expenditure monitoring. As such, we recommend the District establish a target and/or planned fund balance, address and/or correct the issues noted herein, and ensure timely and accurate financial reporting. Specifically, we recommend the Board review its unreserved undesignated fund balance (in the General and Special Revenue Funds) and establish a policy to determine a target and/or planned fund balance to be held for unanticipated and emergency purposes. Planned reserves should also include amounts for future capital investments and/or major repairs and correlate with future budgets with these items. We recommend the District quickly address and implement the corrective action to the comments submitted within this letter. In addition, the District must review its proposed FY2003 budget (and subsequent budgets) and attempt to reduce and/or limit expenditure increases so as to begin to build reserves for emergencies, operational contingencies, future major repairs and capital asset replacements. This effort should be correlated with the design of the five (5) year capital and operational plan, as well as projected tax, impact fee and other revenues. Future major capital repairs, replacement, and expansion should be incorporated into the plan. Methods, timing, and revenue sources to fund such items should be planned and reserves designed and funded over time. The five year plan must be established and monitored in accordance with current and future District _ assessment of asset condition and response, service and staffing standards. In summary, the District should continue to monitor its expenditures closely in the future. Operational efficiency and a capital asset condition assessment should be implemented. The results of such efforts will assist in preparing the five (5) year plan and guide the District's budgeting efforts. Page 63 of 67 13. Potential Deteriorating Financial Condition-Declining Fund Balance Should be Monitored, continued The District did have certain positive financial indicators such as no increase in millage rate, increasing taxable property values within the District, a projected FY2003 increase in ad valorem revenue of over$2 million,projected continued construction within the District boundaries, essentially no debt and continued receipt of impact fees. Other positive District financial indicators include acquisition of a new accounting software program, implementation of certain operating policies,reorganization of the finance department, improved reporting and the renewed managerial intent to more closely analyze future budgets, expenditure levels and future needs. September 30, 2002 Addendum: The District continued to exhibit certain indications of a deteriorating financial condition as noted below. While we still do not believe the District to be in a state of financial emergency, the financial condition of the District must be monitored closely. The financial indicators established by the State continue to show the District performing unfavorably when compared to five of the eight applicable indicators. However, the unfavorable trends noticed over the past five years appear to either have leveled off or are beginning to turn in a positive direction. Fund balance of the District's governmental fund types increased $60,000 over the previous year, a change of 16%. This is due to the conscious effort of the Board regarding internal management,building of District reserves and the development and implementation of new policies and the five year capital plan. We noted, however, that the unreserved fund balance is very small for a District of this size and that no specific designations of fund balance have been made for specific issues such as equipment and buildings. The Board has now adopted a conservative budget approach. The District's management has been replaced and a conservative approach has been adopted. We continue to recommend that the management of the District and the Board of Fire Commissioners monitor the financial condition of the District closely and build reserves through careful budgeting and adherence to the newly implemented policies. It is imperative that the District correlate its five year plan with its budget and actual operating results. The coordinated use of impact fees and tax revenue will assist the District in strengthening its financial position. The five (5) unfavorable financial indicators noted were: 1. Ratio of unreserved fund balance to total expenditures 2. Ratio of cash and investments to current liabilities 3. Ratio of cash and investments to total expenditures divided by twelve (12) 4. Ratio of current liabilities to total revenue 5. Ratio of unreserved fund balance to total revenue Page 64 of 67 13. Potential Deteriorating Financial Condition-Declining Fund Balance Should be Monitored, continued Current Year Addendum: During the year ended September 30, 2003, the District continued to improve its financial condition. Only one (1) of the eight(8) applicable indicators continues to show the District performing unfavorably. The remaining unfavorable indicator is the ratio of cash and investments to total expenditures divided by twelve (12 ). Also, for ^ the year ended September 30, 2003, the District did monitor its expenditures and did not expend more than its General Fund approved budget. A five (5) year plan was adopted in January 2003 and strides were made to implement and then adhere to more comprehensive accounting and budgetary policies. The District has exerted great effort to control its expenditures and is starting to build its reserves as required. Its financial trends, in general, did turn in a positive direction and during the year ended September 30, 2003 timely and accurate financial information was being presented, routinely, to the Board. It is important for the District to continue to monitor its expenditures and manage its budget to improve its financial condition and continue this positive trend as well as to build adequate reserves. 14. State of Florida Auditor General Has Been Requested to Perform an Audit During the audit, we became aware that the State Senator representing the area of Collier ^ County covered by the District has requested the State Auditor General audit the District. No course of action has been determined by the State Joint Legislative Audit Committee. September 30, 2002 Addendum: During the September 30, 2002 audit, we noted that the State Joint Legislative Audit Committee had directed the State Auditor General to determine a schedule and monitor the implementation of the corrective actions contained in the independent audit for the fiscal year ending September 30, 2001. It was agreed that the District's financial status would be communicated to the State Auditor General's Office prior to release of this audit. No audit by the State Auditor General's Office is currently anticipated. Current Year Addendum: During the year ended September 30, 2003, the District's management met with a representative of the State Auditor General's office to communicate the financial status of the District prior to the release of the audit for the fiscal year ended ^ September 30, 2002. Due to the improvements made by the District it was agreed that an audit by the State Auditor General's office was not necessary but rather the District would once again meet with a representative of the State Auditor General's office and communicate the status of the corrective action contained in the independent audit for the fiscal year ended September 30, 2003 audit. The meeting was to be held prior to the release of this audit. No audit by the State Auditor General's office is currently anticipated. Page 65 of 67 District and Fire Chief Admit Certain Unfair Labor Practices During August 2002, the District and its, now former, Fire Chief agreed to settle a dispute with the District firefighters' union regarding twenty-two (22) unfair labor practices. As such, the District agreed to pay$20,000 toward the Union's legal fees and make certain changes in the District's labor practices. Subsequently, the Chief resigned his position with the District and accepted a severance package totaling approximately $300,000 to be paid over the next two fiscal years. September 30, 2002 Addendum: We noted that, during the year ended September 30, 2002, the District paid the full settlement amount of$20,000 for the Union's legal fees per the agreement related to the unfair labor practices. As noted in footnote Q, a citizen was granted a temporary order blocking the payment of the contract settlement to the former chief. As of the date of this report, the former Chief was only paid four months severance per his original employment contract. On August 21, 2003, the District agreed to pay the former Chief an additional $215,000 immediately and pay $15,000 to the citizen that filed for and was granted the temporary order. The settlement is intended to fully settle this issue. Current Year Addendum: We noted that during the year ended September 30, 2003, the District paid the former Chief$215,000 and $15,000 to the citizen that filed for and was granted the temporary order in exchange for general releases to fully settle the issue. The District also paid the former Chief$31,161 in salaries due him. Late Payments Caused Unnecessary Finance Charges During the September 30, 2002 audit, we noted that the District was charged late fees three (3) times, totaling $7,562, during the year by a certain vendor for not paying invoices in a timely manner. We recommend paying all invoices according to their terms to avoid unnecessary finance charges. The District should also investigate the possibility of paying certain invoices early to take advantage of discounts offered by certain vendors. Current Year Addendum: We noted that during the year ended September 30, 2003, the District began processing payables on a weekly basis to avoid late payments and related late fees. No late fees were noted during our audit of the year ended September 30, 2003. Page 66 of 67 17. Certain Agreements for Professional Services Should be Bid During the September 30, 2002 audit, we noted that the District engaged an accounting firm specializing in forensic accounting to examine certain areas of the District's finances. The District also contracted with a consultant to develop internal control policies. Neither of these two services were put out for bid. We recommend that the District solicit bids for all significant professional services especially because of the District's financial condition. In addition, the bid process affords the District the best method to evaluate the bidders qualifications. Current Year Addendum: We noted that during the year ended September 30, 2003, the Board of Commissioners approved a bidding policy to more clearly define the types of products and services that must be put out for bid. 18. Stale Dated Checks Should be Researched During the September 30, 2002 audit, we noted that the District's health insurance cash account reconciliation contained eight (8) outstanding checks that were issued more than one (1) year prior to the year ended September 30, 2002. We recommend the District research these checks and attempt to locate the original recipients. If they cannot be located, we recommend the District remit the money to the State of Florida as unclaimed property. Current Year Addendum: We noted that subsequent to the year ended September 30, 2003, the District researched and resolved the stale dated checks contained in the health insurance cash account. The District also, in January 2004, changed from the self-insured health plan to a fully insured health plan with a major insurance carrier. CURRENT YEAR COMMENTS: 1. No Duplicate Check Numbers Should be Used During the audit, we noted that six (6) duplicate check numbers were used in one of the District's cash accounts. The duplicate numbers were caused by an oversight, when the District ordered new checks for the new accounting software. The first six (6) checks from the new batch should have been voided as those numbers had already been used. We recommend the District carefully review sequences, when new check batches are used and/or ordered. Page 67 of 67 2. Controls Over Post-Retirement Benefits Should be Enhanced During the year ended September 30, 2003, the District discovered that it had been improperly paying post-retirement health insurance benefits to a former employee. The District discovered that the former employee did not meet the requirements to be eligible for the benefits. The District has notified the employee that he may elect to continue the health benefit under the provisions of COBRA for the specified time with the employee paying for the continuation of coverage, if so elected by the former employee. At the end of the specified COBRA time period, the former employee must make his own arrangements for insurance coverage, if so elected. The Board of Commissioners has decided not to seek reimbursement from the former employee for benefits already paid. We recommend the District more closely monitor its post retirement benefits recipients. We have included in this letter all comments which came to our attention during the course of our audit regarding Items 1 through 6, as applicable, of the "Rules of the Auditor General-Local Governmental Entity Audits," Rule 10.554, Section (1)(g). In regard to Item 2, we represent that the North Naples Fire Control and Rescue District has complied with Florida Statute 218.415 regarding investment of public funds. In regard to items 10.554(4)(a-c), we have disclosed possible violations of law being investigated by various law enforcement agencies, the outcome of which cannot be determined. We have also disclosed other possible expenditures not specifically determinable as legal or inadequately documented. In regard to Item 6a, nothing came to our attention to cause us to believe that at any time during the year the North Naples Fire Control and Rescue District met any of the criteria for being in a state of financial emergency as defined in Florida Statute 218.503(1). In regard to item 6(c)(1), we applied financial condition assessment procedures pursuant to Rule 10.556(8) and noted certain indications of deteriorating financial conditions, as defined by Statute. As such, we do not believe the District to be in a state of financial emergency as a consequence of conditions described in Section 218.503(1), of the Florida Statutes. Additionally, in regard to Item 6b, we represent that the financial report filed with the Department of Financial Services, pursuant to Florida Statute 218.32(1)(a), is in agreement with the annual financial audit report for the same period. This report is intended solely for the information and use of the Board of Commissioners, management, the Auditor General of the State of Florida and other federal and state audit agencies. This report is not intended to be, and should not be, used by anyone other than these specified parties. STROEMER TUSCAN & COMPANY, P.A. Fort Myers, Florida March 29, 2004 EXHIBIT ,,,coni mitesNorth Naples Fire Cofrol c�' Rescue II J�Ils-1I°I1(Ci- ti '. 1885 Veterans Park Drive•Naples, Florida 34109 Aft. (239) 597-3222• Fax(239) 597-7082 FLA May 17, 2004 Auditor General's Office Local Government Audits/342 Claude Pepper Building, Room 401 111 West Madison Street Tallahassee, FL 32399-1450 The following is management's response to the audit report for the fiscal year 2002/2003: PRIOR YEAR COMMENTS THAT CONTINUE TO APPLY: 1. FIVE YEAR PLAN SHOULD BE ADOPTED. As noted by the Auditors, a Five Year Plan was filed with the Department of Community Affairs and Collier County Finance Department on January 24, 2003. District staff continues to work on revisions and improvements to the existing plan in order to achieve a more fully comprehensive document. Staff plans to submit a Draft of this revised Five Year Plan to the Board for discussion and possible approval prior to the end of the fiscal 2004 year. 2. FIXED ASSET POLICY SHOULD BE FORMALLY EXPANDED, DESIGNED AND ADOPTED AND CONTROL ACCOUNTS SHOULD BE RECONCILED. As noted by the Auditors, at the November 2002 Board of Fire Commissioners' Meeting, an updated and expanded Fixed Asset Policy was adopted by Resolution 02-006. Changes from the former policy include the minimum threshold changed from $500 to $750 per State Statute, provisions for depreciation of fixed assets, and the requirement for Board approval to delete and add fixed assets to the District's fixed asset list. Additionally, at the February 2003 Board of Fire Commissioners' Meeting, approval was received for a fixed asset numbering system, and inventory control forms. A detailed list of additions and deletions to the District's fixed assets has been created and maintained, with supporting board approval attached. All fixed assets are now numbered pursuant to the Board approved schedule, at the time the item is received by the District, or as soon thereafter as possible. Assets are then placed on the fixed asset list. The fixed asset list is routinely reconciled with the general ledger fixed asset accounts. Auditor General's Office May 17, 2004 Page Two The District intends to continue to improve and modify its policies and procedures relating to the designation, tracking and financial recording of its fixed assets, and to address any deficiencies in the policies and/or procedures in a timely manner. 3. TRAVEL POLICY SHOULD BE DEVELOPED. As noted by the Auditors, a Travel and Per Diem Policy was adopted by the Board of Fire Commissioners on October 11, 2001. The Travel and Per Diem Policy has been revised and updated on April 10, 2003 by Resolution 03-017, and again on September 11, 2003 by Resolution 03-046. State mandated travel reimbursements forms are used, and are being reviewed on a weekly basis as reimbursement checks are submitted for signature to ensure the forms are submitted completely and correctly, and no reimbursement is made without the appropriate receipts and signatures as required by Florida Statute. 4. OPERATING POLICIES SHOULD BE FORMALLY ADOPTED. As noted by the Auditors, numerous Polices and Procedures have been adopted and implemented since October 1, 2002, specifically: a. Fixed Assets Accounting and Control Policy adopted November 14, 2002 by Resolution 02-006; revised April 8, 2004 by Resolution 04-008. b. Revised Cellular Phone Policy adopted November 14, 2002 by Resolution 02-012. c. Revised Purchase Policy adopted December 5, 2002 by Resolution 02- 018, and revised April 10, 2003 by Resolution 03-016. d. Cash Management Policy adopted February 13, 2003 by Resolution 03- 004. This policy provides procedures for cash receipts, petty cash and bank account reconciliations. e. Revised Travel and Per Diem Reimbursement Policy adopted February 13, 2003 by Resolution 03-002; revised April 10, 2003 by Resolution 03-017 and September 11, 2003 by Resolution 03-046. f. Education Reimbursement Policy adopted March 13, 2003 by Resolution 03-011; Revised Education Reimbursement Policy adopted April 10, 2003 by Resolution 03-018; revised April 8, 2004 by Resolution 04-009. g. In-Town Meals and Other Cost Reimbursement Policy adopted May 11, 2003 by Resolution 03-018. Auditor General's Office May 17, 2004 Page Three h. Computer Use Policy adopted May 8, 2003 by Resolution 03-030. i. Revised Public Inspection, Examination and Duplication of Records Policy adopted July 24, 2003 by Resolution 03-038. j. Computer Use-Internet and E-Mail Use adopted August 21, 2003 by Resolution 03-039 ; revised by Resolution 03-056 November 13, 2003. k. Resolution 02-013 adopted December 5, 2002- No Investment Policy. 1. Policy for Retirement of Helmet and Badge upon employee retirement adopted February 13, 2003 by Resolution 03-005. m. Bidding Policy adopted September 11, 2003 by Resolution 03-045. n. Policy for Engagement of Independent Contractors adopted November 13, 2003 by Resolution 03-057. o. General Provisions for Personnel (Non-Union) Policies and Procedures adopted November 13, 2003 by Resolution 03-058. p. Discrimination/Harassment Policy adopted November 13, 2003 by Resolution 03-058. q. Drug Free Workplace adopted December 15, 2003 by Resolution 03-059. r. District Years of Service Recognition Policy adopted March 11, 2004 by Resolution 04-005. s. Fire Commissioner Phone and Pager Policy adopted March 11, 2004 by Resolution 04-006 The following procedures were approved at the February 2003 Board meeting: a. Payroll: (i) Recording Daily Time Sheets (ii) Adjust Salary for Promotion or Step Raise (iii) Entering Information from Time Sheets into Great Plains (iv) Entering Time Used or to Adjust Time Available (v) Entering Vacation/Sick Time Balance on P/R Checks (vi) Preparing Non-Employee Payroll Disbursements b. Petty Cash c. Bank Reconciliation d. Cash Receipts e. Purchasing and Accounts Payable f. Check Signing and Electronic Transfer of Funds g. Processing of Incoming District Mail In addition, a comprehensive set of Personnel Rules and Regulations has been prepared for Board review. A workshop on those policies and procedures is scheduled for May 21, 2004. It is staff's intent to present these Personnel Rules and Regulations for Board adoption prior to the end of the fiscal 2004 year. Auditor General's Office May 17, 2004 Page Four 5. USE OF IMPACT FEES SHOULD BE MORE CLOSELY REVIEWED. As noted by the Auditors, all Impact Fee Fund purchases for the year ended September 30, 2003 were submitted to the District's legal counsel so an opinion could be provided to the Board regarding the legal appropriateness of the use of Impact Fees. The District intends to continue this practice. Additionally, because of the extensive review performed by staff of prior year impact fee expenditures, staff's knowledge has greatly increased regarding the criteria used to determine if Impact Fees can be utilized. Careful review of a potential Impact Fee Fund expenditure is performed prior to submission to the Board for approval. 6. CREDIT CARD AND IN-TOWN MEAL/OTHER COSTS REIMBURSEMENT POLICY SHOULD BE DESIGNED AND APPROVED (AS REVISED FOR THE CURRENT YEAR. On October 11, 2001, the Board adopted a Credit Card Policy. As noted by the Auditors, at the May 2003 Board of Fire Commissioners' Meeting, an In-Town Meal and Other Cost Reimbursement Policy was adopted by Resolution 03-030. The District has monitored employee's credit card use very closely, and restricted all credit card use by keeping all credit cards in the finance department, issued to an employee only upon the completion and submission of approved purchase requests forms. Receipts are turned in to the finance department for all credit card purchases. The District will continue to closely monitor and supervise all credit card use. 7. PAYROLL PROCESS SHOULD BE ENHANCED. As noted by the Auditors, in February 2003, the District hired a Payroll Bookkeeper who is a Certified Payroll Specialist to assume the responsibilities of all payroll preparation and benefit time accrual and monitoring. The Director of Finance reviews all payroll related general ledger accounts on a semi-monthly basis. All payroll entries are done in accordance with generally accepting accounting principles. Auditor General's Office May 17, 2004 Page Five As a result of these improvements to and enhancements of the District's payroll process, payroll errors and inaccuracies have dramatically decreased, and procedures to ensure internal control have been created. Documentation is maintained in the employee's file supporting any changes in pay or benefits. 8. RETIREMENT PLANS SHOULD BE ANALYZED. As noted by the Auditors, in October 2002, the Board approved the final distribution of funds from the General Pension Plan. Final distributions were approved by the Board of Trustees of the General Pension Plan on November 8, 2002, and subsequently made by checks dated November 8 2002. The General Pension Plan bank account was closed in May of 2003. The status of the District's other retirement plans is as follows: ICMA Plan No.109725 —(Chief Tobin). The Board of Fire Commissioners adopted Resolution 02-010 on November 14, 2002, terminating this 401(a) plan. ICMA Plan No.107725 (Fire Code Officials). On February 13, 2003, the Board of Fire Commissioners adopted Resolution 03-008, terminating the Fire Code Official's 401(a) plan, since the District no longer administers the Collier County Fire Code Officials. ICMA Plan No. 107818 —(Administrative Employees and Elected Officials) On June 12, 2003 the Board of Fire Commissioners adopted Resolution 03-034, terminating ICMA Plan No. 107818 in order to enter these employees into the Florida Retirement System. ICMA Plan No. 107788 —(Executive Assistant) On July 24, 2003 the Board of Fire Commissioners adopted Resolution 03-040, terminating ICMA Plan No. 107788, since the Executive Assistant was the only participant, and is no longer employed by the District. As of this date, the District's employees participate in one of two pension plans— the Florida Retirement System, or the Chapter 175 Firefighters Pension Plan. The staff continues to recommend analysis of the Chapter 175 Plan, and recommends investigation into returning all employees to the Florida Retirement System. Auditor General's Office May 17, 2004 Page Six 9. DISTRICT CELL PHONE USAGE POLICY SHOULD BE DEVELOPED. A revised Cellular Phone Policy was adopted by the Board of Fire Commissioners at their November 14, 2002 Board Meeting by Resolution 02-012. This policy addresses approved usages, monitoring procedures to ensure adherence to the policy, collection efforts and consequences of the abuse of the cell phone privilege. Additionally, the Deputy Chief of Operations reviews the cell phone bill on a monthly basis, and maintains accountability of personnel who have a District cell phone in their possession. 10. EXPENDITURES SHOULD BE CONSISTENTLY RECORDED. As noted by the Auditors, beginning September 2002, the Director of Finance, upon review of invoices during the approval process, indicates the general ledger account to which the expense should be recorded. Beginning January 1, 2004, the appropriate general ledger expense account number is written on the purchase request and purchase order forms by the Director of Finance to ensure the appropriate classification of expenditures. In August and September of 2003, a more detailed budget format was developed to assist staff in assigning consistent, accurate expense codes to the District's expenditures. General ledger expense accounts are reviewed on a monthly basis by the Director of Finance to monitor the accuracy of income and expense classification. Adjustments are made as needed on a timely basis. 11. INVESTMENT POLICY SHOULD BE DEVELOPED AND IMPLEMENTED. As noted by the Auditors, on December 5, 2002, the Board of Fire Commissioners adopted Resolution 02-013, opting not to have an investment policy, but to operate in accordance with Section 218.415(17) of the Florida Statutes. 12. FIREFIGHTER PENSION PLAN INVESTMENT POLICY SHOULD BE REVIEWED. As noted by the Auditors, the Board of Trustees of the Chapter 175 Firefighters' Pension Plan continues to monitor the investments of the fund. Both the Board of Trustees of the Pension Plan and the Board of Fire Commissioners continue to Auditor General's Office May 17, 2004 Page Seven discuss the feasibility of transferring the participants of the Chapter 175 Pension Plan to the Florida Retirement System. 13. POTENTIAL DETERIORATING FINANCIAL CONDITION-DECLINING FUND BALANCE SHOULD BE MONITORED. As noted by the Auditors, in August and September 2002, management and Board members met with the District's auditor and were advised of the serious nature of this comment. Management is committed to fiduciary responsibility and the necessity of closely monitoring expenditures, as well as providing accurate and timely financial information to the Board. In an effort to improve the financial condition of the District, the Board of Fire Commissioners adopted a budget for the fiscal year 2002/2003 that did not have expenditures greater than annual revenue and provided for designated reserves as follows: Reserve-Emergency $69,748 Reserve-Vehicles $75,000 Reserve-Bldg.Improvements $75,000 Reserve-St. #40 $162,350 Reserve-St. #46 $20,900 Total Designated Reserve $402,998 The District has effectively managed to control expenditures and build designated reserves, and did not expend more than its General Fund approved budgeted expenditures for the year ended September 30,2003. Because of the adoption and implementation of comprehensive financial and budgetary policies and procedures, as well as the Board's commitment to building cash reserves and increasing the District's financial stability, the Board was able to approve an increase to the budgeted designated reserves for the year ended September 30, 2003 as follows: Reserve-Emergency $246,451 Reserve-Vehicles $246,451 Reserve-Bldg.Improvements $246,451 Reserve-St. #40 $162,350 Reserve-St. #46 $ 20,900 Reserve-Operating $171,451 Reserve-Dis. Preparedness $171,451 Reserve-Capital Equip. $171,451 Auditor General's Office May 17, 2004 Page Eight Reserve-Fire Apparatus $171,451 Total Designated Reserve $1,608,407 The budget for the year ended September 30, 2004 also contains provisions for designated reserves. Staff continues to work on revisions to the filed Five Year Plan to ensure the designated reserves are adequate to provide funding for the District's future needs. The budget for the year ended September 30, 2004 provides for no increase in millage rate, and indicates an increase in Ad Valorem revenue of over 2 million dollars. The District's cash flow continues to be carefully monitored. As a result of tightly controlling expenditures, no bridge loan to support operational expenses from October 1, 2003 through November 30, 2003 was required. In January of 2004, the Board of Fire Commissioners approved the purchase of eight million dollars' worth of certificates of deposit for the General Fund, maturing on a staggered basis. Because the District has continued to monitor cash flow and expenditures, the maturity date for the first certificate of deposit due to mature was extended beyond the initial maturity date. Staff continues to provide the Board with complete and accurate financial information on a monthly basis as part of the Treasurer's Report. Management has continued to maintain its commitment to closely analyzing current and future budgets and expenditure levels. 14. STATE OF FLORIDA AUDITOR GENERAL HAS BEEN REQUESTED TO PERFORM AN AUDIT. As noted by the Auditors, on March 25, 2003, the District's auditors, Fire Chief James Webb, and Director of Finance Becky Pogan met with Jim Dwyer of the Auditor General's Office. Auditor General's Office May 17, 2004 Page Nine During this meeting, the change in the District's administration, the policies and _ procedures that have been implemented and the financially conservative position taken by the administration and Commissioners were discussed. The outcome of that meeting was the preliminary decision that the Auditor General's office would continue to monitor the District's progress and review the audit for the fiscal year ended September 30, 2002 before deciding whether or not to request the Joint Legislative Committee to institute an audit of the District. On September 8, 2003 another meeting occurred with Jim Dwyer, Jeff Tuscan, Fire Chief James Webb and Director of Finance Becky Pogan. As a result of both of these meetings, as well as the input of Jeff Tuscan, the Auditor General's office sent a letter to the District dated October 20, 2003, indicating an auditof the District would not be performed, but that Mr. Dwyer would continue to monitor the District's progress. As of this date, a meeting is scheduled for May 24, 2004 between Jeff Tuscan, Jim Dwyer of the Auditor General's Office, Treasurer of the Board of Fire Commissioners Joyceanna J. Rautio, Fire Chief James Webb and Director of Finance Becky Pogan. The purpose of this meeting is to review the audit for the year ended September 30, 2003 with the representative of the Auditor General's office prior to public presentation to the Board. Staff anticipates no audit of the District by the Auditor General's office will be recommended. 15. DISTRICT AND FIRE CHIEF ADMIT CERTAIN UNFAIR LABOR PRACTICES. As noted by the Auditors, in September of 2002, the Union sent a letter to Fire Chief Webb informing him that they would not be filing the remaining 8 outstanding unfair labor practices against the District in an effort to show good faith and demonstrate support of the healing process between administration and the Union. On August 21, 2003, the Board of Fire Commissioners approved entering into a Settlement Agreement with former Fire Chief James Tobin to fully settle the former Fire Chief's separation from the District. This Agreement was executed by all parties on August 21, 2003. 16. LATE PAYMENTS CAUSED UNNECESSARY FINANCE CHARGES. As noted by the Auditors, beginning September 5, 2002, all invoices are reviewed upon receipt and immediately forwarded to the Accounts Payable/Receivable Accountant for payment. Auditor General's Office May 17, 2004 Page Ten Beginning September 2003, accounts payable disbursements have been processed on a weekly basis, rather than semi-monthly, to ensure timely payment of invoices due. This practice eliminated the assessment of late charges to the District. 17. CERTAIN AGREEMENTS FOR PROFESSIONAL SERVICES SHOULD BE BID. As noted by the Auditors, on September 11, 2003, the Board of Fire Commissioners adopted a Bidding Policy by Resolution 03-045. Section 6 of that Policy specifically addresses professional services. Since the adoption of the Bidding Policy, the bidding process has been utilized for all new professional services. 18. STALE DATED CHECKS SHOULD BE RESEARCHED. As noted by the Auditors, all stale dated checks are researched and resolved on a timely basis. Any check listed as outstanding in excess of six months is researched, and either voided or reissued. CURRENT YEAR COMMENTS: 1. NO DUPLICATE CHECK NUMBERS SHOULD BE USED. In October and November of 2002, as the District was implementing new financial software, the purchase of new checks was required. During the initial implementation of the new software, six duplicate check numbers were used for the administrative Inspection Fee Fund. In an effort to eliminate the occurrence of duplicate checks, check register logs have been created for all expenditure accounts of the District, identifying the first and last check number of each check run. This will enable staff to account for all checks to ensure no duplication of check numbers occurs. 2. CONTROLS OVER POST-RETIREMENT BENEFITS SHOULD BE ENHANCED. In April of 2003, following a change in District administrative staff, it was discovered that a post retirement health insurance benefits was being provided to a former employee who did not meet the requirements to be eligible for benefits as a"retiree" (the former employee was not collecting FRS retirement benefits Auditor General's Office May 17, 2004 Page Eleven and therefore separated from the District and did not retire). Following many discussions between staff and the District's human resources attorney, a letter dated September 8, 2003 was sent to the former employee, advising that the designation of"retiree" was incorrect, and that the former employee would only be eligible for COBRA health insurance benefits as of November 1, 2003. The District has expanded the job description and responsibilities of the Payroll Bookkeeper to include benefits coordination, and as such has assigned the responsibility of verifying eligibility for retirement benefits to that staff member. The Board of Fire Commissioners continues to maintain a commitment to fiscal responsibility, conservative spending and financial stability of the District. Staff continues to carefully monitor the District's financial status and provide accurate financial information to the Board on a timely basis. Sincerely, NORTH NAPLES FIRE_CONTROL & RESCUE DISTRICT JOY a ANNA J. RAUTI• Treas firer, Board of Fire Commissioners JAM' M. EBB Fire Ch -f rA 4°-k ".1 REBECAH POGAN Director of Finance BJP/bp 101". fa North Naples Fire ConLrol t' Rescue District Ft (IL.�4 )j 1885 Veterans Park Drive•Naples, Florida 34109 a . E 41.0,- (239)597-3222• Fax(239)597-7082 0L* June 21, 2004 Clerk of Courts ATTN: Minutes Department 3301 E. Tamiami Trail Naples,FL 34112 Re: Audit for Fiscal Year Ending 9-30-03 To Whom It May Concern, Enclosed please find one copy of the annual Audit for the fiscal year ended September 30, 2003 and one copy of the Annual Local Government Financial Report for the fiscal year 2002-2003 for the North Naples Fire Control & Rescue District. Please contact me at the above number if you require any additional information. Very truly yours, 0� 017 BECKY POGAN Director of Finance BJP/bp Enclosures o mm 0 0 0 -0 -v m N cn 3 (_n _-I Z X Z X o o 0 o o m m• - n j 7 o CD CD 0 0 CD Cl 7 'X Dm mflj� CD m vi v am y i p oC c a CD 0 ' m to m Z p I 5 u) mCD3_ C. 3 � CD r, C . t0 _ ZA o• . ► -n 10- 1. \ CD 5' r. t� I r m O N 73 w v :tp to N tD O N to en C) -O V b to H Cea a - cD 1. ..... ate;, 1 CD C -Ow N N 0w w O j It CD \`�r. * • O 7. C ,...)09 N N ro ? C ` . CO ( m rt ' x _,• O > > it ,y N v C. 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OWO Co Ni 2 DEPARTMENT OF FINANCIAT , SERVICES STATE OF FLORIDA ANNUAL FINANCIAL REPORT OF UNITS OF LOCAL GOVERNMENT (SECTION 218.32, FLORIDA STATUTES) PREPARER'S CHECKLIST YES Verify that the name on the certification page is correct for your unit. Completed Be sure to answer the question on the certification page pertaining to expenditure of funds received from the State of Florida for advertising in support of, or in opposition to, any candidate or issue appearing on the ballot. N/A If you will be using reporting forms generated by your own computer system, rather than filing electronically, check to see that they mirror our forms. (Please note, there have been changes to the names of various funds.) YES Report in whole dollars. YES Are revenues and expenditures/expenses reported by fund group, i.e., General Fund, Special Revenue Fund, Debt Service Fund, Capital Project Fund, Permanent Fund, Enterprise Fund, Internal Service Fund, Pension Fund and Trust Fund? Use account codes only once; across fund columns where applicable. YES Are all like funds rolled up and reported as one fund group? YES Are all account codes consistent with those listed in the Uniform Accounting System Manual? ONLY ACCOUNT CODES THAT APPEAR ON THE ENCLOSED LIST CAN BE USED. PLEASE CALL IF ADDITIONAL ACCOUNT NUMBERS ARE NEEDED. YES Check to see that Revenue codes contain 6 digits, none of which is an X. For example, 313.XXX should be reported as 313.100, 313.200, 313.300, etc. Codes with X's cannot be entered electronically or entered manually into our database and forms containing these codes will be returned as unacceptable. (Refer to the enclosed list, or the Uniform Accounting System Manual for valid codes.) YES Check to see that Expenditure/Expense codes contain 5 digits, 2 of which represent object codes (10, 30, 60, 70, 80, 90) such as 513.10, 513.30, 513.60, etc. Do not list sub-objects such as 513.11, 513.21, 513.23, etc. when filing manually; electronic filing will not accept incorrect account codes. All expenditures/expenses are to be rolled up to the 10 (11-29), 30 (31-59), 60 (61- 67), 70(71-73), 80 (81-83), 90 (91-99) levels. Manual reporting forms which present sub-object detail will be returned as unacceptable. (Refer to the enclosed list, or the Uniform Accounting System manual for valid codes.) N/A If you are reporting a discretely presented component unit, record the revenues and expenditures under the COMPONENT UNIT column as you would for any other fund group. N/A If you are reporting a dependent district, make sure to complete Component Unit Reporting—Part 1 and Component Unit Reporting—Part 2 forms manually. They should be submitted along with the certification page, if filing electronically, or with the annual report if filing manually. Add any units you may have that are not listed. Also, please list any independent special district which is reported as a component unit by your agency. N/A If filing electronically, has the certification page been completed and signed by the Chairman of the Board and the Chief Financial Officer and mailed? YES If filing manually, have all applicable parts of the form been completed and has the certification page been completed and signed by the Chairman of the Board and the Chief Financial Officer and mailed? YES Submit one (1)1 copy of the audit report, (management letter version), with the completed certification page, and any component unit reports, if filing electronically, or with all completed forms if filing manually. YES Annual Financial Report must be filed electronically, or postmarked by April 30, 2004 if an audit is not required in accordance with Section 218.39 F.S., or within 45 days after the completion of the audit report, but no later than 12 months after the end of the fiscal year. There are no provisions in the statutes for any extensions for filing the Annual Financial Report. Nonfilers are subject to having state revenue sharing funds withheld until reporting deficiencies are remedied. Note mailing address for the annual report: Department of Financial Services Bureau of Accounting 200 E. Gaines Street Tallahassee, FL 32399-0354 - Do not hesitate to contact this office if assistance or clarification is needed regarding reporting requirements. Our telephone and fax numbers are as follows: Otis Smith (850)410-9347 Suncom 210-9347 Jeanne Dowdrick (850)410-9344 Suncom 210-9344 Burton Marshall (850)410-9365 Suncom 210-9365 Hal Foy (850)410-9345 Suncom 210-9345 FAX (850)410-9993 Suncom 210-9993 C.\word\AFR chccki s,for FY 2002-O3\jsd AUDITOR GENERAL • LOCAL GOVERNMENTAL ENTITY AUDIT REPORT SUBMITTAL CHECKLIST (SECTION 218.39, FLORIDA STATUTES) (To be submitted with the 2002-2003 fiscal year audit report) Local Governmental Entity Name North Naples Fire Control and Rescue District Contact Person Name and Title Becky Pogan, Director of Finance Contact Person Phone Number (239) 597-3222 Contact Person Email Address Fiscal Year Audited September 30 , 2003 Date Auditor Delivered Audit Report to Local Government b "l0 -o le Does the audit report include the following items required by Auditor General Rule 10.557(3): Required for municipalities, special districts, the county as a whole, and county agencies ** YES The financial statements described in Auditor General Rules 10.556(3) through (5), as applicable, together with related notes to financial statements? N/A Required supplementary information (RSI) such as the Management's Discussion and Analysis (not required for county agencies), or the Budgetary Comparison Schedule (required as RSI if not presented as part of the financial statements), for entities that have implemented GASB 34? YES The auditor's report on the financial statements? YES The auditor's report on compliance and internal control? YES The management letter defined in Auditor General Rule 10.554(1)(8)? YES The written statement of explanation or rebuttal required by Auditor General Rule 10.558(1)? ** Pursuant to Section 218.39(2),Florida Statutes, an audit of the board of county commissioners is not required. However, if the county report includes an audit of the board of county commissioners, it should include the items by Auditor General Rule 10.557(3). Required for municipalities, special districts, and the county as a whole N/A Any auditor's reports and related financial information required pursuant to the Federal Single Audit Act Amendments of 1996, OMB Circular A-133, or other applicable Federal law? N/A Any auditor's reports and related financial information required pursuant to the Florida Single Audit Act(see Auditor General Rule 10.557(3)(d))? Page 1 of 2 In addition to the above, have the following requirements been complied with: YES Are all of the above elements of the audit report included in a single bound document as required by Auditor General Rule 10.557(3)? YES Are two copies of the audit report being submitted as required by Auditor General Rule 10.558(2)? YES Was the audit report submitted within 45 days after the completion of the audit, but no later than 12 months after the end of the fiscal year? NOTE: There are no provisions in the statutes for any extensions for filing the audit report. Nonfilers are subject to having state revenue sharing funds withheld, or may be subjected to other penalties, for failure to file an audit report. N1 A If the audit report is for a county or municipality, and a dependent special district was audited as part of the county or municipality audit, did the notes to financial statements clearly indicate that the special district had been included as part of the county's or municipality's reporting entity? NOTE: Pursuant to Section 218.39(3), Florida Statutes, an independent special district may not be audited as part of a county or municipality audit. When a dependent special district is audited as part of the county or municipality audit, the county or municipality notes to financial statements should clearly disclose that the special district is a component unit included within the county's or municipality's reporting entity. This checklist should accompany the audit report. It is suggested that you retain a copy of the checklist for your files. Do not hesitate to contact this office if assistance or clarification is needed regarding reporting requirements. Our telephone and fax numbers, and electronic addresses, are as follows: Auditor General's Office Local Government Audits/342 Claude Pepper Building, Room 401 111 West Madison Street Tallahassee, FL 32399-1450 Telephone: (850) 487-9031 Suncom 277-9031 Fax (850) 487-4403 Fax-Suncom 277-4403 E-mail Address: flaudgen localgovt(aaud.state.fl.us Web site Address: www.state.fl.us/audgen Page 2 of 2