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CAFR Year End 09-30-2012 .. COA'Pf?Yt7Vf/VE „ J , ' ' '‘i'': 1/U/UUYI/ F/MIiVC/& ~„ I' .*..!ik 11:::':...-..\ .,' ' EPIC / �. ,1,... -‘, .. ..: . . , . . ,- ......., ... .,...., .:„ t., _ ,,,...„„, .... ., ,, . ., , . ,..,.....,...:.-_,_;:: .. ,. .. ,..,,..... ....,,,.._.„......„. . ..., ,.. ..„ ... \,. . ...... .,::..,. ,.. ,,.,,,, .•., , ,, , _ ....„ �E�fk Eri/OE SEPTEMBER 30, 2012 J' \\ f .„,„,• /, r ' .} �t.• ' .j-j, \ J i'',,r 0 i,frj 1 +Y isok, • l 't I } . ifs ';rv+ r m ui 't$#Jam . 4 -" r }.♦ „ea . '- 4..j . CO/4'fEE 0 110/filM TT e orpre4e,miv e lb raahcaffeial Refiort (t1'4i ) is reloareai cad gear 1, de obi6ee oi de Cane 01 ek G't'eait Coat off 6e%a��olf de elder G'oa/1 toaervffee. COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED SEPTEMBER 30, 2012 COLLIER COUNTY, FLORIDA BOARD OF COUNTY COMMISSIONERS FRED W. COYLE, CHAIRMAN—DISTRICT 4 JIM COLETTA, VICE-CHAIRMAN—DISTRICT 5 DONNA FIALA—DISTRICT 1 GEORGIA A. HILLER, ESQ.—DISTRICT 2 TOM HENNING- DISTRICT 3 COUNTY MANAGER LEO E. OCHS,Jr. COUNTY ATTORNEY JEFFREY A. KLATZKOW CLERK OF THE CIRCUIT COURT AND CHIEF FINANCIAL OFFICER DWIGHT E. BROCK DIRECTOR OF FINANCE AND ACCOUNTING CRYSTAL K. KINZEL Prepared by the Office of the Clerk of the Circuit Court, Finance and Accounting Department COLLIER COUNTY, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED SEPTEMBER 30, 2012 TABLE OF CONTENTS INTRODUCTORY SECTION Page Transmittal Letter i Certificate of Achievement vii Organizational Chart ix FINANCIAL SECTION Report of Independent Certified Public Accountants 1 Management's Discussion and Analysis(Unaudited) 3 Basic Financial Statements: Statement of Net Assets 16 Statement of Activities 18 Balance Sheet—Governmental Funds 20 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 21 Statement of Revenues,Expenditures and Changes in Fund Balances—Governmental Funds 22 Reconciliation of the Statement of Revenues,Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 23 General Fund-Statement of Revenues,Expenditures and Changes in Fund Balances—Budget and Actual (Budgetary Basis) 24 Statement of Net Assets—Proprietary Funds 27 Statement of Revenues,Expenses and Changes in Fund Net Assets—Proprietary Funds 29 Statement of Cash Flows—Proprietary Funds 30 Statement of Fiduciary Assets and Liabilities—Agency Funds 32 Notes to the Financial Statements 33 Required Supplementary Information 76 Combining and Individual Fund Financial Statements: Nonmaior Governmental Funds Combining Balance Sheet 82 Combining Statement of Revenues,Expenditures and Changes in Fund Balances 92 Combining Schedule of Revenues, Expenditures and Changes in Fund Balances-Budget and Actual(Non-GAAP) 102 Nonmaior Enterprise Funds Combining Statement of Net Assets 126 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 127 Combining Statement of Cash Flows 128 Internal Service Funds Combining Statement of Net Assets 130 Combining Statement of Revenues,Expenses and Changes in Fund Net Assets 131 Combining Statement of Cash Flows 132 Fiduciary Funds Combining Statement of Fiduciary Assets and Liabilities 134 Combining Statement of Changes in Assets and Liabilities 135 Component Units Combining Statement of Net Assets 138 Combining Statement of Revenues,Expenditures and Changes in Net Assets 139 COLLIER COUNTY, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED SEPTEMBER 30, 2012 TABLE OF CONTENTS - CONTINUED STATISTICAL SECTION (UNAUDITED) Net Assets by Component 142 Change in Net Assets 143 Governmental Activities Tax Revenues by Source 146 Fund Balances of Governmental Funds 147 Changes in Fund Balances of Governmental Funds 148 Assessed Value and Estimated Actual Value of Taxable Property 150 Property Tax Rates—All Direct and Overlapping Governments 151 Principal Tax Payers County-Wide 152 Property Tax Levies and Collections 153 Ratios of Outstanding Debt by Type 154 Ratios of General Bonded Debt Outstanding 155 Legal Debt Margin Information 156 Direct and Overlapping Governmental Activities Debt 156 Pledged-Revenue Coverage 157 Demographic and Economic Statistics 158 Principal Employers 159 Full-Time Equivalent County Employees by Function 160 Operating Indicators by Function 161 Capital Asset Statistics by Function 162 SINGLE AUDIT/SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE PROJECTS Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards 165 Report of Independent Certified Public Accountants on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major Federal Program and State Project and on Internal Control Over Compliance in Accordance With OMB Circular A-133 and Chapter 10.550,Rules of the Auditor General 167 Schedule of Expenditures of Federal Awards and State Projects 170 Notes to the Schedule of Expenditures of Federal Awards and State Projects 179 Schedule of Findings and Questioned Costs 181 Schedule of Prior Audit Findings 206 THIS PAGE INTENTIONALLY LEFT BLANK n �olier CLERK OF 114E ' RCC' IT COURT Dwight E. Brock COLLIER COUNTY OURT OUSE Clerk of Courts g 3299 TAMIAMI TRAIL ST, S ITE#403 Accountant Clerk of Courts NAPLES,FLORID4'34112-5 46 Auditor Custodian of County Funds March 12, 2013 To the Citizens and Members of the Board of County Commissioners, Collier County, Florida: It is with extreme pleasure that we present to you, the citizens of Collier County and members of the Board of County Commissioners, the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, 2012. Responsibility for the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the Board of County Commissioners and County management. The Clerk of the Circuit Court's Finance and Accounting Department, as well as County management, is responsible for establishing and maintaining internal controls to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition, the reliability of financial records for preparing financial statements, and maintaining accountability of assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived, and the evaluation of costs and benefits requires estimates and judgments by management. Chapter 218.39 of the Florida Statutes requires an independent certified public accountant's financial audit of counties in the State. For the fiscal year ended September 30, 2012 the independent auditor, Ernst and Young LLP, issued an unqualified opinion on the financial statements. Their report is included in the Financial Section of this report. In addition to meeting the requirements set forth in State statutes, the audit was also designed to meet the requirements of the Government Auditing Standards, the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations and the Rules of the Auditor General, Chapter 10.550. Information relating to the Single Audits, including the schedule of expenditures of federal awards and state projects and the independent auditors' report on compliance and internal control over compliance with requirements applicable to each major federal and state program, are included in the Federal and State Single Audit Section of this report. Governmental accounting and auditing principles require that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and the two should be read in concert. Collier County's MD&A can be found in the Financial Section immediately following the independent auditors' report. Phone- (239) 252-2745 Fax- (239) 252-2755 Website- www.collierclerk.com Email- collierclerk @collierclerk.com PROFILE OF THE GOVERNMENT Collier County is a Constitutional form of government and was established in 1923 under the Constitution and the laws of the State of Florida. The Board of County Commissioners is the legislative body for Collier County and is made up of five residents elected by voters. In addition to the County Commissioners, voters elect the following five constitutional officers: the Clerk of the Circuit Court, Property Appraiser, Sheriff, Supervisor of Elections and Tax Collector. The County provides its citizens with a wide range of services that include law enforcement, emergency management, fire and EMS services, animal services, library, museum and cultural services, parks and recreation operations, road maintenance and construction. Additionally, the County owns and operates a water and wastewater utility, a solid waste landfill and recycling program, and a transit system. Budgets are prepared annually. Formal budgetary integration is employed as a management control throughout the year. The Board of County Commissioners conducts budget workshops during June of each year. The Board's proposed budget is released by July 15, in accordance with Florida Statutes. The budgets of Constitutional Officers are presented to the appropriate authorizing bodies according to state statute. Public hearings are held in September to allow taxpayer input and to adopt the final budget. ECONOMIC CONDITION AND OUTLOOK Collier County, the state's largest county at 2,026 square miles, is on the southwest coast of Florida, directly west of Miami. With a 2012 population of 323,785 (a 14 percent increase over the last ten years), the County has been considered to be one of the fastest growing counties in the state over the last ten years. The resident population includes Unincorporated County (pop. 287,485) and three municipalities: the Cities of Naples (pop. 19,451), Marco Island (pop. 16,443) and Everglades (pop. 406). The County's economic base is concentrated in tourism, agriculture, fishing, ranching and forestry with a growing services economy and an emerging high technology sector. Gulf of Mexico beaches and the Everglades National Park are important attractions to this area. Taxable property market valuation for fiscal year 2012 totaled $58.2 billion, or a very high $179,757 per capita. The County's millage for General Fund operations in fiscal year 2012 remained at only 35% of the statutory 10 mill limit, or $3.56 per thousand dollars of taxable value. Unemployment levels in recent years approximate, or are slightly above, the statewide average. The 2012 annual County unemployment rate stood at 9.3%, while the statewide average is 8.6%. Income levels are high, with a per capita personal income of$59,264. LONG TERM FINANCIAL PLANNING Beginning with the fiscal year 2009 budget, the County annually performs a three-year projection of major ad valorem supported funds (General Fund and the Unincorporated Area Municipal Services Taxing District Fund) prior to developing annual budget policy. On an annual ii basis the County prepares and adopts a five-year Capital Improvement Element (CIE). The CIE is a planning document that identifies public facilities that will be required during the next five or more years. The Capital Improvement Element is the foundation of Collier County's annual Capital Improvement Program (CIP). The total CIP for fiscal years 2013-2017 is $469.4 million. Included in the County's current CIP for fiscal years 2013-2017 are approximately$127.6 million for transportation projects and approximately $229.6 million for water and wastewater facilities and various replacement and rehabilitation projects. Parks and recreation projects of approximately $10.7 million are planned, as well as $30.2 million for tourist development funded projects and $21.3 million of Solid Waste projects. None of the fiscal year 2013 — 2017 Capital Improvement Program is currently planned to be funded by bond or loan proceeds. RELEVANT FINANCIAL POLICIES Relevant financial policies include the appropriation of carryforward as revenue in the following year, maintaining a recommended General Fund unreserved fund balance of between 10% and 15% of actual expenditures, the assessment of impact fees at such levels as allowed by law and supported by studies, and the earmarking of gas taxes for payment of debt service on the Series 2003, 2005 and 2012 Gas Tax Revenue Bonds. Debt administration policies include the limitation of the debt repayment period to the useful life of the underlying assets and the establishment of a 5% benchmark for net present value savings generated by refinancing. The Collier County Debt Policy provides that a smaller net present value savings may be considered, but only on a case-by-case basis. In addition, the debt policy establishes a maximum ratio of total general governmental debt service to bondable revenues from current sources of 13%. Consistent with the County's Debt Management Policy, outstanding debt is continually monitored in relation to existing conditions in the debt market. When sufficient cost savings can be realized, debt will be refinanced. Collier County took advantage of this type of savings by refunding portions of the Series 2003 and 2005 Capital Improvement Revenue Bonds with the Series 2011 Special Obligation Refunding Revenue Bonds. Collier County refunded a portion of the Series 2003 Gas Tax Revenue Bonds with the Series 2012 Gas Tax Revenue Refunding Bonds. These transactions are further described in Note 8 to the financial statements. The Finance and Accounting Department monitors the daily cash needs of the County and invests the County's portfolio in accordance with the County's investment policy. The primary objective of the investment policy is the preservation of capital and the protection of investment principal. Authorized investments include certificates of deposit, the Local Government Funds Surplus Trust Fund, U.S. treasury securities, U.S. agency securities, commercial paper and bankers' acceptances. The weighted average maturity, to first call, of the total managed portfolio was .64 years as of September 30, 2012. The average yield for fiscal year 2012 was .64%, which constitutes a reduction from historical rates, but is consistent with current market rates for similar portfolios. Changes in the fair value of investments are recorded as part of interest income in the financial statements. iii AWARDS GFOA Certificate of Achievement: The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Collier County, Florida for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, 2011. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. Collier County has received this award for the past twenty-six years, from fiscal year 1986 to 2011. We believe our current report conforms to the Certificate of Achievement program requirements, and we are submitting it to the GFOA for consideration for an award again this year. Distinguished Budget Presentation Awards: The Government Finance Officers Association of the United States and Canada presented an award for Distinguished Presentation to Collier County for its annual budget for the fiscal year beginning October 1, 2011. In order to receive this award, a government unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. The Distinguished Budget Presentation Award is valid for a period of one year only. Collier County has received this award for the last twenty-eight consecutive years. The Government Finance Officers Association of the United States and Canada presented an award for Distinguished Presentation to the Office of the Collier County Clerk of the Circuit Court for its annual budget for the fiscal year beginning October 1, 2011. In order to receive this award, a government unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a communications device. The Distinguished Budget Presentation Award is valid for a period of one year only. The Clerk's Office has received this award for the last ten consecutive years. ACKNOWLEDGEMENTS The preparation and publication of this Comprehensive Annual Financial Report represents a significant effort by the Finance and Accounting Department as well as numerous County personnel who contribute to its production. In particular we would like to express our appreciation to Kelly Jones, CGFO, Edith Manuel, CPA, Precious Corrado, June Wathen, Karen Cardenas-Tafur, Suzanne Boothby, Christine Killen, Dan Tripaldi, Laura Drigotas and Don Holder, all Accountants, along with Constance Murray, CGFO, General Operations Manager, Raymond iv Milum, Jr., Clerk's Fiscal Operations Manager and Nancy Fragione, Senior Financial Specialist, Jennifer Milum, Office Assistant, and all of the staff of the Finance and Accounting Department. Sincere appreciation is also expressed to Ernst and Young LLP, the Board of County Commissioners, the Constitutional Officers, the County Manager, Division Administrators and the Department Directors for their assistance throughout the year in matters pertaining to the financial affairs of the County. We hope you find this report informative, accurate and easily readable. If you should have any questions related to this report or if additional information is desired, do not hesitate to contact Crystal K. Kinzel, Director of Finance and Accounting, at (239) 252-6299. Respe fully, 60" • iit_os.,,vk, Dwigh L'Brock Clerk ."the Circuit Court Chief Financial Officer I / i 4 Crysta' . Kinzel • Deputy erk Direct° of in7ce and Accounting r M. Johnssen, CPA eputy Clerk General Accounting Manager v Certificate of Achievement for Excellence in Financial Reporting The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Collier County, Florida for its comprehensive annual financial report for the fiscal year ended September 30, 2011. This was the twenty-sixth consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Certificate of Achievement for Excellence in Financial Reporting Presented to Collier County Clerk of the Circuit Court Florida For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2011 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports(CAFRs)achieve the highest standards in government accounting and financial reporting. ott ON, 4. ltlglEa STATE 9_ 7/paw & AHD '', y M President X4.9 $36A� ~ iocer 4 .4e9,0440,0 oitio Executive Director IIIIMIML 2 v n 9,o =m m 8 w c `o c 3 O o y L .. a a Z a o m° \ t ysm N m 3 c u 3d « Jr.- a 8 -' r0, w v �` — <.<. ov u C} 3` N _ O N• EON ult � a° ry a p m . 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C C E C A z v `c °gp L N 1114Ui z 2 a v y o o u m$ a 3 O a N Y H T ` v v 8 O L u 4 8 m T YO Y Q CO C d.'-i `O N m C v �N E L- a N ..U x N p « t Q F ` v v v E °�'o o v 0 a•0 p C ° °U c a p u c E w C v E v7,W M w v v Ec u c mE N o c=� mco mm� o p E m v v F m o'v v ^ N o ° g- v; 3'.a v f'f, ?v 2 3m o m c o E d N� v E LL7 o o W c o LL E o E._ u E 0 o-° v L N Q C LO N N Y FINANCIAL SECTION THIS PAGE INTENTIONALLY LEFT BLANK L ERNST&YOUNG Sue 5100 Town Center Circle II,IIIII111thhhhhhhhhhh1 Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants Distinguished Members of the Board of County Commissioners Collier County, Florida: We have audited the accompanying financial statements of the governmental activities, the business- type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Collier County, Florida(the County), as of and for the year ended September 30, 2012, which collectively comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 financial statements are free of material misstatement. We were not engaged to perform an audit of the County's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the County's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the County as of September 30, 2012, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparison information for the general fund for the year then ended in conformity with US generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated March 6, 2013 on our consideration of the County's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 1302-1032546 A member firm of Ernst&Young Global Limited IfIII111111H'W'I'ff El ERNST&YOUNG 110 Accounting principles generally accepted in the United States require that management's discussion and analysis and schedule of funding progress for retiree health plans, on pages 3 through 15 and 76 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County's basic financial statements. The combining and individual nonmajor fund financial statements and budgetary comparison schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards and state financial assistance is presented for purposes of additional analysis as required by OMB Circular A-133, section 215.97, Florida Statutes and Chapter 10.550, Rules of the Auditor General and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County's basic financial statements. The introduction section and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. :>/t/sitt tverki.P March 6, 2013 1302-1032546 2 A member firm of Ernst&Young Global Limited MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED) As Clerk of the Circuit Court and chief financial officer of Collier County, Florida, I present the readers of the County's financial statements this narrative overview and analysis of the financial activities of Collier County for the fiscal year ended September 30, 2012. Readers are encouraged to consider the information presented in this narrative in conjunction with additional information offered in the letter of transmittal, found on pages i-v of this report. Financial Highlights • Collier County's assets exceeded its liabilities as of September 30, 2012 by $2,440,691,675. Of this amount, $341,576,935 represents unrestricted net assets and may be used to meet future obligations. • The County's total net assets increased by $7,795,895 when compared to fiscal year 2011, with a $11,758,436 decrease from governmental activities and a $19,554,331 increase resulting from business-type activities. • As of September 30, 2012 Collier County's governmental fund financial statements showed combined ending fund balances of $359,651,868, a decrease of $25,014,959 over the previous fiscal year. Of the total combined ending fund balance, $8,146,280 remains in the various governmental funds of Collier County as unassigned. Negative unassigned balances in various capital project funds offset the General Fund's unassigned fund balance. • The General Fund reported an unassigned fund balance of$57,090,349 at September 30, 2012, an increase in unassigned General Fund balance of $2,631,687 when compared to September 30, 2011. • Total face value of bonded debt, notes and outstanding loans owed by Collier County decreased by $49,662,751 during fiscal year 2012, with a decrease in governmental activities debt of $37,394,117 and a decrease in the net business-type activities debt of$12,268,634. In January of 2012 portions of the outstanding Series 2003 and 2005 Capital Improvement Revenue Bonds were refinanced by the Series 2011 Special Obligation Revenue Bonds. In June of 2012 a portion of the Series 2003 Gas Tax Revenue Bonds were refinanced by the Series 2012 Gas Tax Refunding Bonds. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction and explanation of Collier County's basic financial statements. Collier County's basic financial statements include government-wide and fund financial statements, as well as notes to the basic financial statements. This report also contains a statistical section, single audit and other supplementary information in addition to the basic financial statements. Government-Wide Financial Statements Government-wide financial statements are designed to provide the reader an overview of the financial position of the County and are similar to private sector financial statements. These statements are comprised of a Statement of Net Assets and a Statement of Activities and are found on pages 16 to 19 of this report. 3 The Statement of Net Assets shows the financial position of Collier County as of September 30, 2012. The statement shows the County's assets less its liabilities, with the difference being reported as net assets. Changes in net assets are useful indicators of financial condition. The Statement of Activities follows the statement of net assets and reports the changes in net assets over the fiscal period. All changes in net assets are reported as soon as the underlying events that gave rise to the change occur, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported for some items, such as accounts receivable, notes receivable or accrued unused vacation and sick leave, that will manifest themselves in cash inflows and outflows, respectively, in future fiscal periods. These statements distinguish Collier County functions that are supported by taxes and intergovernmental revenues (governmental activities), from business-type activities, which are intended to have their costs primarily recovered through user fees and charges. Governmental activities reported in the financial statements are general government, public safety, physical environment, transportation, economic environment, human services and culture and recreation. Business-type activities in Collier County include water and sewer, solid waste collections, airport operations,transit operations and emergency medical services. Fund Financial Statements A fund is a group of related accounts used to maintain control over resources that have been segregated to meet specific objectives. As dictated by generally accepted accounting principles, Collier County uses fund accounting to ensure and demonstrate compliance with financial legal requirements. The funds of the County can be divided into the following three categories:governmental, proprietary and fiduciary. Governmental funds Governmental funds, presented on pages 20 to 26, account for substantially the same functions as governmental activities reported under the government-wide Statement of Net Assets and Statement of Activities. The difference is that the governmental fund financial statements focus on inflows and outflows of expendable resources, as well as balances of expendable resources available at the end of the fiscal year, on a near term basis. As such, these statements present a narrower view of financial condition, but are nonetheless useful in evaluating Collier County's near term financing requirements and available resources. Comparison between the two sets of financial statements allows the reader to better assess the future impact of the government's near term financial decisions. Both the governmental fund balance sheet and the statement of revenues, expenditures and changes in fund balances provide a reconciliation to the respective government-wide financial statements to facilitate comparison. Governmental funds presented individually in Collier County's statements include two major funds, the General Fund and the Government Facilities Impact Fee Fund. While there are many smaller governmental funds under Collier County management, they are aggregated in a total column named "other governmental funds". Combining statements for these other governmental funds have been presented elsewhere in this report. 4 Proprietary funds Collier County maintains two different types of proprietary funds, enterprise and internal service, which are reflected on pages 27 to 31 of this report. Enterprise funds report, with more detail, the same functions presented as business-type activities in the government-wide financial statements for water and sewer, Goodland water, solid waste disposal, emergency medical services, transit and the airport authority. The Collier County Water and Sewer District Fund and the Solid Waste Disposal Fund are presented individually as major funds. Internal service funds are maintained to allocate and accumulate costs internally for Collier County. The County uses internal service funds to account for health insurance, worker's compensation insurance, property and casualty insurance, fleet operations and information technology. The internal service funds are presented in total in the proprietary fund financial statements, but may be viewed on a combining basis elsewhere in the report. Fiduciary funds Fiduciary funds are used to account for resources held for the benefit of parties outside of Collier County government. These funds are not presented in the government-wide financial statements as they do not represent resources available to support Collier County functions. The fiduciary funds are presented on page 32 of this report. All of the County's fiduciary funds are agency funds. The accounting used for agency funds is based on the concept that assets equal liabilities when the government is acting in a fiduciary capacity. Notes to the Financial Statements The notes provide additional information essential to a full understanding of the data provided in both the government-wide and fund financial statements. The notes appear on pages 34 to 74 of this report. Other Information The combining and individual nonmajor fund financial statements and schedules mentioned above present more detailed views of nonmajor governmental and enterprise funds and begin on page 80. This section contains combining balance sheets and statements of revenues, expenditures and changes in fund balance for governmental funds, including budgetary comparisons, and combining statements of net assets and statements of revenues, expenses and changes in fund net assets for enterprise funds. Also included are combining financial statements for internal service and agency funds. Additional information about the County, which may be of interest to the reader, can be found under the Statistical and Single Audit sections of this report. The statistical section has been prepared in accordance with Governmental Accounting Standards Board Statement No. 44, Economic Condition Reporting: The Statistical Section. This section contains data regarding financial trends, revenue capacity, debt capacity, demographic and economic conditions and operating indicators of the County. The Single Audit grants compliance section lists the expenditures of Federal Awards and State Financial Assistance during the fiscal year and presents grant compliance information as well as auditor reports. 5 Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. Assets exceeded liabilities by $2,440,691,675 as of the fiscal year ending September 30, 2012 for Collier County. Positive balances were reported in all categories of net assets in the governmental and business-type activities for fiscal year 2012, as well as fiscal year 2011. Collier County's net assets at September 30, 2012 increased by$16,557,669 for unrestricted net assets and decreased $30,845,399 for restricted net assets. Restricted net assets are resources subject to external restriction on how they may be used while unrestricted net assets may be used to meet the County's ongoing obligations. The decrease over fiscal year 2012 is mainly due to spend down of net assets restricted to transportation capital improvements. Collier County's investment in capital assets such as land, roads, buildings, parks and machinery and equipment, net of depreciation or any outstanding debt related to the asset, amounts to 75.0% of net assets as of September 30, 2012, compared to 74.6% as of September 30, 2011. The County's investment in capital assets, net of depreciation and related debt, increased by $22,083,625, when compared to fiscal year 2011. Capital assets are used to provide services to the citizens and consequently do not represent spendable resources and cannot be used to liquidate the debt incurred to purchase or construct the capital assets. Following are Collier County's net assets and changes in net assets for the fiscal years ended September 30, 2011 and 2012,shown in condensed form: Collier County's Schedule of Net Assets (in millions) Total Governmental Business-type Percentage Activities Activities Total Change 2012 2011 2012 2011 2012 2011 2011-2012 Current and other assets $ 466.1 $ 477.2 $247.4 $235.6 $ 713.5 $ 712.8 0.1% Capital assets,net 1,598.5 1,619.8 882.3 887.7 2,480.8 2,507.5 (1.1%) Total assets 2,064.6 2,097.0 1,129.7 1,123.3 3,194.3 3,220.3 (0.8%) Long-term liabilities 402.9 436.6 222.3 233.9 625.2 670.5 (6.8%) Current liabilities 100.3 87.2 28.1 29.7 128.4 116.9 9.8% Total liabilities 503.2 523.8 250.4 263.6 753.6 787.4 (4.3%) Net assets: Invested in capital assets, net of related debt 1,187.3 1,172.1 650.7 643.8 1,838.0 1,815.9 1.2% Restricted 226.9 254.0 34.2 37.9 261.1 291.9 (10.6%) Unrestricted 147.2 147.1 194.4 178.0 341.6 325.1 5.1% Total net assets $1,561.4 $1,573.2 $879.3 $859.7 $2,440.7 $2,432.9 0.3% 6 Collier County's Schedule of Changes in Net Assets (in millions) Total Governmental Business-type Percentage Activities Activities Total Change 2012 2011 2012 2011 2012 2011 2011-2012 Revenues Program revenues: Charges for services $ 63.1 $ 61.6 $151.7 $152.9 $ 214.8 $ 214.5 0.1% Operating grants and contributions 22.9 19.5 3.0 4.4 25.9 23.9 8.4% Capital grants and contributions 20.3 19.4 17.8 14.3 38.1 33.7 13.1% General revenues: Property taxes 248.2 261.6 - - 248.2 261.6 (5.1%) Other taxes and shared revenues 81.3 78.9 - - 81.3 78.9 3.0% Interest income 2.4 3.9 1.1 1.6 3.5 5.5 (36.4%) Miscellaneous 7.4 11.5 0.1 0.1 7.5 11.6 (35.3%) Total revenues 445.6 456.4 173.7 173.3 619.3 629.7 (1.7%) Expenses General government 94.2 103.0 - - 94.2 103.0 (8.5%) Public safety 165.8 173.3 - - 165.8 173.3 (4.3%) Physical environment 24.6 18.3 - - 24.6 18.3 34.4% Transportation 73.0 81.4 - - 73.0 81.4 (10.3%) Economic environment 14.4 7.8 - - 14.4 7.8 84.6% Human services 12.1 13.9 - - 12.1 13.9 (12.9%) Culture and recreation 42.5 44.2 - - 42.5 44.2 (3.8%) Interest on long-term debt 16.4 19.8 - - 16.4 19.8 (17.2%) Water and sewer - - 102.6 104.3 102.6 104.3 (1.6%) Solid waste - - 29.6 28.0 29.6 28.0 5.7% Airport authority - - 4.6 4.5 4.6 4.5 2.2% Mass transit - - 9.9 10.2 9.9 10.2 (2.9%) Emergency medical services - - 21.8 22.7 21.8 22.7 (4.0%) Total expenses 443.0 461.7 168.5 169.7 611.5 631.4 (3.2%) Increase(decrease)in net assets before net transfers 2.6 (5.3) 5.2 3.6 7.8 (1.7) (558.8%) Transfers,net (14.4) (13.1) 14.4 13.1 - - - Change in net assets (11.8) (18.4) 19.6 16.7 7.8 (1.7) (558.8%) Net assets-beginning 1,573.2 1,591.6 859.7 843.0 2,432.9 2,434.6 (0.1%) Net assets-ending $1,561.4 $1,573.2 $879.3 $859.7 $2,440.7 $2,432.9 0.3% 7 Expenses and revenues, in the form of fees, fines,grants and contributions,for governmental activities are shown graphically by function. General revenues,such as property tax, must be used to the extent that the fee,fines,grants and contributions do not cover the cost of the governmental function. Public Safety is the largest category of expenditures followed by general government. Revenues and Expenses Governmental Activities Fiscal Year 2012 180 160 — �/ 140 — — r// —120 c 100 F. 2 400 /!. _ _------- 7//,_:,—----------- -------_� _. 20 Leo a't`¢ F�c N. ae Fecw •c, ex? 5 0 o et e o�¢� �•c. 'e �SQo c,`to a°S ato� �¢c,29 Q r��\`a\e s� poi``¢ �JF J`oac Q < ( •Revenues Gl Expenses Revenues for governmental activities are shown graphically by type. The largest type of revenue for governmental activities is property taxes followed by fines,fees and charges for services. Revenue by Type Governmental Activities Fiscal Year 2012 TouristTaxes Other Income Sales Taxes 3% l 6%' 7% Gas Taxes 4% " Capital Grants and— Contributions 5% Operating Grants and Contributions 5% Fines,Fees and Charges for Services 14% 8 Revenues and expenses are shown by business-type activity. The Water and Sewer system is the largest business-type activity followed by the Solid Waste system. Revenues and Expenses Business-type Activities Fiscal Year 2012 140 120 100 ' 80 f — o 2 60 40 — Water and Sewer Solid Waste Airport Authority Mass Transit Emergency Medical Services •Revenues fa Expenses Revenues for business-type activities are shown graphically by type. The largest type of revenue is fines, fees and charges for services followed by capital grants and contributions. Revenue by Type Business-type Activities Fiscal Year 2012 Capital Grants and Contributions 10% Operati ng Gra nts and Contributions 2% Other Income 1% s.X Fines,Fees and Charges for Services 87% 9 Governmental Activities The current year decrease in the net assets of governmental activities amounted to $11,758,436, a decrease of .1% when compared to the previous year's net assets. The previous fiscal years' decrease was 1.2%and this trend is the result of a continued decline in overall governmental activities expenses. • Overall, revenues related to governmental activities decreased by 2.4%, or $10,794,090 and expenses decreased by 4.1%, or$18,721,788. • Total ad valorem taxes collected in fiscal year 2012 were down $13,398,390, or 5.1%, when compared to fiscal year 2011. The decrease in collections is primarily due to a 5.1% reduction in countywide taxable property values. • Decreases in expenses occurred in most areas of governmental activity in fiscal year 2012, with the exceptions being physical environment and economic environment. Expenses for physical environment increased mainly due to the Federal Emergency Management Agency's de- obligation of $11,172,273 in Hurricane Wilma related beach erosion repair costs previously reimbursed by the Agency. Expenses for economic environment activities increased by $6,532,968 largely due to expenses related to Disaster Recovery Initiative III projects in Immokalee, Bayshore and Collier County Public Schools. • Interest expense decreased by 17.1% when compared to fiscal year 2011, primarily due to interest savings from the refinancing of various Capital Improvement Series bonds by the Special Obligation Bonds, Series 2010 and 2011. Business-type Activities Increases in net assets related to business-type activities amounted to $19,554,331 in the aggregate, representing a 2.3% increase over the previous year's net assets. • The majority of the increase, or$10,834,979, can be attributed to the Collier County Water and Sewer District (District). Total operating revenues, including water, wastewater and reuse irrigation user fees decreased by$2,768,611, or 2.6%, over the previous fiscal year primarily due to decreased usage of potable water for irrigation. The District's total fiscal year 2012 operating expenses, including personal services and depreciation, decreased by 2.2% compared to fiscal year 2011. The primary reason for this decrease was less spending on contracted services related to maintenance. • Fiscal year 2012 water and wastewater impact fee collections were $8,731,883, an increase of 17.8% over fiscal 2011. The District charges water and wastewater impact fees on new construction in order to finance growth necessitated capital expansion. • Solid waste operating revenues increased by 1.5% from fiscal year 2011 while operating costs, including depreciation, increased by 5.1% over the same period. The increase in solid waste operating revenues can be mainly attributed to an 18.8% increase in construction and demolition waste being accepted into the Naples landfill during fiscal year 2012. Operating costs increased primarily due to maintenance costs associated with the Collier County Landfill. These factors contributed to an increase in solid waste net assets year on year of$2,922,065. 10 Fund Financial Statement Analysis As mentioned above, Collier County utilizes fund accounting to ensure compliance with finance related legal requirements. Governmental Funds Governmental funds provide information on near term inflows, outflows and balances of spendable resources. Unassigned fund balance is a useful measure of net resources available to be spent at the end of the fiscal year. Governmental funds consist of the General Fund, Special Revenue Funds, Debt Service Funds and Capital Project Funds. As of September 30, 2012 Collier County governmental funds reported combined fund balances of $359,651,868 a decrease of $25,014,959 when compared to prior year combined fund balances. The governmental funds had non-spendable fund balances of $12,914,017 consisting of inventory, prepaid items and General Fund advances to other funds. The restricted fund balance was $209,461,702 and consists of monies whose expenditure is externally constrained by grantors, creditors, binding law or enabling legislation. Of the remaining $137,276,149 in fund balance, $47,405,806 is classified as committed, $81,724,063 is recorded as assigned and $8,146,280 is recorded as unassigned. The following were noteworthy activities and changes relating to the major governmental funds for fiscal year 2012: The General Fund is the primary operating fund of Collier County. At September 30, 2012, total fund balance in the General Fund was $71,066,638, of which $57,090,349 was unassigned. As a percentage of total general fund expenditures and net transfers, the unassigned portion is 22.2%. The total fund balance increased by$3,688,661 or 5.5%, compared to the September 30, 2011 total fund balance. The increase in total fund balance was primarily the result of a decrease in General Fund expenditures and net transfers of 6.2%when compared to fiscal year 2011. The main components of the decrease were a 4.9% decrease in Sheriff's personal services and an $8.5M decrease in General Fund transfers to the Countywide Capital Improvement Fund. The Government Facilities Impact Fee Fund accounts for the receipt and expenditure of government facilities impact fees collected from qualifying new construction. The impact fees must be used for the acquisition or construction of growth related capital government facilities. During fiscal year 2012 the Government Facilities Impact Fee Fund spent $7,289 on the Property Appraiser's Radio Road location, $6,708 on the Emergency Services Center and $46,007 on the Courthouse Annex. In addition, the fund made debt service related transfers of $4,591,701, paid $3,855 in administrative charges as well as $19,043 of interest on an interfund advance from the Solid Waste Disposal Fund. Proprietary funds Proprietary fund statements provide the same information as the business-type activities in the government-wide financial statements, but in greater detail, and on a fund basis for enterprise funds. At September 30, 2012,total net assets amounted to$879,272,454 for enterprise funds, as compared to $859,718,123 as of September 30, 2011, an increase of $19.6 million. Net assets change as a result of operations, non-operating revenues and expenses, capital contributions and grants and donations. The Collier County Water and Sewer District's activities represent the majority of the increase in the business-type net assets. 11 For the year ended September 30, 2012 the Water and Sewer District reported capital grants and contributions of $11,272,319, which includes system development fees of $8,731,883, $2,529,018 in developer infrastructure contributions and other contributions of$11,418. Net Operating Income/(Loss) 2012 2011 County Water and Sewer $ 10,508,829 $ 11,200,354 Solid Waste Disposal 4,924,135 5,834,741 Non-major enterprise funds (21,683,842) (23,765,216) Total $ (6,250,878) $ (6,730,121) The Collier County Water and Sewer Fund net operating income decreased by $691,525, when compared to fiscal year 2011. The decrease in net operating income was the result of a decrease in total operating revenues of 2.6%. The reason for this was the decline in the use of less potable water for irrigation purposes. County Water and Sewer payments in lieu of taxes paid to the General Fund of $3,786,500 were reclassified from operating expense to operating transfers for financial statement purposes. Total operating expenses, including depreciation, decreased by $2,077,086 when compared to fiscal year 2011. Capital Assets Collier County's financial statements present capital assets in two distinct groups, those that are depreciated and those not subject to depreciation. Buildings and equipment are examples of assets that are depreciated and land and construction in progress are examples of assets not depreciated. Collier County's investment in capital assets for the governmental and business-type activities amounted to $2,480,791,670, net of accumulated depreciation. This investment in capital assets, both purchased and donated, includes land, buildings and improvements, water and wastewater plants, machinery and equipment, parks, roads, beach renourishment and drainage structures. Investment in capital assets for the current fiscal year, net of depreciation, decreased by $26,724,625 when compared to the previous year. There was a decrease in the governmental activities net capital assets of $21,330,441, or 1.3%. The proprietary fund capital assets decreased by $5,394,184, or .6% as in both the governmental and business-type activities, amounts depreciated exceeded amounts capitalized. The major factors behind these changes are as follows: • The business-type activities capitalized $25,307,886 of work in process during fiscal year 2012 including $1,266,286 for North County Water Reclamation Facility Upgrades, $2,543,454 for the Marco Airport Taxiway and$2,840,565 for a joint utilities project with the Florida Department of Transportation for improvements to Davis Boulevard. In addition, mass transit costs of$977,103 related to the construction of an Intermodal Transfer Facility and $621,910 of solid waste costs for roadway hardening were capitalized as work in progress. The remaining $16,895,387 was made up of $14,767,667 in other County Water and Sewer projects, $388,731 in other Airport projects, $1,091,756 in other Solid Waste projects and$647,233 in Mass Transit. 12 • Capitalization of construction in progress of$38,993,555 for governmental activity related costs including $12,100,184 for Oil Well Road construction and safety improvements, $6,297,274 for improvements to Collier Boulevard, $5,801,580 in improvements to Davis Boulevard and $2,598,256 for Immokalee stormwater improvements. In addition, $1,469,523 was spent for bridge and other structure design and replacement. The remaining $10,726,738 related to $3,168,625 in other transportation projects, $2,727,199 in culture and recreation projects and $4,830,914 in other capital projects. • Total purchases of land and non-depreciable assets were $2,181,201 for fiscal year 2012, compared to$4,764,182 for fiscal year 2011. Additional information regarding Collier County's capital assets can be found in Note 5 beginning on page 48 of this report. Debt Administration At September 30, 2012, Collier County had total bonded debt, notes and loans, net of premiums, discounts and deferred losses of$642,223,884, a decrease of$48,738,587 from the previous year. The following table illustrates the balances of all outstanding long-term debt for the fiscal years ended September 30, 2012 and 2011: Outstanding Debt 2012 2011 Limited General Obligation Bonds, net $ 9,993,882 $ 14,683,976 Revenue Bonds, net 530,106,136 559,847,386 State Revolving Fund Loans 92,368,676 105,775,919 Miscellaneous Notes 9,755,190 10,655,190 Total $ 642,223,884 $ 690,962,471 On January 9, 2012 Collier County issued the Series 2011 Special Obligation Refunding Revenue Bonds in the par amount of $92,295,000. These bonds were issued for the purpose of advance refunding portions of the County's outstanding Capital Improvement Revenue Refunding Bonds, Series 2003 and 2005. The refinancing of the Series 2003 and 2005 Bonds, and their attendant restrictive covenants, caused the required cash reserve surety replacement relating to the 2003 and 2005 bonds to further decrease from $15,717,300 to$10,401,508, or a$5,315,792 release of internally borrowed funds. On June 5, 2012 Collier County issued the Series 2012 Gas Tax Refunding Revenue Bonds in the par amount of$38,680,000. These bonds were issued for the purpose of advance refunding a portion of the County's outstanding Series 2003 Gas Tax Revenue Bonds. 13 On January 24, 2012 Collier County prepaid the outstanding State Infrastructure Bank loan in the amount of$4,414,096, plus accrued interest. The Constitution of the State of Florida, Florida Statute 200.181 and Collier County set no legal debt limit. Further information regarding Collier County's long-term debt can be found in Note 6 beginning on page 49 of this report. General Fund Budgetary Highlights During the current fiscal year, the Board of County Commissioners approved a $1,758,168 increase in appropriations between the original and the final amended budget. Significant budgetary variances between the final amended budget and actual results are listed below: • $547,800 increase in Clerk's agency for data processing equipment • $676,063 decrease in the Tax Collector's agency to reduce budget to actual expenditures. • $275,166 increase in the County Attorney due to re-budgeting of lapsed appropriates from the previous fiscal year. • $587,100 increase in Other General Administration due to re-budgeting of lapsed appropriations from the previous fiscal year. • $675,424 decrease in Facilities Management operating due to revised revenue forecasts. • $1,543,000 increase in Sheriff's agency related to special detail duties. • $279,800 decrease in Beach/Water Park Operations due to revised revenue forecasts. Significant variances between actual results and final budget amounts in the General Fund occurred during fiscal year 2012. Tax revenues were under budget by $8,684,062 primarily due to the early payment discount allowed for property taxes. The discount ranges from a maximum 4% to 1%, depending on the date of payment. General Fund general government expenditures were under budget primarily due to $850,790 in unspent budget related goods and services contracted for in 2012 that had not been received as of September 30, 2012 as well as an effort to reduce spending in all departments. Sheriff's public safety expenditures were a combined $4,074,556 less than anticipated for fiscal year 2012. Economic Factors and Year 2013 Budgets and Rates The following factors were taken into account in preparing the fiscal year 2013 budget: • A.68% increase in countywide taxable property values. • Millage neutral General Fund and Unincorporated Area General Fund tax rates. • Expected year on year increases in sales tax and state shared revenues of 5.6% and .7%, respectively. 14 • No new fees or service charges to County residents. • Continuation of Board Agency exception basis hiring freeze within ad valorem funded operations and enterprise operations. • Maintain health care program contributions at 80% employer and 20% employee across all agencies (Non-Sheriff). During fiscal year 2012, the General Fund unassigned fund balance increased by $2,631,687 to $57,090,349. As of January 24, 2013, $44,793,200 of the fiscal year 2012 unassigned fund balance has been appropriated as carryforward for fiscal year 2013, with $24,529,400 budgeted in reserves. Contact Information This financial report is intended to give the user a general overview of Collier County Government's finances. Any questions resulting from review of this information may be addressed to: Collier County Clerk of the Circuit Court Department of Finance and Accounting 3299 Tamiami Trail East, Suite#403 Naples, Florida 34112-5746 Our office may also be contacted via the internet at www.collierclerk.com. 15 COLLIER COUNTY, FLORIDA STATEMENT OF NET ASSETS SEPTEMBER 30,2012 Primary Government Governmental Business-type Component Activities Activities Total Units ASSETS Current assets: Cash,cash equivalents and investments $ 207,566,908 $ 171,907,384 $ 379,474,292 $ 326,518 Trade receivables,net 1,107,536 9,601,303 10,708,839 - Special assessments receivable - 65,174 65,174 - Interest receivable 153,569 286,024 439,593 - Unbilled receivables - 5,155,031 5,155,031 - Due from other governments 4,412,736 363,668 4,776,404 - Internal balances (12,754,599) 12,754,599 - - Deposits 318,220 - 318,220 - Inventory for resale 245,951 - 245,951 - Inventory 1,236,286 4,288,166 5,524,452 - Prepaid costs 20,995 19,832 40,827 - Restricted assets: Cash,cash equivalents and investments 31,500,791 3,099,672 34,600,463 - Trade receivables,net 1,185,344 - 1,185,344 - Notes receivable 25,161 - 25,161 - Interest receivable 191,321 - 191,321 - Due from other governments 13,018,398 4,753,457 17,771,855 - Inventory for resale 15,913,817 - 15,913,817 - Total current assets 264,142,434 212,294,310 476,436,744 326,518 Noncurrent assets: Restricted assets: Cash,cash equivalents and investments 189,305,924 34,030,309 223,336,233 - Notes receivable 7,294,204 - 7,294,204 - Special assessments receivable 26,394 6,375 32,769 - Notes receivable 1,688,515 - 1,688,515 - Deferred charges 3,668,176 1,105,344 4,773,520 - Capital assets: Land and non-depreciable capital assets 498,088,283 87,166,627 585,254,910 - Depreciable capital assets,net 1,100,423,805 795,112,955 1,895,536,760 - Total noncurrent assets 1,800,495,301 917,421,610 2,717,916,911 - Total assets 2,064,637,735 1,129,715,920 3,194,353,655 326,518 The notes to the financial statements are an integral part of this statement. 16 Primary Government Governmental Business-type Component Activities Activities Total Units LIABILITIES Current liabilities: Accounts payable $ 11,332,241 $ 8,583,500 $ 19,915,741 $ - Wages payable 4,889,062 675,338 5,564,400 - Retainage payable 262,773 385,027 647,800 - Due to other governments 3,968,275 92,012 4,060,287 - Due to individuals 277,424 1,258,986 1,536,410 - Self-insurance claims payable 5,888,564 - 5,888,564 - Compensated absences 10,816,669 1,801,955 12,618,624 - Capital lease obligations 88,783 134,914 223,697 - Unearned revenue 606,620 - 606,620 - Interest payable 6,964,697 2,322,378 9,287,075 - Bonds and loans payable 23,682,299 9,152,712 32,835,011 - Liabilities payable from restricted assets: Accounts payable 8,656,971 855,422 9,512,393 - Wages payable 112,942 - 112,942 - Retainage payable 3,295,315 67,037 3,362,352 - Refundable deposits 5,480,104 50,389 5,530,493 - Notes payable - 69,190 69,190 - Due to other governments 11,305,173 - 11,305,173 - Unearned revenue 2,650,286 188,453 2,838,739 - Bonds and loans payable - 2,492,562 2,492,562 - Total current liabilities 100,278,198 28,129,875 128,408,073 - Noncurrent liabilities: Self-insurance claims payable 1,512,212 - 1,512,212 - Compensated absences 12,286,483 772,265 13,058,748 - Capital lease obligations 322,859 39,651 362,510 - Landfill post-closure liability - 1,795,108 1,795,108 - Net OPEB obligation 1,698,208 - 1,698,208 - Bonds and loans payable,net 387,120,554 219,706,567 606,827,121 - Total noncurrent liabilities 402,940,316 222,313,591 625,253,907 - Total liabilities 503,218,514 250,443,466 753,661,980 - NET ASSETS Invested in capital assets,net of related debt 1,187,297,593 650,683,986 1,837,981,579 - Restricted for: Growth related capital expansion 74,389,900 21,314,836 95,704,736 - Transportation capital projects 36,667,191 - 36,667,191 - Tourist development 33,263,428 - 33,263,428 - Conservation Collier 28,859,178 - 28,859,178 - Community redevelopment 14,055,535 - 14,055,535 - Grants 14,898,048 - 14,898,048 - Debt service 5,214,850 12,584,155 17,799,005 - Other 19,586,040 - 19,586,040 - Renewal and replacement - 300,000 300,000 - Unrestricted 147,187,458 194,389,477 341,576,935 326,518 Total net assets $1,561,419,221 $ 879,272,454 $2,440,691,675 $ 326,518 17 COLLIER COUNTY, FLORIDA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Program Revenues Fees,Fines and Operating Capital Charges for Grants and Grants and FUNCTIONS/PROGRAMS Expenses Services Contributions Contributions Primary Government: Governmental Activities: General government $ 94,227,594 $ 31,387,795 $ 2,625,902 $ 1,113,607 Public safety 165,781,602 16,742,617 2,134,108 2,013,415 Physical environment 24,593,366 1,003,250 867,481 2,128,333 Transportation 73,000,040 880,276 5,829,476 10,803,109 Economic environment 14,319,738 3,396,958 8,899,106 - Human services 12,144,081 541,297 2,159,517 8,620 Culture and recreation 42,506,595 9,125,363 376,371 4,211,773 Interest and fiscal charges 16,411,860 - - - Total governmental activities 442,984,876 63,077,556 22,891,961 20,278,857 Business-type Activities: Water and sewer 102,642,521 103,042,334 250,000 11,267,697 Solid waste 29,618,250 34,275,076 18,400 - Airport authority 4,600,792 2,804,419 - 2,772,737 Mass transit 9,924,750 1,360,341 2,591,039 3,777,739 Emergency medical services 21,791,677 10,248,981 88,966 - Total business-type activities 168,577,990 151,731,151 2,948,405 17,818,173 Total primary government $ 611,562,866 $ 214,808,707 $ 25,840,366 $ 38,097,030 Component Units: Industrial Development Authority $ 15 $ 17,500 $ - $ - Housing Finance Authority 692 - - - Educational Facilities Authority 46 - - - Total component units $ 753 $ 17,500 $ - $ General revenues: Property taxes Gas taxes Sales taxes Tourist taxes Communications services tax State revenue sharing Other taxes Interest income Miscellaneous Transfers,net Total general revenues and transfers Change in net assets Net assets-beginning Net assets-ending The notes to the financial statements are an integral part of this statement. 18 Net(Expense)Revenue and Changes in Net Assets Primary Government Governmental Business-type Component Activities Activities Total Units $ (59,100,290) $ - $ (59,100,290) $ - (144,891,462) - (144,891,462) - (20,594,302) - (20,594,302) - (55,487,179) - (55,487,179) - (2,023,674) - (2,023,674) - (9,434,647) - (9,434,647) - (28,793,088) - (28,793,088) - (16,411,860) - (16,411,860) - (336,736,502) - (336,736,502) - - 11,917,510 11,917,510 - - 4,675,226 4,675,226 - - 976,364 976,364 - - (2,195,631) (2,195,631) - - (11,453,730) (11,453,730) - - 3,919,739 3,919,739 - (336,736,502) 3,919,739 (332,816,763) - $ 17,485 (692) (46) 16,747 248,232,008 - 248,232,008 - 18,524,878 - 18,524,878 - 29,712,986 - 29,712,986 - 14,898,077 - 14,898,077 - 5,346,777 - 5,346,777 - 8,233,378 - 8,233,378 - 4,649,794 - 4,649,794 - 2,430,120 1,106,007 3,536,127 144 7,396,815 81,818 7,478,633 - (14,446,767) 14,446,767 - - 324,978,066 15,634,592 340,612,658 144 (11,758,436) 19,554,331 7,795,895 16,891 1,573,177,657 859,718,123 2,432,895,780 309,627 $ 1,561,419,221 $ 879,272,454 $ 2,440,691,675 $ 326,518 19 COLLIER COUNTY, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30,2012 Government Other Total General Facilities Governmental Governmental Fund Impact Fee Funds Funds ASSETS Cash,cash equivalents and investments $68,825,802 $ 3,244,096 $312,721,527 $384,791,425 Receivables: Interest 45,830 3,596 269,286 318,712 Trade,net 417,410 3,009 1,734,840 2,155,259 Notes 1,688,515 235,407 7,083,958 9,007,880 Special assessments - - 26,394 26,394 Due from other funds 4,388,457 - 4,904,112 9,292,569 Due from other governments 3,133,515 12,775 14,244,557 17,390,847 Deposits 4,628 - - 4,628 Inventory for resale - - 16,159,768 16,159,768 Inventory 166,097 - 201,646 367,743 Advances to other funds 12,726,925 - 42,036,500 54,763,425 Prepaid costs 20,995 - - 20,995 Total assets $91,418,174 $ 3,498,883 $399,382,588 $494,299,645 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 6,468,342 $ 33,726 $ 12,481,208 $ 18,983,276 Wages payable 4,198,942 - 703,294 4,902,236 Due to other funds 1,150,808 - 6,590,520 7,741,328 Due to other governments 2,607,919 - 11,979,125 14,587,044 Due to individuals 277,007 - 417 277,424 Deferred revenue 249,114 235,407 10,031,432 10,515,953 Refundable deposits 5,399,404 - 80,700 5,480,104 Retainage payable - - 3,558,088 3,558,088 Advances from other funds - 22,992,791 45,609,533 68,602,324 Total liabilities 20,351,536 23,261,924 91,034,317 134,647,777 Fund balances(deficit): Nonspendable 12,914,017 - - 12,914,017 Restricted 109,802 - 209,351,900 209,461,702 Committed - - 47,405,806 47,405,806 Assigned 952,470 - 80,771,593 81,724,063 Unassigned 57,090,349 (19,763,041) (29,181,028) 8,146,280 Total fund balances(deficit) 71,066,638 (19,763,041) 308,348,271 359,651,868 Total liabilities and fund balances(deficit) $91,418,174 $ 3,498,883 $399,382,588 $494,299,645 The notes to the financial statements are an integral part of this statement. 20 COLLIER COUNTY, FLORIDA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2012 Differences in amounts reported for governmental activities in the statement of net assets on pages 14-15: Fund balances-total governmental funds $ 359,651,868 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Those assets consist of: Land and other non-depreciable assets $ 386,540,604 Construction in progress 111,547,679 Depreciable assets,net of$620,913,482 in accumulated depreciation 1,081,032,227 1,579,120,510 Certain long-term assets are not financial resources and therefore are not reported in the governmental funds. 3,668,176 Certain revenues will be collected after year-end,but are not available to pay for the current period's expenditures,and therefore are reported as deferred revenue in the funds. 7,259,047 Certain liabilities applicable to the County's governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. Interest on long-term debt is not accrued in the governmental funds,but is recognized as an expenditure when due. All liabilities are reported in the statement of net assets. Balances at September 30,2012 are: Installment payment program to State of Florida $ (686,404) Accrued interest on bonds (6,964,697) Bonds and notes payable (395,839,427) Capital lease obligations (411,642) Compensated absences (22,626,409) Unamortized deferred loss 10,888,204 Unamortized premium (25,909,714) Unamortized discount 58,084 (441,492,005) Internal service funds are used by the County to charge self-insurance,fleet management and information technology services to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets. Internal service fund net assets are: 53,211,625 Total net assets-governmental activities $ 1,561,419,221 The notes to the financial statements are an integral part of this statement. 21 COLLIER COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Government Other Total General Facilities Governmental Governmental Fund Impact Fee Funds Funds Revenues: Taxes $199,156,838 $ - $ 84,966,668 $284,123,506 Licenses,permits and impact fees 301,410 1,181,850 28,953,158 30,436,418 Intergovernmental 41,058,174 - 38,344,330 79,402,504 Charges for services 17,603,057 - 13,136,110 30,739,167 Fines and forfeitures 1,302,691 - 2,901,833 4,204,524 Interest income 577,361 19,696 1,600,198 2,197,255 Special assessments - - 3,034,899 3,034,899 Miscellaneous 1,294,549 - 3,369,368 4,663,917 Total revenues 261,294,080 1,201,546 176,306,564 438,802,190 Expenditures: Current: General government 51,894,964 57,151 21,859,432 73,811,547 Public safety 131,436,468 6,708 20,414,271 151,857,447 Physical environment 680,098 - 22,190,228 22,870,326 Transportation - - 42,176,460 42,176,460 Economic environment 972,612 - 13,420,243 14,392,855 Human services 8,597,484 - 2,390,773 10,988,257 Culture and recreation 15,527,909 - 18,725,014 34,252,923 Debt service: Principal - - 31,602,123 31,602,123 Interest - 19,043 18,129,824 18,148,867 Fiscal charges - - 1,081,579 1,081,579 Capital outlay 3,644,806 - 45,761,565 49,406,371 Total expenditures 212,754,341 82,902 237,751,512 450,588,755 Excess(deficiency)of revenues over(under)expenditures 48,539,739 1,118,644 (61,444,948) (11,786,565) Other financing sources(uses): Bonds issued - - 131,525,000 131,525,000 Premiums on bonds issued - - 17,191,707 17,191,707 Payment to refunding bond escrow - - (150,550,385) (150,550,385) Capital leases - - 235,588 235,588 Sale of capital assets 225,279 - 87,982 313,261 Insurance proceeds 20,587 - 249,243 269,830 Transfers in 8,532,931 - 82,991,539 91,524,470 Transfers out (53,629,875) (4,591,701) (45,516,289) (103,737,865) Total other financing sources(uses) (44,851,078) (4,591,701) 36,214,385 (13,228,394) Net change in fund balances 3,688,661 (3,473,057) (25,230,563) (25,014,959) Fund balances(deficit)at beginning of year 67,377,977 (16,289,984) 333,578,834 384,666,827 Fund balances(deficit)at end of year $ 71,066,638 $(19,763,041) $308,348,271 $359,651,868 The notes to the financial statements are an integral part of this statement. 22 COLLIER COUNTY,FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Differences in amounts reported for governmental activities in the statement of activities on pages 16-17: Net change in fund balances-total governmental funds $ (25,014,959) Governmental funds report capital outlays as expenditures. However,in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay $ 49,406,371 Depreciation expense (66,248,247) (16,841,876) Donations of capital assets are not financial resources to governmental funds,but receiving donated assets increases net assets in the statement of net assets. 800,527 Capital assets transferred to and from proprietary funds are not recorded in the governmental funds as there is no flow of current financial resources. (1,668,754) In the statement of activities,the loss on the sale of capital assets is reported. However,in the governmental funds the proceeds from the sale of capital assets increase financial resources. The change in net assets differs from the change in fund balance by the net book value of assets disposed. (1,757,417) Certain revenues not considered available are not recognized in the governmental funds but are included in the statement of activities. (3,500,175) Debt proceeds provide current financial resources to governmental funds,but issuing debt increases long-term liabilities in the statement of net assets. Proceeds from loans $ (131,525,000) Proceeds from capital leases (235,588) (131,760,588) Repayment of principal on long-term debt is an expenditure in governmental funds,but a reduction of long-term liabilities in the statement of net assets. Bond and loan principal payments $ 31,509,118 Premium on bonds issued (17,191,707) Payments to refunding escrow agent 150,550,385 Payments on capital lease obligations 93,005 164,960,801 Certain amounts reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in the governmental funds. Installment payment program to State of Florida $ (686,404) Increase in compensated absences 478,612 Accrued interest on bonds 891,696 Amortization of deferred charges (328,382) Amortization of deferred loss (675,454) Amortization of premium 1,884,082 Amortization of discount (6,038) 1,558,112 Certain amounts reported in the statement of activities as deferred are reported as expenditures in the governmental funds. 1,052,682 The net revenues of internal service funds are reported with governmental activities. 413,211 Change in net assets-governmental activities $ (11,758,436) The notes to the financial statements are an integral part of this statement. 23 COLLIER COUNTY,FLORIDA GENERAL FUND STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Variance with Final Budget Original Final Favorable Budget Budget Actual (Unfavorable) Revenues: Taxes $ 207,840,900 $ 207,840,900 $ 199,156,838 $ (8,684,062) Licenses,permits and impact fees 253,000 253,000 301,410 48,410 Intergovernmental 36,184,700 36,184,700 41,058,174 4,873,474 Charges for services 17,141,946 18,924,311 17,603,057 (1,321,254) Fines and forfeitures 1,157,100 1,157,100 1,302,691 145,591 Interest income 843,500 843,500 672,967 (170,533) Miscellaneous 6,964,000 6,974,359 7,776,349 801,990 Total revenues 270,385,146 272,177,870 267,871,486 (4,306,384) Expenditures: Current: General government Board of County Commissioners personal services 986,000 986,000 941,060 44,940 Board of County Commissioners operating 93,100 93,100 77,716 15,384 County manager administrative personal services 751,300 751,300 593,831 157,469 County manager administrative operating 51,600 51,600 33,308 18,292 Budget and management personal services 754,900 754,900 687,989 66,911 Budget and management operating 88,500 88,500 53,673 34,827 Administrative services personal services 2,016,300 2,002,300 1,777,644 224,656 Administrative services operating 116,500 127,500 106,328 21,172 Administrative services capital outlay - 3,000 1,150 1,850 Human resources administration personal services 1,228,300 1,228,300 1,145,592 82,708 Human resources administration operating 258,400 258,400 181,854 76,546 Clerk of the Circuit Court personal services 5,700,700 5,287,600 5,282,900 4,700 Clerk of the Circuit Court operating 1,804,500 2,241,600 2,206,278 35,322 Clerk of the Circuit Court capital outlay 392,300 916,100 915,998 102 Property Appraiser personal services 5,004,471 5,004,471 4,355,639 648,832 Property Appraiser operating 1,454,390 1,454,390 1,807,305 (352,915) Property Appraiser capital outlay 25,000 25,000 12,124 12,876 Tax Collector personal services 9,240,587 8,899,366 8,899,366 - Tax Collector operating 2,885,242 2,550,430 2,546,073 4,357 Tax Collector capital outlay 39,803 39,773 39,773 - County attorney personal services 2,333,100 2,333,100 2,203,817 129,283 County attorney operating 380,900 656,066 206,393 449,673 County attorney capital - 13,200 13,006 194 Natural resource planning operating 96,500 280,503 243,903 36,600 Circuit court costs operating 34,700 34,700 21,550 13,150 Courthouse security operating 1,359,200 1,420,987 1,371,779 49,208 Courthouse security capital outlay 20,000 19,213 19,213 - County court cost operating 22,800 22,800 10,036 12,764 State Attorney operating 271,900 271,900 250,713 21,187 Public Defender operating 182,500 182,500 176,951 5,549 Other general administrative personal services 300,000 260,000 158,070 101,930 Other general administrative operating 6,695,800 7,282,900 6,290,650 992,250 Facilities management personal services 3,316,000 3,316,000 3,278,374 37,626 Facilities management operating 6,933,200 6,257,776 6,287,066 (29,290) Facilities management capital outlay 91,000 88,716 88,716 - 24 COLLIER COUNTY,FLORIDA GENERAL FUND STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Variance with Final Budget Original Final Favorable Budget Budget Actual (Unfavorable) Sheriff personal services 2,870,700 2,870,700 2,858,933 11,767 Sheriff operating 180,000 180,000 107,781 72,219 Supervisor of Elections personal services 2,043,900 2,043,900 1,950,818 93,082 Supervisor of Elections operating 1,516,400 1,503,178 1,449,363 53,815 Supervisor of Elections capital outlay 14,000 20,385 19,270 1,115 Real property management personal services 830,100 775,736 772,901 2,835 Real property management operating 41,900 43,300 41,110 2,190 Total general government 62,426,493 62,641,190 59,486,014 3,155,176 Public safety Sheriff personal services 104,785,500 106,328,500 105,531,307 797,193 Sheriff operating 26,707,800 26,691,600 21,888,932 4,802,668 Sheriff capital outlay 926,500 926,500 2,451,805 (1,525,305) Emergency management administration personal services 797,600 797,600 761,432 36,168 Emergency management administration operating 600,400 786,499 492,046 294,453 Helicopter operations personal services 640,000 696,300 684,884 11,416 Helicopter operations operating 777,500 709,951 595,997 113,954 Helicopter operations capital - 11,249 11,187 62 Intersection safety personal services 30,100 30,100 30,070 30 Intersection safety operating 649,900 820,900 391,090 429,810 Medical examiner services operating 1,063,200 1,063,200 1,060,710 2,490 Total public safety 136,978,500 138,862,399 133,899,460 4,962,939 Physical environment Conservation and resource management personal services 581,700 583,900 553,125 30,775 Conservation and resource management operating 126,700 126,700 125,161 1,539 Immokalee cemetery operating 3,500 2,100 1,812 288 Total physical environment 711,900 712,700 680,098 32,602 Economic environment Veterans services personal services 210,300 210,300 195,640 14,660 Veterans services operating 65,900 40,900 28,350 12,550 Housing and urban improvement personal services - 75,000 57,766 17,234 Housing and urban improvement operating 1,006,400 931,400 690,856 240,544 Total economic environment 1,282,600 1,257,600 972,612 284,988 Human services Health Care Responsibility Act operating 48,500 48,500 22,631 25,869 Domestic animal services personal services 2,001,000 2,001,000 1,866,611 134,389 Domestic animal services operating 686,600 670,980 540,582 130,398 Domestic animal services capital outlay 41,500 24,000 1,268 22,732 Health department operating 1,651,700 1,651,700 1,300,111 351,589 Mental health operating 899,300 899,300 674,475 224,825 Client assistance personal services 448,800 498,700 417,367 81,333 Client assistance operating 3,694,800 3,644,900 3,468,038 176,862 Public services division office personal services 309,800 299,800 286,638 13,162 Public services division office operating 27,600 27,600 21,031 6,569 Total human services 9,809,600 9,766,480 8,598,752 1,167,728 25 COLLIER COUNTY,FLORIDA GENERAL FUND STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Variance with Final Budget Original Final Favorable Budget Budget Actual (Unfavorable) Culture and recreation Library administration personal services 5,096,600 5,096,600 4,912,926 183,674 Library administration operating 1,729,400 1,729,400 1,651,523 77,877 Library administration capital outlay 70,000 70,000 69,921 79 Beach and water park operations personal services 4,782,700 4,502,900 4,218,699 284,201 Beach and water park operations operating 5,168,400 5,153,227 4,744,761 408,466 Beach and water park operations capital outlay - 21,865 1,375 20,490 Total culture and recreation 16,847,100 16,573,992 15,599,205 974,787 Total expenditures 228,056,193 229,814,361 219,236,141 10,578,220 Excess of revenues over expenditures 42,328,953 42,363,509 48,635,345 6,271,836 Other financing sources(uses): Sale of capital assets 70,000 70,000 225,279 155,279 Insurance proceeds - 576 20,587 20,011 Transfers in 6,243,047 6,045,812 8,782,931 2,737,119 Transfers out (64,896,400) (64,909,837) (55,247,475) 9,662,362 Total other financing sources(uses) (58,583,353) (58,793,449) (46,218,678) 12,574,771 Net change in fund balance (16,254,400) (16,429,940) 2,416,667 18,846,607 Fund balance at beginning of year 48,297,400 49,411,516 49,411,516 - Fund balance at end of year $ 32,043,000 $ 32,981,576 $ 51,828,183 $ 18,846,607 Reconciliation: Net change in fund balance,budgetary basis $ 2,416,667 Net change in fair value of investments (95,606) Advances budgeted as transfers 1,367,600 Net change in fund balance,GAAP basis $ 3,688,661 The notes to the financial statements are an integral part of this statement. 26 COLLIER COUNTY, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30,2012 Business-type Activities Enterprise Funds Governmental County Activities- Water Solid Waste Other Internal Service and Sewer Disposal Funds Total Funds ASSETS Current assets: Cash,cash equivalents and investments $ 142,824,860 $ 25,299,224 $ 3,783,300 $ 171,907,384 $ 43,582,198 Receivables: Trade,net 5,874,324 805,083 2,921,896 9,601,303 137,621 Special assessments 65,174 - - 65,174 - Interest 163,816 117,444 4,764 286,024 26,178 Unbilled revenue 4,976,651 - 178,380 5,155,031 - Due from other funds 38,186 - 269,674 307,860 725,764 Due from other governments 359,642 - 4,026 363,668 40,287 Deposits - - - - 313,592 Inventory 4,149,513 - 138,653 4,288,166 868,543 Prepaid costs 19,832 - - 19,832 - Restricted assets: Cash,cash equivalents and investments 2,787,822 72,309 239,541 3,099,672 - Due from other governments - - 4,753,457 4,753,457 - Total current assets 161,259,820 26,294,060 12,293,691 199,847,571 45,694,183 Noncurrent assets: Restricted assets: Cash,cash equivalents and investments 34,030,309 - - 34,030,309 - Receivables: Special assessments 6,375 - - 6,375 - Advances to other funds 10,401,508 3,437,391 - 13,838,899 - Deferred charges 1,105,344 - - 1,105,344 - Capital assets: Land and nondepreciable capital assets 72,602,775 3,831,471 10,732,381 87,166,627 - Depreciable capital assets,net 745,123,741 17,561,649 32,427,565 795,112,955 19,391,578 Total noncurrent assets 863,270,052 24,830,511 43,159,946 931,260,509 19,391,578 Total assets 1,024,529,872 51,124,571 55,453,637 1,131,108,080 65,085,761 (Continued) 27 COLLIER COUNTY, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30,2012 Business-type Activities Enterprise Funds Governmental Activities- County Water Solid Waste Other Internal Service and Sewer Disposal Funds Total Funds LIABILITIES Current liabilities: Accounts payable $ 4,853,718 $ 2,645,740 $ 1,084,042 $ 8,583,500 $ 1,005,936 Wages payable 364,753 29,092 281,493 675,338 99,768 Retainage payable 385,027 - - 385,027 - Due to other funds 88,543 11 2,404,410 2,492,964 91,901 Due to other governments 452 502 91,058 92,012 - Due to individuals 881,717 - 377,269 1,258,986 - Self-insurance claims payable - - - - 5,888,564 Compensated absences 1,197,350 84,748 519,857 1,801,955 333,720 Capital lease obligations - - 134,914 134,914 - Interest payable 2,322,378 - - 2,322,378 - Bonds and loans payable 9,152,712 - - 9,152,712 - Liabilities payable from restricted assets: Accounts payable 193,045 - 662,377 855,422 - Retainage payable - - 67,037 67,037 - Refundable deposits 33,025 - 17,364 50,389 - Unearned revenue - 72,309 116,144 188,453 - Notes payable 69,190 - - 69,190 - Bonds and loans payable 2,492,562 - - 2,492,562 - Total current liabilities 22,034,472 2,832,402 5,755,965 30,622,839 7,419,889 Noncurrent liabilities: Self-insurance claims payable - - - - 1,512,212 Compensated absences 513,150 36,320 222,795 772,265 143,023 Capital lease obligations - - 39,651 39,651 - Net OPEB obligation - - - - 1,698,208 Landfill post-closure liability - 1,795,108 - 1,795,108 - Bonds and loans payable,net 219,706,567 - - 219,706,567 - Total noncurrent liabilities 220,219,717 1,831,428 262,446 222,313,591 3,353,443 Total liabilities 242,254,189 4,663,830 6,018,411 252,936,430 10,773,332 NET ASSETS Invested in capital assets,net of related debt 586,305,485 21,393,120 42,985,381 650,683,986 19,391,578 Restricted for growth related capital expansion 21,314,836 - - 21,314,836 - Restricted for renewal and replacement 300,000 - - 300,000 - Restricted for debt service 12,584,155 - - 12,584,155 - Unrestricted 161,771,207 25,067,621 6,449,845 193,288,673 34,920,851 Total net assets $ 782,275,683 $ 46,460{741 $ 49,435,226 878,171,650 $ 54,312,429 Cumulative consolidation adjustment for internal service fund activities related to enterprise funds 1,100,804 Net assets of Business-type Activities $ 879,272,454 The notes to the financial statements are an integral part of this statement. 28 COLLIER COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Business-type Activities Enterprise Funds Governmental County Activities- Water Solid Waste Other Internal Service and Sewer Disposal Funds Total Funds Operating revenues: Charges for services $ 102,070,376 $ 34,076,045 $ 14,684,703 $ 150,831,124 $ 74,240,621 Miscellaneous 613,507 199,031 87,489 900,027 243,057 Total operating revenues 102,683,883 34,275,076 14,772,192 151,731,151 74,483,678 Operating expenses: Personal services 23,671,349 1,742,275 18,770,338 44,183,962 6,174,481 Operating 34,484,083 26,669,984 15,003,890 76,157,957 68,895,320 Depreciation and amortization 34,019,622 938,682 2,681,806 37,640,110 1,938,482 Total operating expenses 92,175,054 29,350,941 36,456,034 157,982,029 77,008,283 Operating income(loss) 10,508,829 4,924,135 (21,683,842) (6,250,878) (2,524,605) Non-operating revenues(expenses): Operating grants and contributions 250,000 18,400 2,680,005 2,948,405 - Interest income 912,756 160,297 32,954 1,106,007 232,865 Insurance reimbursement 75,432 320 6,066 81,818 2,495,614 Interest expense (8,648,228) - (12,759) (8,660,987) - Loss on disposal of capital assets (915,005) (239,479) (10,094) (1,164,578) (6,113) Total non-operating revenues(expenses) (8,325,045) (60,462) 2,696,172 (5,689,335) 2,722,366 Income(loss)before contributions and transfers 2,183,784 4,863,673 (18,987,670) (11,940,213) 197,761 Capital grants and contributions 11,272,319 811 8,223,187 19,496,317 282 Transfers in 1,468,336 - 17,614,538 19,082,874 361,200 Transfers out (4,089,460) (1,942,419) (272,700) (6,304,579) (926,100) Change in net assets 10,834,979 2,922,065 6,577,355 20,334,399 (366,857) Net assets-beginning 771,440,704 43,538,676 42,857,871 54,679,286 Net assets-ending $ 782,275,683 $ 46,460,741 $ 49,435,226 $ 54,312,429 Consolidation adjustment for internal service fund activities related to enterprise funds (780,068) Change in net assets of Business-type Activities $ 19,554,331 The notes to the financial statements are an integral part of this statement. 29 COLLIER COUNTY, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Business-type Activities Enterprise Funds Governmental County Activities- Water Solid Waste Other Internal Service and Sewer Disposal Funds Total Funds Cash flows from operating activities: Cash received for services $103,141,445 $ 34,171,283 $ 15,026,546 $152,339,274 $ - Cash received from other funds for services - - - - 68,250,031 Cash received from employees for services - - - - 5,489,426 Cash received from other governments for services - - - - 464,179 Cash received from refundable deposits 39,000 899,234 - 938,234 - Cash received from retirees for services - - - - 1,197,797 Cash payments on behalf of retirees - - - - (612,146) Cash payments for goods and services (27,366,705) (24,962,557) (10,723,439) (63,052,701) (68,882,891) Cash payments to employees (23,597,459) (1,744,367) (18,786,561) (44,128,387) (6,220,005) Cash payments for interfund services (6,665,387) (897,409) (4,396,235) (11,959,031) (395,793) Cash payments on refundable deposits (42,977) (1,082,130) (867) (1,125,974) - Net cash provided by(used for)operating activities 45,507,917 6,384,054 (18,880,556) 33,011,415 (709,402) Cash flows from non-capital financing activities: Cash received from operating grants - 18,400 3,980,885 3,999,285 - Cash transfers from other funds 6,800,912 4,031,964 22,366,771 33,199,647 361,200 Cash transfers to other funds (4,089,461) (6,005,133) (4,637,522) (14,732,116) (1,776,100) Net cash provided by(used for)non-capital financing activities 2,711,451 (1,954,769) 21,710,134 22,466,816 (1,414,900) Cash flows from capital and related financing activities: System development charges 9,523,421 - - 9,523,421 - Special assessment collections 26,658 - - 26,658 - Receipts from insurance reimbursements 20,174 320 31,558 52,052 2,588,865 Proceeds from disposal of capital assets 79,944 - 11,495 91,439 2,905 Proceeds from capital grants - - 5,952,870 5,952,870 - Payments for capital acquisitions (21,236,975) (2,061,124) (7,826,910) (31,125,009) (68,625) Principal payments on state revolving loans (7,079,698) - - (7,079,698) - Principal payments on bonds (5,188,936) - - (5,188,936) - Principal payments on leases - - (212,246) (212,246) - Interest and fiscal agent fees paid (9,312,190) - (12,759) (9,324,949) - Net cash provided by(used for)capital and related financing activities (33,167,602) (2,060,804) (2,055,992) (37,284,398) 2,523,145 Cash flows from investing activities: Interest on investments 940,818 157,943 33,671 1,132,432 243,368 Net cash provided by investing activities 940,818 157,943 33,671 1,132,432 243,368 Net increase in cash,cash equivalents and investments 15,992,584 2,526,424 807,257 19,326,265 642,211 Cash,cash equivalents and investments,October 1,2011 163,650,407 22,845,109 3,215,584 189,711,100 42,939,987 Cash,cash equivalents and investments,September 30,2012 $179,642,991 $ 25,371,533 $ 4,022,841 $209,037,365 $ 43,582,198 Current cash,cash equivalents and investments $142,824,860 $ 25,299,224 $ 3,783,300 $171,907,384 $ 43,582,198 Current cash,cash equivalents and investments-restricted 2,787,822 72,309 239,541 3,099,672 - Noncurrent cash,cash equivalents and investments-restricted 34,030,309 - - 34,030,309 - Cash,cash equivalents and investments,September 30,2012 $179,642,991 $ 25,371,533 $ 4,022,841 $209,037,365 $ 43,582,198 (Continued) 30 COLLIER COUNTY, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (CONTINUED) RECONCILIATION OF OPERATING INCOME (LOSS)TO NET CASH PROVIDED BY(USED FOR)OPERATING ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Business-type Activities Enterprise Funds Governmental County Activities- Water Solid Waste Other Internal Service and Sewer Disposal Funds Total Funds Operating income(loss) $ 10,508,829 $ 4,924,135 $ (21,683,842) $ (6,250,878) $ (2,524,605) Adjustments to reconcile operating income(loss)to net cash provided by(used for)operating activities: Depreciation expense 33,420,909 938,682 2,681,806 37,041,397 1,938,482 Amortization of bond issuance costs 538,258 - - 538,258 - Amortization of utility acquisition adjustment 60,455 - - 60,455 - Net changes in assets and liabilities: Trade receivable (368,903) (74,967) 263,730 (180,140) 222,841 Due from other funds (23,225) 77,027 14 53,816 54,767 Due from other governments (12,405) - (3,133) (15,538) 12,219 Deposits - - - - 110,961 Prepaid costs (875) - - (875) - Inventory (371,732) - 12,130 (359,602) (263,798) Prepaid costs - - - - 49,410 Accounts payable 729,772 720,948 (127,996) 1,322,724 (198,251) Wages payable 16,498 3,833 1,091 21,422 (823) Due to other funds 101,208 12,049 82 113,339 56,355 Due to other governments (102) (6) 23 (85) - Due to individuals 855,815 - (47) 855,768 - Compensated absences 57,392 (5,925) (17,314) 34,153 (44,701) Refundable deposits (3,977) (182,896) (867) (187,740) - Unearned revenue - - (6,233) (6,233) - Self-insurance claims payable - - - - (241,723) Net OPEB obligation - - - - 119,464 Landfill post closure liability - (28,826) - (28,826) - Total adjustments 34,999,088 1,459,919 2,803,286 39,262,293 1,815,203 Net cash provided by(used for)operating activities $ 45,507,917 $ 6,384,054 $ (18,880,556) $ 33,011,415 $ (709,402) Non-cash investing,capital and financing activities: Change in fair value of investments $ (242,573) $ (40,246) $ 1,448 $ (281,371) $ (13,866) Contributed capital assets 4,622 811 1,672,711 1,678,144 282 Developer infrastructure contributions 2,529,018 - - 2,529,018 - The notes to the financial statements are an integral part of this statement. 31 COLLIER COUNTY, FLORIDA STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUNDS SEPTEMBER 30,2012 Agency Funds ASSETS Cash,cash equivalents and investments $ 32,325,988 Receivables: Interest 3,781 Other 41,473 Total assets $ 32,371,242 LIABILITIES Due to other governments $ 6,529,076 Due to individuals 640,702 Refundable deposits 24,075,689 Due to special assessment holders 1,125,775 Total liabilities $ 32,371,242 The notes to the financial statements are an integral part of this statement. 32 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 INDEX NOTE PAGE NUMBER 1 Summary of Significant Accounting Policies 34 2 Cash,Cash Equivalents and Investments 44 3 Trade Receivables 47 4 Interfund Payables and Receivables 48 5 Capital Assets 50 6 Long-Term Obligations 51 7 Conduit Debt Obligations 59 8 Defeased Debt 60 9 Pension Plan Obligations 61 10 Transfers 63 11 Net Assets/Fund Balances 63 12 Risk Management 66 13 Other Postemployment Benefits 68 14 Landfill Liability 71 15 Significant Contingencies 72 16 Significant Commitments 73 17 Fund Deficits 74 33 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES THE REPORTING ENTITY The primary government consists of Collier County, a political subdivision of the State of Florida that was established in 1923 by the Florida State Legislature. The County is governed by a Board of County Commissioners which consists of five members elected within single member districts. In addition, there are five separately elected Constitutional Officers: the Tax Collector, Property Appraiser, Sheriff, Clerk of the Circuit Court and Supervisor of Elections. The Constitutional Officers are elected county wide. Under the direction of the Clerk of the Circuit Court, the Collier County Finance and Accounting Department maintains the accounting system for the operations of the Board of County Commissioners, Supervisor of Elections and the Clerk of the Circuit Court. The Tax Collector, Property Appraiser and Sheriff each maintain their own accounting systems. For financial reporting purposes the operations of the Board of County Commissioners and the Constitutional Officers are combined and presented as the primary government. Component units are legally separate agencies that the primary government is financially accountable for or organizations which should be included in the reporting entity 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,and the existence of a financial benefit/burden relationship or fiscal dependency. The County's blended component units consist of organizations whose respective governing Boards are composed entirely of the Board of County Commissioners serving ex-officio. These entities are legally separate, however financial support has been pledged and financial or operational policies may be significantly influenced by the County. In accordance with Governmental Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity (GASB 14), as amended by GASB Statement No. 39, Determining Whether Certain Organizations are Component Units (GASB 39), these organizations are reported as if they were part of the County's operations. Collier County Water and Sewer District The District was established by Chapter 88-499, as amended by Chapter 03-353, Laws of Florida, to provide water, sewer and effluent services to portions of the unincorporated area of Collier County. Goodland Water District The District was established by a Special Referendum Election authorized by Collier County Ordinance 75-5 and Section 125.01(q), Florida Statutes. The District provides potable water service to the residents of Goodland. Collier County Community Redevelopment Agency(CRA) The CRA was established by Resolution 2000-82 to benefit blighted areas in both the Immokalee Redevelopment and Bayshore/Gateway Triangle Redevelopment areas. These two redevelopment areas are geographically separate and distinct. 34 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED THE REPORTING ENTITY—CONTINUED Collier County Airport Authority The Board of County Commissioners was established as the governing body of the Airport Authority by Ordinance 2010-10. The Airport Authority is responsible for construction, improvement, equipment, development, regulation, operation and maintenance of the Marco Island, Immokalee and Everglades Airports and all related airport facilities. Collier County Metropolitan Planning Organization(MPO) The Authority was created in 1981 by Collier County Resolution 81-222 pursuant to Section 334.215, Florida Statutes, as amended by Section 339.175, Florida Statutes. The purpose of the MPO is to provide for short-term and long-term planning for all modes of travel in order to benefit the citizens of Collier County. The MPO is reported as part of the Grants and Shared Revenue fund. The County's discretely presented component units consist of organizations whose board members are appointed by the Board of County Commissioners. The County is able to impose its will on these entities because of its ability to remove appointed members from the component units' Boards. The Authorities maintain their own financial records, but do not issue separate financial statements. GASB 14, as amended by GASB 39, requires that the financial data of the following organizations be reported in separate columns to emphasize that they are legally separate from the County. Collier County Housing Finance Authority The Authority was formed in 1980 by Collier County Ordinance 80-66 for the purpose of stimulating the construction of residential housing for low and moderate income families through the use of public financing. Their financial position and results of operations are reported in the accompanying financial statements and the outstanding conduit debt issued by the Authority is disclosed in Note 7, "Conduit Debt Obligations". Collier County Health Facilities Authority The Authority was established in 1979 by Collier County Ordinance 79-75 for the purpose of assisting health facilities in the acquisition,construction and financing of projects within the County. Their financial position and results of operations are reported in the accompanying financial statements and the outstanding conduit debt issued by the Authority is disclosed in Note 7, "Conduit Debt Obligations". Collier County Industrial Development Authority The Authority was created in 1978 by Collier County Resolution 78-94 to facilitate the financing of projects that promote economic growth and increase opportunities for employment in the County. Their financial position and results of operations are reported in the accompanying financial statements and the outstanding conduit debt issued by the Authority is disclosed in Note 7, "Conduit Debt Obligations". 35 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-CONTINUED Collier County Educational Facilities Authority The Authority was created in 1999 by Collier County Resolution 99-177 to assist institutions for higher education in the construction,financing and refinancing of projects. Their financial position and results of operations are reported in the accompanying financial statements and the outstanding conduit debt issued by the Authority is disclosed in Note 7, "Conduit Debt Obligations". Financial information on the individual component units can be obtained from their respective administrative offices or from the Finance and Accounting Department of the Clerk of the Circuit Court. Administrative Offices Collier Water and Sewer District Goodland Water District 3339 East Tamiami Trail,Suite#214 3339 East Tamiami Trail,Suite#214 Naples, Florida 34112 Naples, Florida 34112 Collier County Airport Authority Collier County Health Facilities Authority and 2005 Mainsail Drive,Suite#1 Housing Finance Authority Naples, FL 34114 5150 Tamiami Trail North,Suite 502 Naples, FL 34103 Bayshore Gateway Community Redevelopment Collier County Industrial Development Authority Agency and Educational Facilities Authority 4069 Bayshore Drive 3050 North Horseshoe Drive,Suite#120 Naples, Florida 34112 Naples, Florida 34104 Immokalee Community Redevelopment Agency Collier County Metropolitan Planning Organization 310 Alachua Street 2885 South Horseshoe Drive Immokalee, Florida 34142 Naples, Florida 34104 GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The basic financial statements are made up of the government-wide financial statements and fund financial statements. Both of these sets of financial statements distinguish between the governmental and business-type activities of Collier County. The government-wide financial statements consist of a Statement of Net Assets and a Statement of Activities. These statements report on the financial condition of Collier County, at the reporting entity level. Internal balances represent net amounts due between the governmental and business-type activities. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Fiduciary funds are not included in these presentations as their assets do not represent amounts that are available for Collier County government operations. The Statement of Net Assets reports all financial and capital resources of Collier County's governmental and business-type activities. Net assets equal assets minus liabilities, and is shown in three categories: invested in capital assets, net of related debt; restricted net assets and unrestricted net assets. The Statement of Activities reports results of operations on a functional activity (program) basis and demonstrates to what degree the particular program has been self- supporting. 36 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS—CONTINUED Program revenues are reported in the following three categories: charges for services, operating grants and contributions and capital grants and contributions. Charges for services are amounts charged to customers for a particular service, and are netted against the cost of the relevant program. Internal charges for indirect services are allocated across functions as direct expenses. Grants and contributions refer to revenues restricted for capital or operational use in a particular program. The general revenue category encompasses all other revenue types and represents revenue collected to support all functions of Collier County government. The fund financial statements follow the government-wide statements and report more detailed information about operations of major funds on an individual basis and nonmajor funds on an aggregate basis for the governmental and proprietary funds. Following the governmental fund balance sheet and statement of revenues, expenditures and changes in fund balances are reconciliations explaining the differences between the governmental fund presentation and the government-wide presentation. BASIS OF PRESENTATION The following are reported as major governmental funds: General Fund—the General fund is the general operating fund of the County. All general tax revenues and other receipts that are not accounted for in other funds are accounted for in the General Fund. The general operating funds of the Clerk of the Circuit Court, Property Appraiser, Sheriff, Supervisor of Elections and Tax Collector are presented together with the Board of County Commissioners'general operating fund in the County's consolidated General Fund. Government Facilities Impact Fee Fund — the Government Facilities Impact Fee fund is used to account for the receipt and expenditure of government facilities impact fees collected from qualifying new construction. The impact fees must be used for the acquisition and construction of government facilities. The following are reported as major enterprise funds: County Water and Sewer Fund—the County Water and Sewer fund is used to account for the provision of water, wastewater and effluent services to certain portions of the County's unincorporated area. Solid Waste Disposal Fund — the Solid Waste Disposal fund is used to account for the provision of solid waste disposal services to users throughout the County. 37 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED BASIS OF PRESENTATION—CONTINUED Collier County also maintains the following nonmajor fund types: Special Revenue Funds—Special revenue funds are used to account for the proceeds of specific revenue sources that are restricted or committed to expenditure for specific purposes other than debt service or capital projects. Debt Service Funds — Debt service funds are used to account for the accumulation of resources that are restricted, committed or assigned to expenditure for principal and interest related to long-term obligations. Capital Project Funds — Capital project funds are used to account for the accumulation of resources that are restricted, committed or assigned to expenditure for capital outlays including the acquisition or construction of capital facilities and other capital assets. Enterprise Funds— Enterprise funds are used to account for activities for which a fee is charged to external users for goods or services. Internal Service Funds — Internal service funds are used to account for the provision of goods and services by one department to other departments within the County or to other governmental units on a cost reimbursement basis. Collier County currently operates the following Internal Service Funds: Self Insurance, Sheriffs Self Insurance, Fleet Management and Information Technology. Agency Funds — Agency funds are custodial in nature and do not report the results of operations (assets equal liabilities). Agency funds are clearing accounts for assets held by the government as an agent for individuals, private organizations or other governments. The Board of County Commissioners, Sheriff, Clerk of the Circuit Court and Tax Collector all maintain agency funds. BASIS OF ACCOUNTING AND MEASUREMENT FOCUS Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made regardless of the measurement focus applied. The government-wide financial statements, as well as the fund financial statements for the proprietary funds, are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recognized in the period in which they are earned and expenses are recognized in the period incurred. Grant revenues are recognized when eligibility requirements are met. The intent in proprietary operations is that the costs of providing goods or services to the general public be financed primarily through user charges, or where periodic determination of revenues earned, expenses incurred,and/or net income is deemed appropriate. 38 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED BASIS OF ACCOUNTING AND MEASUREMENT FOCUS—CONTINUED Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Primary revenues including non-grant intergovernmental revenues, charges for services and interest are treated as susceptible to accrual under the modified accrual basis. In applying the susceptibility-to-accrual concept to grant revenues, the legal and contractual requirements of the numerous individual programs are used as guidance. In addition, grant revenues are considered available if they are expected to be collected within one year of the end of the current fiscal period. Property taxes are discussed later in this footnote. Other revenue sources are not considered measurable and available and are not treated as susceptible to accrual. Expenditures are recorded when the related fund liability is incurred. Exceptions to this general rule include accrued compensated absences and principal and interest on long-term debt. BUDGETS AND BUDGETARY DATA The following are the statutory procedures followed by the Board of County Commissioners in establishing the budgets for the County: 1) Within fifteen days after certification of the ad valorem tax roll by the Property Appraiser, the County budget officer prepares and presents to the Board a tentative budget for the ensuing fiscal year. The budget includes all estimated receipts and all estimated expenditures, reserves and balances to be carried forward at the end of the year as specified in Section 129.03, Florida Statutes. 2) Within eighty days of the certification of value, but not earlier than sixty-five days after certification, the Board holds a public hearing on the tentative budget and proposed millage rate. At this hearing the Board amends and adopts the tentative budget, recomputes the proposed millage rate, and announces publicly the percentage, if any, by which the recomputed proposed millage rate exceeds the rolled-back rate. If the millage rate tentatively adopted exceeds that proposed, each taxpayer within the jurisdiction is notified of the increase by first class mail,at the expense of the Board. 3) Within fifteen days of the meeting adopting the tentative budget, the Board advertises the County's intent to adopt a final budget and millage rate. 39 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED BUDGETS AND BUDGETARY DATA—CONTINUED 4) A public hearing is held by the Board to finalize the budget and adopt a millage rate. This hearing is held not less than two days and not more than five days after the day that the advertisement is first published. Prior to September 30,the millage levy is adopted by a separate vote. The millage rate adopted is not allowed to exceed the tentatively adopted millage rate, except as allowed for by emergency provision with strict public notice requirements. This is followed by the approval and ratification of the final budget. 5)The resolution approved at the final hearing is forwarded to the Property Appraiser,Tax Collector and Florida Department of Revenue, not later than thirty days following the adoption of the Resolution, the Board certifies to the State of Florida, Department of Revenue, Division of Ad Valorem Tax, that it has complied with the provisions of Chapter 200, Florida Statutes. 6)The County Manager approves interdepartmental budget changes within the same fund and division of$50,000 or less that do not impact reserves or recognize revenue. All other budgetary changes must be approved by the Board of County Commissioners as matter of policy. The initial adopted budget was amended in accordance with Florida Statutes. 7) Florida State Section 129.07, as amended in 1978, provides that expenditures in excess of total fund budgets are unlawful. However, because the Board approves all budgetary changes between departments, except those approved by the County Manager, the departmental budget becomes the level of control. Formal budgetary integration is employed as a management control device during the fiscal year for all funds. Budgets have been legally adopted by the Board for all Board departments except for agency funds and the Impact Fees Escrow special revenue fund. The Property Appraiser and the Tax Collector adopt budgets for their general funds independently of the Board. The Clerk of Courts operates as a fee officer, and as such, prepares its budget in accordance with Section 218.35, Florida Statutes. The Sheriff and Supervisor of Elections prepare budgets for their general funds, which are submitted to and approved by the Board. The Clerk of Court's budget for court related functions is prepared according to Section 28.36 Florida Statutes and submitted to the Clerks of Court Operations Corporation for approval by the Florida Department of Revenue. Budgets are adopted for all governmental departments except as described in the previous paragraph. These budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) except for certain non-budgeted revenues and expenses and mark to market activity on investments. All unencumbered appropriations lapse at the end of the current year. For further information regarding encumbrances, refer to Note 16 on page 73. 40 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED BUDGETS AND BUDGETARY DATA—CONTINUED Capital project costs are budgeted in the year they are anticipated to be obligated. In subsequent years, the unused budget is reappropriated until the project is completed. Proprietary funds are budgeted on a basis consistent with generally accepted accounting principles, except that capital related and debt transactions are based upon cash receipts and disbursements. Estimated beginning fund balances are considered in the budgetary process. For purposes of the budgetary presentation, certain transactions that have been accounted for in the governmental funds statements of revenues, expenditures and changes in fund balances have not been reflected in the budgetary financial statements. Specifically, bad debt expense and the net change in fair value of investments are not presented in the budget to actual statements. ACCOUNTS RECEIVABLE—UNBILLED REVENUE Unbilled charges for services are accrued in the County Water and Sewer, Emergency Medical Services and Goodland Water funds by prorating subsequent bills. INVENTORIES AND PREPAID COSTS Inventory is valued at cost using the first-in, first-out method. Inventory in the governmental funds consists of supplies held for consumption. The cost is recorded as an expenditure at the time inventory items are consumed rather than when purchased. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. Inventories and prepaid costs reported within governmental funds are classified as non-spendable, which indicates that they do not constitute available resources. Inventories and prepaid costs in the government-wide and proprietary fund financial statements are reported as an expense when consumed. Inventory held for resale consists of real estate holdings, acquired through various programs, which the County intends to sell. The value of these properties includes the original purchase price plus the cost of any rehabilitation. Inventory held for resale of $15,913,817 is classified as restricted and $245,951 is classified as committed,which indicates that they do not constitute available resources. CAPITAL ASSETS Land, buildings, improvements and equipment are stated at cost. Capital contributions are recorded at their fair value on the date donated. Facilities constructed using system development impact fees, collected from developers and customers,are stated at cost. The County capitalizes expenditures with a cost of$1,000 or more and with a useful life in excess of one year. Expenditures for maintenance and repairs are charged to operating expenses. The cost of assets retired or sold,together with the related accumulated depreciation, is removed from the accounts and any gain or loss on disposition is credited or charged to earnings. 41 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED CAPITAL ASSETS—CONTINUED Depreciation is calculated using the straight-line method. The estimated useful life of the various classes of depreciable capital assets is as follows: Capital Asset Class Estimated Useful Life Buildings 20-45 years Infrastructure 3-30 years Improvements other than buildings 4-45 years Machinery and equipment 3-20 years Costs incurred in the renourishment of beaches are included in the infrastructure class of capital assets and are capitalized and depreciated over three years. Infrastructure acquired prior to fiscal years ended June 30, 1980 is not reported. Effective October 1, 2009 the County adopted the provisions of GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets, which establishes accounting and financial reporting standards for intangible assets. CAPITAL LEASE OBLIGATIONS In the government-wide financial statements and proprietary fund financial statements capital lease obligations and the related cost of assets acquired are reflected in the Statement of Net Assets. For capital lease obligations originating in governmental funds, an expenditure for the asset and the offsetting other financing source is reflected in the fund financial statements in the year of inception. BOND PREMIUMS, DISCOUNTS AND ISSUANCE COSTS Bond premiums, discounts and issuance costs for the governmental activities and the business-type activities are deferred and amortized over the term of the bonds using the straight-line method. Bond discounts are presented as a reduction of the face amount of bonds payable, premiums as an increase, while issuance costs are recorded as deferred charges, which are shown on the face of the Statement of Net Assets as a component of noncurrent assets. In the governmental fund financials, bond premiums, discounts and issuance costs are recognized in the current period. DEFEASANCE OF DEBT For refundings resulting in the defeasance of debt, generally accepted accounting principles require that the difference between the reacquisition price and the net carrying amount of the old debt be deferred and amortized over the shorter of the life of the new debt or the remaining life of the old debt as a component of interest expense. The straight-line method is used for amortization of the deferred gain/loss, and the unamortized portion is shown as an increase or reduction of bonds payable. INTEREST COST In the proprietary funds, interest costs are expensed or capitalized as required by the interest Topic 835, Subtopic 20, Section 30 "Amount of Interest to be Capitalized" of the Financial Accounting Standards Board (FASB)Accounting Standards Codification. 42 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED PROPERTY TAXES Property taxes become due and payable on November 1st of each year and become delinquent on April 1st of the following year. Property taxes receivable and a corresponding allowance for uncollectible property taxes are not included in the financial statements, as delinquent taxes as of September 30, 2012 are not significant. Discounts on property taxes are allowed for payments made prior to the April 1st delinquent date as follows: November - 4%, December- 3%, January - 2%, and February - 1%. Tax certificates for the full amount of any unpaid taxes must be sold not later than June 1st of each year. No accrual for the property tax levy becoming due in November 2012 is included in the accompanying financial statements, since such taxes are collected to finance expenditures of the subsequent period. Key dates in the property tax cycle for the fiscal year ended September 30, 2012 are as follows: Property Tax Cycle Date Assessment roll compiled January 1,2011 Assessment roll certified July 1, 2011 Millage resolution approved Within 35 days of the certification of the assessment roll Beginning of fiscal year for tax levy October 1, 2011 Taxes due and payable(levy date) November 1, 2011 Collection dates By November 30: 4%discount By December 31: 3%discount By January 31: 2%discount By February 28: 1%discount Due date March 31, 2012 Delinquent(lien date) April 1, 2012 Tax certificates sold Prior to June 1, 2012 APPLICATION OF FASB PRONOUNCEMENTS TO PROPRIETARY FUNDS In accordance with GASB Statement No. 20,Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting, the County has elected not to apply private sector guidance issued after November 30, 1989. ACCOUNTING ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimated. 43 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—CONTINUED UNEARNED REVENUE AND DEFERRED REVENUE In instances where assets have been received by the County for services to be rendered in future periods, asset balances are offset by an unearned revenue liability account in the financial statements. Examples of unearned revenues of the County as of September 30, 2012 are unspent State Housing Initiative Partnership (SHIP) monies and cash receipts associated with unspent advance grant agreements. Deferred revenue liabilities are reported in the governmental funds to offset receivables that do not meet the availability criterion under the modified accrual basis of accounting. Primary examples of the County's deferred revenues are amounts associated with SHIP loans made to qualifying organizations and deferred impact fee agreements made with developers and individuals. ACCRUED COMPENSATED ABSENCES The County follows the provisions of GASB Statement No. 16,Accounting for Compensated Absences. This statement provides for the measurement of accrued vacation leave and other compensated absences using the pay or salary rates in effect at the balance sheet date. It also requires additional amounts to be accrued for certain salary related payments associated with the payment of compensated absences. It is the Board of County Commissioners' policy to allow employees of record on August 2, 1996 a sick leave payment upon termination for any service period earned prior to August 2, 1996 and a payout of unused vacation up to 440 hours for all employees. The Sheriffs policy allows for a percentage of unused sick leave payout based upon years of service, not to exceed 1,000 hours, and up to 500 hours of unused vacation time. Both the Clerk of the Circuit Court's and Tax Collector's policies allow for a percentage of unused sick leave payout based upon years of service, and up to 240 hours of unused vacation hours. The Property Appraiser's policy allows for a percentage of unused sick leave payout based upon years of service, not to exceed 1,040 hours, and up to 200 hours of unused vacation hours. The Supervisor of Election's policy allows for a percentage of unused sick leave payout based upon years of service, and up to 440 hours of unused vacation. Payments for compensated absences are made by the respective fund. Accrued compensated absences are recorded as liabilities in the government-wide financial statements and the proprietary fund financials. A liability is reported in governmental funds only if they have matured, for example, as a result of employee resignations or retirements,and are considered due and payable as of year end. NOTE 2—CASH,CASH EQUIVALENTS AND INVESTMENTS The County maintains a cash and investment pool that is available for use by all funds. Each fund's portion of this pool is displayed on the balance sheet under the heading of Cash, Cash Equivalents and Investments. Investment income is allocated monthly to participating funds based on the percentage of each fund's average daily balance in the total pool. 44 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 2—CASH,CASH EQUIVALENTS AND INVESTMENTS—CONTINUED As of September 30, 2012,the County had the following cash, cash equivalents and investments: Final First Investment Maturities Fair Value Call Date Call Frequency Rating* Cash on hand N/A $ 91,191 N/A N/A N/A Demand deposits N/A 321,461,690 N/A N/A N/A State Board of Administration Pool: Florida PRIME N/A 723,328 N/A N/A AAAm Pool B N/A 13,303 N/A N/A N/A U.S.Treasury Note 12/31/2012 50,058,500 none N/A AA+ Federal Farm Credit Bank 01/17/2014 56,735,567 4/17/2012 continuous AA+ Federal Farm Credit Bank 01/27/2014 25,000,250 4/27/2012 continuous AA+ Federal Home Loan Bank 01/29/2014 45,082,350 none N/A AA+ Federal Farm Credit Bank 01/30/2014 30,237,997 1/30/2013 continuous AA+ Federal Home Loan Bank 08/13/2014 25,011,000 2/13/2013 continuous AA+ Federal Home Loan Mortgage Corp.Note 04/17/2015 25,086,000 none N/A AA+ Federal National Mortgage Association 04/23/2015 40,160,800 4/23/2013 once AA+ Federal National Mortgage Association 05/22/2015 25,040,000 5/22/2013 continuous AA+ Federal Home Loan Mortgage Corp.Note 09/04/2015 25,035,000 none N/A AA+ Total $ 669,736,976 *Standard and Poor's rating CREDIT RISK Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The County's investment practices are governed by Florida Statutes, Chapter 218 and the County's Investment Policy. The County's Investment Policy limits credit risk by restricting authorized investments to the Florida Local Government Surplus Trust Fund (Florida PRIME), direct obligations of, or obligations backed by the full faith and credit of the United States Government, U.S. government sponsored Corporation/Instrumentalities (except for Student Loan Marketing Association), certificates of deposit collateralized by U.S. Government Securities or Agencies, fixed income mutual funds collateralized by U.S. Government Securities or Agencies, domestic bankers' acceptances rated "AA" or higher, prime commercial paper rated "A-1" and "P-1", tax-exempt obligations rated "AA" or higher and issued by state or local governments, NOW accounts fully collateralized in accordance with Chapter 280, Florida Statutes and qualifying repurchase agreements. The policy requires that each firm involved in a repurchase agreement must execute the County's master repurchase agreement, a third party custodian must hold collateral for all repurchase agreements with a term of more than one day and the market value of the collateral shall maintain a minimum price of 101 percent on U.S. Government securities and 104 percent on Agencies and Instrumentalities with a term over five (5) years, and must be marked to market at least weekly. The Florida PRIME is an investment pool administered by the State Board of Administration (SBA), under the regulatory oversight of the State of Florida. The SBA operates two pools, Florida PRIME and Fund B Surplus Trust Fund (Fund B), with the Florida PRIME carrying a AAAm rating from Standard &Poor's. 45 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 2—CASH,CASH EQUIVALENTS AND INVESTMENTS-CONTINUED CREDIT RISK—CONTINUED At September 30, 2012, the Sheriff had $736,631 invested in the State Board of Administration's Local Government Surplus Funds Trust Fund Investment Pool. Of this amount, $723,328 is invested in the Florida PRIME and $13,303 in Fund B. The Florida PRIME investment is fully liquid and carries a weighted average days to maturity of 39 days. Fund B is accounted for as a fluctuating net asset value pool and the fair value factor for September 30, 2012 was .95. Fund B has a weighted average life of 4.08 years. Fund B cash holdings continue to be distributed to participants as they become available from maturities, sales and income received. All cash deposits are held in qualified public depositories pursuant to Florida Statutes Chapter 280, "Florida Security for Public Deposits Act". Under the Act, all qualified public depositories are required to pledge eligible collateral having a market value equal to or greater than the average daily or monthly balance of all public deposits, multiplied by the depository's collateral pledging level. The pledging level may range from 25%to 200%depending upon the depository's financial condition. Any losses to public deposits are covered by applicable deposit insurance, sale of securities pledged as collateral, and if necessary, assessments against other qualified public depositories of the same type as the depository in default. CUSTODIAL CREDIT RISK The policy requires execution of a third-party custodial safekeeping agreement for purchased securities and collateral, and requires that securities be held in the County's name. At September 30, 2012, the County had demand deposits of $321,461,690. These demand deposits do not include discretely presented component unit deposits of $326,518. All balances in excess of the Federal Depository Insurance Corporation insurance for demand deposits are fully collateralized by the multiple financial institutions' collateral pool in accordance with Florida Statutes Section 280. INTEREST RATE RISK Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. One of the primary objectives of the investment policy is to match investment cash flow and maturity with known cash needs and anticipated cash flow requirements. The County limits exposure to interest rate risk by structuring the portfolio to meet daily cash flow demands. Investments shall have an average maturity of not more than five years, except for mortgage securities. Mortgage securities will not be used to match liabilities that are reasonably definable as to amount and disbursement date and are used to invest funds associated with reserves or liabilities that are not associated with a specifically identified cash flow schedule. CONCENTRATION OF CREDIT RISK The County's investment policy establishes limitations on portfolio composition in order to control credit risk. The policy allows 100 percent of the portfolio to be invested in U.S. Government Securities, Agencies and Instrumentalities (excluding mortgage securities), 50 percent to be invested in Florida PRIME, 30 percent to be invested in certificates of deposit, 20 percent to be invested in qualifying repurchase agreements and 10 percent each in the categories of fixed income mutual funds, domestic bankers' acceptances, prime commercial paper and tax-exempt obligations. 46 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 2—CASH,CASH EQUIVALENTS AND INVESTMENTS—CONTINUED CONCENTRATION OF CREDIT RISK—CONTINUED The portion of the County's portfolio invested in U.S. Government Instrumentalities is detailed as follows, at September 30, 2012: Percent of Issuer Portfolio Federal Home Loan Bank 10.47% Federal Farm Credit Bank 16.72% Federal Home Loan Mortgage Corporation 7.48% Federal National Mortgage Association 9.74% Total U.S.Government Instrumentalities 44.41% Reconciliation of cash, cash equivalents and investments to the basic financial statements: Primary government: Cash,cash equivalents and investments $ 379,474,292 Restricted cash,cash equivalents and investments-current 23,428,190 Restricted cash,cash equivalents and investments-noncurrent 234,508,506 Agency funds: Cash,cash equivalents and investments 32,325,988 Total $ 669,736,976 NOTE 3-TRADE RECEIVABLES Trade receivables for Governmental and Business-type Activities are net of an allowance for doubtful accounts as follows: Trade Allowance for Net Trade Receivables Doubtful Accounts Receivables General Fund $ 509,731 $ 92,321 $ 417,410 Government Facilities Impact Fee 3,009 - 3,009 Nonmajor Governmental Funds 2,401,078 666,238 1,734,840 Total receivables reported in Governmental Funds 2,913,818 758,559 2,155,259 Total receivables reported in Internal Service Funds 153,260 15,639 137,621 Total Governmental Activities trade receivables $ 3,067,078 $ 774,198 $ 2,292,880 County Water and Sewer $ 5,957,089 $ 82,765 $ 5,874,324 Solid Waste Disposal 805,083 - 805,083 Nonmajor Enterprise Funds 2,939,270 17,374 2,921,896 Total Business-type Activities trade receivables $ 9,701,442 $ 100,139 $ 9,601,303 47 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 3-TRADE RECEIVABLES—CONTINUED The County has multi and single-family home rehabilitation and homeownership loan programs funded under the Community Development Block Grant (CDBG), HOME Investment Partnership Loan Program (HOME), Disaster Recovery Initiative (DRI), Neighborhood Stabilization Program (NSP) and the State Housing Initiative Partnership Program (SHIP). If the homeowners remain in their homes for the full term of the deferred loan, the loan is forgiven. If the property is transferred or sold before the end of the loan period, the proceeds from the repayment including interest, if any, are then repaid and returned to the appropriate grant program. A lien is placed against the property to ensure the repayment of the loan and interest, if any. As collection is uncertain on these loans, they are not recognized in the financial statements. NOTE 4-INTERFUND PAYABLES AND RECEIVABLES ADVANCES Advances to and advances from other funds at September 30, 2012 were as follows: Advance Advance To From Governmental Activities: General Fund $ 12,726,925 $ - Government Facilities Impact Fees Fund - 22,992,791 Other governmental funds: Community Development Fund - 900,000 Capital Improvement Revenue Bonds Fund - 10,401,508 Parks Improvement Fund 900,000 - County-Wide Capital Improvements Fund 41,136,500 - County-Wide Library Impact Fees Fund - 9,715,125 Correctional Facilities Impact Fees Fund - 5,364,500 Emergency Medical Services Impact Fees Fund - 2,760,800 Law Enforcement Impact Fees Fund - 16,467,600 Total Governmental Activities 54,763,425 68,602,324 Business-type Activities: County Water and Sewer 10,401,508 - Solid Waste Disposal 3,437,391 - Total Business-type Activities 13,838,899 - Total Advances $ 68,602,324 $ 68,602,324 Advances are made to funds for the purposes of capital improvements and the funding of certain surety requirements. Reimbursements will take place over the next several years as funds are available. 48 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 4-INTERFUND PAYABLES AND RECEIVABLES—CONTINUED DUE FROM AND DUE TO Interfund receivables and payables generally result from recording the excess fees associated with Tax Collector and Property Appraiser services, as excess fees are allocated from the General Fund back to the funds that paid for the collection services. Excess fees are calculated after year end, and as such are interfund receivables and payables. Other outstanding balances are the result of time delays between the provision and payment of interfund services and to cover temporary cash deficits. Due from and due to other funds at September 30, 2012 were as follows: Due From Due To Governmental Activities: General Fund $ 4,388,457 $ 1,150,808 Other Governmental Funds: Road Districts 1,483 19 Bayshore Gateway Community Redevelopment Agency 280,839 - Immokalee Community Redevelopment Agency 423,961 355 Unincorporated Area MSTD 251,659 12,121 Community Development - 375 Water Management and Pollution Control 42,888 - Grants and Shared Revenues 84,284 4,860,042 Improvement Districts 34,552 1,770 Fire Control Districts 26,628 - Lighting Districts 8,475 - 911 Enhancement Fee - 737,295 Tourist Development - 841 State Court Administration 11,457 - Confiscated Property - 10,998 Conservation Collier 205,263 - Other Special Revenue Funds - 81,798 Conservation Collier Limited General Obligation Bonds 52,183 115,100 Forest Lakes Limited General Obligation Bonds 4,375 - Other Debt Service 835 16 Water Management 165,844 496 Road Impact Districts 278,340 500,037 Road Construction 3,031,046 269,257 Total other governmental funds 4,904,112 6,590,520 Business-type Activities: County Water and Sewer 38,186 88,543 Solid Waste - 11 Other Business-type funds: Emergency Medical Services - 82 Airport Authority 1,529 - Collier Area Transit 268,145 2,404,328 Total other business-type funds 269,674 2,404,410 Internal Service Funds 725,764 91,901 Total All Funds $ 10,326,193 $ 10,326,193 49 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 5—CAPITAL ASSETS A summary of capital asset activity for the year ended September 30, 2012 is as follows: October 1, September 30, 2011 Additions Deductions Reclassifications 2012 Governmental Activities: Capital assets not depreciated: Land and other non-depreciable assets $ 384,467,144 $ 2,073,460 $ - $ - $ 386,540,604 Construction in progress 85,885,755 38,993,555 (1,443,560) (11,888,071) 111,547,679 Total capital assets not depreciated 470,352,899 41,067,015 (1,443,560) (11,888,071) 498,088,283 Capital assets depreciated: Buildings 434,244,700 12,990 (42,411) 309,239 434,524,518 Infrastructure 901,113,808 635,834 (25,871) (42,302,796) 859,420,975 Improvements other than buildings 212,175,942 781,649 (1,439,268) 49,839,443 261,357,766 Machinery and equipment 166,227,305 7,878,813 (5,103,414) 9,254,851 178,257,555 Total capital assets depreciated 1,713,761,755 9,309,286 (6,610,964) 17,100,737 1,733,560,814 Less accumulated depreciation: Buildings 109,385,172 13,585,646 (13,756) 5,130 122,962,192 Infrastructure 258,890,781 28,925,644 (25,871) (43,948,738) 243,841,816 Improvements other than buildings 70,125,301 10,465,244 (380,262) 45,335,594 125,545,877 Machinery and equipment 125,870,871 15,285,346 (4,189,773) 3,820,680 140,787,124 Total accumulated depreciation 564,272,125 68,261,880 (4,609,662) 5,212,666 633,137,009 Total depreciable capital assets,net 1,149,489,630 (58,952,594) (2,001,302) 11,888,071 1,100,423,805 Total Governmental Activities capital assets,net $ 1,619,842,529 $ (17,885,579) $ (3,444,862) $ - $ 1,598,512,088 Business-type Activities: Capital assets not depreciated: Land and other non-depreciable assets $ 25,111,349 $ 107,741 $ - $ - $ 25,219,090 Construction in progress 64,571,925 25,307,886 (1,222,932) (26,709,342) 61,947,537 Total capital assets not depreciated 89,683,274 25,415,627 (1,222,932) (26,709,342) 87,166,627 Capital assets depreciated: Buildings 138,910,220 1,663 - (9,955,188) 128,956,695 Improvements other than buildings 985,723,759 3,838,766 - 34,967,229 1,024,529,754 Machinery and equipment 33,862,767 4,027,706 (1,108,608) 3,884,037 40,665,902 Total capital assets depreciated 1,158,496,746 7,868,135 (1,108,608) 28,896,078 1,194,152,351 Less accumulated depreciation: Buildings 67,033,115 3,551,515 - 135,434 70,720,064 Improvements other than buildings 272,631,830 30,814,697 - 118,904 303,565,431 Machinery and equipment 20,841,309 3,067,213 (1,087,019) 1,932,398 24,753,901 Total accumulated depreciation 360,506,254 37,433,425 (1,087,019) 2,186,736 399,039,396 Total depreciable capital assets,net 797,990,492 (29,565,290) (21,589) 26,709,342 795,112,955 Total Business-type Activities capital assets,net $ 887,673,766 $ (4,149,663) $ (1,244,521) $ - $ 882,279,582 50 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 5-CAPITAL ASSETS-CONTINUED Schedule of depreciation for fiscal year 2012: General Government $ 9,444,681 Public Safety 14,440,377 Physical Environment 2,103,475 Transportation 31,440,278 Economic Environment 31,255 Human Services 399,610 Culture and Recreation 8,388,571 Subtotal 66,248,247 Internal Service Funds 1,938,482 Total Governmental Activities $ 68,186,729 Water and Sewer $ 33,477,602 Solid Waste 938,682 EMS 683,509 Airport Authority 954,392 Mass Transit 987,212 Total Business-type Activities $ 37,041,397 NOTE 6-LONG-TERM OBLIGATIONS SUMMARY OF CHANGES IN LONG-TERM OBLIGATIONS The following is a summary of changes in long-term obligations for the year ended September 30,2012: 000's Omitted Premium or October 1, Discount/Loss September 30, Due within 2011 Additions Reductions Amortized,net 2012 one year Governmental Activities: Bonds and Loans Payable $ 433,234 $ 131,525 $ (168,920) $ - $ 395,839 $ 23,682 Premium/Discount,net 16,045 17,192 (5,508) (1,877) 25,852 - Deferred Loss (1,827) (9,737) - 676 (10,888) - Capital Lease Obligations 269 236 (93) - 412 89 Self-Insurance Claims 7,642 - (241) - 7,401 5,889 Net OPEB Obligation 1,579 1,902 (1,783) - 1,698 - Compensated Absences 23,626 7,735 (8,258) - 23,103 10,817 Total $ 480,568 $ 148,853 $ (184,803) $ (1,201) $ 443,417 $ 40,477 Business-type Activities: Bonds and Loans Payable $ 243,463 $ - $ (12,269) $ - $ 231,194 $ 11,645 Premium 4,153 - - (293) 3,860 - Deferred Loss (4,175) - - 472 (3,703) - Notes Payable 69 - - - 69 69 Capital Lease Obligations 387 (212) - 175 135 Landfill Closure Liability 1,824 - (29) - 1,795 - Compensated Absences 2,540 2,310 (2,276) - 2,574 1,802 Total $ 248,261 $ 2,310 $ (14,786) $ 179 $ 235,964 $ 13,651 51 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 6-LONG-TERM DEBT-CONTINUED DESCRIPTIONS OF BONDS, LOANS AND NOTES PAYABLE Bonds, loans and notes payable at September 30,2012 were composed of the following: GOVERNMENTAL ACTIVITIES Governmental Activities Limited General Obligation Bonds $32,815,000 2005A Limited General Obligation Bonds, Conservation Collier Program, due in annual installments of$3,285,000 to $4,805,000 through January 1, 2013; interest at 3.00% to 5.00%and collateralized by a limited ad valorem pledge of up to.25 mils. $ 4,805,000 $6,215,000 2007 Limited General Obligation Bonds, Forest Lakes Roadway and Drainage Municipal Service Taxing Unit, due in installments of$300,000 to $540,000 through January 1, 2022; interest at 3.75% to 4.25% and collateralized by a limited ad valorem pledge of up to 4 mils. 4,535,000 Total Governmental Activities Limited General Obligation Bonds $ 9,340,000 Governmental Activities Revenue Bonds $49,360,000 2003 Capital Improvement and Refunding Revenue Bonds due in annual installments of $2,005,000 to $2,300,000 through October 1, 2033; interest at 4.75% and collateralized by a pledge on the proceeds of the local government half-cent sales tax. $ 8,605,000 $167,200,000 2005 Capital Improvement and Refunding Revenue Bonds due in annual installments of$4,395,000 to$7,240,000 through October 1, 2035; interest at 4.375%to 4.625% and collateralized by a pledge on the proceeds of the local government half-cent sales tax. 61,145,000 $102,125,000 2003 Gas Tax Revenue Bonds, due in annual installments of $2,585,000 and $3,660,000 on June 1, 2013; interest at 3.70% and 5.25%, respectively, and collateralized by a pledge on the combined gas tax proceeds. 6,245,000 $96,255,000 2005 Gas Tax Revenue Bonds, due in annual installments of $445,000 to $13,985,000 through June 1, 2025; interest at 3.00%to 5.00%and collateralized by a pledge on the combined gas tax proceeds. 90,600,000 $38,680,000 2012 Gas Tax Revenue Bonds, due in annual installments of $2,700,000 to $6,605,000 through June 1, 2023; interest at 3.00% to 5.00% and collateralized by a pledge on the combined gas tax proceeds.. 38,680,000 $59,895,000 2010 Special Obligation Revenue Bonds,due in annual installments of$1,545,000 to $3,860,000 through July 1, 2034; interest at 3.00% to 4.50% and collateralized by pledge on legally available non-ad valorem revenues, including but not limited to the proceeds of the local government half cent sales tax, state revenue sharing, communications services tax and charges and services generated by governmental activities. 56,660,000 52 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 6-LONG-TERM DEBT-CONTINUED DESCRIPTIONS OF BONDS, LOANS AND NOTES PAYABLE—CONTINUED $24,620,000 2010B Special Obligation Revenue Bonds, due in annual installments of$1,830,000 to $2,630,000 through October 1, 2021; interest at 3.00%to 5.00% and collateralized by pledge on legally available non-ad valorem revenues, including but not limited to the proceeds of the local government half cent sales tax, state revenue sharing, communications services tax and charges and services generated by governmental activities. $ 22,045,000 $92,295,000 2011 Special Obligation Revenue Bonds,due in annual installments of$1,605,000 to $8,270,000 through October 1, 2029; interest at 2.50%to 5.00%and collateralized by pledge on legally available non-ad valorem revenues, including but not limited to the proceeds of the local government half cent sales tax, state revenue sharing, communications services tax and charges and services generated by governmental activities. 92,295,000 Total Governmental Activities Revenue Bonds $ 376,275,000 Governmental Activities Notes Payable $13,500,000 Bayshore Gateway Community Redevelopment Agency Taxable Note, due September 1, 2014; monthly variable interest rate of 30-Day LIBOR plus 3.75%and collateralized by a pledge on all legally available non-ad valorem revenues of the Bayshore Gateway Community Redevelopment Agency. $ 9,686,000 $550,000 2012 Limited General Obligation Note, Radio Road East Municipal Service Taxing Unit, due in installments of$3,847 to$5,408 through June 1,2022;interest at 3.44%and collateralized by a limited ad valorem pledge of up to.5 mils. 538,427 Total Governmental Activities Notes Payable $ 10,224,427 Total Governmental Activities Obligations $ 395,839,427 Unamortized Bond Discount $ (58,084) Unamortized Bond Premium 25,909,714 Deferred Loss on Bond Refunding (10,888,204) Governmental Activities Obligations, Net 410,802,853 Less Current Portion of Governmental Activities Obligations (23,682,299) Long-Term Portion of Governmental Activities Obligations, Net $ 387,120,554 BUSINESS-TYPE ACTIVITIES Business-type Activities Revenue Bonds $33,630,000 2003B County Water and Sewer Refunding Revenue Bonds due in annual installments of$1,410,000 to $4,125,000 through July 1, 2021; interest at 4.25% to 5.50% and collateralized by a lien on and a pledge of net revenues of the Collier County Water and Sewer District. $ 21,690,000 53 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 6-LONG-TERM DEBT-CONTINUED DESCRIPTIONS OF BONDS, LOANS AND NOTES PAYABLE—CONTINUED $110,165,000 2006 Collier County Water and Sewer Revenue Bonds due in annual installments of $2,310,000 to $8,695,000, commencing July 1, 2017 through July 1, 2036; interest at 4.00% to 5.00% and collateralized by a lien on and a pledge of net revenues of the Collier County Water and Sewer District. $ 110,165,000 $11,727,489 2009 Collier County Water and Sewer Revenue Bonds due in annual installments of $1,569,324 to $1,817,005, commencing July 1, 2010 through July 1, 2016; interest at 2.97%and collateralized by a lien on and a pledge of net revenues of the Collier County Water and Sewer District. 6,970,072 Total Business-type Activities Revenue Bonds $ 138,825,072 Business-type Activities Loans and Notes Payable $166,580 County Water and Sewer District agreement with private developer payable through use of sewer system development fee credits. Non-interest bearing agreement. $ 69,190 $13,292,898 County Water and Sewer District State Revolving Fund Loan, interest payable at 2.65%payable in 40 semiannual payments commencing January 15, 1999 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 4,879,635 $22,238,677 County Water and Sewer District State Revolving Fund Loan, interest payable at 3.05% payable in 40 semiannual payments commencing November 15, 2001 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 11,434,038 $5,160,675 County Water and Sewer District State Revolving Fund Loan, interest payable at 3.05%payable in 40 semiannual payments commencing October 15,2004 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 3,461,104 $6,560,956 County Water and Sewer District State Revolving Fund Loan, interest payable at 3.05%payable in 40 semiannual payments commencing January 15, 2005 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 4,397,261 $29,224,004 County Water and Sewer District State Revolving Fund Loan, interest payable at 2.95% payable in 40 semiannual payments commencing June 15, 2006 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 21,524,054 $10,525,509 County Water and Sewer District State Revolving Fund Loan, interest payable at 2.90% payable in 40 semiannual payments commencing September 15, 2006 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 7,421,050 $5,445,223 County Water and Sewer District State Revolving Fund Loan, interest payable at 2.92% payable in 40 semiannual payments commencing December 15, 2005 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 3,904,319 54 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 6-LONG-TERM DEBT-CONTINUED DESCRIPTIONS OF BONDS, LOANS AND NOTES PAYABLE—CONTINUED $5,188,500 County Water and Sewer District State Revolving Fund Loan, interest payable at 2.74% payable in 40 semiannual payments commencing November 15, 2007 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. $ 3,259,793 $7,123,496 County Water and Sewer District State Revolving Fund Loan, interest payable at 2.75% and 2.64% payable in 40 semiannual payments commencing April 15, 2008 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 4,488,129 $17,577,022 County Water and Sewer District State Revolving Fund Loan, interest payable at 2.64% and 2.79% payable in 40 semiannual payments commencing August 15, 2008 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 14,618,876 $11,637,070 County Water and Sewer District State Revolving Fund Loan, interest payable at 2.64% and 2.79% payable in 40 semiannual payments commencing October 15, 2009 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 10,454,542 $3,294,890 County Water and Sewer District State Revolving Fund Loan, interest payable at 2.79% payable in 40 semiannual payments commencing December 15, 2009 and collateralized by a subordinated pledge on the net revenues of the Collier County Water and Sewer District. 2,525,875 Total Business-type Activities Loans and Notes Payable $ 92,437,866 Total Business-type Activities Obligations $ 231,262,938 Unamortized Bond Premium 3,860,586 Deferred Loss on Bond Refunding (3,702,493) Business-type Activities Obligations,Net $ 231,421,031 Less Current Portion of Business-type Activities Obligations Payable from Unrestricted Assets (9,152,712) Less Current Portion of Business-type Activities Obligations Payable from Restricted Assets (2,561,752) Long-Term Portion of Business-type Activities Obligations,Net $ 219,706,567 55 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 6-LONG-TERM DEBT-CONTINUED SUMMARY OF DEBT SERVICE REQUIREMENTS TO MATURITY The total annual debt service requirements to maturity of long-term debt, excluding compensated absences,capitalized leases, premiums,discounts and arbitrage rebate liability,are as follows: Governmental Activities Fiscal Limited General Year Obligation Bonds Revenue Bonds Notes Payable Totals Principal Interest Principal Interest Principal Interest 2013 $ 5,185,000 $ 298,525 $ 17,550,000 $ 16,862,835 $ 947,299 $ 655,257 $ 41,498,916 2014 390,000 163,475 17,185,000 16,210,789 8,834,951 591,736 43,375,951 2015 410,000 147,475 17,260,000 15,505,362 50,662 14,417 33,387,916 2016 425,000 130,775 18,080,000 14,680,663 52,433 12,646 33,381,517 2017 440,000 113,475 18,940,000 13,811,574 54,265 10,814 33,370,128 2018-22 2,490,000 272,700 109,085,000 54,518,822 284,817 24,310 166,675,649 2023-27 - - 91,210,000 28,937,237 - - 120,147,237 2028-32 - - 50,475,000 14,965,516 - - 65,440,516 2033-37 - - 36,490,000 3,111,900 - - 39,601,900 Totals $ 9,340,000 $ 1,126,425 $ 376,275,000 $ 178,604,698 $ 10,224,427 $ 1,309,180 $ 576,879,730 Business-type Activities Fiscal Loans and Year Revenue Bonds Notes Payable Totals Principal Interest Principal Interest 2013 $ 5,422,044 $ 6,267,614 $ 6,292,420 $ 2,598,891 $ 20,580,969 2014 5,630,093 6,058,578 6,438,072 2,418,402 20,545,145 2015 5,885,930 5,792,443 6,624,505 2,231,968 20,534,846 2016 3,942,005 5,533,892 6,816,353 2,040,119 18,332,369 2017 3,720,000 5,363,053 7,013,778 1,842,695 17,939,526 2018-22 21,270,000 24,145,863 33,044,138 6,229,006 84,689,007 2023-27 26,640,000 18,774,700 23,605,236 1,922,184 70,942,120 2028-32 33,695,000 11,723,262 2,603,364 73,214 48,094,840 2033-37 32,620,000 3,707,963 - - 36,327,963 Totals $ 138,825,072 $ 87,367,368 $ 92,437,866 $ 19,356,479 $ 337,986,785 LEGAL DEBT MARGIN The Constitution of the State of Florida and the Florida Statutes set no legal debt limit. RESTRICTIVE COVENANTS According to the official statements and County resolutions authorizing the issuance of the Series 2003 and 2005 Capital Improvement Revenue and Refunding Revenue Bonds, as well as the Series 2003 and 2005 Gas Tax Revenue Bonds, the issues are payable from and secured by liens on the local government half-cent sales tax and gas tax revenues, respectively. 56 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 6-LONG-TERM DEBT—CONTINUED RESTRICTIVE COVENANTS-CONTINUED During fiscal year 2008 insurer ratings were downgraded on the 2003 and 2005 Capital Improvement and Refunding Revenue Bonds. The covenants related to these issues require that in the event of a downgrade below "A", by either Moody's or Standard and Poor's, the County must fund a cash reserve to replace the surety within twelve months. The County used internal loans from the County Water and Sewer fund to achieve the required reserve funding. A subsequent partial refinancing of the Series 2003 and Series 2005 Capital Improvement Revenue Bonds decreased the cash reserve requirement. See Note 8, Defeased Debt for more information. The current reserve requirement of$10,401,508 is funded as of September 30, 2012. Interest earned on the reserve is assigned to the funds from which the advances were made and the reserve amount is included in non-current restricted cash, cash equivalents and investments in the Statement of Net Assets. All required principal and interest payments have been made in a timely manner on the Series 2003 and 2005 Capital Improvement and Refunding Revenue Bonds. During fiscal year 2012, Collier County issued the Series 2011 Special Obligation Revenue Bonds. According to the official statements and County resolutions authorizing the issuance of these bonds,the County has covenanted, subject to certain restrictions and limitations, to appropriate in its annual budget, by amendment, if necessary, from non-ad valorem revenues amounts sufficient to pay the principal and interest on the Series 2011 Bonds. Tax increment revenues and a covenant to budget and appropriate from all legally available CRA non-ad valorem revenues is pledged for the repayment of the Bayshore Gateway Community Redevelopment Agency's taxable note. The average of actual receipts and cash carried forward from the previous year must cover annual debt service requirements by 125%. The agency was in compliance with this covenant for the year ended September 30, 2012. Water and sewer revenue bonds are payable solely from and secured by a first lien upon and pledge of the net revenues and certain other fees and charges derived from operation of the County's water and sewer system. The pledge of net revenues derived by the County from the operation of the system does not constitute a lien upon the system or any other property of the County. The covenants of the resolutions authorizing the County Water and Sewer District Bonds, Series 2009, Series 2006 and 2003B include an obligation for the County to fix, establish and maintain such rates and collect such fees, rentals or other charges for the services and facilities of the water and sewer system, and to revise the same whenever necessary, so as to provide in each year net revenues, as defined in the resolutions authorizing the revenue bonds, which together with system development fees and special assessment proceeds received shall be adequate to pay at least 125% of the annual debt service requirements for the Water and Sewer Bonds; provided, however, that net revenues in each fiscal year shall be adequate to pay at least 100% of the annual debt service for the bonds. In addition, bond covenants require a renewal and replacement amount equal to $300,000 to be set aside in the County Water and Sewer District Funds. The water and sewer funds were in compliance with these covenants for the year ended September 30, 2012. 57 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 6-LONG-TERM DEBT—CONTINUED RESTRICTIVE COVENANTS-CONTINUED The Collier County Water and Sewer District has several State Revolving Fund loans outstanding with the Florida Department of Environmental Protection. These loans are collateralized by a lien on pledged revenues consisting of net revenues from the operations of the County Water and Sewer System and system development fees. The lien shall be subordinate in all respects to liens placed upon pledged revenues established by bonded indebtedness. The County Water and Sewer District shall maintain rates and charges for services which together with system development fees are sufficient to pay 115% to 125%, depending upon the individual loan agreement, of the annual debt service requirements on the loans, as well as satisfy the coverage requirements of all senior debt obligations. The County Water and Sewer District State Revolving funds were in compliance with these covenants for the year ended September 30, 2012. INTEREST CAPITALIZED Interest costs on the long-term debt of business-type activities, including capitalized leases, incurred and capitalized during the year ended September 30, 2012 were as follows: Total Interest Cost Interest Cost Net Interest Incurred Capitalized Expense Business-type Activities $ 8,883,047 $ 222,060 $ 8,660,987 Interest expense is shown as a direct expense of the Business-type Activities. LEASE OBLIGATIONS Capitalized leases payable at September 30, 2012 amounted to $586,207. These obligations, which are collateralized by equipment and vehicles, have total annual installments ranging from $29,702 to $248,027 including interest ranging from 4.26% to 4.85% and mature through 2022. As of year-end, equipment leased under capital leases in the governmental activities had a historical cost of$1,114,847 and accumulated depreciation of$881,538. Equipment leased under capital leases in the business-type activities had a historical cost of$1,061,529 and accumulated depreciation of$705,895. 58 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 6-LONG-TERM DEBT—CONTINUED Future minimum capital lease obligations as of September 30, 2012 were as follows: Governmental Business-type Activities Activities Total 2013 $ 107,622 $ 140,405 $ 248,027 2014 107,622 41,576 149,198 2015 64,933 - 64,933 2016 29,702 - 29,702 2017 29,702 - 29,702 2018-22 148,512 - 148,512 Total minimum lease payments 488,093 181,981 670,074 Less amount representing interest (76,451) (7,416) (83,867) Present value of minimum lease payments $ 411,642 $ 174,565 $ 586,207 The County also leases office space, office equipment and storage space under operating leases. These leases expire or are cancellable within the next fiscal year. In the normal course of operations these leases will be renewed or replaced by other leases. Total rental expenditures for all operating leases within the governmental activities for the year ended September 30, 2012 were $926,871. Total rental expenditures for all operating leases within business-type activities governmental activities for the year ended September 30, 2012 were $175,186. NOTE 7-CONDUIT DEBT OBLIGATIONS COMPONENT UNIT CONDUIT DEBT The Industrial Development Authority, Housing Finance Authority, Health Facilities Authority and Educational Facilities Authority, all component units of Collier County, issue debt instruments for the purpose of providing capital financing to independent third parties. Industrial development revenue bonds have been issued to provide financial assistance to public entities for the acquisition and construction of industrial and commercial facilities. Housing revenue bonds have been issued for the purpose of financing the development of multi-family residential rental communities. The health facility revenue bonds were issued to provide financing for the construction of health park facilities.The educational facility revenue bonds were used to provide financing for the construction of educational facilities. These bonds were secured by the financed property, a letter of credit or a corporate guarantee. The primary revenues pledged to pay the debt are those revenues derived from the project or facilities constructed. Neither the issuer, nor the County, is obligated in any manner for repayment of the bonds and as such they are not reported as liabilities in the accompanying financial statements. 59 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 7-CONDUIT DEBT OBLIGATIONS—CONTINUED As of September 30, 2012 the outstanding principal amount payable on all component unit conduit debt was$206,976,446 and is made up of the following: Industrial development revenue bonds $ 30,526,446 Housing finance revenue bonds 28,025,000 Health facilities revenue bonds 80,775,000 Educational facilities revenue bonds 67,650,000 Total $ 206,976,446 NOTE 8-DEFEASED DEBT The County has defeased certain outstanding bonds by placing the proceeds of new bonds in irrevocable trusts to provide for all future debt service payments on the defeased debt. Accordingly, the trust accounts and the defeased bonds are not included in the County's financial statements. At September 30, 2012 the following issues were considered defeased: Original Debt Defeased Bonds Governmental Activities Defeased Outstanding 1986 Capital Improvement Program Revenue Bonds, $ 12,245,000 $ 2,555,000 Sub-Series 5 Mode A 2003 Gas Tax Revenue Bonds 41,395,000 41,395,000 2003 Capital Improvement and Refunding Revenue Bonds 29,810,000 29,305,000 2005 Capital Improvement and Refunding Revenue Bonds 70,565,000 70,565,000 Total Governmental Activities Defeased Debt $ 154,015,000 $ 143,820,000 On January 9, 2012 Collier County issued the Series 2011 Special Obligation Refunding Revenue Bonds in the par amount of $92,295,000. These bonds were issued for the purpose of advance refunding a portion of the County's outstanding Capital Improvement and Refunding Revenue Bonds, Series 2003 and 2005. The final maturity of the bonds is October 1, 2029, with interest rates of 2.50% to 5.00%. The refunding achieved a net present value savings of 5.05% on the refunded bonds. The partial refinancing of the Series 2003 and 2005 Bonds, and their attendant restrictive covenants, caused the required cash reserve surety replacement relating to the Series 2003 and 2005 bonds to decrease from $15,717,300 to $10,401,508, or$5,315,792. The advance refunding achieved an aggregate debt service savings of $5,832,503 and an economic gain of $5,500,688. The Series 2003 and 2005 bonds have redemption dates of October 1, 2013 and October 1, 2014, respectively. On June 5, 2012 Collier County issued the Series 2012 Gas Tax Refunding Revenue Bonds in the par amount of$38,680,000. These bonds were issued for the purpose of advance refunding a portion of the County's outstanding Series 2003 Gas Tax Revenue Bonds. The final maturity of the bonds is June 1, 2023, with interest rates of 3.00%to 5.00%. The refunding achieved a net present value savings of 9.21%on the refunded bonds. The advance refunding also achieved an aggregate debt service savings of $4,361,010 and an economic gain of$4,066,098. The Series 2003 bonds have a redemption date of June 1, 2013. 60 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 9—PENSION PLAN OBLIGATIONS RETIREMENT PLAN Substantially all full time and part time employees of the County are eligible to participate in the State of Florida Retirement System (the System), a cost sharing, multiple employer program administered by the State of Florida, Division of Retirement. The System provides two retirement plans from which eligible employees can choose: the Pension Plan (defined benefit)and the Investment Plan(defined contribution). The County follows the provisions of GASB 27,Accounting for Pensions by State and Local Governmental Employers,as described in the following disclosure. PLAN DESCRIPTION Employees hired prior to July 1, 2011 participating in the Pension Plan who retire at or after age 62 with 6 years of credited service for regular risk or with 30 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.6% for regular employees, 2.0% for senior management, and 3.0%for county elected officials of their final average compensation for each year of credited service; and for special risk, after age 55 with 6 years or with 25 years of service regardless of age, are entitled to a retirement benefit payable monthly for life, up to 3.0% for each year of credited service times their final average compensation. Final average compensation is the employee's average of the five highest years of salary earned during credited service. Vested employees may retire before age 62 for regular risk and 55 for special risk and receive retirement benefits that are reduced 5.0%for each year prior to normal retirement age. Employees hired on July 1, 2011 or later participating in the Pension Plan who retire at or after age 65 with 8 years of credited service for regular risk or with 33 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.6% for regular employees, 2.0% for senior management, and 3.0%for county elected officials of their final average compensation for each year of credited service; and for special risk, after age 60 with 8 years or with 30 years of service and age 57 or after 30 years of special risk service regardless of age, or after 33 years of any creditable service are entitled to a retirement benefit payable monthly for life. Vested employees may retire before age 65 for regular risk and 60 for special risk and receive retirement benefits that are reduced 5.0% for each year prior to normal retirement age. Employees participating in the investment plan are vested after one year of service with no age requirement. The System also provides death and disability benefits. Benefits are established by Chapter 121, Florida Statutes and Chapter 228, Florida Administrative Code. The Florida Legislature has sole authority to amend benefit provisions. The Deferred Retirement Option Program (DROP) is a program that provides an alternative method for payment of retirement benefits for a specified and limited period for members of the System, effective July 1, 1998. Under this program, the employee may retire and have their benefits accumulate in the Florida Retirement System Trust Fund, earning interest, while continuing to work for a System employer. Employees enrolled in DROP prior to July 1, 2011 earn interest on accumulated benefits in the Trust Fund at 6.5%; those enrolling on or after July 1, 2011 earn interest at 1.30%. The act of participating in the program does not change the individual employee's employment conditions. 61 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 9—PENSION PLAN OBLIGATIONS-CONTINUED When the DROP period ends, a maximum of 60 months, employment must be terminated. At the time of termination of employment, the employee will receive payment of the accumulated DROP benefits, and begin receiving their monthly retirement benefit (in the same amount determined at retirement, plus annual cost-of-living increases). The System publishes an annual report that provides ten-year historical trend information regarding progress made in accumulating sufficient assets to pay benefits when due. The report may be obtained by writing the Division of Retirement, Research, Education and Policy Section, 1317 Winewood Boulevard, Tallahassee, Florida 32315-9000, or by calling (866) 738-2366, or accessing their internet site at www.dms.myflorida.com. FUNDING POLICY The County is required to contribute at an actuarially determined rate. Rates from October 1, 2011 through June 30, 2012 were 14.10% for special risk, 11.14% for county elected officials, 6.27% for senior management,4.91%for regular employees and 4.42%for DROP employees based on covered payroll. The current rates, effective July 1, 2012, are 14.90%for special risk, 10.23%for county elected officials, 6.30% for senior management, 5.18% for regular employees and 5.44% for DROP employees based on covered payroll. In addition, as of July 1, 2011, employee contributions of 3.00% are required of all Pension Plan and Investment Plan members,except for those in DROP. Subsequent to the 3% employee contribution requirement plaintiffs sued defendants, representing the State of Florida, in the Circuit Court of the Second Judicial Circuit arguing that the rights to the members in the noncontributory pension plan were of a contractual nature and that such rights were legally enforceable pursuant to the Constitutional provision which states that existing contractual rights may not be impaired by the passage of legislation. On March 6, 2012 the circuit judge ruled in favor of the plaintiffs in the case. Lawyers for the defendants in the case appealed the decision to the Florida Supreme Court. Oral arguments in the case occurred in September 2012. On January 17, 2013 the Florida Supreme Court reversed the judgment of the trial court, upholding the 3% employee contribution rate. The contributions of the County are established by the State Legislature and therefore subject to amendment. The County's contributions to the System for the years ending September 30, 2012, 2011 and 2010 are represented in the table below. The County's contributions were equal to the required contributions for each year. 2012 2011 2010 General Fund $ 10,489,397 $ 16,291,406 $ 18,869,604 Nonmajor Governmental Funds 2,092,765 3,763,954 7,058,236 County Water and Sewer 832,576 1,502,003 1,640,191 Solid Waste 61,084 110,698 119,386 Nonmajor Enterprise Funds 1,547,097 2,405,063 2,637,057 Internal Service Funds 230,115 431,678 487,388 Totals $ 15,253,034 $ 24,504,802 $ 30,811,862 62 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 10—TRANSFERS Transfers between funds move unrestricted revenues collected in the General Fund to finance operating and capital programs accounted for in other funds in accordance with budgetary authorizations and to move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as payments become due. Transfers for the year ended September 30, 2012 were as follows: Transfers from Fund Transfers to Fund Amount Governmental Activities: General Fund Nonmajor Governmental Funds $ 37,790,390 County Water and Sewer 136 Nonmajor Business-type 15,839,349 Government Facilities Impact Fee Nonmajor Governmental Funds 4,591,701 Nonmajor Governmental Funds General Fund 2,705,552 Nonmajor Governmental Funds 40,606,448 County Water and Sewer 67,900 Nonmajor Business-type 1,775,189 Internal Service 361,200 Business-type Activities: County Water and Sewer General Fund 4,089,460 Solid Waste Disposal General Fund 560,719 County Water and Sewer 1,381,700 Nonmajor Business-type General Fund 251,100 Nonmajor Governmental Funds 3,000 County Water and Sewer 18,600 Internal Service Funds General Fund 926,100 Totals $ 110,968,544 NOTE 11—NET ASSETS/FUND BALANCE CLASSIFICATION Net assets represent the difference between total assets and liabilities and are categorized as follows: Invested in capital assets, net of related debt: Total capital assets, net of debt issued in the acquisition of these assets and net of depreciation is reported separately in the net assets section. Restricted for growth related capital expansion: Impact fee and system development charges restricted for growth related capital expansion. Restricted for transportation capital projects: Gas taxes and other revenues restricted for transportation capital improvements. Restricted for tourist development: Tourist development tax proceeds are restricted for tourist related activities. Restricted for Conservation Collier: One quarter mill of ad valorem revenues restricted for the purchase of environmentally sensitive land. 63 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 11—NET ASSETS/FUND BALANCE CLASSIFICATION—CONTINUED Restricted for Grants: State and federal government grant monies restricted for grant related purposes. Restricted for debt service: Balances are restricted in conjunction with the issuance of bonds and have been funded by operating transfers from the appropriate funds. The use of monies in the sinking fund is restricted to the payment of principal and interest on long-term debt. Restricted for renewal and replacement: Balance is restricted in conjunction with the issuance of County Water and Sewer District Bonds. The use of monies in the renewal and replacement fund is restricted to funding the cost of additions, replacement or major repair of water and wastewater capital assets. Unrestricted:Balances are not restricted for specific purposes. Governmental funds report fund balances as either spendable or non-spendable. Spendable fund balances are further classified as restricted, committed, assigned or unassigned depending upon the extent to which there are external or internal constraints on the spending of these fund balances. Non-spendable fund balance: Amounts that are not in spendable form or that are legally or contracturally required to be maintained intact. Items that are not spendable also include inventories, prepaid amounts and long term portions of advances, loans and notes receivable, as well as property held for resale. Spendable fund balance: Restricted fund balance — Amounts that can be spent only for specific purposes through restrictions placed upon them by external resource providers such as creditors, grantors or contributors;or imposed by law through constitutional provisions or enabling legislation. Committed fund balance—Amounts that can be spent only for specific purposes determined by the County's highest decision making authority, the Board of County Commissioners, via ordinance. Commitments may be modified or removed by the Board of County Commissioners only by amending the ordinance that created the original commitment. Assigned fund balance — Amounts that are intended to be spent for specific purposes as determined by the Board of County Commissioners, but that are neither restricted nor committed to the specific purpose. Unassigned fund balance—Unassigned fund balance is the residual classification for the County's general fund. Amounts in this classification are spendable but have not been deemed restricted, committed or assigned. Unassigned fund balance may also include negative balances for any governmental fund whose expenditures have exceeded the amounts restricted, committed or assigned for those specific purposes. When both restricted and unrestricted amount are available the County spends the restricted amounts first, unless prohibited by law, grant agreements or other contractural arrangement. Further, when committed fund balance is available the County will use it first, followed by assigned fund balance and then unassigned fund balance for purposes in which any of the unrestricted fund balance classifications could be used. 64 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 11—NET ASSETS/FUND BALANCE CLASSIFICATION -CONTINUED A detailed schedule of fund balances at September 30, 2012 is as follows: Government Other Total General Facilities Governmental Governmental Fund Impact Fee Funds Funds Nonspendable: Advances $ 12,726,925 $ - $ - $ 12,726,925 Inventory 166,097 - - 166,097 Prepaids/deposits 20,995 - - 20,995 Total nonspendable fund balance 12,914,017 - - 12,914,017 Restricted for: Community redevelopment - - 14,741,142 14,741,142 Federal and state grants 109,802 - 11,032,232 11,142,034 Bond covenants or debt service - - 5,157,149 5,157,149 Growth related capital expansion - - 59,674,611 59,674,611 Transportation capital projects - - 39,428,980 39,428,980 Tourist development - - 33,262,587 33,262,587 Conservation Collier - - 29,064,441 29,064,441 Emergency 911 - - 3,825,501 3,825,501 Public safety - - 4,654,837 4,654,837 Court functions - - 5,043,479 5,043,479 Public Records Modernization - - 3,466,920 3,466,920 Other purposes - - 21 21 Total restricted fund balance 109,802 - 209,351,900 209,461,702 Committed for: Special districts - - 31,358,586 31,358,586 Community development - - 8,873,600 8,873,600 Natural resource management - - 2,548,845 2,548,845 Utility regulation - - 903,106 903,106 Libraries - - 610,922 610,922 Other purposes - - 3,110,747 3,110,747 Total committed fund balance - - 47,405,806 47,405,806 Assigned for: Transportation operations - - 2,314,548 2,314,548 Parks and recreation - - 13,754,280 13,754,280 General buildings and improvements - - 47,990,198 47,990,198 Water management - - 13,828,012 13,828,012 Libraries - - 365,415 365,415 Court functions - - 357,557 357,557 Federal and state grants - - - - Other purposes 952,470 - 2,161,583 3,114,053 Total assigned fund balance 952,470 - 80,771,593 81,724,063 Unassigned: 57,090,349 (19,763,041) (29,181,028) 8,146,280 Total Fund Balances $ 71,066,638 $ (19,763,041) $ 308,348,271 $ 359,651,868 65 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 12-RISK MANAGEMENT The County is exposed to various risks of loss related to tort;theft of, damage to and destruction of assets; errors and omissions; injuries to employees and natural disasters. A self-insurance internal service fund is maintained by the County to administer insurance activities relating to workers' compensation, health and property and casualty, which covers general, property, auto, public official and crime liabilities. The County self insurance program covers operations of the Board and the constitutional officers, except for the Sheriff. Under these programs, the self-insurance fund provides coverage up to a maximum amount for each claim. The County purchases commercial insurance for claims in excess of coverage provided by the self-insurance fund and for all other covered risks of loss. Claim Type County's Coverage Excess Carrier's Coverage Property and casualty claims $50,000-$500,000 $50,000-$125,000,000 (5% Named Storm) Auto liability claims $200,000 $200,000-$1,000,000 Employee health claims $325,000 $325,000- Unlimited Workers' compensation claims $500,000 $500,000-Statutory Settled claims have not exceeded the insurance provided by third party carriers in any of the past three years. All divisions of the County, excluding the Sheriff, participate in this program. Charges to operating departments are based upon amounts believed by management to meet the required annual payouts during the fiscal year and to pay for the estimated operating costs of the programs. For the fiscal year ended September 30, 2012 the operating departments were charged $35,672,218 for workers' compensation, health and property and casualty self-insurance programs. The claims loss reserve for workers' compensation, health and property and casualty of $5,060,776 reported at September 30, 2012 was calculated by third party actuaries based upon GASB Statement 30, Risk Financing Omnibus, which requires that a liability for claims be reported when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. The estimated liabilities for unpaid losses related to workers' compensation and property and casualty were discounted at 3.5%. It should be noted that the discount rate is an estimate based on the expected rate of return over extended periods. The estimated liabilities for unpaid losses related to health were not discounted as their turnover period is much shorter. Claims loss reserves of$3,548,564 are recorded as current liabilities. The Sheriff participates in the Statewide Florida Sheriff's Self-Insurance Fund for its professional liability insurance. The fund is managed by representatives of the participating Sheriff offices and provides professional liability insurance to participating Sheriff agencies. The Florida Sheriff's Self-Insurance Fund provides liability insurance coverage subject to the following limitations: $3,200,000 for any claim involving a single individual, $3,300,000 for any one incident or occurrence and $10,000,000 for an annual aggregate per member. The Sheriff also participates in the Statewide Florida Sheriff's Self-Insurance Fund program for workers' compensation coverage. The Florida Sheriff's Association Workers' Compensation Insurance Trust (FSAWIT) is a limited self-insurance fund providing coverage for the first $350,000 of every claim. Re- insurance is provided through a third party insurer for all claims exceeding$350,000 up to $10,000,000. 66 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 12-RISK MANAGEMENT-CONTINUED Settled claims have not exceeded the insurance provided by third party carriers in any of the past three years. Premiums charged to participating Sheriffs are based upon amounts believed by Fund management to meet the estimated annual payouts during the fiscal year and to pay for the estimated operating costs of the program. All liabilities associated with these self-insured risks are reported in the basic financial statements of the Statewide Florida Sheriffs Self-Insurance Fund. The Sheriff cannot be additionally assessed for claims paid by the program. The Sheriff has also established a self-funded employee health plan. An internal service fund is used to account for the activities of the plan. Excess coverage has been purchased which provides specific claim excess coverage for any one incident exceeding $200,000 up to $1,000,000. Payments to the internal service fund are based on actuarial estimates of amounts needed to pay prior year and current year claims including claims incurred but not yet reported. The claims loss reserve for health of$2,340,000 reported at September 30, 2012 was calculated by third party actuaries based upon GASB Statement 30, Risk Financing Omnibus, which requires that a liability for claims be reported when it is probable that a loss has been incurred and the amount of that loss can be reasonably estimated. The entire Sheriff's health claim loss reserve is recorded as a current liability. CHANGES IN SELF-INSURANCE CLAIMS PAYABLE Changes in the self-insurance claims payable for fiscal years 2011 and 2012 were as follows for the County and Sheriff self-insurance programs: Property and Group Workers' Casualty Health Compensation Total Balance at September 30,2010 $ 1,379,000 $ 5,401,000 $ 1,829,000 $ 8,609,000 Current year claims incurred and changes in estimates 846,772 43,216,238 (703,435) 43,359,575 Claim payments (700,920) (43,076,238) (548,918) (44,326,076) Balance at September 30,2011 1,524,852 5,541,000 576,647 7,642,499 Current year claims incurred and changes in estimates 388,230 47,775,374 418,745 48,582,349 Claim payments (739,084) (47,618,374) (466,614) (48,824,072) Balance at September 30,2012 $ 1,173,998 $ 5,698,000 $ 528,778 $ 7,400,776 67 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 13—OTHER POSTEMPLOYMENT BENEFITS Plan Description - The Board and the Tax Collector administer a single-employer defined benefit plan (OPEB Plan) and can amend the benefit provisions. The Board offers an OPEB Plan that subsidizes the cost of health care for its retirees who have at least 60%of eligible accrued sick leave remaining at the time of retirement and have completed 15 years of continuous service with the Board. In addition, the retiree must retire from the County, be at least 55 years of age or have completed 30 years of service under the Florida Retirement System (FRS) and be eligible to receive an FRS benefit with no break in time. Such employees are eligible to receive a 50% to 100% subsidy toward the cost of coverage under the active plan. A subsidy is currently provided to fourteen retirees. The Tax Collector offers an OPEB plan that subsidizes 100% the cost of health care for employees with 10 years of service, between the ages of 54 and 64 and who exchange 800 hours of sick leave at retirement. Additionally, in accordance with Florida Statute 112.0801, County employees who retire and immediately begin receiving benefits from the FRS have the option of paying premiums to continue in the County's health insurance plan at the same group rate as for active employees. The plan does not issue a publicly available financial report. At September 30, 2012, the date of the latest actuarial valuation, County plan participation consisted of: OPEB plan participants 2,054 Retirees receiving benefits 122 Funding Policy-The County has the authority to establish and amend funding policy. For the year ended September 30, 2012, the County contributed $511,971 to the OPEB Plan. No trust or agency fund has been established for the plan. Annual OPEB Cost and Net OPEB Obligation - The annual cost of the County's OPEB Plan is calculated based on the Annual Required Contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liability over a period not to exceed 30 years. The following table shows the components of the County's annual OPEB Plan cost for the year, the amount actually contributed, and the changes in the net OPEB Plan obligation. 2012 2011 2010 Annual required contribution(ARC) $ 732,713 $ 662,704 $ 661,962 Interest on net OPEB obligation 13,137 10,651 10,651 Adjustment to ARC (21,690) (17,585) (17,585) Annual OPEB cost 724,160 655,770 655,028 Contributions made (511,971) (508,627) (719,310) Increase(decrease)in net OPEB obligation 212,189 147,143 (64,282) Net OPEB obligation-beginning of year 437,881 290,738 355,020 Net OPEB obligation-end of year $ 650,070 $ 437,881 $ 290,738 68 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 13—OTHER POSTEMPLOYMENT BENEFITS—CONTINUED Funded Status and Funding Progress -The contributions made for the 2012 fiscal year were 71% of the annual OPEB cost. Contributions as a percentage of OPEB cost for fiscal years 2010 and 2011 were 110% and 78%, respectively. As of the September 30, 2011 actuarial valuation date the OPEB Plan was 0.0% funded and the actuarial accrued liability for benefits was $6,564,292, and the actuarial value of plan assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of$6,564,292. As of the September 30, 2012 actuarial valuation date the OPEB Plan was 0.0%funded and the actuarial accrued liability for benefits was$6,650,672, and the actuarial value of plan assets was$0, resulting in a UAAL of $6,650,672. The covered payroll (annual payroll of active employees covered by the OPEB Plan) was $150.8 million, and the ratio of the UAAL to the covered payroll was 4.4%. Actuarial Methods and Assumptions - Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Calculations for financial reporting purposes are based on the benefits provided under terms of the plan as understood by the employer and the plan members in effect at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The actuarial methods and assumptions are: Actuarial cost method Projected Unit Credit Actuarial Cost Amortization method Level Dollar Amount Amortization period 30 years, Closed Investment rate of return 3% Discount rate 3% Inflation rate 3% Healthcare cost trend rate 8%for the 2012 fiscal year grading to an ultimate rate of 5%for the 2018 fiscal year Plan Description - The Sheriff administers a single-employer defined benefit plan (OPEB Plan) and can amend the benefit provisions. Prior to 2012,the Sheriff offered an OPEB Plan that subsidizes the cost of health care for its retirees who have 6 years of creditable service with the Sheriff and who receive a monthly retirement benefit from the Florida Retirement System. The Sheriff subsidizes approximately 20% for both single and family coverage for qualifying individuals. In 2012, the subsidy was no longer made available to eligible retirees who chose to continue their health insurance coverage. Approximately 73% of retirees receive the subsidy. Additionally, in accordance with Florida Statute 112.0801, Sheriff's employees who retire and immediately begin receiving benefits from the FRS have the option of paying premiums to continue in the Sheriffs health insurance plan at the same group rate as for active employees. The plan does not issue a publicly available financial report. 69 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 13—OTHER POSTEMPLOYMENT BENEFITS-CONTINUED At September 30, 2012,the date of the latest actuarial valuation,Sheriff plan participation consisted of: OPEB plan participants 1,100 Retirees receiving benefits 100 Funding Policy-The Sheriff has the authority to establish and amend funding policy. For the year ended September 30, 2012, the Sheriff contributed $1,192,805 to the OPEB Plan. No trust or agency fund has been established for the plan. Annual OPEB Cost and Net OPEB Obligation - The annual cost of the Sheriffs OPEB Plan is calculated based on the Annual Required Contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liability over a period not to exceed 30 years.The following table shows the components of the Sheriff's annual OPEB Plan cost for the year, the amount actually contributed, and the changes in the net OPEB Plan obligation. 2012 2011 2010 Annual required contribution(ARC) $ 1,122,365 $ 1,117,938 $ 1,108,742 Interest on net OPEB obligation 34,226 33,881 30,794 Adjustment to ARC (56,511) (55,941) (50,844) Annual OPEB cost 1,100,080 1,095,878 1,088,692 Contributions made (1,192,805) (1,084,368) (985,790) Increase(decrease)in net OPEB obligation (92,725) 11,510 102,902 Net OPEB obligation-beginning of year 1,140,863 1,129,353 1,026,451 Net OPEB obligation-end of year $ 1,048,138 $ 1,140,863 $ 1,129,353 Funded Status and Funding Progress-The contributions made for the 2012 fiscal year were 108%of the annual OPEB cost. Contributions as a percentage of OPEB cost for fiscal years 2010 and 2011 were 91% and 99%, respectively. As of the September 30, 2011 actuarial valuation date, the OPEB Plan was 0.0% funded, the actuarial accrued liability for benefits was $12,018,242, and the actuarial value of assets was$0, resulting in an unfunded actuarial accrued liability (UAAL) of$12,018,242. As of the September 30, 2012 actuarial valuation date, the OPEB Plan was 0.0% funded, the actuarial accrued liability for benefits was $13,291,909, and the actuarial value of assets was $0, resulting in a UAAL of$13,291,909. The covered payroll (annual payroll of active employees covered by the OPEB Plan) was $108.4 million, and the ratio of the UAAL to the covered payroll was 12.3%. Actuarial Methods and Assumptions - Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. 70 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 13—OTHER POSTEMPLOYMENT BENEFITS—CONTINUED Calculations for financial reporting purposes are based on the benefits provided under terms of the plan as understood by the employer and the plan members in effect at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The actuarial methods and assumptions are: Actuarial cost method Projected Unit Credit Actuarial Cost Amortization method Level Dollar Amount Amortization period 30 years,Closed Investment rate of return 3% Discount rate 3% Inflation rate 3% Healthcare cost trend rate 10%for the 2013 fiscal year grading to an ultimate rate of 6%for the 2022 fiscal year NOTE 14—LANDFILL LIABILITY On May 1, 1995 the County entered into a landfill operating agreement with a third party for the privatization of the County's landfill operations. Under the contract, the third party is responsible for the daily operations, capital improvements, closure, postclosure and financial assurance requirements of the active cells within the Naples and Immokalee landfill sites. Collier County is responsible for the postclosure costs relating to portions of the Naples and Immokalee landfill sites. None of the cells that Collier County is responsible for has accepted waste since December 1989. The County is also responsible for staffing and operating the scale house at each site. In accordance with U.S. Environmental Protection Agency rule Solid Waste Disposal and Facility Criteria and GASB Statement 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs, a liability has been established representing amounts estimated to be spent on postclosure relating to cells for which Collier County is responsible. The County's estimated liability in connection with the landfills is included in the proprietary funds statement of net assets. The landfill liability will be reassessed on an annual basis, and any increase due to inflation, changes in technology or additional postclosure care requirements will be recorded as a current cost. The County has funded an escrow account with Fifth Third Bank in the amount of$11,561, as of September 30, 2012, to comply with Rule 62-701.630, Florida Administrative Code for the inactive Eustis Avenue Landfill site. These funds bear interest and are restricted for the exclusive use of the Eustis Avenue Landfill site's long-term care. There were no deposits, other than interest, or withdrawals from this account in fiscal year 2012. 71 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 15-SIGNIFICANT CONTINGENCIES LITIGATION The County is involved as defendant or plaintiff in certain litigation and claims arising in the ordinary course of operations. In the opinion of County legal counsel, the range of potential recoveries or liabilities, other than as disclosed here, will not materially affect the financial position of the County. During fiscal year 2010, the Collier County Water-Sewer District recorded an impairment of the value of its South Reverse Osmosis Raw Water Wellfield due to the failure of a raw water transmission pipeline. The pipeline was less than one year into its service life at the time of the failure. On November 19, 2010, the Water-Sewer District, through outside counsel, filed suit against the project's contractor and surety. Damages sought by the Water-Sewer District in this action are currently estimated at $9,000,000. During fiscal year 2012, the Federal Emergency Management Agency (Agency) made a decision to de- obligate $11,172,273 in sand replacement costs previously reimbursed by the Agency to Collier County. The reimbursed costs were related to a project to repair beach erosion due to Hurricane Wilma. The decision to de-obligate the funding has been appealed by Collier County. In the opinion of County legal counsel, Collier County is unlikely to prevail. As such, a liability has been recorded in the amount of $11,172,273 in both the entity wide financial statements and the fund financial statements of Collier County. STATE AND FEDERAL GRANTS Grant monies received and disbursed by the County are for specific purposes and are subject to review by the grantor agencies. Such audits may result in requests for reimbursement due to disallowed expenditures. Based upon prior experience, the County does not believe that such disallowances, if any, would have a material effect on the financial position of the County. The Clerk's office is aware of inquiries being conducted by various grantor agencies. The impact to the financial statements, if any, is unknown and therefore unable to be calculated at this time. ARBITRAGE REBATE In accordance with the Tax Reform Act of 1986, any interest earnings on borrowed construction funds in excess of the interest costs incurred are required to be rebated to the federal government. There was no arbitrage rebate liability as of September 30, 2012. 72 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 16-SIGNIFICANT COMMITMENTS Collier County has active construction projects as of September 30, 2012. The projects include road construction, governmental facilities and utilities improvements. At year end the County's commitments with contractors includes the following: Construction Category Commitments Governmental Activities: Other Governmental Funds General Government $ 306,742 Public Safety 294,932 Physical Environment 4,513,094 Transportation 26,448,561 Economic Environment 1,800,884 Culture and Recreation 898,753 Business-type Activities: Water and Sewer Utilities 13,208,579 Solid Waste Disposal Landfill 617,285 Other Enterprise Funds Airports 296,099 Mass Transit 3,546,530 Total $ 51,931,459 Encumbrances represent commitments for future expenditures, based on purchase orders or contracts issued, where the goods or services have been order but not received. Encumbrance commitments do not include construction contracts, as they are included as contract commitments. Collier County has the following encumbrances as of September 30, 2012: Encumbrance Category Commitments Governmental Activities: General Fund General Government $ 850,790 Public Safety 5,525 Economic Environment 30,000 Human Services 23,778 Culture and Recreation 42,340 Government Facilities Impact Fee General Government 4,878 Other Governmental Funds General Government 1,029,635 Public Safety 614,816 Physical Environment 1,379,885 Transportation 4,274,854 Economic Environment 7,909,616 Human Services 1,187,731 Culture and Recreation 1,016,322 Business-type Activities: Water and Sewer Utilities 14,918,874 Solid Waste Disposal Landfill 1,048,017 Other Enterprise Funds Emergency Medical Services 25,409 Airports 85,425 Mass Transit 1,373,552 Internal Service Funds Information Technology 26,992 Total $ 35,848,439 73 COLLIER COUNTY, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2012 NOTE 17—FUND DEFICITS The following funds had fund balance deficits at September 30, 2012: Fund Amount Government Facilities Impact Fee $ (19,763,041) County-Wide Library Impact Fee (8,255,818) Correctional Facilities Impact Fee (3,516,119) Emergency Medical Service Impact Fee (2,361,630) Law Enforcement Impact Fee (15,047,461) Total $ (48,944,069) The fund balance deficits are primarily the result of advances from other funds made prior to September 30, 2012. These advances were recorded to ensure repayment of non-impact fee monies loaned to the impact fee fund for the construction of growth necessitated facilities. County management anticipates that the deficits will be covered by future years' impact fee revenues. 74 REQUIRED SUPPLEMENTARY INFORMATION REQUIRED SUPPLEMENTAL INFORMATION COLLIER COUNTY,FLORIDA OTHER POSTEMPLOYMENT BENEFITS SCHEDULE OF FUNDING PROGRESS FOR THE RETIREE HEALTH PLAN Actuarial Accrued UAAL as a Actuarial Actuarial Liability(AAL)- Percentage of Valuation Value of Unit Credit Unfunded Funded Covered Covered Agency Date Assets Actuarial Cost AAL(UAAL) Ratio Payroll Payroll Board and Constitutionals 10/1/2009 $ - $ 5,814,470 $ 5,814,470 0.0% $ 164,923,591 3.5% (Non-Sheriff) Board and Constitutionals 10/1/2010 - 5,825,874 5,825,874 0.0% 159,321,900 3.7% (Non-Sheriff) Board and Constitutionals 10/1/2011 - 6,564,292 6,564,292 0.0% 155,365,190 4.2% (Non-Sheriff) Board and Constitutionals 10/1/2012 - 6,650,672 6,650,672 0.0% 150,761,054 4.4% (Non-Sheriff) Sheriff 10/1/2009 - 14,171,709 14,171,709 0.0% 123,296,677 11.5% Sheriff 10/1/2010 - 12,148,033 12,148,033 0.0% 117,879,632 10.3% Sheriff 10/1/2011 - 12,018,242 12,018,242 0.0% 114,185,572 10.5% Sheriff 10/1/2012 - 13,291,909 13,291,909 0.0% 108,390,240 12.3% 76 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS THIS PAGE INTENTIONALLY LEFT BLANK Nonmajor Governmental Funds Special Revenue Funds ROAD DISTRICTS —To account for taxes levied and expenditures to carry on all work on roads and bridges in the County except that provided for in capital project funds. BAYSHORE GATEWAY COMMUNITY REDEVELOPMENT AGENCY — To account for the activities of the Bayshore- Gateway Triangle Community Redevelopment Agency. IMMOKALEE COMMUNITY REDEVELOPMENT AGENCY—To account for the activities of the Immokalee Community Redevelopment Agency. UNINCORPORATED AREA MUNICIPAL SERVICES TAXING DISTRICT — To account for revenues derived from and expanded for the benefit of the unincorporated areas of the County. COMMUNITY DEVELOPMENT—To account for building permit and development fees to support licensing,permitting and inspection services. WATER MANAGEMENT AND POLLUTION CONTROL — To account for taxes levied County-wide to provide water resource management and water pollution control. GRANTS AND SHARED REVENUES—To account for the revenues received from federal,state and local grants. IMPROVEMENT DISTRICTS — To account for taxes levied within municipal service taxing districts to provide for specified improvements and/or the maintenance of such improvements. FIRE CONTROL DISTRICTS—To account for taxes levied within municipal service taxing districts for fire prevention and control. LIGHTING DISTRICTS—To account for taxes levied within municipal service taxing district for street lighting. 911 ENHANCEMENT FEE — To account for fees levied on each telephone access line in the County for the enhancement of the 911 emergency telephone system. PUBLIC RECORDS MODERNIZATION—To account for the statutory surcharge on recording documents to be paid to the Clerk of the Circuit Court for the modernization of the Clerk's official records management system. TOURIST DEVELOPMENT—To account for the 4%tourist development tax. STATE HOUSING INITIATIVE PARTNERSHIP—To account for state revenues received to provide affordable residential housing for very low to moderate income persons and those who have special housing needs. 800 MHZ INTERGOVERNMENTAL RADIO COMMUNICATIONS PROGRAM FUND — To account for moving traffic violation surcharges received to fund the County's intergovernmental radio communications program. STATE COURT ADMINISTRATION—To account for County monies used to fund the operation of the court system. CONFISCATED PROPERTY—To account for the accumulation and expenditure of proceeds from the sale of property confiscated by the Sheriff. GAC LAND SALES, ROADS AND CANALS — To account for principal and settlement fees received from a 1977 settlement with GAC Properties, Inc., and interest thereon to be expended for the restoration and maintenance of roads,facilities and drainage improvements in the Golden Gate Estates area. UTILITY FEE —To account for fees to be used to effectively and efficiently regulate private water and wastewater utilities operating within the unincorporated areas of Collier County and the City of Marco Island. CONSERVATION COLLIER—To account for the acquisition and management of environmentally sensitive lands. IMPACT FEE ESCROW—To account for impact fees relating to certain projects under construction until permits are issued. COURT INFORMATION TECHNOLOGY — To account for the accumulation of resources to enhance and increase access to court information. COURT SERVICES—To account for the accumulation of revenues associated with the function of the local court system. UNIVERSITY EXTENSION —To account for fund accumulation to meet the educational goals of the Collier County OF/IFAS extension. COURT FACILITIES FEE—To account for the accumulation of resources to improve court facilities. AFFORDABLE HOUSING—To account for fees to be used to provide for affordable housing related projects. OTHER SPECIAL REVENUE FUNDS—To account for the accumulation of resources for the following programs: Miscellaneous Florida Statutes Fee Collections Euclid and Lakeland Assessment Adoption Awareness Legal Aid Society Teen Court Federal Equitable Sharing Animal Control Domestic Violence Public Library Juvenile Assessment Center Law Library Driver Education Inmate Welfare Crime Prevention County Drug Abuse Freedom Memorial Law Enforcement Training Debt Service Funds GAS TAX REVENUE BONDS—To account for the accumulation of resources and payments of interest and principal on the Series 2003 and 2005 Gas Tax Bonds. CAPITAL IMPROVEMENT REVENUE BONDS — To account for the accumulation of resources, surety reserve and payment of interest and principal on the Series 2002,2003 and 2005 Bonds. RADIO ROAD EAST LIMITED GENERAL OBLIGATION BONDS—To account for the accumulation of resources, surety reserve and payment of interest and principal on the Radio Road East limited general obligation bonds. CONSERVATION COLLIER LIMITED GENERAL OBLIGATION BONDS— To account for the accumulation of resources and payment of interest and principal on long-term debt incurred for the acquisition of environmentally sensitive lands. COMMUNITY REDEVELOPMENT TAXABLE NOTE — To account for the accumulation of resources and payment of interest and principal on taxable long-term debt incurred for the acquisition of land in the Bayshore/Gateway Community Redevelopment Agency. FOREST LAKES LIMITED GENERAL OBLIGATION BONDS—To account for the accumulation of resources and payment of interest and principal on long-term debt incurred on the Forest Lakes Limited General Obligation Bonds. SPECIAL OBLIGATION REVENUE BONDS—To account for the accumulation of resources and payment of interest and principal on long-term debt incurred in the refinancing of various outstanding variable rate commercial paper loans. OTHER DEBT SERVICE — To account for the accumulation of resources and payment of interest and principal on variable rate commercial paper loans and special assessment debt incurred in the Naples Park area. Capital Project Funds COUNTY-WIDE CAPITAL IMPROVEMENTS — To account for capital projects, designated by the Board of County Commissioners,to be funded by a County-wide one third mil levy. PARKS IMPROVEMENTS — To account for the expenditure of funds raised specifically for improvements to parks. Projects include land acquisition, design, construction and equipping of certain Community Park sites in the unincorporated areas of the County. Primary funding is ad valorem taxes. COUNTY-WIDE LIBRARY IMPACT FEES—To account for the receipt and expenditure of library impact fees collected from all qualifying new construction.These impact fees must be used for acquisition of County-wide library facilities. CORRECTIONAL FACILITIES IMPACT FEES—To account for the receipt and expenditure of correctional facilities impact fees collected from all qualifying new construction. The impact fee must be used for the acquisition/construction of correctional facilities. EMERGENCY MEDICAL SERVICES IMPACT FEES—To account for the receipt and expenditure of emergency medical service impact fees collected from all qualifying new construction. The impact fees must be used for acquisition/construction of emergency service facilities. WATER MANAGEMENT — To account for the receipt and expenditure of funds raised specifically for water management purposes.Primary funding is ad valorem taxes. PARKS IMPACT DISTRICTS — To account for the receipt and expenditure of parks impact fees collected from all qualifying new construction.The impact fees must be used for the acquisition/construction of park facilities. ROAD IMPACT DISTRICTS — To account for the receipt and expenditure of road impact fees collected from all qualifying new construction.The impact fees must be used for the acquisition/construction of roads. ROAD CONSTRUCTION — To account for the receipt and expenditure of gas taxes. Projects include, but are not limited to,right-of-way acquisition,design and construction of various transportation improvements. LAW ENFORCEMENT IMPACT FEES —To account for the receipt and expenditure of law enforcement impact fees collected from all qualifying new construction. The impact fee must be used for the acquisition/construction of law enforcement related facilities. OTHER CAPITAL PROJECTS—To account for major capital expenditure financed from resources other than proceeds from the issuance of long-term debt and the one third mil levy. COLLIER COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30,2012 Special Revenue Funds Bayshore Gateway Immokalee Community Community Road Redevelopment Redevelopment Unincorporated Districts Agency Agency Area MSTD ASSETS Cash,cash equivalents and investments $ 2,509,130 $ 1,160,009 $ 424,871 $ 9,154,819 Receivables: Interest 3,265 1,449 670 11,116 Trade,net 30,703 - - 193,897 Notes - - - Special assessments - - - - Due from other funds 1,483 280,839 423,961 251,659 Due from other governments 334,936 - - 376,696 Inventory for resale - 13,504,133 - - Inventory 201,646 - - - Advances to other funds - - - Total assets $ 3,081,163 $ 14,946,430 $ 849,502 $ 9,988,187 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 631,299 577,112 183,504 1,067,839 Wages payable 135,158 3,704 6,923 203,553 Due to other funds 19 - 355 12,121 Due to other governments 109 1,050 - 5,494 Due to individuals - - - - Deferred revenues 30 18,837 - 1,710 Refundable deposits - - - 2,783 Retainage payable - 20,635 242,670 - Advances from other funds - - - - Total liabilities 766,615 621,338 433,452 1,293,500 Fund balances(deficits): Restricted - 14,325,092 416,050 - Committed - - - 8,694,687 Assigned 2,314,548 - - - Unassigned - - - - Total fund balances(deficits) 2,314,548 14,325,092 416,050 8,694,687 Total liabilities and fund balances $ 3,081,163 $ 14,946,430 $ 849,502 $ 9,988,187 See accompanying independent auditor's report 82 Special Revenue Funds Water Management Grants and Fire Community and Pollution Shared Improvement Control Lighting Development Control Revenues Districts Districts Districts $ 10,520,012 $ 2,508,773 $ 7,677,917 $ 22,449,721 $ 626,547 $ 460,783 8,875 2,708 3,712 18,885 921 489 102,302 1,478 237,480 19,494 - 1,364 - - 212,667 - - - - 42,888 84,284 34,552 26,628 8,475 69,703 114,475 7,828,364 - - - - - 2,409,684 - - - $ 10,700,892 $ 2,670,322 $ 18,454,108 $ 22,522,652 $ 654,096 $ 471,111 75,962 87,140 2,154,574 704,275 17,769 75,284 120,508 34,337 27,725 8,202 33,320 1,622 375 - 4,860,042 1,770 - - 668,245 - - - - - 417 - - - - - - - 1,182,213 - - - 61,785 - 3,000 - - - - - 116,931 141,718 - - 900,000 - - - - - 1,827,292 121,477 8,344,485 855,965 51,089 76,906 - - 10,109,623 - - - 8,873,600 2,548,845 - 21,666,687 603,007 394,205 8,873,600 2,548,845 10,109,623 21,666,687 603,007 394,205 $ 10,700,892 $ 2,670,322 $ 18,454,108 $ 22,522,652 $ 654,096 $ 471,111 83 COLLIER COUNTY,FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30,2012 Special Revenue Funds State 911 Public Housing Enhancement Records Tourist Initiative Fee Modernization Development Partnership ASSETS Cash,cash equivalents and investments $ 4,559,076 $ 3,492,596 $ 44,917,740 $ 2,230,334 Receivables: Interest 3,720 - 39,314 2,310 Trade,net - - 636,626 68,222 Notes - - - 969,852 Special assessments - - - - Due from other funds - - - - Due from other governments - 336,572 68,411 - Inventory for resale - - - - Inventory - - - - Advances to other funds - - - - Total assets $ 4,562,796 $ 3,829,168 $ 45,662,091 $ 3,270,718 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - 25,676 1,020,936 899 Wages payable - - 28,872 2,530 Due to other funds 737,295 - 841 - Due to other governments - - 11,304,123 - Due to individuals - - - - Deferred revenues - 336,572 - 2,344,680 Refundable deposits - - - - Retainage payable - - 44,732 - Advances from other funds - - - - Total liabilities 737,295 362,248 12,399,504 2,348,109 Fund balances(deficits): Restricted 3,825,501 3,466,920 33,262,587 922,609 Committed - - - _ Assigned - - - - Unassigned - - - _ Total fund balances(deficits) 3,825,501 3,466,920 33,262,587 922,609 Total liabilities and fund balances $ 4,562,796 $ 3,829,168 $ 45,662,091 $ 3,270,718 See accompanying independent auditor's report 84 Special Revenue Funds 800 MHZ GAC Land IRCP State Court Confiscated Sales,Roads Utility Conservation Fund Administration Property and Canals Fee Collier $ 53,699 $ 303,429 $ 482,773 $ 1,475,540 $ 848,802 $ 28,865,378 95 410 589 1,295 744 25,427 24,910 89,564 - - 58,520 861 - 11,457 - - - 205,263 - - - 245,951 - - $ 78,704 $ 404,860 $ 483,362 $ 1,722,786 $ 908,066 $ 29,096,929 19,137 17,655 - - 31 27,531 - 29,648 - - 4,929 4,957 - - 10,998 - - - - - 245,951 - - 19,137 47,303 10,998 245,951 4,960 32,488 - - - - 29,064,441 59,567 - 472,364 1,476,835 903,106 - 357,557 - - - - 59,567 357,557 472,364 1,476,835 903,106 29,064,441 $ 78,704 $ 404,860 $ 483,362 $ 1,722,786 $ 908,066 $ 29,096,929 85 COLLIER COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30,2012 Special Revenue Funds Court Impact Fee Information Court University Escrow Technology Services Extension ASSETS Cash,cash equivalents and investments $ 679,116 $ 640,911 $ 454,672 $ 65,135 Receivables: Interest 799 604 - 55 Trade,net - 66,758 - 100 Notes - - - - Special assessments - - - - Due from other funds - - Due from other governments - - 20,637 - Inventory for resale - - - - Inventory - - - - Advances to other funds - - - - Total assets $ 679,915 $ 708,273 $ 475,309 $ 65,290 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - 98,218 196,261 - Wages payable - - - - Due to other funds - - - - Due to other governments - - - - Due to individuals - - - - Deferred revenues - - - - Refundable deposits 13,132 - - - Retainage payable - - - - Advances from other funds - - - - Total liabilities 13,132 98,218 196,261 - Fund balances(deficits): Restricted - 610,055 279,048 - Committed - - - 65,290 Assigned 666,783 - - - Unassigned - - - - Total fund balances(deficits) 666,783 610,055 279,048 65,290 Total liabilities and fund balances $ 679,915 $ 708,273 $ 475,309 $ 65,290 See accompanying independent auditor's report 86 Special Revenue Funds Debt Service Funds Other Total Capital Court Special Special Gas Tax Improvement Facilities Affordable Revenue Revenue Revenue Revenue Fee Housing Funds Funds Bonds Bonds $ 4,067,700 $ 649,940 $ 5,869,307 $ 157,148,730 $ 2,562,408 $ 10,476,820 3,416 569 3,247 134,684 2,666 - 83,260 - 40,087 1,655,626 - - - - - 1,182,519 - - - - - 1,371,489 - - - - 25,000 9,174,794 - - - - - 16,159,768 - - - - - 201,646 - - $ 4,154,376 $ 650,509 $ 5,937,641 $ 187,029,256 $ 2,565,074 $ 10,476,820 - - 49,595 7,030,697 - - - - 1,142 647,130 - - - - 81,798 5,705,614 - - - - 104 11,979,125 - - - - - 417 - - - - - 4,129,993 - - - - - 80,700 - - - - - 566,686 - - - - - 900,000 - 10,401,508 - - 132,639 31,040,362 - 10,401,508 4,154,376 - 4,654,858 105,091,160 2,565,074 - 650,509 997,104 47,405,806 - - 153,040 3,491,928 - 75,312 4,154,376 650,509 5,805,002 155,988,894 2,565,074 75,312 $ 4,154,376 $ 650,509 $ 5,937,641 $ 187,029,256 $ 2,565,074 $ 10,476,820 87 COLLIER COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30,2012 Debt Service Funds Conservation Radio Road East Collier Community Forest Lakes Limited General Limited General Redevelopment Limited General Obligation Bonds Obligation Bonds Taxable Note Obligation Bonds ASSETS Cash,cash equivalents and investments $ 23,625 $ 510,831 $ 1,678,554 $ 381,244 Receivables: Interest 16 495 1,297 322 Trade,net - 630 - - Notes - - - - Special assessments - - - - Due from other funds - 52,183 - 4,375 Due from other governments - - - - Inventory for resale - - - - Inventory - - - - Advances to other funds - - - - Total assets $ 23,641 $ 564,139 $ 1,679,851 $ 385,941 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - - - - Wages payable - - - - Due to other funds - 115,100 - - Due to other governments - - - - Due to individuals - - - - Deferred revenues - - - - Refundable deposits - - - - Retainage payable - - - - Advances from other funds - - - - Total liabilities - 115,100 - - Fund balances(deficits): Restricted 23,641 449,039 1,679,851 385,941 Committed - - - - Assigned - - - - Unassigned - - - - Total fund balances(deficits) 23,641 449,039 1,679,851 385,941 Total liabilities and fund balances $ 23,641 $ 564,139 $ 1,679,851 $ 385,941 See accompanying independent auditor's report 88 Debt Service Funds Capital Projects Funds Total Special Debt County-Wide County-Wide Obligation Other Service Capital Parks Library Revenue Bonds Debt Service Funds Improvements Improvements Impact Fees $ 256,898 $ 77,034 $ 15,967,414 $ 6,986,014 $ 13,172,679 $ 1,467,594 429 47 5,272 7,446 11,405 1,265 - 89 719 4,352 9,705 1,983 - - - - - 250,831 - 835 57,393 - - - - - - - 6,552 5,267 - - 41,136,500 900,000 - $ 257,327 $ 78,005 $ 16,030,798 $ 48,134,312 $ 14,100,341 $ 1,726,940 - - - 144,114 322,731 16,802 - 16 115,116 - - - - - - - - 250,831 - - - - 23,330 - - - 10,401,508 - - 9,715,125 - 16 10,516,624 144,114 346,061 9,982,758 - 53,603 5,157,149 - - - 257,327 24,386 357,025 47,990,198 13,754,280 - - - - - - (8,255,818) 257,327 77,989 5,514,174 47,990,198 13,754,280 (8,255,818) $ 257,327 $ 78,005 $ 16,030,798 $ 48,134,312 $ 14,100,341 $ 1,726,940 89 COLLIER COUNTY, FLORIDA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30,2012 Capital Projects Funds Emergency Correctional Medical Parks Facilities Services Water Impact Impact Fees Impact Fees Management Districts ASSETS Cash,cash equivalents and investments $ 1,838,314 $ 396,624 $ 14,214,970 $ 12,464,398 Receivables: Interest 1,657 322 12,478 10,637 Trade,net 364 655 - 14,185 Notes 68,887 70,349 - 1,524,237 Special assessments - - Due from other funds - - 165,844 - Due from other governments 8,046 1,569 - 432,262 Inventory for resale - - - - Inventory - - - - Advances to other funds - - - - Total assets $ 1,917,268 $ 469,519 $ 14,393,292 $ 14,445,719 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable - - 510,709 7,317 Wages payable - - -Due to other funds - - 496 - Due to other governments - - - - Due to individuals - - - - Deferred revenues 68,887 70,349 - 1,524,237 Refundable deposits - - - - Retainage payable - - 97,725 - Advances from other funds 5,364,500 2,760,800 - - Total liabilities 5,433,387 2,831,149 608,930 1,531,554 Fund balances(deficits): Restricted - - - 12,914,165 Committed - - - - Assigned - - 13,784,362 - Unassigned (3,516,119) (2,361,630) - - Total fund balances(deficits) (3,516,119) (2,361,630) 13,784,362 12,914,165 Total liabilities and fund balances $ 1,917,268 $ 469,519 $ 14,393,292 $ 14,445,719 See accompanying independent auditor's report 90 Capital Projects Funds Total Total Road Law Other Capital Nonmajor Impact Road Enforcement Capital Projects Governmental Districts Construction Impact Fees Projects Funds Funds $ 49,626,222 $ 36,504,432 $ 1,417,603 $ 1,516,533 $ 139,605,383 $ 312,721,527 45,945 34,970 1,554 1,651 129,330 269,286 44,806 56 982 1,407 78,495 1,734,840 3,898,798 - 88,337 - 5,901,439 7,083,958 - - - 26,394 26,394 26,394 278,340 3,031,046 - - 3,475,230 4,904,112 878,164 3,737,903 - - 5,069,763 14,244,557 - - - - - 16,159,768 - - - - - 201,646 - - - - 42,036,500 42,036,500 $ 54,772,275 $ 43,308,407 $ 1,508,476 $ 1,545,985 $ 196,322,534 $ 399,382,588 2,073,180 2,265,911 - 109,747 5,450,511 12,481,208 38,231 - 17,933 56,164 703,294 500,037 269,257 - - 769,790 6,590,520 - - - - 11,979,125 - - - - - 417 3,898,798 - 88,337 - 5,901,439 10,031,432 - - - - 80,700 1,564,319 1,306,028 - - 2,991,402 3,558,088 - 16,467,600 - 34,308,025 45,609,533 8,036,334 3,879,427 16,555,937 127,680 49,477,331 91,034,317 46,735,941 39,428,980 - 24,505 99,103,591 209,351,900 - - - 47,405,806 - - - 1,393,800 76,922,640 80,771,593 - (15,047,461) - (29,181,028) (29,181,028) 46,735,941 39,428,980 (15,047,461) 1,418,305 146,845,203 308,348,271 $ 54,772,275 $ 43,308,407 $ 1,508,476 $ 1,545,985 $ 196,322,534 $ 399,382,588 91 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Special Revenue Funds Bayshore Gateway Immokalee Community Community Road Redevelopment Redevelopment Unincorporated Districts Agency Agency Area MSTD Revenues: Taxes $ - $ 996,100 $ 354,600 $ 30,624,102 Licenses,permits and impact fees 311,075 - - 220,954 Intergovernmental 2,296,693 - - _ Charges for services 207,081 467,551 2,915,958 2,564,854 Fines and forfeitures - - - 423,673 Interest income 12,356 10,560 3,302 81,377 Special assessments - - Miscellaneous 49,597 306,397 - 221,955 Total revenues 2,876,802 1,780,608 3,273,860 34,136,915 Expenditures: Current: General government - - - 6,014,664 Public safety - - - 4,016,140 Physical environment - - - 658,761 Transportation 16,352,927 - - 9,731,081 Economic environment - 911,973 756,090 102,528 Human services - - Culture and recreation - - - 10,308,376 Debt service: Principal - - - - Interest - - _ - Fiscal charges - - - Capital outlay 86,188 778,732 2,835,851 156,100 Total expenditures 16,439,115 1,690,705 3,591,941 30,987,650 Excess(deficiency)of revenues over(under)expenditures (13,562,313) 89,903 (318,081) 3,149,265 Other financing sources(uses): Bonds issued - - - - Premiums on bonds issued - - - - Payment to refundinging bond escrow - - - - Capital leases - - - Sale of capital assets 750 - - - Insurance proceeds 155,415 - - 61,059 Transfers in 13,842,300 136,800 76,000 644,087 Transfers out (397,576) (1,400,000) - (4,947,729) Total other financing sources(uses) 13,600,889 (1,263,200) 76,000 (4,242,583) Net change in fund balances 38,576 (1,173,297) (242,081) (1,093,318) Fund balances(deficits)at beginning of year 2,275,972 15,498,389 658,131 9,788,005 Fund balances(deficits)at end of year $ 2,314,548 $ 14,325,092 $ 416,050 $ 8,694,687 See accompanying independent auditor's report 92 Special Revenue Funds Water Management Grants and Fire Community and Pollution Shared Improvement Control Lighting Development Control Revenues Districts Districts Districts $ - $ 1,647,740 $ - $ 3,414,965 $ 2,554,862 $ 968,306 11,766,180 960 - - - - - 105,827 17,018,721 - - - 1,891,723 546,618 12,500 243,687 8,369 - 40,959 18,911 29,093 121,328 7,268 2,963 - 2,480,542 - - - - 60,448 620 1,402,655 21,605 4,769 1,545 13,759,310 4,801,218 18,462,969 3,801,585 2,575,268 972,814 2,650,801 - 1,324,053 - - - 7,001,309 - 1,138,169 - 2,955,178 - 375,836 2,807,551 274,982 998,798 - - - 1,554,769 539,916 1,641,317 - 816,836 - - 10,592,883 - - - - 2,202,176 - - - - - 1,244 919,325 - - - - - - 66,423 - - - - - 11,497 - 123,998 96,538 4,179,636 3,577,559 264,144 - 10,151,944 4,458,858 20,253,059 7,136,999 3,297,242 816,836 3,607,366 342,360 (1,790,090) (3,335,414) (721,974) 155,978 - - - 550,000 - - - - 235,588 - 29,714 20,418 - - 37,100 - 298 - 2,706 2,665 9,251 696,300 42,888 367,470 396,552 464,228 8,475 (580,300) (742,875) (165,844) (1,060,544) (79,842) (24,254) 145,714 (679,271) 201,626 (111,286) 659,739 (6,528) 3,753,080 (336,911) (1,588,464) (3,446,700) (62,235) 149,450 5,120,520 2,885,756 11,698,087 25,113,387 665,242 244,755 $ 8,873,600 $ 2,548,845 $ 10,109,623 $ 21,666,687 $ 603,007 $ 394,205 93 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Special Revenue Funds State 911 Public Housing Enhancement Records Tourist Initiative Fee Modernization Development Partnership Revenues: Taxes $ 1,900,264 $ - $ 14,898,077 $ - Licenses,permits and impact fees - - - - Intergovernmental - - 67,093 1,056,769 Charges for services - 1,306,166 410 - Fines and forfeitures - - - - Interest income 19,496 7,203 205,714 13,383 Special assessments - - - - Miscellaneous - - 31,414 405,156 Total revenues 1,919,760 1,313,369 15,202,708 1,475,308 Expenditures: Current: General government - 1,257,359 - - Public safety 1,518,869 - - - Physical environment - - 12,673,496 - Transportation - - - - Economic environment - - - 1,056,769 Human services - - - - Culture and recreation - - 6,797,778 - Debt service: Principal - - - - Interest - - - - Fiscal charges - - - - Capital outlay - 211,835 1,230,235 - Total expenditures 1,518,869 1,469,194 20,701,509 1,056,769 Excess(deficiency)of revenues over(under)expenditures 400,891 (155,825) (5,498,801) 418,539 Other financing sources(uses): Bonds issued - - - - Premiums on bonds issued - - - - Payment to refunding bond escrow - - - - Capital leases - - - Sale of capital assets - - - - Insurance proceeds - - 1,341 - Transfers in - - - - Transfers out - - (610,692) - Total other financing sources(uses) - - (609,351) - Net change in fund balances 400,891 (155,825) (6,108,152) 418,539 Fund balances(deficits)at beginning of year 3,424,610 3,622,745 39,370,739 504,070 Fund balances(deficits)at end of year $ 3,825,501 $ 3,466,920 $ 33,262,587 $ 922,609 See accompanying independent auditor's report 94 Special Revenue Funds GAC Land 800 MHZ State Court Confiscated Sales,Roads Utility Conservation ICRP Fund Administration Property and Canals Fee Collier $ - $ - $ - $ - $ 282,207 $ 9,486,051 421,041 144,765 - - 188,520 6,180 - 1,095,610 65,389 - - - 495 2,482 3,477 7,346 3,926 130,179 124,065 3,939 - - 2 6,428 545,601 1,246,796 68,866 7,346 474,655 9,628,838 - 922,879 - - - - 1,114,031 1,442,300 123,999 - - - - - - - 323,546 745,498 - - - 8 - - - - - - - 665 1,114,031 2,365,179 123,999 8 323,546 746,163 (568,430) (1,118,383) (55,133) 7,338 151,109 8,882,675 11,256 - - - - - 558,900 1,143,357 - - 30,000 384,291 (11,100) (162,833) - - (1,153,037) 570,156 1,132,257 (162,833) - 30,000 (768,746) 1,726 13,874 (217,966) 7,338 181,109 8,113,929 57,841 343,683 690,330 1,469,497 721,997 20,950,512 $ 59,567 $ 357,557 $ 472,364 $ 1,476,835 $ 903,106 $ 29,064,441 95 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Special Revenue Funds Court Impact Fee Information Court University Escrow Technology Services Extension Revenues: Taxes $ - $ - $ - $ - Licenses,permits and impact fees - - - - Intergovernmental - - 8,041,861 - Charges for services - 754,502 - 6,053 Fines and forfeitures - - - - Interest income 4,530 2,784 - 295 Special assessments - - - - Miscellaneous - 293 - 28,407 Total revenues 4,530 757,579 8,041,861 34,755 Expenditures: Current: General government - 548,587 8,001,788 - Public safety - 10,174 - - Physical environment - - - 26,161 Transportation - - - - Economic environment - - - - Human services - 3,582 - - Culture and recreation - - - - Debt service: Principal - - - - Interest - - - - Fiscal charges - - - - Capital outlay - 20,082 - - Total expenditures - 582,425 8,001,788 26,161 Excess(deficiency)of revenues over(under)expenditures 4,530 175,154 40,073 8,594 Other financing sources(uses): Bonds issued - - - - Premiums on bonds issued - - - _ Payment to refunding bond escrow - - - - Capital leases - - - - Sale of capital assets - - - - Insurance proceeds - - - - Transfers in - - - - Transfers out - - - - Total other financing sources(uses) - - - - Net change in fund balances 4,530 175,154 40,073 8,594 Fund balances(deficits)at beginning of year 662,253 434,901 238,975 56,696 Fund balances(deficits)at end of year $ 666,783 $ 610,055 $ 279,048 $ 65,290 See accompanying independent auditor's report 96 Special Revenue Funds Debt Service Funds Other Total Capital Court Special Special Gas Tax Improvement Facilities Affordable Revenue Revenue Revenue Revenue Fee Housing Funds Funds Bonds Bonds $ - $ - $ - $ 67,127,274 $ - $ - - - 4,976 12,304,145 - - - - - 28,586,964 - - - - 1,190,093 12,876,071 - - 1,158,998 - 158,163 2,901,833 - - 16,632 3,197 24,603 773,859 13,397 (13,796) - - - 2,480,542 - - - 18,810 339,089 3,027,194 - - 1,175,630 22,007 1,716,924 130,077,882 13,397 (13,796) 5,142 - 168,094 20,893,367 - - - - 817,557 20,137,726 - - - - - 18,884,629 - - - - - 30,636,846 - - - - - 13,420,243 - - - - 185,015 2,390,773 - - - - 13,468 18,040,199 - - - - - 66,423 7,505,000 7,560,000 - - - 11,497 7,076,815 5,655,716 - - - - 399,293 5,203 - - 77,149 13,638,712 - - 5,142 - 1,261,283 138,120,415 14,981,108 13,220,919 1,170,488 22,007 455,641 (8,042,533) (14,967,711) (13,234,715) - - - 550,000 38,680,000 - - - - - 4,766,373 - - - - - (43,336,693) (3,138,948) - - - 235,588 - - - - - 87,982 - - - - - 243,991 - - - - 48,900 18,840,548 13,479,900 16,339,223 - - (11,457) (11,348,083) - - - - 37,443 8,610,026 13,589,580 13,200,275 1,170,488 22,007 493,084 567,493 (1,378,131) (34,440) 2,983,888 628,502 5,311,918 155,421,401 3,943,205 109,752 $ 4,154,376 $ 650,509 $ 5,805,002 $ 155,988,894 $ 2,565,074 $ 75,312 97 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Debt Service Funds Conservation Radio Road East Collier Community Forest Lakes Limited General Limited General Redevelopment Limited General Obligation Bonds Obligation Bonds Taxable Note Obligation Bonds Revenues: Taxes $ - $ 4,572,927 $ - $ 366,503 Licenses,permits and impact fees - - - - Intergovernmental - - - - Charges for services - - - - Fines and forfeitures - - - - Interest income 17 4,364 7,424 1,539 Special assessments - - - - Miscellaneous - - - - Total revenues 17 4,577,291 7,424 368,042 Expenditures: Current: General government - - - Public safety - - - - Physical environment - - - - Transportation - - - - Economic environment - - - - Human services - - _ - Culture and recreation - - - - Debt service: Principal 11,573 4,575,000 900,000 365,000 Interest 4,697 354,625 413,654 192,369 Fiscal charges 20,906 275 - 2,835 Capital outlay - - - - Total expenditures 37,176 4,929,900 1,313,654 560,204 Excess(deficiency)of revenues over(under)expenditures (37,159) (352,609) (1,306,230) (192,162) Other financing sources(uses): Bonds issued - - - Premiums on bonds issued - - - - Payment to refunding bond escrow - - - - Capital leases - - - - Sale of capital assets - - - - Insurance proceeds - - - - Transfers in 60,800 952,183 1,400,000 504,375 Transfers out - (465,165) - (13,390) Total other financing sources(uses) 60,800 487,018 1,400,000 490,985 Net change in fund balances 23,641 134,409 93,770 298,823 Fund balances(deficits)at beginning of year - 314,630 1,586,081 87,118 Fund balances(deficits)at end of year $ 23,641 $ 449,039 $ 1,679,851 $ 385,941 See accompanying independent auditor's report 98 Debt Service Funds Capital Projects Funds Special Total County-Wide County-Wide Obligation Other Debt Service Capital Parks Library Revenue Bonds Debt Service Funds Improvements Improvements Impact Fees $ - $ 1,195 $ 4,940,625 $ - $ - $ - - - - - 565,608 480,677 5,461 386 18,792 46,229 65,506 9,740 - 110,582 110,582 - - - - - - 450 16,699 - 5,461 112,163 5,069,999 46,679 647,813 490,417 - - - 815,315 - - - - - 257,240 - - - - - 38,005 - - - - - - 486,267 41,125 4,265,000 6,327,545 31,509,118 26,582 - - 4,265,283 154,849 18,118,008 319 - - 643,294 9,773 1,081,579 - - - - - - 350,954 780,386 487,834 9,173,577 6,492,167 50,708,705 1,488,415 1,266,653 528,959 (9,168,116) (6,380,004) (45,638,706) (1,441,736) (618,840) (38,542) 92,295,000 - 130,975,000 - - - 12,425,334 - 17,191,707 - - - (104,074,744) - (150,550,385) - - - - - - 4,352 - - 8,540,051 6,482,815 47,759,347 1,020,400 - - (105,770) (584,325) (361,200) (322,648) (1,148,300) 9,185,641 6,377,045 44,791,344 663,552 (322,648) (1,148,300) 17,525 (2,959) (847,362) (778,184) (941,488) (1,186,842) 239,802 80,948 6,361,536 48,768,382 14,695,768 (7,068,976) $ 257,327 $ 77,989 $ 5,514,174 $ 47,990,198 $ 13,754,280 $ (8,255,818) 99 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Capital Projects Funds Emergency Correctional Medical Parks Facilities Services Water Impact Impact Fees Impact Fees Management Districts Revenues: Taxes $ - $ - $ - $ - Licenses,permits and impact fees 772,785 209,683 - 4,240,865 Intergovernmental - - 1,000,000 - Charges for services - - - - Fines and forfeitures - - - - Interest income 7,240 1,686 60,584 58,038 Special assessments - - 319,749 - Miscellaneous - - 240 - Total revenues 780,025 211,369 1,380,573 4,298,903 Expenditures: Current: General government - - - - Public safety 13,084 3,855 - - Physical environment - - 1,844,175 - Transportation - - - - Economic environment - - - - Human services - - - - Culture and recreation - - - 132,375 Debt service: Principal - - - - Interest - - - - Fiscal charges - - - - Capital outlay - - 1,190,920 900,989 Total expenditures 13,084 3,855 3,035,095 1,033,364 Excess(deficiency)of revenues over(under)expenditures 766,941 207,514 (1,654,522) 3,265,539 Other financing sources(uses): Bonds issued - - - - Premiums on bonds issued - - - - Payment to refunding bond escrow - - - - Capital leases - - - - Sale of capital assets - - - - Insurance proceeds - - - - Transfers in - - 6,390,544 - Transfers out (2,028,150) (724,269) (1,024,505) (3,211,775) Total other financing sources(uses) (2,028,150) (724,269) 5,366,039 (3,211,775) Net change in fund balances (1,261,209) (516,755) 3,711,517 53,764 Fund balances(deficits)at beginning of year (2,254,910) (1,844,875) 10,072,845 12,860,401 Fund balances(deficits)at end of year $ (3,516,119) $ (2,361,630) $ 13,784,362 $ 12,914,165 See accompanying independent auditor's report 100 Capital Projects Funds Total Total Road Law Other Capital Nonmajor Impact Road Enforcement Capital Projects Governmental Districts Construction Impact Fees Projects Funds Funds $ - $ 12,898,769 $ - $ - $ 12,898,769 $ 84,966,668 9,905,583 - 467,279 6,533 16,649,013 28,953,158 785,613 7,971,753 - - 9,757,366 38,344,330 260,039 - - 260,039 13,136,110 - - - - - 2,901,833 286,160 249,797 10,148 12,419 807,547 1,600,198 - - 124,026 443,775 3,034,899 827 322,539 - 1,419 342,174 3,369,368 10,978,183 21,702,897 477,427 144,397 41,158,683 176,306,564 - - - 150,750 966,065 21,859,432 - - 2,366 - 276,545 20,414,271 - - - 1,423,419 3,305,599 22,190,228 2,582,245 8,957,369 - - 11,539,614 42,176,460 - - - - - 13,420,243 - - - - - 2,390,773 - - 25,048 684,815 18,725,014 - - - - 26,582 31,602,123 - - - - 319 18,129,824 - - - - 1,081,579 15,625,697 12,140,889 - 645,184 32,122,853 45,761,565 18,207,942 21,098,258 2,366 2,244,401 48,922,392 237,751,512 (7,229,759) 604,639 475,061 (2,100,004) (7,763,709) (61,444,948) - - - - 131,525,000 - - - - - 17,191,707 - - - - - (150,550,385) - - - - - 235,588 - - - - - 87,982 900 - - 5,252 249,243 - 7,669,100 - 1,311,600 16,391,644 82,991,539 (22,035,535) (2,723,568) (3,931) (33,583,881) (45,516,289) (14,365,535) (2,723,568) 1,307,669 (17,186,985) 36,214,385 (7,229,759) (13,760,896) (2,248,507) (792,335) (24,950,694) (25,230,563) 53,965,700 53,189,876 (12,798,954) 2,210,640 171,795,897 333,578,834 $ 46,735,941 $ 39,428,980 $ (15,047,461) $ 1,418,305 $ 146,845,203 $ 308,348,271 101 COLLIER COUNTY,FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Government Facilities Road Districts Impact Fees(Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ - $ - $ - $ - $ - $ - Licenses,permits and impact fees 725,700 1,181,850 456,150 308,000 311,075 3,075 Intergovernmental - - - 2,262,500 2,296,693 34,193 Charges for services - - - 119,000 207,081 88,081 Fines and forfeitures - - - - -Interest income 30,000 25,197 (4,803) - 17,464 17,464 Special assessments - - - - - Miscellaneous - - - 20,200 49,597 29,397 Total revenues 755,700 1,207,047 451,347 2,709,700 2,881,910 172,210 Expenditures: Current: General government 254,009 57,151 196,858 - - - Public safety 5,980 6,708 (728) - - - Physical environment - - - - - - Transportation - - - 17,820,996 16,352,927 1,468,069 Economic environment - - - - - - Human services - - - - - - Culture and recreation - - - - - - Debt service 20,000 19,043 957 - - - Capital outlay 351,168 - 351,168 92,105 86,188 5,917 Total expenditures 631,157 82,902 548,255 17,913,101 16,439,115 1,473,986 Excess(deficit)of revenues over(under)expenditures 124,543 1,124,145 999,602 (15,203,401) (13,557,205) 1,646,196 Other financing sources(uses): Bonds issued - - - - - - Premiums on bonds issued - - - - - - Payment to refunding bond escrow - - - - - - Sale of capital assets - - - - 750 750 Insurance proceeds - - - 62,000 155,415 93,415 Transfers in 2,536,600 696,400 (1,840,200) 15,342,300 13,842,300 (1,500,000) Transfers out (5,225,600) (4,591,701) 633,899 (398,000) (397,576) 424 Total other financing sources(uses) (2,689,000) (3,895,301) (1,206,301) 15,006,300 13,600,889 (1,405,411) Net change in fund balances (2,564,457) (2,771,156) (206,699) (197,101) 43,684 240,785 Fund balances at beginning of year 6,151,386 6,151,386 - 1,306,201 1,306,201 - Fund balances(deficits)at end of year $ 3,586,929 $ 3,380,230 $ (206,699) $ 1,109,100 $ 1,349,885 $ 240,785 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ (2,771,156) $ 43,684 Change in fair value of investments (5,501) (5,108) Advances budgeted as transfers (696,400) - Unbudgeted funds - - Deferred revenues - - Net change in fund balance,GAAP basis $ (3,473,057) $ 38,576 102 Bayshore Gateway Immokalee Community Redevelopment Agency Community Redevelopment Agency (Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance $ 996,100 $ 996,100 $ - $ 354,600 $ 354,600 $ - 61,947 - (61,947) 2,709,150 467,551 (2,241,599) 6,230,146 2,915,958 (3,314,188) 10,000 13,183 3,183 5,000 4,241 (759) 39,000 306,397 267,397 - - - 3,754,250 1,783,231 (1,971,019) 6,651,693 3,274,799 (3,376,894) 1,677,401 911,973 765,428 3,831,334 756,090 3,075,244 2,728,150 778,732 1,949,418 3,472,838 2,835,851 636,987 4,405,551 1,690,705 2,714,846 7,304,172 3,591,941 3,712,231 (651,301) 92,526 743,827 (652,479) (317,142) 335,337 136,800 136,800 - 76,000 76,000 - (1,500,000) (1,400,000) 100,000 - - - (1,363,200) (1,263,200) 100,000 76,000 76,000 - (2,014,501) (1,170,674) 843,827 (576,479) (241,142) 335,337 1,781,501 1,781,501 - 747,879 747,879 - $ (233,000) $ 610,827 $ 843,827 $ 171,400 $ 506,737 $ 335,337 $ (1,170,674) $ (241,142) (2,623) (939) $ (1,173,297) $ (242,081) 103 COLLIER COUNTY, FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Unincorporated Area MSTD Community Development (Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ 31,560,100 $ 30,624,102 $ (935,998) $ - $ - $ - Licenses,permits and impact fees 175,100 220,954 45,854 8,847,000 11,766,180 2,919,180 Intergovernmental - - - - - - Charges for services 2,398,179 2,564,854 166,675 1,770,100 1,891,723 121,623 Fines and forfeitures 165,900 423,673 257,773 - - - Interest income 50,000 102,839 52,839 34,900 54,168 19,268 Special assessments - - - - - - Miscellaneous 235,600 221,955 (13,645) 58,100 60,448 2,348 Total revenues 34,584,879 34,158,377 (426,502) 10,710,100 13,772,519 3,062,419 Expenditures: Current: General government 6,498,600 6,014,664 483,936 2,912,796 2,650,801 261,995 Public safety 4,234,550 4,016,140 218,410 7,529,567 7,001,309 528,258 Physical environment 777,475 658,761 118,714 392,800 375,836 16,964 Transportation 11,051,901 9,731,081 1,320,820 - - - Economic environment 135,300 102,528 32,772 - - - Human services - - - - - - Culture and recreation 11,084,733 10,308,376 776,357 - - - Debt service - - - - - - Capital outlay 176,687 156,100 20,587 128,125 123,998 4,127 Total expenditures 33,959,246 30,987,650 2,971,596 10,963,288 10,151,944 811,344 Excess(deficit)of revenues over(under)expenditures 625,633 3,170,727 2,545,094 (253,188) 3,620,575 3,873,763 Other financing sources(uses): Bonds issued - - - - - - Premiums on bonds issued - - - - - - Payment to refunding bond escrow - - - - - - Sale of capital assets - - - - 29,714 29,714 Insurance proceeds 19,390 61,059 41,669 - - - Transfers in 752,700 794,087 41,387 926,300 926,300 - Transfers out (5,188,202) (5,097,729) 90,473 (1,060,300) (1,060,300) - Total other financing sources(uses) (4,416,112) (4,242,583) 173,529 (134,000) (104,286) 29,714 Net change in fund balances (3,790,479) (1,071,856) 2,718,623 (387,188) 3,516,289 3,903,477 Fund balances at beginning of year 7,520,179 7,520,179 - - - - Fund balances(deficits)at end of year $ 3,729,700 $ 6,448,323 $ 2,718,623 $ (387,188) $ 3,516,289 $ 3,903,477 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ (1,071,856) $ 3,516,289 Change in fair value of investments (21,462) (13,209) Advances budgeted as transfers - 250,000 Unbudgeted funds - - Deferred revenues - - Net change in fund balance,GAAP basis $ (1,093,318) $ 3,753,080 104 Water Management and Grants and Shared Revenues Pollution Control(Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance $ 1,711,100 $ 1,647,740 $ (63,360) $ - $ - $ - 200 960 760 - - - 114,000 105,827 (8,173) 39,556,070 15,358,188 (24,197,882) 511,300 546,618 35,318 775,016 12,500 (762,516) 30,200 23,844 (6,356) - 22,213 22,213 2,574,100 2,480,542 (93,558) - - _ 620 620 982,995 1,402,655 419,660 4,940,900 4,806,151 (134,749) 41,314,081 16,795,556 (24,518,525) - - - 3,216,145 1,198,207 2,017,938 - - 1,624,388 486,463 1,137,925 3,415,000 2,807,551 607,449 484,250 274,982 209,268 1,685,900 1,554,769 131,131 1,222,959 539,916 683,043 - - 26,618,263 10,592,883 16,025,380 - - - 4,998,179 2,202,176 2,796,003 - - - 218,962 1,244 217,718 168,600 96,538 72,062 10,805,064 3,301,417 7,503,647 5,269,500 4,458,858 810,642 49,188,210 18,597,288 30,590,922 (328,600) 347,293 675,893 (7,874,129) (1,801,732) 6,072,397 - 20,418 20,418 - - - - 298 298 - - 42,888 42,888 4,497,661 455,691 (4,041,970) (910,900) (742,875) 168,025 (218,205) (265,734) (47,529) (910,900) (679,271) 231,629 4,279,456 189,957 (4,089,499) (1,239,500) (331,978) 907,522 (3,594,673) (1,611,775) 1,982,898 2,487,600 2,487,600 - 9,740,189 9,740,189 - $ 1,248,100 $ 2,155,622 $ 907,522 $ 6,145,516 $ 8,128,414 $ 1,982,898 $ (331,978) $ (1,611,775) (4,933) (5,422) 28,733 $ (336,911) $ (1,588,464) 105 COLLIER COUNTY, FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Improvement Districts (Budgetary Basis) Fire Control Districts(Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ 3,557,900 $ 3,414,965 $ (142,935) $ 2,665,500 $ 2,554,862 $ (110,638) Licenses,permits and impact fees - - - - - - Intergovernmental - - - - - - Charges for services 254,800 243,687 (11,113) 1,500 8,369 6,869 Fines and forfeitures - - - - - - Interest income 42,800 151,975 109,175 5,300 9,130 3,830 Special assessments - - - - - - Miscellaneous 5,000 21,605 16,605 2,300 4,769 2,469 Total revenues 3,860,500 3,832,232 (28,268) 2,674,600 2,577,130 (97,470) Expenditures: Current: General government - - - - - Public safety - - - 3,372,100 3,033,098 339,002 Physical environment 4,318,525 998,798 3,319,727 - - - Transportation 2,642,275 1,641,317 1,000,958 - - - Economic environment - - - - - Human services - - - - - - Culture and recreation 1,043,371 919,325 124,046 - - - Debt service - - - - - - Capital outlay 17,217,385 3,577,559 13,639,826 18,565 18,556 9 Total expenditures 25,221,556 7,136,999 18,084,557 3,390,665 3,051,654 339,011 Excess(deficit)of revenues over(under)expenditures (21,361,056) (3,304,767) 18,056,289 (716,065) (474,524) 241,541 Other financing sources(uses): Bonds issued 550,000 550,000 - - - - Premiums on bonds issued - - - - - - Payment to refunding bond escrow - - - - - - Sale of capital assets - - - - 27,100 27,100 Insurance proceeds - 2,706 2,706 2,665 2,665 - Transfers in 362,000 396,552 34,552 583,500 578,806 (4,694) Transfers out (1,083,800) (1,060,544) 23,256 (225,700) (194,420) 31,280 Total other financing sources(uses) (171,800) (111,286) 60,514 360,465 414,151 53,686 Net change in fund balances (21,532,856) (3,416,053) 18,116,803 (355,600) (60,373) 295,227 Fund balances at beginning of year 23,789,256 23,789,256 - 546,900 546,900 - Fund balances(deficits)at end of year $ 2,256,400 $ 20,373,203 $ 18,116,803 $ 191,300 $ 486,527 $ 295,227 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ (3,416,053) $ (60,373) Change in fair value of investments (30,647) (1,862) Advances budgeted as transfers - - Unbudgeted funds - Deferred revenues - - Net change in fund balance,GAAP basis $ (3,446,700) $ (62,235) 106 Lighting Districts 911 Enhancement Fee(Budgetary Basis) Budget Actual Variance Budget Actual Variance $ 1,007,100 $ 968,306 $ (38,794) $ 1,970,000 $ 1,900,264 $ (69,736) 4,800 3,838 (962) 20,000 25,217 5,217 1,545 1,545 - - - 1,011,900 973,689 (38,211) 1,990,000 1,925,481 (64,519) - - 3,391,487 1,518,869 1,872,618 831,600 816,836 14,764 - - - 1,000 - 1,000 115,000 - 115,000 832,600 816,836 15,764 3,506,487 1,518,869 1,987,618 179,300 156,853 (22,447) (1,516,487) 406,612 1,923,099 9,251 9,251 - - - 8,475 8,475 - (38,700) (24,254) 14,446 - - - (38,700) (6,528) 32,172 - - - 140,600 150,325 9,725 (1,516,487) 406,612 1,923,099 222,900 222,900 - 3,650,387 3,650,387 - $ 363,500 $ 373,225 $ 9,725 $ 2,133,900 $ 4,056,999 $ 1,923,099 $ 150,325 $ 406,612 (875) (5,721) $ 149,450 $ 400,891 107 COLLIER COUNTY,FLORIDA COMBINING SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Tourist Development Public Records Modernization (Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ - $ - $ - $ 13,050,100 $ 14,898,077 $ 1,847,977 Licenses,permits and impact fees - - - - - _ Intergovernmental - - - - 67,093 67,093 Charges for services 1,165,000 1,306,166 141,166 1,500 410 (1,090) Fines and forfeitures - - - - - - Interest income 9,500 7,203 (2,297) 205,000 266,035 61,035 Special assessments - - - - - - Miscellaneous - - - 70,000 31,414 (38,586) Total revenues 1,174,500 1,313,369 138,869 13,326,600 15,263,029 1,936,429 Expenditures: Current: General government 1,690,589 1,257,359 433,230 - - - Public safety - - - - - - Physical environment - - - 2,289,171 1,501,223 787,948 Transportation - - - - - - Economic environment - - - - - - Human services - - - - - _ Culture and recreation - - - 9,670,774 6,797,778 2,872,996 Debt service - - - - - - Capital outlay 1,031,984 211,835 820,149 6,685,694 1,230,235 5,455,459 Total expenditures 2,722,573 1,469,194 1,253,379 18,645,639 9,529,236 9,116,403 Excess(deficit)of revenues over(under)expenditures (1,548,073) (155,825) 1,392,248 (5,319,039) 5,733,793 11,052,832 Other financing sources(uses): Bonds issued - - - - - - Premiums on bonds issued - - - - - Payment to refunding bond escrow - - - _ _ - Sale of capital assets - - - - _ Insurance proceeds - - - - 1,341 1,341 Transfers in - - - 1,296,400 1,795,248 498,848 Transfers out - - - (2,036,116) (2,405,940) (369,824) Total other financing sources(uses) - - - (739,716) (609,351) 130,365 Net change in fund balances (1,548,073) (155,825) 1,392,248 (6,058,755) 5,124,442 11,183,197 Fund balances at beginning of year 2,616,219 2,616,219 - 38,970,283 38,970,283 Fund balances(deficits)at end of year $ 1,068,146 $ 2,460,394 $ 1,392,248 $ 32,911,528 $ 44,094,725 $ 11,183,197 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ (155,825) $ 5,124,442 Change in fair value of investments - (60,321) Advances budgeted as transfers - _ Unbudgeted funds - (11,172,273) Deferred revenues Net change in fund balance,GAAP basis $ (155,825) $ (6,108,152) 108 State Housing Initiativeship 800 MHZ IRCP Fund Partnership(Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance $ - $ - $ - $ - $ - $ - 430,987 1,056,769 625,782 - - - 459,000 421,041 (37,959) 10,823 17,117 6,294 1,100 675 (425) 322,772 405,156 82,384 117,000 124,065 7,065 764,582 1,479,042 714,460 577,100 545,781 (31,319) - - 1,199,700 1,114,031 85,669 3,379,929 1,056,769 2,323,160 - - - 3,379,929 1,056,769 2,323,160 1,199,700 1,114,031 85,669 (2,615,347) 422,273 3,037,620 (622,600) (568,250) 54,350 - - - - 11,256 11,256 20,711 136,251 115,540 558,900 558,900 - (20,711) (136,251) (115,540) - - - - - 558,900 570,156 11,256 (2,615,347) 422,273 3,037,620 (63,700) 1,906 65,606 2,852,984 2,852,984 - 92,600 92,600 - $ 237,637 $ 3,275,257 $ 3,037,620 $ 28,900 $ 94,506 $ 65,606 $ 422,273 $ 1,906 (3,734) (180) $ 418,539 $ 1,726 109 COLLIER COUNTY, FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 State Court Administration Confiscated Property (Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ - $ - $ - $ - $ - $ _ Licenses,permits and impact fees - - - - - Intergovernmental - - - - - - Charges for services 165,000 144,765 (20,235) - - - Fines and forfeitures 1,110,500 1,095,610 (14,890) - 65,389 65,389 Interest income 1,000 3,148 2,148 - 4,422 4,422 Special assessments - - - - - Miscellaneous - 3,939 3,939 - - - Total revenues 1,276,500 1,247,462 (29,038) - 69,811 69,811 Expenditures: Current: General government 983,600 922,879 60,721 - - - Public safety 1,494,100 1,442,300 51,800 124,000 123,999 1 Physical environment - - - - - - Transportation - - - - - Economic environment - - - - - - Human services - - - - - Culture and recreation - - - - - - Debt service - - - - - - Capital outlay 5,000 - 5,000 - - - Total expenditures 2,482,700 2,365,179 117,521 124,000 123,999 1 Excess(deficit)of revenues over(under)expenditures (1,206,200) (1,117,717) 88,483 (124,000) (54,188) 69,812 Other financing sources(uses): Bonds issued - - - - - - Premiums on bonds issued - - - - - - Payment to refunding bond escrow - - - - - - Sale of capital assets - - - - - - Insurance proceeds - - - - - - Transfers in 1,231,300 1,242,757 11,457 - - - Transfers out (110,500) (110,500) - (268,000) (162,833) 105,167 Total other financing sources(uses) 1,120,800 1,132,257 11,457 (268,000) (162,833) 105,167 Net change in fund balances (85,400) 14,540 99,940 (392,000) (217,021) 174,979 Fund balances at beginning of year 174,400 174,400 - 699,900 699,900 - Fund balances(deficits)at end of year $ 89,000 $ 188,940 $ 99,940 $ 307,900 $ 482,879 $ 174,979 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ 14,540 $ (217,021) Change in fair value of investments (666) (945) Advances budgeted as transfers - - Unbudgeted funds - - Deferred revenues - - Net change in fund balance,GAAP basis $ 13,874 $ (217,966) 110 GAC Land Sales, Utility Fees Roads and Canals(Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance $ - $ - $ - $ 240,000 $ 282,207 $ 42,207 - - - 130,000 188,520 58,520 8,100 9,383 1,283 - 5,095 5,095 16,500 - (16,500) - 2 2 24,600 9,383 (15,217) 370,000 475,824 105,824 - - - 365,500 323,546 41,954 300,700 8 300,692 - - - 300,700 8 300,692 365,500 323,546 41,954 (276,100) 9,375 285,475 4,500 152,278 147,778 - - 30,000 30,000 - - - - 30,000 30,000 - (276,100) 9,375 285,475 34,500 182,278 147,778 1,394,200 1,394,200 - 709,500 709,500 - $ 1,118,100 $ 1,403,575 $ 285,475 $ 744,000 $ 891,778 $ 147,778 $ 9,375 $ 182,278 (2,037) (1,169) $ 7,338 $ 181,109 111 COLLIER COUNTY, FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Conservation Collier Court Information (Budgetary Basis) Technology Fee(Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ 9,857,900 $ 9,486,051 $ (371,849) $ - $ - $ - Licenses,permits and impact fees - - - - - Intergovernmental - - - - - - Charges for services - 6,180 6,180 600,000 754,502 154,502 Fines and forfeitures - - - - - - Interest income 208,500 169,899 (38,601) 3,300 3,665 365 Special assessments - - - - - - Miscellaneous 5,300 6,428 1,128 - 293 293 Total revenues 10,071,700 9,668,558 (403,142) 603,300 758,460 155,160 Expenditures: Current: General government - - - 643,600 548,587 95,013 Public safety - - - 12,200 10,174 2,026 Physical environment 902,790 745,498 157,292 - - - Transportation - - - - - - Economic environment - - - - - - Human services - - - 6,000 3,582 2,418 Culture and recreation - - - - - - Debt service - - - - - - Capital outlay 3,355,700 665 3,355,035 63,400 20,082 43,318 Total expenditures 4,258,490 746,163 3,512,327 725,200 582,425 142,775 Excess(deficit)of revenues over(under)expenditures 5,813,210 8,922,395 3,109,185 (121,900) 176,035 297,935 Other financing sources(uses): Bonds issued - - - - - - Premiums on bonds issued - - - - - - Payment to refunding bond escrow - - - - - - Sale of capital assets - - - - - - Insurance proceeds - - - - - - Transfers in 7,114,700 6,364,791 (749,909) - - - Transfers out (7,154,945) (7,133,537) 21,408 - - - Total other financing sources(uses) (40,245) (768,746) (728,501) - - Net change in fund balances 5,772,965 8,153,649 2,380,684 (121,900) 176,035 297,935 Fund balances at beginning of year 20,760,035 20,760,035 - 394,700 394,700 - Fund balances(deficits)at end of year $ 26,533,000 $ 28,913,684 $ 2,380,684 $ 272,800 $ 570,735 $ 297,935 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ 8,153,649 $ 176,035 Change in fair value of investments (39,720) (881) Advances budgeted as transfers - - Unbudgeted funds - - Deferred revenues - - Net change in fund balance,GAAP basis $ 8,113,929 $ 175,154 112 Court Services University Extension Budget Actual Variance Budget Actual Variance $ - $ - $ - $ - $ - $ - 8,305,723 8,041,861 (263,862) - - - - - 2,300 6,053 3,753 - - - - 379 379 - - - 19,286 28,407 9,121 8,305,723 8,041,861 (263,862) 21,586 34,839 13,253 8,305,723 8,001,788 303,935 - - - - - 29,886 26,161 3,725 8,305,723 8,001,788 303,935 29,886 26,161 3,725 40,073 40,073 (8,300) 8,678 16,978 40,073 40,073 (8,300) 8,678 16,978 42,600 42,600 - - $ - $ 40,073 $ 40,073 $ 34,300 $ 51,278 $ 16,978 $ 40,073 $ 8,678 (84) $ 40,073 $ 8,594 113 COLLIER COUNTY, FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Court Facilities Fee Other Special (Budgetary Basis) Revenue Funds(Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ - $ - $ - $ - $ - $ - Licenses,permits and impact fees - - - 5,000 4,976 (24) Intergovernmental - - - 20,000 - (20,000) Charges for services - - - 386,800 469,940 83,140 Fines and forfeitures 1,090,000 1,158,998 68,998 138,000 158,163 20,163 Interest income 9,000 21,792 12,792 17,100 24,619 7,519 Special assessments - - - - - - Miscellaneous - - - 99,400 98,939 (461) Total revenues 1,099,000 1,180,790 81,790 666,300 756,637 90,337 Expenditures: Current: General government 10,000 5,142 4,858 225,310 168,094 57,216 Public safety - - - 734,500 299,909 434,591 Physical environment - - - - - - Transportation - - - - - - Economic environment - - - - - - Human services - - - 226,176 185,015 41,161 Culture and recreation - - - 14,300 13,468 832 Debt service - - - - - - Capital outlay 1,612,423 - 1,612,423 242,990 74,249 168,741 Total expenditures 1,622,423 5,142 1,617,281 1,443,276 740,735 702,541 Excess(deficit)of revenues over(under)expenditures (523,423) 1,175,648 1,699,071 (776,976) 15,902 792,878 Other financing sources(uses): Bonds issued - - - - - - Premiums on bonds issued - - - - - - Payment to refunding bond escrow - - - - - - Sale of capital assets - - - - - - Insurance proceeds - - - - - - Transfers in - - - 51,900 48,900 (3,000) Transfers out - - - - (11,457) (11,457) Total other financing sources(uses) - - - 51,900 37,443 (14,457) Net change in fund balances (523,423) 1,175,648 1,699,071 (725,076) 53,345 778,421 Fund balances at beginning of year 2,939,623 2,939,623 - 2,983,686 2,983,686 - Fund balances(deficits)at end of year $ 2,416,200 $ 4,115,271 $ 1,699,071 $ 2,258,610 $ 3,037,031 $ 778,421 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ 1,175,648 $ 53,345 Change in fair value of investments (5,160) (5,142) Advances budgeted as transfers - Unbudgetedfunds - 444,881 Deferred revenues - Net change in fund balance,GAAP basis $ 1,170,488 $ 493,084 114 Gas Tax Revenue Bonds Capital Improvement (Budgetary Basis) Revenue Bonds(Budgetary Basis) Budget Actual Variance Budget Actual Variance $ - $ - $ - $ - $ - $ - 4,500 17,625 13,125 - 569 569 4,500 17,625 13,125 569 569 15,006,300 14,981,108 25,192 13,229,300 13,220,919 8,381 15,006,300 14,981,108 25,192 13,229,300 13,220,919 8,381 (15,001,800) (14,963,483) 38,317 (13,229,300) (13,220,350) 8,950 38,680,000 38,680,000 - - - - 4,766,400 4,766,373 (27) - - - (43,336,700) (43,336,693) 7 (3,139,000) (3,138,948) 52 13,479,900 13,479,900 - 16,361,100 16,339,223 (21,877) - - (5,315,800) (5,315,794) 6 13,589,600 13,589,580 (20) 7,906,300 7,884,481 (21,819) (1,412,200) (1,373,903) 38,297 (5,323,000) (5,335,869) (12,869) 3,955,200 3,955,200 - 15,724,600 15,724,600 - $ 2,543,000 $ 2,581,297 $ 38,297 $ 10,401,600 $ 10,388,731 $ (12,869) $ (1,373,903) $ (5,335,869) (4,228) (14,365) - 5,315,794 $ (1,378,131) $ (34,440) 115 COLLIER COUNTY,FLORIDA COMBINING SCHEDULE OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Radio Road East Limited General Conservation Collier Limited General Obligation Bonds(Budgetary Basis) Obligation Bonds(Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ - $ - $ - $ 4,742,100 $ 4,572,927 $ (169,173) Licenses,permits and impact fees - - - - Intergovernmental - - - - - - - Charges for services - - - - - Fines and forfeitures - - - Interest income - 31 31 4,300 5,170 870 Special assessments - - - - - Miscellaneous - - - - Total revenues - 31 31 4,746,400 4,578,097 (168,303) Expenditures: Current: General government - - - - Public safety - - - - Physical environment - - - Transportation - - - Economic environment - - - - Human services - - - Culture and recreation - - - - Debt service 44,400 37,176 7,224 4,933,200 4,929,900 3,300 Capital outlay - - Total expenditures 44,400 37,176 7,224 4,933,200 4,929,900 3,300 Excess(deficit)of revenues over(under)expenditures (44,400) (37,145) 7,255 (186,800) (351,803) (165,003) Other financing sources(uses): Bonds issued - - - _ - - Premiums on bonds issued - - - Payment to refunding bond escrow - - - - - - - Sale of capital assets - - - _ - Insurance proceeds - - - Transfers in 60,800 60,800 - 900,000 952,183 52,183 Transfers out - - - (1,240,200) (465,165) 775,035 Total other financing sources(uses) 60,800 60,800 - (340,200) 487,018 827,218 Net change in fund balances 16,400 23,655 7,255 (527,000) 135,215 662,215 Fund balances at beginning of year - - - 764,100 764,100 - Fund balances(deficits)at end of year $ 16,400 $ 23,655 $ 7,255 $ 237,100 $ 899,315 $ 662,215 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ 23,655 $ 135,215 Change in fair value of investments (14) (806) Advances budgeted as transfers - - Unbudgeted funds - - Deferred revenues - Net change in fund balance,GAAP basis $ 23,641 $ 134,409 116 Community Redevelopment Forest Lakes Limited General Taxable Note(Budgetary Basis) Obligation Bonds(Budgetary Basis) Budget Actual Variance Budget Actual Variance $ - $ - $ - $ 380,600 $ 366,503 $ (14,097) 6,000 7,868 1,868 1,000 2,077 1,077 6,000 7,868 1,868 381,600 368,580 (13,020) 1,604,400 1,313,654 290,746 561,900 560,204 1,696 1,604,400 1,313,654 290,746 561,900 560,204 1,696 (1,598,400) (1,305,786) 292,614 (180,300) (191,624) (11,324) 1,500,000 1,400,000 (100,000) 500,000 504,375 4,375 (16,100) (13,390) 2,710 1,500,000 1,400,000 (100,000) 483,900 490,985 7,085 (98,400) 94,214 192,614 303,600 299,361 (4,239) 1,524,200 1,524,200 - 72,300 72,300 - $ 1,425,800 $ 1,618,414 $ 192,614 $ 375,900 $ 371,661 $ (4,239) $ 94,214 $ 299,361 (444) (538) $ 93,770 $ 298,823 117 COLLIER COUNTY, FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Special Obligation Revenue Bonds(Budgetary Basis) Other Debt Service(Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ - $ - $ - $ - $ 1,195 $ 1,195 Licenses,permits and impact fees - - - - Intergovernmental - - - - - - Charges for services - - - - - Fines and forfeitures - - - Interest income - 6,924 6,924 700 500 (200) Special assessments - - - 102,000 110,582 8,582 - Miscellaneous - - - Total revenues - 6,924 6,924 102,700 112,277 9,577 Expenditures: Current: General government - - - - - - Public safety - - - - Physical environment - - - Transportation - - - - - - Economic environment - - - - - - Human services - - - Culture and recreation - - - - Debt service 9,221,500 9,173,577 47,923 6,493,895 6,492,167 1,728 Capital outlay - - - - Total expenditures 9,221,500 9,173,577 47,923 6,493,895 6,492,167 1,728 Excess(deficit)of revenues over(under)expenditures (9,221,500) (9,166,653) 54,847 (6,391,195) (6,379,890) 11,305 Other financing sources(uses): Bonds issued 92,295,000 92,295,000 - - - - Premiums on bonds issued 12,425,350 12,425,334 (16) - - - Payment to refunding bond escrow (104,074,750) (104,074,744) 6 - - - - Sale of capital assets - - - - - - Insurance proceeds - - - - - Transfers in 8,541,200 8,540,051 (1,149) 6,486,895 6,482,815 (4,080) Transfers out - - - (107,500) (105,770) 1,730 Total other financing sources(uses) 9,186,800 9,185,641 (1,159) 6,379,395 6,377,045 (2,350) Net change in fund balances (34,700) 18,988 53,688 (11,800) (2,845) 8,955 Fund balances at beginning of year 203,200 203,200 - 30,000 30,000 - Fund balances(deficits)at end of year $ 168,500 $ 222,188 $ 53,688 $ 18,200 $ 27,155 $ 8,955 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ 18,988 $ (2,845) Change in fair value of investments (1,463) (114) Advances budgeted as transfers - - Unbudgeted funds - - - Deferred revenues - Net change in fund balance,GAAP basis $ 17,525 $ (2,959) 118 County Wide Capital Improvememts Parks Improvements (Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance $ - $ - $ - $ - $ - $ - - - 412,000 565,608 153,608 35,600 58,950 23,350 43,000 83,514 40,514 - 450 450 - 16,699 16,699 35,600 59,400 23,800 455,000 665,821 210,821 863,817 842,216 21,601 - - - 54,456 257,240 (202,784) - - - 50,000 38,005 11,995 - - - 506,189 486,267 19,922 - - 5,931,842 350,954 5,580,888 10,897,463 780,386 10,117,077 6,900,115 1,488,415 5,411,700 11,403,652 1,266,653 10,136,999 (6,864,515) (1,429,015) 5,435,500 (10,948,652) (600,832) 10,347,820 - 4,352 4,352 - - - 3,730,600 1,020,400 (2,710,200) 250,000 250,000 - (3,840,400) (2,630,200) 1,210,200 (336,424) (322,648) 13,776 (109,800) (1,605,448) (1,495,648) (86,424) (72,648) 13,776 (6,974,315) (3,034,463) 3,939,852 (11,035,076) (673,480) 10,361,596 9,430,450 9,430,450 - 13,599,648 13,599,648 - $ 2,456,135 $ 6,395,987 $ 3,939,852 $ 2,564,572 $ 12,926,168 $ 10,361,596 $ (3,034,463) $ (673,480) (12,721) (18,008) 2,269,000 (250,000) $ (778,184) $ (941,488) 119 COLLIER COUNTY, FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 County-Wide Library Correctional Facilities Impact Fees(Budgetary Basis) Impact Fees(Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ - $ - $ - $ - $ - $ - Licenses,permits and impact fees 415,800 480,677 64,877 460,800 772,785 311,985 Intergovernmental - - - - Charges for services - - - - - Fines and forfeitures - - - - - - Interest income 13,000 11,867 (1,133) 7,000 9,557 2,557 Special assessments - - - - - Miscellaneous - - - - - Total revenues 428,800 492,544 63,744 467,800 782,342 314,542 Expenditures: Current: General government - - - - - - Public safety - .. - 210,325 13,084 197,241 Physical environment - - - - - - Transportation - - - - - Economic environment - - - - - - Human services - - - - - - Culture and recreation 148,789 41,125 107,664 - - - Debt service - - - - Capital outlay 632,639 487,834 144,805 49,129 - 49,129 Total expenditures 781,428 528,959 252,469 259,454 13,084 246,370 Excess(deficit)of revenues over(under)expenditures (352,628) (36,415) 316,213 208,346 769,258 560,912 Other financing sources(uses): Bonds issued - - - - - - Premiums on bonds issued - - - - - Payment to refunding bond escrow - - - - - - Sale of capital assets - - - - - - Insurance proceeds - - - - - - Transfers in - - - 1,145,700 1,145,700 - Transfers out (1,148,300) (1,148,300) - (2,032,500) (2,028,150) 4,350 Total other financing sources(uses) (1,148,300) (1,148,300) - (886,800) (882,450) 4,350 Net change in fund balances (1,500,928) (1,184,715) 316,213 (678,454) (113,192) 565,262 Fund balances at beginning of year 2,557,628 2,557,628 - 2,038,164 2,038,164 - Fund balances(deficits)at end of year $ 1,056,700 $ 1,372,913 $ 316,213 $ 1,359,710 $ 1,924,972 $ 565,262 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ (1,184,715) $ (113,192) Change in fair value of investments (2,127) (2,317) Advances budgeted as transfers - (1,145,700) Unbudgeted - - Deferred revenues - - Net change in fund balance,GAAP basis $ (1,186,842) $ (1,261,209) 120 Emergency Medical Services Water Management Impact Fees(Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance $ - $ - $ - $ - $ - $ - 154,300 209,683 55,383 - - - - - - 1,000,000 1,000,000 - - - - 52,500 79,600 27,100 5,000 2,118 (2,882) - - - - - - 331,900 319,749 (12,151) - - - - 240 240 159,300 211,801 52,501 1,384,400 1,399,589 15,189 129,228 3,855 125,373 - - - - - 3,677,450 1,844,175 1,833,275 3,678 - 3,678 12,864,456 1,190,920 11,673,536 132,906 3,855 129,051 16,541,906 3,035,095 13,506,811 26,394 207,946 181,552 (15,157,506) (1,635,506) 13,522,000 426,900 426,900 - 6,224,700 6,390,544 165,844 (724,600) (724,269) 331 (1,188,181) (1,024,505) 163,676 (297,700) (297,369) 331 5,036,519 5,366,039 329,520 (271,306) (89,423) 181,883 (10,120,987) 3,730,533 13,851,520 471,207 471,207 - 10,190,087 10,190,087 - $ 199,901 $ 381,784 $ 181,883 $ 69,100 $ 13,920,620 $ 13,851,520 $ (89,423) $ 3,730,533 (432) (19,016) (426,900) - $ (516,755) $ 3,711,517 121 COLLIER COUNTY,FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Parks Impact Districts Road Impact Districts (Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance Revenues: Taxes $ - $ - $ - $ - $ - $ Licenses,permits and impact fees 2,238,000 4,240,865 2,002,865 10,475,100 9,905,583 (569,517) Intergovernmental - - - - 785,613 785,613 Charges for services - - - - - - Fines and forfeitures - - Interest income 52,000 74,232 22,232 417,400 361,679 (55,721) Special assessments - - - - - Miscellaneous - - - - 827 827 Total revenues 2,290,000 4,315,097 2,025,097 10,892,500 11,053,702 161,202 Expenditures: Current: General government - - - - Public safety - - - - Physical environment - - - - Transportation - - - 6,673,714 2,582,245 4,091,469 Economic environment - - - - - - Human services - - - - - Culture and recreation 755,284 132,375 622,909 - - - Debt service - - - Capital outlay 3,006,080 900,989 2,105,091 45,340,675 15,625,697 29,714,978 Total expenditures 3,761,364 1,033,364 2,728,000 52,014,389 18,207,942 33,806,447 Excess(deficit)of revenues over(under)expenditures (1,471,364) 3,281,733 4,753,097 (41,121,889) (7,154,240) 33,967,649 Other financing sources(uses): Bonds issued - - - - Premiums on bonds issued - - - - - Payment to refunding bond escrow - - - - - - Sale of capital assets - - - - - - Insurance proceeds - - - - - Transfers in - Transfers out (3,214,100) (3,211,775) 2,325 (3,228,600) - 3,228,600 Total other financing sources(uses) (3,214,100) (3,211,775) 2,325 (3,228,600) - 3,228,600 Net change in fund balances (4,685,464) 69,958 4,755,422 (44,350,489) (7,154,240) 37,196,249 Fund balances at beginning of year 12,670,964 12,670,964 - 56,838,993 56,838,993 - Fund balances(deficits)at end of year $ 7,985,500 $ 12,740,922 $ 4,755,422 $ 12,488,504 $ 49,684,753 $ 37,196,249 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ 69,958 $ (7,154,240) Change in fair value of investments (16,194) (75,519) Advances budgeted as transfers - - Unbudgeted funds - Deferred revenues - Net change in fund balance,GAAP basis $ 53,764 $ (7,229,759) 122 Road Construction Law Enforcement Impact Fees (Budgetary Basis) (Budgetary Basis) Budget Actual Variance Budget Actual Variance $ 12,817,900 $ 12,898,769 $ 80,869 $ - $ - $ - - - 292,800 467,279 174,479 7,482,100 7,971,753 489,653 - - - 460,917 260,039 (200,878) - - - 351,000 310,009 (40,991) 12,900 12,826 (74) 20,358 322,539 302,181 - - - 21,132,275 21,763,109 630,834 305,700 480,105 174,405 164,877 2,366 162,511 - - 9,800,223 8,957,369 842,854 - - - 52,457,346 12,140,889 40,316,457 - - - 62,257,569 21,098,258 41,159,311 164,877 2,366 162,511 (41,125,294) 664,851 41,790,145 140,823 477,739 336,916 - 900 900 - - - 16,465,200 10,298,800 (6,166,400) 1,700,000 1,079,600 (620,400) (26,140,218) (24,665,235) 1,474,983 (2,724,300) (2,723,568) 732 (9,675,018) (14,365,535) (4,690,517) (1,024,300) (1,643,968) (619,668) (50,800,312) (13,700,684) 37,099,628 (883,477) (1,166,229) (282,752) 57,341,653 57,341,653 - 2,395,081 2,395,081 - $ 6,541,341 $ 43,640,969 $ 37,099,628 $ 1,511,604 $ 1,228,852 $ (282,752) $ (13,700,684) $ (1,166,229) (60,212) (2,678) _ (1,079,600) $ (13,760,896) $ (2,248,507) 123 COLLIER COUNTY, FLORIDA COMBINING SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL(BUDGETARY BASIS) MAJOR CAPITAL PROJECT AND NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Other Capital Projects (Budgetary Basis) Budget Actual Variance Revenues: Taxes $ - $ - $ - Licenses,permits and impact fees 2,000 6,533 4,533 Intergovernmental - - - Charges for services - - - Fines and forfeitures - - Interest income 17,000 15,251 (1,749) Special assessments 127,100 124,026 (3,074) Miscellaneous - 1,419 1,419 Total revenues 146,100 147,229 1,129 Expenditures: Current: General government 832,502 150,750 681,752 Public safety 3,852 - 3,852 Physical environment 1,736,212 1,423,419 312,793 Transportation - - - Economic environment - - - Human services - - - Culture and recreation 10,984 25,048 (14,064) Debt service - - - Capital outlay 1,136,285 645,184 491,101 Total expenditures 3,719,835 2,244,401 1,475,434 Excess(deficit)of revenues over(under)expenditures (3,573,735) (2,097,172) 1,476,563 Other financing sources(uses): Bonds issued - - - Premiums on bonds issued - - - Payment to refunding bond escrow - - - Sale of capital assets - - - Insurance proceeds - - Transfers in 1,411,600 1,311,600 (100,000) Transfers out (6,500) (3,931) 2,569 Total other financing sources(uses) 1,405,100 1,307,669 (97,431) Net change in fund balances (2,168,635) (789,503) 1,379,132 Fund balances at beginning of year 2,591,735 2,591,735 - Fund balances(deficits)at end of year $ 423,100 $ 1,802,232 $ 1,379,132 See accompanying independent auditor's report Reconciliation: Net change in fund balance,budgetary basis $ (789,503) Change in fair value of investments (2,832) Advances budgeted as transfers - Unbudgeted funds - Deferred revenues - Net change in fund balance,GAAP basis $ (792,335) 124 Nonmajor Enterprise Funds EMERGENCY MEDICAL SERVICES — To account for the provision of emergency ambulance and paramedical services to users throughout the County. GOODLAND WATER — To account for the provision of potable water services to residents of Goodland. AIRPORT AUTHORITY—To account for the provision of landing facilities and the sale of fuel at the airports. COLLIER AREA TRANSIT — To account for the provision of public transportation throughout the County. COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS SEPTEMBER 30,2012 Total Emergency Collier Nonmajor Medical Goodland Airport Area Enterprise Services Water Authority Transit Funds ASSETS Current assets: Cash,cash equivalents and investments $ 2,700,958 $ 195,931 $ 783,648 $ 102,763 $ 3,783,300 Receivables: Trade,net 2,873,542 23,078 25,069 207 2,921,896 Interest 3,305 207 898 354 4,764 Unbilled revenue 169,885 8,495 - - 178,380 Due from other funds - - 1,529 268,145 269,674 Due from other governments 4,026 - - - 4,026 Inventory 17,753 - 120,900 - 138,653 Restricted assets: Cash,cash equivalents and investments 26,945 - 107,818 104,778 239,541 Due from other governments - - 125,984 4,627,473 4,753,457 Total current assets 5,796,414 227,711 1,165,846 5,103,720 12,293,691 Noncurrent assets: Capital assets: Land and nondepreciable capital assets - - 2,936,323 7,796,058 10,732,381 Depreciable capital assets,net 4,567,709 739,698 17,940,220 9,179,938 32,427,565 Total noncurrent assets 4,567,709 739,698 20,876,543 16,975,996 43,159,946 Total assets 10,364,123 967,409 22,042,389 22,079,716 55,453,637 LIABILITIES Current liabilities: Accounts payable 137,177 613 9,516 936,736 1,084,042 Wages payable 264,888 - 14,573 2,032 281,493 Due to other funds 82 - - 2,404,328 2,404,410 Due to other governments - - 1,911 89,147 91,058 Due to individuals 377,269 - - - 377,269 Compensated absences 475,367 - 40,300 4,190 519,857 Capital lease obligations 134,914 - - - 134,914 Liabilities payable from restricted assets: Accounts payable - - 24,071 638,306 662,377 Retainage payable - - - 67,037 67,037 Refundable deposits - - 17,364 - 17,364 Unearned revenue 26,945 - 89,199 - 116,144 Total current liabilities 1,416,642 613 196,934 4,141,776 5,755,965 Noncurrent liabilities: Compensated absences 203,728 - 17,272 1,795 222,795 Capital lease obligations 39,651 - - - 39,651 Total noncurrent liabilities 243,379 - 17,272 1,795 262,446 Total liabilities 1,660,021 613 214,206 4,143,571 6,018,411 NET ASSETS Invested in capital assets,net of related debt 4,393,144 739,698 20,876,543 16,975,996 42,985,381 Unrestricted 4,310,958 227,098 951,640 960,149 6,449,845 Total net assets $ 8,704,102 $ 966,796 $ 21,828,183 $ 17,936,145 $ 49,435,226 See accompanying independent auditor's report 126 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Total Emergency Collier Nonmajor Medical Goodland Airport Area Enterprise Services Water Authority Transit Funds Operating revenues: Charges for services $ 10,200,091 $ 356,797 $ 2,773,545 $ 1,354,270 $ 14,684,703 Miscellaneous 48,890 1,654 30,874 6,071 87,489 Total operating revenues 10,248,981 358,451 2,804,419 1,360,341 14,772,192 Operating expenses: Personal services 17,524,685 - 1,049,309 196,344 18,770,338 Operating 3,362,216 407,389 2,573,796 8,660,489 15,003,890 Depreciation 683,509 56,693 954,392 987,212 2,681,806 Total operating expenses 21,570,410 464,082 4,577,497 9,844,045 36,456,034 Operating loss (11,321,429) (105,631) (1,773,078) (8,483,704) (21,683,842) Non-operating revenues(expenses): Operating grants and contributions 88,966 - - 2,591,039 2,680,005 Interest income 17,534 1,313 8,686 5,421 32,954 Insurance reimbursement 3,745 - 2,321 - 6,066 Interest expense (12,759) - - - (12,759) Loss on disposal of capital assets (10,094) - - - (10,094) Total non-operating revenues(expenses) 87,392 1,313 11,007 2,596,460 2,696,172 Loss before contributions and transfers (11,234,037) (104,318) (1,762,071) (5,887,244) (18,987,670) Capital grants and contributions 952,185 - 2,783,745 4,487,257 8,223,187 Transfers in 12,797,940 - 538,000 4,278,598 17,614,538 Transfers out (3,000) (19,700) (250,000) - (272,700) Total transfers and contributions 13,747,125 (19,700) 3,071,745 8,765,855 25,565,025 Changes in net assets 2,513,088 (124,018) 1,309,674 2,878,611 6,577,355 Net assets-beginning 6,191,014 1,090,814 20,518,509 15,057,534 42,857,871 Netassets-ending $ 8,704,102 $ 966,796 $ 21,828,183 $ 17,936,145 $ 49,435,226 See accompanying independent auditor's report 127 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Total Emergency Collier Nonmajor Medical Goodland Airport Area Enterprise Services Water Authority Transit Funds Cash flows from operating activities: Cash received for services $ 10,528,504 $ 350,198 $ 2,787,550 $ 1,360,294 $ 15,026,546 Cash payments for goods and services (1,714,869) (291,030) (2,162,805) (6,554,735) (10,723,439) Cash payments to employees (17,525,175) - (1,059,380) (202,006) (18,786,561) Cash payments for interfund services (1,559,891) (120,469) (437,586) (2,278,289) (4,396,235) Cash payments on refundable deposits - - (867) - (867) Net cash used for operating activities (10,271,431) (61,301) (873,088) (7,674,736) (18,880,556) Cash flows from non-capital financing activities: Cash received from operating grants 38,919 - 817,648 3,124,318 3,980,885 Cash transfers from other funds 12,797,940 - - 9,568,831 22,366,771 Cash transfers to other funds (3,000) (19,700) (531,224) (4,083,598) (4,637,522) Net cash provided by(used for)non-capital financing activities 12,833,859 (19,700) 286,424 8,609,551 21,710,134 Cash flows from capital and related financing activities: Receipts from insurance reimbursements 3,745 - 4,316 23,497 31,558 Proceeds from disposal of capital assets - - - 11,495 11,495 Proceeds from capital grants - - 4,906,298 1,046,572 5,952,870 Payments for capital acquisitions (843,356) (3,115) (5,095,502) (1,884,937) (7,826,910) Principal payments on leases (212,246) - - - (212,246) Interest and fiscal agent fees paid (12,759) - - - (12,759) Net cash used for capital and related financing activities (1,064,616) (3,115) (184,888) (803,373) (2,055,992) Cash flows from investing activities: Interest on investments 16,741 1,464 9,750 5,716 33,671 Net cash provided by investing activities 16,741 1,464 9,750 5,716 33,671 Net increase(decrease)in cash,cash equivalents and investments 1,514,553 (82,652) (761,802) 137,158 807,257 Cash,cash equivalents and investments,October 1,2011 1,213,350 278,583 1,653,268 70,383 3,215,584 Cash,cash equivalents and investments,September 30,2012 $ 2,727,903 $ 195,931 $ 891,466 $ 207,541 $ 4,022,841 Cash,cash equivalents and investments $ 2,700,958 $ 195,931 $ 783,648 $ 102,763 $ 3,783,300 Cash,cash equivalents and investments-restricted 26,945 - 107,818 104,778 239,541 Cash,cash equivalents and investments,September 30,2012 $ 2,727,903 $ 195,931 $ 891,466 $ 207,541 $ 4,022,841 Operating loss $ (11,321,429) $ (105,631) $ (1,773,078) $ (8,483,704) $ (21,683,842) Adjustments to reconcile operating loss to net cash provided by(used for)operating activities: Depreciation expense 683,509 56,693 954,392 987,212 2,681,806 Net changes in assets and liabilities: Trade receivable 282,689 (8,253) (10,659) (47) 263,730 Due from other funds 14 - - - 14 Due from other governments (3,133) - - - (3,133) Inventory (1,989) - 14,119 - 12,130 Accounts payable 89,363 (4,110) (40,714) (172,535) (127,996) Wages payable 2,884 - (1,005) (788) 1,091 Due to other funds 82 - - - 82 Due to other governments - - 23 - 23 Due to individuals (47) - - - (47) Compensated absences (3,374) - (9,066) (4,874) (17,314) Refundable deposits - - (867) - (867) Unearned revenue - - (6,233) - (6,233) Total adjustments 1,049,998 44,330 899,990 808,968 2,803,286 Net cash provided by(used for)operating activities $ (10,271,431) $ (61,301) $ (873,088) $ (7,674,736) $ (18,880,556) Non-cash investing,capital and financing activities: Change in fair value of investments $ 5,065 $ (346) $ (1,995) $ (1,276) $ 1,448 Contributed capital assets 952,185 - 11,008 709,518 1,672,711 See accompanying independent auditor's report 128 Internal Service Funds SELF-INSURANCE — To account for the self-insurance costs of providing coverage for property, general and vehicle liability. To account for the provisions of health benefits to Board and participating constitutional officer employees and their dependents. To account for payment of workers' compensation claims, in lieu of insurance. SHERIFF'S SELF-INSURANCE — To account for the provisions of health benefits to Sheriff employees and their dependents. To account for payment of workers' compensation claims, in lieu of insurance. FLEET MANAGEMENT — To account for fuel, oil, lubricants, repairs and maintenance of County vehicles and the use of certain County owned vehicles by County employees. INFORMATION TECHNOLOGY—To account for the costs of operating the County data processing facility and telephone communication system. COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30,2012 Sheriffs Self- Self- Fleet Information Insurance Insurance Management Technology Total ASSETS Current assets: Cash,cash equivalents and investments $ 24,999,915 $ 15,359,981 $ 719,815 $ 2,502,487 $ 43,582,198 Receivables: Trade,net 96,281 - 10,040 31,300 137,621 Interest 23,329 - 428 2,421 26,178 Due from other funds 134,109 500,000 105 91,550 725,764 Due from other governments - - 40,287 - 40,287 Deposits 313,592 - - - 313,592 Inventory - - 868,543 - 868,543 Total current assets 25,567,226 15,859,981 1,639,218 2,627,758 45,694,183 Noncurrent assets: Capital assets: Depreciable capital assets,net 284,802 - 12,108,764 6,998,012 19,391,578 Total noncurrent assets 284,802 - 12,108,764 6,998,012 19,391,578 Total assets 25,852,028 15,859,981 13,747,982 9,625,770 65,085,761 LIABILITIES Current liabilities: Accounts payable 276,346 - 573,156 156,434 1,005,936 Wages payable 16,280 - 32,090 51,398 99,768 Due to other funds 395 - - 91,506 91,901 Self-insurance claims payable 3,548,564 2,340,000 - - 5,888,564 Compensated absences 77,051 - 99,125 157,544 333,720 Total current liabilities 3,918,636 2,340,000 704,371 456,882 7,419,889 Noncurrent liabilities: Self-insurance claims payable 1,512,212 - - - 1,512,212 Compensated absences 33,022 - 42,482 67,519 143,023 Net pension obligation 650,070 1,048,138 - - 1,698,208 Total noncurrent liabilities 2,195,304 1,048,138 42,482 67,519 3,353,443 Total liabilities 6,113,940 3,388,138 746,853 524,401 10,773,332 NET ASSETS Invested in capital assets,net of related debt 284,802 - 12,108,764 6,998,012 19,391,578 Unrestricted 19,453,286 12,471,843 892,365 2,103,357 34,920,851 Total net assets $ 19,738,088 $ 12,471,843 $ 13,001,129 $ 9,101,369 $ 54,312,429 See accompanying independent auditor's report 130 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Sheriff's Self- Self- Fleet Information Insurance Insurance Management Technology Total Operating revenues: Charges for services $ 41,822,277 $ 18,172,571 $ 8,576,712 $ 5,669,061 $ 74,240,621 Miscellaneous 175,119 - 20,294 47,644 243,057 Total operating revenues 41,997,396 18,172,571 8,597,006 5,716,705 74,483,678 Operating expenses: Personal services 1,029,143 - 1,991,985 3,153,353 6,174,481 Operating 43,340,997 17,973,208 6,338,744 1,242,371 68,895,320 Depreciation 24,937 - 556,686 1,356,859 1,938,482 Total operating expenses 44,395,077 17,973,208 8,887,415 5,752,583 77,008,283 Operating income(loss) (2,397,681) 199,363 (290,409) (35,878) (2,524,605) Non-operating revenues(expenses): Interest income 140,290 81,753 2,339 8,483 232,865 Insurance reimbursement 2,494,707 - 907 - 2,495,614 Gain(Loss)on disposal of capital assets - - 2,904 (9,017) (6,113) Total non-operating revenues(expenses) 2,634,997 81,753 6,150 (534) 2,722,366 Income(loss)before contributions 237,316 281,116 (284,259) (36,412) 197,761 Capital grants and contributions - - 282 - 282 Transfers in - - - 361,200 361,200 Transfers out (926,100) - - - (926,100) Change in net assets (688,784) 281,116 (283,977) 324,788 (366,857) Net assets-beginning 20,426,872 12,190,727 13,285,106 8,776,581 54,679,286 Net assets-ending $ 19,738,088 $ 12,471,843 $ 13,001,129 $ 9,101,369 $ 54,312,429 See accompanying independent auditor's report 131 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Sheriff's Self- Self- Fleet Information Insurance Insurance Management Technology Total Cash flows from operating activities: Cash received from other funds for services $ 36,519,639 $17,897,664 $ 8,125,448 $ 5,707,280 $ 68,250,031 Cash received from employees for services 5,489,426 - - - 5,489,426 Cash received from other governments for services - - 464,179 - 464,179 Cash received from retirees for services 642,454 555,343 - - 1,197,797 Cash payments on behalf of retirees (612,146) - - - (612,146) Cash payments for goods and services (43,169,618) (17,825,399) (6,170,671) (1,717,203) (68,882,891) Cash payments to employees (1,038,124) - (2,003,291) (3,178,590) (6,220,005) Cash payments for interfund services (102,332) - (254,925) (38,536) (395,793) Net cash provided by(used for)operating activities (2,270,701) 627,608 160,740 772,951 (709,402) Cash flows from non-capital financing activities: Cash transfers from other funds - - - 361,200 361,200 Cash transfers to other funds (1,776,100) - - - (1,776,100) Net cash provided by(used for)non-capital financing activities (1,776,100) - - 361,200 (1,414,900) Cash flows from capital and related financing activities: Receipts from insurance reimbursements 2,587,563 - 1,302 - 2,588,865 Proceeds from disposal of capital assets - - 2,905 - 2,905 Payments for capital acquisitions (4,385) - (16,857) (47,383) (68,625) Net cash provided by(used for)capital and related financing activities 2,583,178 - (12,650) (47,383) 2,523,145 Cash flows from investing activities: Interest on investments 151,472 81,753 2,472 7,671 243,368 Net cash provided by investing activities 151,472 81,753 2,472 7,671 243,368 Net increase(decrease)in cash,cash equivalents and investment (1,312,151) 709,361 150,562 1,094,439 642,211 Cash,cash equivalents and investments,October 1,2011 26,312,066 14,650,620 569,253 1,408,048 42,939,987 Cash,cash equivalents and investments,September 30,2012 $ 24,999,915 $15,359,981 $ 719,815 $ 2,502,487 $ 43,582,198 Operating income(loss) $ (2,397,681) $ 199,363 $ (290,409) $ (35,878) $ (2,524,605) Adjustments to reconcile operating income(loss)to net cash provided(used for)by operating activities: Depreciation expense 24,937 - 556,686 1,356,859 1,938,482 Net changes in assets and liabilities: Trade receivable 65,276 151,534 (9,788) 15,819 222,841 Due from other funds (134,109) 280,436 (10) (91,550) 54,767 Due from other governments - - 2,419 9,800 12,219 Deposits 110,961 - - - 110,961 Inventory - - (263,798) - (263,798) Prepaid costs - - - 49,410 49,410 Accounts payable 187,581 - 176,946 (562,778) (198,251) Wages payable (780) - 980 (1,023) (823) Due to other funds (151) - - 56,506 56,355 Compensated absences (8,201) - (12,286) (24,214) (44,701) Self-insurance claims payable (330,723) 89,000 - - (241,723) Net pension obligation 212,189 (92,725) - - 119,464 Total adjustments 126,980 428,245 451,149 808,829 1,815,203 Net cash provided by(used for)operating activities $ (2,270,701) $ 627,608 $ 160,740 $ 772,951 $ (709,402) Non-cash investing,capital and financing activities: Change in fair value of investments $ (35,855) $ 26,048 $ (644) $ (3,415) $ (13,866) Contributed capital assets - - 282 - 282 See accompanying independent auditor's report 132 Fiduciary Funds CLERK OF COURTS AGENCY FUND—To account for monies held in Trust by the Clerk of the Circuit Court prior to disbursement. SHERIFF AGENCY FUND—To account for monies held in a custodial capacity by the Sheriff. TAX COLLECTOR AGENCY FUND — To account for assets held by the Tax Collector prior to legal disbursement. DEPOSITS AGENCY FUND — To account for monies held by the County for businesses and individuals. PINE RIDGE AND NAPLES PRODUCTION PARK AGENCY FUND — To account for the receipt of special assessments and the payment of principal and interest on behalf of assessment holders. COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUNDS SEPTEMBER 30,2012 Pine Ridge Clerk Tax and Naples of Courts Sheriff Collector Deposits Production Park Agency Fund Agency Fund Agency Fund Agency Fund Agency Fund Total ASSETS Cash,cash equivalents and investments $ 21,872,332 $ 476,968 $ 5,660,404 $ 3,197,324 $ 1,118,960 $32,325,988 Receivables: Interest - - - 2,798 983 3,781 Other - 20,637 15,004 - 5,832 41,473 Total assets $ 21,872,332 $ 497,605 $ 5,675,408 $ 3,200,122 $ 1,125,775 $32,371,242 LIABILITIES Due to other governments $ 996,765 $ 70,101 $ 5,462,210 $ - $ - $ 6,529,076 Due to individuals - 427,504 213,198 - - 640,702 Refundable deposits 20,875,567 - - 3,200,122 - 24,075,689 Due to special assessment holders - - - - 1,125,775 1,125,775 Total liabilities $ 21,872,332 $ 497,605 $ 5,675,408 $ 3,200,122 $ 1,125,775 $32,371,242 See accompanying independent auditor's report 134 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Balance Balance October 1 Additions Deductions September 30 Clerk of Courts Agency Fund Assets: Cash,cash equivalents and investments $ 18,905,959 $ 153,018,389 $ 150,052,016 $ 21,872,332 Total assets $ 18,905,959 $ 153,018,389 $ 150,052,016 $ 21,872,332 Liabilities: Due to other governments $ 2,266,815 $ 10,261,140 $ 11,531,190 $ 996,765 Refundable deposits 16,639,144 142,757,249 138,520,826 20,875,567 Total liabilities $ 18,905,959 $ 153,018,389 $ 150,052,016 $ 21,872,332 Sheriff Agency Fund Assets: Cash,cash equivalents and investments $ 464,087 $ 3,635,443 $ 3,622,562 $ 476,968 Receivable: Other 8,864 20,637 8,864 20,637 Total assets $ 472,951 $ 3,656,080 $ 3,631,426 $ 497,605 Liabilities: Due to other governments $ 45,180 $ 70,101 $ 45,180 $ 70,101 Due to individuals 427,771 427,504 427,771 427,504 Total liabilities $ 472,951 $ 497,605 $ 472,951 $ 497,605 Tax Collector Agency Fund Assets: Cash,cash equivalents and investments $ 5,443,691 $ 818,281,714 $ 818,065,001 $ 5,660,404 Receivable: Other 8,436 1,527,888 1,521,320 15,004 Total assets $ 5,452,127 $ 819,809,602 $ 819,586,321 $ 5,675,408 Liabilities: Due to other governments $ 5,309,135 $ 796,155,862 $ 796,002,787 $ 5,462,210 Due to individuals 142,992 32,269,000 32,198,794 213,198 Total liabilities $ 5,452,127 $ 828,424,862 $ 828,201,581 $ 5,675,408 Deposits Agency Fund Assets: Cash,cash equivalents and investments $ 3,228,598 $ 494,650 $ 525,924 $ 3,197,324 Receivables: Interest 3,495 2,798 3,495 2,798 Total assets $ 3,232,093 $ 497,448 $ 529,419 $ 3,200,122 Liabilities: Refundable deposits $ 3,232,093 $ 489,575 $ 521,546 $ 3,200,122 Total liabilities $ 3,232,093 $ 489,575 $ 521,546 $ 3,200,122 (Continued) 135 COLLIER COUNTY, FLORIDA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012 Balance Balance October 1 Additions Deductions September 30 Pine Ridge and Naples Production Park Agency Fund Assets: Cash,cash equivalents and investments $ 363,024 $ 769,996 $ 14,060 $ 1,118,960 Receivables: Interest 569 983 569 983 Other 6,541 12,857 13,566 5,832 Total assets $ 370,134 $ 783,836 $ 28,195 $ 1,125,775 Liabilities: Due to special assessment holders $ 370,134 $ 1,593,271 $ 837,630 $ 1,125,775 Total liabilities $ 370,134 $ 1,593,271 $ 837,630 $ 1,125,775 Total -All Agency Funds Assets: Cash,cash equivalents and investments $ 28,405,359 $ 976,200,192 $ 972,279,563 $ 32,325,988 Receivables: Interest 4,064 3,781 4,064 3,781 Other 23,841 1,561,382 1,543,750 41,473 Total assets $ 28,433,264 $ 977,765,355 $ 973,827,377 $ 32,371,242 Liabilities: Due to other governments $ 7,621,130 $ 806,487,103 $ 807,579,157 $ 6,529,076 Due to individuals 570,763 32,696,504 32,626,565 640,702 Refundable deposits 19,871,237 143,246,824 139,042,372 24,075,689 Due to special assessment holders 370,134 1,593,271 837,630 1,125,775 Total liabilities $ 28,433,264 $ 984,023,702 $ 980,085,724 $ 32,371,242 See accompanying independent auditor's report 136 Component Units COLLIER COUNTY HOUSING FINANCE AUTHORITY — The authority was established for the purpose of stimulating the construction of residential housing for low and moderate income families through the use of public financing. COLLIER COUNTY HEALTH FACILITIES AUTHORITY — The authority was established for the purpose of assisting health facilities in the acquisition, construction and financing of projects within the County. COLLIER COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY — The authority was established for the purpose of facilitating projects that promote economic growth and opportunities for employment in Collier County. COLLIER COUNTY EDUCATIONAL FACILITIES AUTHORITY—The authority was established for the purpose of assisting institutions of higher education in the construction, financing and refinancing of projects. COLLIER COUNTY, FLORIDA COMPONENT UNITS COMBINING STATEMENT OF NET ASSETS SEPTEMBER 30,2012 Housing Health Industrial Educational Finance Facilities Development Facilities Authority Authority Authority Authority Totals ASSETS Cash,cash equivalents and investments $ 283,997 $ 19,946 $ 20,034 $ 2,541 $ 326,518 Total Assets $ 283,997 $ 19,946 $ 20,034 $ 2,541 $ 326,518 NET ASSETS Net assets-unrestricted $ 283,997 $ 19,946 $ 20,034 $ 2,541 $ 326,518 Total Net Assets $ 283,997 $ 19,946 $ 20,034 $ 2,541 $ 326,518 See accompanying independent auditor's report 138 COLLIER COUNTY, FLORIDA COMPONENT UNITS COMBINING STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2012 Net(Expense) Revenue and Changes Program Revenues in Net Assets Fees,Fines and Governmental FUNCTIONS/PROGRAMS Expenses Charges for Services Activities Industrial Development Authority $ 15 $ 17,500 $ 17,485 Housing Finance Authority 692 - (692) Educational Facilities Authority 46 - (46) Total $ 753 $ 17,500 16,747 General revenues: Interest income 144 Total general revenues 144 Change in net assets 16,891 Net assets-beginning 309,627 Net assets-ending $ 326,518 See accompanying independent auditor's report 139 THIS PAGE INTENTIONALLY LEFT BLANK STATISTICAL SECTION (UNAUDITED) Statistical schedules differ from financial statements because they usually cover more than one fiscal year and may present non-accounting data.These schedules reflect social and economic data, and financial trends of Collier County, Florida. CONTENTS PAGE FINANCIAL TRENDS These schedules contain trend information to help the reader understand how the government's financial performance and wellbeing have changed over time. Net assets by component 142 Change in net assets 143 Governmental activities tax revenues by source 146 Fund balances of governmental funds 147 Changes in fund balance of governmental funds 148 REVENUE CAPACITY These schedules contain information to help the reader assess the Country's most significant local revenue source,the Property Tax. Assessed value and estimated actual value of taxable property 150 Property Tax Rates—All direct and overlapping governments 151 Principal Taxpayers County-wide 152 Property Tax levies and collections 153 DEBT CAPACITY These schedules present information to help reader assess the affordability of the County's current levels of outstanding debt and the County's ability to issue additional debt in the future. Ratios of outstanding debt by type 154 Ratios of general bonded debt outstanding 155 Legal debt margin information 156 Direct and overlapping governmental activities debt 156 Pledged-revenue coverage 157 DEMOGRAPHIC AND ECONOMIC INFORMATION These schedules offer demographic and economic indicators to help the reader understand the environment within which the County's financial activities take place. Demographic and economic statistics 158 Principal employers 159 OPERATING INFORMATION These schedules contain service and infrastructure data to help the reader understand how the information in the County's financial report relates to the services the County provides and the activities it performs. Full-time equivalent County employees by function 160 Operating indicators by function 161 Capital Asset statistics by function/program 162 Sources: Unless otherwise noted,the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 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Z r0 Z m an i 1i 0- ii 2 U 3 162 SINGLE AUDIT/FEDERAL AND STATE SCHEDULE OF FINANCIAL ASSISTANCE The Single Audit/Federal and State schedule of financial assistance section presents Grants compliance reports filed by Collier County with Federal government and State government, respectively. THIS PAGE INTENTIONALLY LEFT BLANK ERNST& YOUNG Sute500oungLLP I 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance With Government Auditing Standards Members of the Board of County Commissioners Collier County, Florida We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Collier County, Florida (the County) as of and for the year ended September 30, 2012, which collectively comprise the County's basic financial statements and have issued our report thereon dated March 6, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal control over financial reporting Management of the County is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the County's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the County's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 1302-1025260 165 A member firm of Ernst&Young Global Limited 111111111111��II11III''If E ERNST&YOUNG Compliance and other matters As part of obtaining reasonable assurance about whether the County's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of 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 or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the County in a separate letter dated March 6, 2013. This report is intended solely for the information and use of management, the Board of County Commissioners, others within the entity, the Auditor General of the State of Florida, federal and state awarding agencies and pass-through entities and is not intended to be, and should not be, used by anyone other than these specified parties. it.)40at f youILLP March 6, 2013 1302-1025260 166 A member firm of Ernst 8 Young Global Limited W WI" 11111111111111111 ERNST&YOUNG Ste °ungLLP 00 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major Federal Program and State Project and on Internal Control Over Compliance in Accordance With OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General Members of the Board of County Commissioners Collier County, Florida Compliance We have audited Collier County, Florida's (the County) compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement, and the requirements described in the Department of Financial Services' State Projects Compliance Supplement, that could have a direct and material effect on each of the County's major federal programs and state projects for the year ended September 30, 2012. The County's major federal programs and state projects are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs and state projects is the responsibility of the County's management. Our responsibility is to express an opinion on the County's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB } Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and Chapter 10.550, Rules of the Auditor General, State of Florida (Chapter 10.550). Those standards, OMB Circular A-133, and Chapter 10.550 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program or state project occurred. An audit includes examining, on a test basis, evidence about the County's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the County's compliance with those requirements. 1302-1025260 167 A member firm of Ernst&Young Global Limited 111111111111 1II1IIIII''If =� ERNST&YOUNG As described in the following table, the County did not comply with the following requirements that are applicable to the major federal program and state project listed below: CFDA/CSFA Federal Program/ Compliance Number State Project Requirement Finding Reference 65.010 Community Care for Allowable Costs/Cost 2012-1 the Elderly Principles Reporting 2012-7 10.559 Summer Food Service Allowable Costs/Cost Program for Children Principles 2012-1 Cash Management 2012-3 Period of Availability 2012-5 Compliance with such requirements is necessary, in our opinion, for Collier County to comply with requirements applicable to those programs. In our opinion, except for the noncompliance described in the preceding paragraph, the County complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs and state projects for the year ended September 30, 2012. The results of our auditing procedures also disclosed other instances of noncompliance with those requirements that are required to be reported in accordance with OMB Circular A-133 and Chapter 10.550 and which are described in the accompanying schedule of findings and questioned costs as items 2012-1, 2012-2, 2012-4 and 2012-6. Internal control over compliance The management of the County is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs and state projects. In planning and performing our audit, we considered the County's internal control over compliance with the requirements that could have a direct and material effect on a major federal program or state project to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133 and Chapter 10.550, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the County's internal control over compliance. 1302-1025260 168 A member firm of Ernst&Young Global Limited M11111111111111111111 EERNST&YOUNG Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses, and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be material weaknesses and other deficiencies that we consider to be significant deficiencies. A deficiency in internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program or state project on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program or state project will not be prevented, or detected and corrected, on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2012-1 (CFDA No. 10.559 Summer Food Service Program for Children and CSFA No. 65.010 Community Care for the Elderly), 2012-3, 2012-5 and 2012-7 to be material weaknesses. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program or state project that is less severe than a material weakness yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2012-1 (CFDA Nos. 14.218 and ARRA-14.253 CDBG Entitlement Grants Cluster, CFDA No. 14.228 Community Development Block Grant/State's Program and CFDA No. ARRA-14.257 Homeless Prevention and Rapid Re-Housing Program), 2012-2, 2012-4 and 2012-6, to be significant deficiencies. The County's responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the County's responses and, accordingly, we express no opinion on the responses. This report is intended solely for the information and use of management, the Board of County Commissioners, others within the entity, the Auditor General of the State of Florida, and federal and state awarding agencies and pass-through entities and is not intended to be, and should not be, used by anyone other than these specified parties. f)444.4t f yowriti.LP March 6, 2013 1302-1025260 169 A member firm of Ernst&Young Global Limited Collier County, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended September 30, 2012 Payments to CFDA#1 Sub- Federal or State Grantor/Pass-Through Grantor Program Title CSFA# Grant/Contract Number Expenditures recipients EXPENDITURES OF FEDERAL AWARDS Department of Agriculture Direct Programs: Rural Business-Cooperative Service: Rural Business Enterprise Grants 10.769 09-011-596000558 $ 14,652 $ - Indirect Programs: Florida Department of Agriculture and Consumer Services: Summer Food Service Program for Children 10.559 04-0804(2011) 11815 - Summer Food Service Program for Children 10.559 04-0804(2012) 1 54064 - Total CFDA 165879 - Total Department of Agriculture 180531 -- Department of Commerce Indirect Programs: Florida Department of Environmental Protection: Coastal Zone Management Administration Awards 11.419 Collier County 50175 Executive Office of the Governor Public Safety Interoperable Communications Grant Program 11.555 11-DS-8D-09-21-01-281 67927 - Total Department of Commerce 118102 - Department of Housing and Urban Development Direct Programs: Office of Community Planning and Development: CDBG-Entitlement Grants Cluster: Community Development Block Grants/Entitlement Grants 14.218 B-03-UC-12-0016 -780 Community Development Block Grants/Entitlement Grants 14.218 B-08-UC-12-0016 69 - Community Development Block Grants/Entitlement Grants 14.218 B-08-UN-12-0003 572290 - Community Development Block Grants/Entitlement Grants 14.218 B-10-UC-12-0016 881183 521,634 Community Development Block Grants/Entitlement Grants 14.218 B-11-UN-12-0003 483925 - Community Development Block Grants/Entitlement Grants 14.218 B-11-UC-12-0016 437196 133,278 Total CFDA 2373883 654,912 ARRA Community Development Block Grant ARRA Entitlement Grants 14.253 ARRA B-09-UY-12-0016 500771 493,773 Total CDBG-Entitlement Grants Cluster 2874654 1,148,685 Emergency Shelter Grant Program 14.231 S-10-UC-12-0024 5036 5,036 Emergency Shelter Grant Program 14.231 S-11-UC-12-0024 92825 90,536 Total CFDA 97861 95,572 See accompanying notes to the schedule of expenditures of federal awards and state projects. 1302-1025260 170 Collier County, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended September 30, 2012 (continued) Payments to CFDA#1 Sub- Federal or State Grantor/Pass-Through Grantor Program Title CSFA# Grant/Contract Number Expenditures recipients Supportive Housing Program 14.235 FL0294B4D060801 $ (231) $ - SupportiveHousingProgram 14.235 FL0294B4D060802 (1) - Supportive Housing Program 14.235 FL0294B4D061003 45,462 - Supportive Housing Program 14.235 FL0294B4D061104 24,745 - Supportive Housing Program 14.235 FL0295B4D060802 63,606 63,606 Supportive Housing Program 14.235 FL0295B4D061003 105,970 105,969 Supportive Housing Program 14.235 FL0296B4D060802 55,359 55,359 Supportive Housing Program 14.235 FL0296B4D061003 2,462 - Total CFDA 297,372 224,934 Home Investment Partnerships Program 14.239 M-09-UC-12-0217 15,733 15,733 Home Investment Partnerships Program 14.239 M-10-UC-12-0217 290,310 290,311 Home Investment Partnerships Program 14.239 M-11-UC-12-0217 53,912 6,596 Total CFDA 359,955 312,640 ARRA Homelessness Prevention and Rapid Re-Housing Program(HPRP) 14.257 ARRA S09-UY-12-0024 298,169 279,093 Indirect Programs: Florida Department of Economic Opportunity: Community Development Block Grants/State's Program 14.228 08DB-D3-09-21-01-A03 (650) Community Development Block Grants/State's Program 14.228 10DB-D4-09-21-01-K09 4,458,214 1,333,070 Community Development Block Grants/State's Program 14.228 12DB-P5-09-21-01-K39 9,477 - Total CFDA 4,467,041 1,333,070 Total Department of Housing and Urban Development 8,395,052 3,393,994 Department of the Interior Direct Programs: Bureau of Land Management: Payments in Lieu of Taxes 15.226 Collier County 1,266,939 - Fish and Wildlife Service: Partners for Fish and Wildlife 15.631 401815J021 23,209 - Total Department of the Interior 1,290,148 Department of Justice JAG Program Cluster: Direct Programs: ARRA Recovery Act-Edward Byrne Memorial Justice Assistance Grant (JAG)Program/Grants to Units Of Local Government 16.804 ARRA 2009-SB-B9-1969 223,263 -- Bureau of Justice Assistance: Edward Byrne Memorial Justice Assistance Grant Program 16.738 2009-DJ-BX-0335 1,370 - Edward Byrne Memorial Justice Assistance Grant Program 16.738 2010-DJ-BX-0576 10,352 - Edward Byrne Memorial Justice Assistance Grant Program 16.738 2011-DJ-BX-2520 79,600 - 1302-1025260 171 Collier County, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended September 30, 2012 (continued) Payments to CFDA#1 Sub- Federal or State Grantor/Pass-Through Grantor Program Title CSFA# Grant/Contract Number Expenditures recipients Indirect Programs: Florida Department of Law Enforcement: Edward Byrne Memorial Justice Assistance Grant Program 16.738 2011-JAGC-COLL-1-B2-213 $ 18,151 $ - Edward Byrne Memorial Justice Assistance Grant Program 16.738 2012-JAGC-COLL-1-C4-125 131,472 Total CFDA 240,945 Total JAG Program Cluster 464,208 Direct Programs: Office of Victims of Crime: Services for Trafficking Victims 16.320 2010-VT-BX-0004 26,770 Violence Against Women Office: Supervised Visitation,Safe Havens for Children 16.527 2009-CW-AX-K011 88,097 - Bureau of Justice Assistance: Drug Court Discretionary Grant Program 16.585 2010-DC-BX-0016 45,340 38,269 State Criminal Alien Assistance Program 16.606 2008-AP-BX-0859 461,423 - Bulletproof Vest Partnership Program 16.607 Collier County 8,583 - Office of Community Oriented Policing Services: Public Safety Partnership and Community Policing Grants 16.710 2009-CK-WX-0204 27,540 - Public Safety Partnership and Community Policing Grants 16.710 2010-CK-WX-0107 167,405 Total CFDA 194,945 - Department of Justice: Equitable Sharing Program 16.922 Collier County Sheriff 32,704 Indirect Programs: Florida Office of Attorney General: Crime Victim Assistance 16.575 V11129 131,411 - Florida Department of Children and Families: Violence Against Women Formula Grants 16.588 12-8008-LE 132,729 - Violence Against Women Formula Grants 16.588 13-8008-LE 36,189 - Total CFDA 168,918 - Total Department of Justice 1,622,399 38,269 1302-1025260 172 Collier County, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended September 30, 2012 (continued) Payments to CFDA#/ Sub- Federal or State Grantor/Pass-Through Grantor Program Title CSFA# Grant/Contract Number Expenditures recipients Department of Transportation Direct Programs: Federal Aviation Administration(FAA): Airport Improvement Program 20.106 3-12-0142-008-2010 $ 2,468,991 $ - Federal Transit Administration(FTA): Federal Transit Cluster: Federal Transit-Capital Investment Grants 20.500 FL-03-0264-00 68,020 -- Federal Transit-Capital Investment Grants 20.500 FL-04-0047-00 2,699 - Total CFDA 70,719 - ARRA Federal Transit-Formula Grants 20.507 ARRA FL-96-X019-00 1,083,563 - Federal Transit-Formula Grants 20.507 FL-90-X665-00 14,946 - Federal Transit-Formula Grants 20.507 FL-90-X699-00 116,968 -- Federal Transit-Formula Grants 20.507 FL-90-X731-00 1,313,673 - Federal Transit-Formula Grants 20.507 FL-90-X766-00 1,204,094 - Total CFDA 3,733,244 - Total Federal Transit Cluster 3,803,963 - Indirect Programs: Florida Department of Transportation: Highway Planning and Construction 20.205 416237-1/AQ076 547,701 - Highway Planning and Construction 20.205 420871-1/A4377 229,451 - Highway Planning and Construction 20.205 423645-1/A4377 142,225 - Highway Planning and Construction 20.205 426836-I/AQ258 52,950 - Highway Planning and Construction 20.205 427934-1/AQG31 69 - Highway Planning and Construction 20.205 427936-1/AQ383 741,169 - Total CFDA 1,713,565 - Metropolitan Transportation Planning 20.505 410113-1/AP031 154,869 - Formula Grants for Other Than Urbanized Areas 20.509 410120-1/AOW89 415,347 - ARRA Formula Grants for Other Than Urbanized Areas 20.509 ARRA 426772-1/APII9 108,263 - Total CFDA 523,610 - Capital Assistance Program for Elderly Persons and Persons with Disabilities 20.513 FL-16-0036 78,615 - State and Community Highway Safety 20.600 190245-1/AQK91 14,820 - Total Department of Transportation 8,758,433 - 1302-1025260 173 Collier County, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended September 30, 2012 (continued) Payments to CFDA#/ Sub- Federal or State Grantor/Pass-Through Grantor Program Title CSFA# Grant/Contract Number Expenditures recipients Department of Energy Direct Programs: ARRA Energy Efficiency and Conservation Block Grant Program(EECBG) 81.128 ARRA DE-EE0000783 $ 245,028 $ - Total Department of Energy 245,028 - U.S.Election Assistance Commission Indirect Programs: Florida Department of State: Help America Vote Act Requirements Payments 90.401 Collier County-FY 2008-2009 2,222 -- Help America Vote Act Requirements Payments 90.401 Collier County-FY 2009-2010 36,110 - Help America Vote Act Requirements Payments 90.401 2010-2011-0001 36,110 - Help America Vote Act Requirements Payments 90.401 2011-2012-0001 32,147 - Total U.S.Election Assistance Commission 106,589 - Department of Health and Human Services Direct Programs: Health Resources and Services Administration: Specially Selected Health Projects 93.888 DIARH20098 229,305 220,529 Indirect Programs: Florida Department of Elder Affairs-Area Agency on Aging for Southwest Florida,Inc.dba Senior Choices of Southwest Florida: Aging Cluster: Special Programs for the Aging Title III,Part B Grants for Supportive Services and Senior Centers 93.044 OAA 203.11 20,855 Special Programs for the Aging Title III,Part B Grants for Supportive Services and Senior Centers 93.044 OAA 203.12 45,551 Total CFDA 66,406 - Special Programs for the Aging Title III,Part C Nutrition Services 93.045 OAA 203.11 93,713 -- Special Programs for the Aging Title III,Part C Nutrition Services 93.045 OAA 203.12 300,910 - Total CFDA 394,623 - Nutrition Services Incentive Program 93.053 NSIP 203.11 23 - Nutrition Services Incentive Program 93.053 NSIP 203.12 339 - Total CFDA 362 - Total Aging Cluster 461,391 - National Family Caregiver Support,Title III,Part E 93.052 OAA 203.11 8,975 - National Family Caregiver Support,Title III,Part E 93.052 OAA 203.12 52,882 - Total CFDA 61,857 - 1302-1025260 174 Collier County, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended September 30, 2012 (continued) Payments to CFDA#/ Sub- Federal or State Grantor/Pass-Through Grantor Program Title CSFA# Grant/Contract Number Expenditures recipients Florida Department of Revenue: Child Support Enforcement 93.563 CD311 $ 137,388 $ Florida Department of State: Voting Access for Individuals with Disabilities Grants to States 93.617 2011-2012-0002 396 - Florida Department of Transportation-Commission for the Transportation Disadvantaged: Medical Assistance Program 93.778 416043-IBDM59 426,764 - Total Department of Health and Human Services 1,317,101 220,529 Corporation for National and Community Service Direct Programs: Retired and Senior Volunteer Program 94.002 09SRSFL017 37,675 - Retired and Senior Volunteer Program 94.002 I2SRSFLO12 8,142 - Total Corporation for National and Community Service 45,817 -- Department of Homeland Security Indirect Programs: Executive Office of the Governor: Hazard Mitigation Grant 97.039 11HM-3E-09-21-01-004 2,257 Hazard Mitigation Grant 97.039 11HM-3E-09-21-01-005 8,898 - Hazard Mitigation Grant 97.039 11HM-3E-09-21-01-026 28,191 - Total CFDA 39,346 - Emergency Management Performance Grants 97.042 12-FG-R3-09-21-01-078 90,240 - Homeland Security Grant Program 97.067 11-DS-29-09-21-01-239 215,728 - Homeland Security Grant Program 97.067 I1-DS-29-09-2I-01-240 8,710 Homeland Security Grant Program 97.067 11-DS-9Z-09-21-01-394 50,182 Homeland Security Grant Program 97.067 12-DS-20-09-21-23-435 108,884 - Florida Department of Law Enforcement: Homeland Security Grant Program 97.067 2008-LETP-COLL-1 S3-017 85,898 - Total CFDA 469,402 - Total Department of Homeland Security 598,988 - TOTAL EXPENDITURES OF FEDERAL AWARDS $ 22,678,188 $ 3,652,792 1302-1025260 175 Collier County, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended September 30, 2012 (continued) Payments to CFDA#1 Sub- Federal or State Grantor/Pass-Through Grantor Program Title CSFA# Grant/Contract Number Expenditures recipients EXPENDITURES OF STATE FINANCIAL ASSISTANCE Executive Office of the Governor Emergency Management Programs 31.063 12-BG-05-09-21-01-011 $ 62,258 $ - Emergency Management Programs 31.063 13-BG-83-09-21-01-011 26,273 - Total CSFA 88,531 - Emergency Management Projects 31.067 12-CP-03-09-21-01-185 8,956 - Total Executive Office of the Governor 97,487 - Florida Department of Environmental Protection Beach Erosion Control Program 37.003 05C01 64,091 - Beach Erosion Control Program 37.003 07C01 3,002 Total CSFA 67,093 - Expanded Local Hazardous Waste Management Program 37.008 S0557 18,400 - GAC Properties,Inc.Consent Order#15-Restricted Funds Projects: City of Cape Coral-Rotary Park and Other Future Projects 37.049 S0539 53,645 Total Florida Department of Environmental Protection 139,138 - Florida Department of State and Secretary of State State Aid to Libraries 45.030 07-ST-12 23,083 - State Aid to Libraries 45.030 08-ST-12 5,552 - State Aid to Libraries 45.030 09-ST-10 164,099 - State Aid to Libraries 45.030 10-ST-10 183,637 - Total Florida Department of State and Secretary of State 376,371 - Florida Housine Finance Corporation State Housing Initiatives Partnership(SHIP)Program 52.901 Collier County/Naples 1,056,769 38,967 Total Florida Housing Finance Corporation 1,056,769 38,967 1302-1025260 176 Collier County, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended September 30, 2012 (continued) Payments to CFDA#1 Sub- Federal or State Grantor/Pass-Through Grantor Program Title CSFA# Grant/Contract Number Expenditures recipients Florida Department of Transportation Commission for the Transportation Disadvantaged(CTD)Trip and Equipment Grant Program 55.001 207246-1/207246-3/AQB16 $ 468,783 $ Commission for the Transportation Disadvantaged(CTD)Trip and Equipment Grant Program 55.001 410656-1/AQJ06 29,180 - Commission for the Transportation Disadvantaged(CTD)Trip and Equipment Grant Program 55.001 432027-1/432028-1/AQ087 170,094 - Total CSFA 668,057 - Commission for the Transportation Disadvantaged(CTD) Planning Grant Program 55.002 193630-1/AQP39 4,788 - Commission for the Transportation Disadvantaged(CTD) Planning Grant Program 55.002 207246-2/AQB39 12,632 Total CSFA 17,420 - Aviation Development Grants 55.004 206430-1/A1935 1,553 - Aviation Development Grants 55.004 414298-1/A0V99 151,494 - Aviation Development Grants 55.004 414299-1/AOR09 4,992 - Aviation Development Grants 55.004 414299-1/AOR09 74,462 Aviation Development Grants 55.004 425515-1/AQ122 56,592 Total CSFA 289,093 - Public Transit Block Grant Program 55.010 410139-1/A0W93 838,071 Intermodal Development Program 55.014 420353-1/APF60 977,103 - State Infrastructure Bank 55.020 420655-2/EIF59 6,327,545 - Transportation Regional Incentive Program(TRIP) 55.026 429815-1/AQE89 242,696 Total Florida Department of Transportation 9,359,985 -- Florida Department of Children and Families Homeless Challenge Grant 60.014 HFZ1D 28,000 28,000 Homeless Challenge Grant 60.014 HFZ2B 57,646 37,493 Total CSFA 85,646 65,493 Public Safety,Mental Health,and Substance Abuse Local Matching Grant 60.115 LHZ25 106,217 90,306 Total Florida Department of Children and Families 191,863 155,799 1302-1025260 177 Collier County, Florida Schedule of Expenditures of Federal Awards and State Financial Assistance For the Fiscal Year Ended September 30, 2012 (continued) Payments to CFDA#/ Sub- Federal or State Grantor/Pass-Through Grantor Program Title CSFA# Grant/Contract Number Expenditures recipients Florida Department of Health County Grant Awards 64.005 C8011 $ 17,938 $ - County Grant Awards 64.005 C9011 7,370 - County Grant Awards 64.005 C0011 63,658 - Total Florida Department of Health 88,966 - Florida Department of Elder Affairs Area Agency on Aging for Southwest Florida,Inc dba Senior Choices of Southwest Florida: Home Care for the Elderly 65.001 HCE 203.11 4,909 - Home Care for the Elderly 65.001 HCE 203.12 2,922 Total CSFA 7,831 - Alzheimer's Respite Services 65.004 ADI 203.11 52,797 - Alzheimer's Respite Services 65.004 ADI 203.12 15,018 - Total CSFA 67,815 - Community Care for the Elderly(CCE) 65.010 CCE 203.10 1,045 - Community Care for the Elderly(CCE) 65.010 CCE 203.11 474,044 - Community Care for the Elderly(CCE) 65.010 CCE 203.12 141,820 Total CSFA 616,909 - Total Florida Department of Elder Affairs 692,555 TOTAL EXPENDITURES OF STATE FINANCIAL ASSISTANCE $ 12,003,134 $ 194,766 1302-1025260 178 Collier County, Florida Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance Year Ended September 30,2012 1. Basis of Presentation The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance (the Schedule) includes the federal and state grant activity for Collier County, Florida (the County) and is presented on the modified accrual basis of accounting for expenditures accounted for in the governmental funds and the accrual basis of accounting for expenditures in proprietary funds. Under the modified accrual basis, revenue is recognized if it is both measurable and available for use during the fiscal year and expenditures are recognized in the period liabilities are incurred, if measurable. Under the accrual basis, expenditures are recognized in the period liabilities are incurred. The information in the schedule is presented in accordance with the requirements of U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and Section 215.97, Florida Statutes. Therefore, some amounts presented in the Schedule may differ from amounts presented, or used in the preparation of, the basic financial statements for the fiscal year ended September 30, 2012. 2. State Infrastructure Bank Loan Collier County received a $12,000,000 State Infrastructure Bank Loan from the Florida Department of Transportation in fiscal year 2008 for construction of the I-75/Immokalee Road interchange. The Florida Department of Transportation included this project with their concurrent widening of I-75 and retained the loan proceeds to fund the project. Accordingly, the County's expenditures for purposes of reporting on the Schedule consist of principal loan repayments only ($6,327,545 for fiscal year 2012) as no proceeds were received under the loan and no project expenditures were incurred or paid directly by the County. The current balance of the loan as of September 30, 2012, is $0. The repayment schedule for this loan is as follows: Payment Date Principal Interest Total 10/1/2008 $ 1,957,377 $ 82,623 $ 2,040,000 10/1/2009 1,839,148 200,852 2,040,000 10/1/2010 1,875,930 164,070 2,040,000 10/1/2011 1,913,449 126,551 2,040,000 1/25/2012 4,414,096 28,298 4,442,394 $ 12,000,000 $ 602,394 $ 12,602,394 1302-1025260 179 Collier County, Florida Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance (continued) 3. Contingency The grant revenue amounts received are subject to audit and adjustment. If any expenditures or expenses are disallowed by the grantor agencies as a result of such an audit, any claim for reimbursement to the grantor agencies would become a liability of the County. In the opinion of management, all grant expenditures are in material compliance with the terms of the grant agreements and applicable federal and state laws and regulations. 4. Negative Figures on the Schedule Negative expenditures reported in the Schedule are the result of corrections that reduced expenditures in one grant and increased expenditures in another grant or funding source. Although the current expenditures on a grant may be negative, the total of all expenditures on the grant is expected to be positive over its total period of performance. 1302-1025260 180 Collier County, Florida Schedule of Findings and Questioned Costs For the Year Ended September 30, 2012 Part I—Summary of Auditor's Results Financial Statements Section Type of auditor's report issued(unqualified, qualified, adverse or disclaimer): Unqualified Internal control over financial reporting: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified? Yes X None reported Noncompliance material to financial statements noted? Yes X No Federal awards and State Projects Section Internal control over major programs/projects: Material weakness(es) identified? X Yes No Significant deficiency(ies) identified? X Yes None reported Type of auditor's report issued on compliance for Qualified for the Community Care for major programs (unqualified, qualified, adverse or the Elderly Program (CSFA#65.010) disclaimer): and the Summer Food Service Program for Children(CFDA# 10.559); and Unqualified for all other major federal programs and state projects. Any audit findings disclosed that are required to be reported in accordance with Section .510(a) of OMB Circular A-133, Section 215.97, Florida Statutes, and Chapter 10.550, Rules of the Auditor General, State of Florida? X Yes No 1302-1025260 181 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Identification of major federal programs: CFDA number(s) Name of federal program or cluster 14.218, ARRA-14.253 CDBG—Entitlement Grants Cluster 14.228 Community Development Block Grant/State's Program ARRA-14.257 Homelessness Prevention and Rapid Re-housing Program (HPRP) (Recovery Act Funded) 10.559 Summer Food Service Program for Children 20.205 Highway Planning and Construction 20.500/20.507 Federal Transit Cluster Identification of major state projects: CSFA number(s) Name of state project 52.901 State Housing Initiatives Partnership Program(SHIP) 55.001 Commission for the Transportation Disadvantaged (CTD) Trip and Equipment Grant Program 55.020 State Infrastructure Bank Loan Program 65.010 Community Care for the Elderly 45.030 State Aid to Libraries 55.010 Public Transit Block Grant Program 55.014 Intermodal Development Program 1302-1025260 182 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Dollar threshold used to distinguish between Type A and Type B programs: • Federal Programs $680,345 • State Projects $360,094 Auditee qualified as low-risk auditee? Yes X No 1302-1025260 183 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Part II—Financial Statement Findings Section This section identifies the significant deficiencies, material weaknesses, fraud, illegal acts, violations of provisions of contracts and grant agreements, and abuse related to the financial statements for which Government Auditing Standards require reporting in a Circular A-133, Section 215.97, Florida Statutes and Chapter 10.550, Rules of the Auditor General audit. No such matters were identified. 1302-1025260 184 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Part III—Federal Award Findings and Questioned Costs Section This section identifies the audit findings required to be reported by Circular A-133 Section .510(a), Section 215.97, Florida Statutes, and Chapter 10.550, Rules of the Auditor General, State of Florida, such as material weaknesses, significant deficiencies, and material instances of noncompliance, including questioned costs, as well as any abuse findings involving federal awards or state projects that are material to a major program. Finding 2012-1 Federal Program/State Project Information Florida Department of Elder Affairs: Community Care for the Elderly CSFA No. 65.010 Award No. CCE203.10, Award Year—2010 Award No. CCE 203.11, Award Year—2011 Award No. CCE 203.12, Award Year—2012 U.S. Department of Housing and Urban Development CDBG— Entitlement Grants Cluster (CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. ARRA B-09-UY-12-0016, Award Year—2009 Award No. B 11-UC-12-0016, Award Year—2011 Award No. B-11-UN-12-0003, Award Year—2011 Community Development Block Grant/State's Program (DRI) CFDA No. 14.228 Award No. 08DB-D3-09-21-01-A03, Award Year—2008 Award No. 10-DB-D4-09-21-01-K09, Award Year—2010 Award No. 12-DB-P5-09-21-01-K 39, Award Year—2012 1302-1025260 185 Collier County, Florida Schedule of Findings and Questioned Costs (continued) ARRA: Homelessness Prevention and Rapid Re-Housing Program (HPRP) CFDA No. ARRA— 14.257 Award No. ARRA S09-UY-12-0024, Award Year—2009 Summer Food Service Program for Children CFDA No. 10.559 Award No. 04-0804, Award Year—2011 Award No. 04-0804, Award Year—2012 Criteria or specific requirement(including statutory, regulatory, or other citation): Allowable Costs: Compensation for personnel services rendered in connection with federal awards must be documented and supported as described in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments (A-87). According to A-87, the standards regarding time distribution are in addition to the payroll documentation and require the following: • Charges to federal awards for salaries and wages, whether treated as direct or indirect costs, will be based on payrolls documented in accordance with the generally accepted practice of the governmental unit and approved by responsible official(s) of the governmental unit. • Where employees are expected to work solely on a single federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on the program for the period covered by the certification. These certifications will be prepared at least semiannually and will be signed by the employee or supervisory official having firsthand knowledge of the work performed by the employee. • Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports or equivalent documentation that meets the following standards (unless a statistical system or other substitute system has been approved by the cognizant federal agency): 1302-1025260 186 Collier County, Florida Schedule of Findings and Questioned Costs (continued) a) Must reflect an after-the-fact distribution of the actual activity of each employee b) Must account for the total activity for which each employee is compensated c) Must be prepared at least monthly and must coincide with one or more pay periods d) Must be signed by the employee e) Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to federal awards but may be used for interim accounting purposes. Condition/Context During our testing over payroll, we could not obtain sufficient evidence that the time allocated toward grant programs per time sheets was actual time the employee spent working on the grant programs. As described in the following table, we found multiple cases where the time recorded by the employee did not agree to the expenditure recorded. Summary Sample Exceptions Type of Grant Program Selected Found Expenditures CCE(CSFA No. 65.010) 65 1 Payroll 13 Payroll and 3 Payroll and CDBG(CFDA No. 14.218 and 14.253) 52 Non-payroll 4 1 Non-payroll DRI(CFDA No. 14.228) 60 1 Payroll HPRP (CFDA No. 14.257) 35 3 Payroll SFP (CFDA No. 10.559) 9 2 Payroll 1302-1025260 187 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Payroll Expenditures: Time Sheets associated with the expenditures below did not agree to the schedule of expenditures. We also noted that the County did not have proper time sheets for several of our selections. Expenditures Amount per Based on Employee Pay Period Expenditure Time Sheet Grant Program Type of Payroll Expense No. Ending Date Detail Allocation Difference CCE(CSFA No.65.010) Social Security Match 5260 01/13/2012 $ 101 $ 91 $ 10 CDBG(CFDA No. 14.218 Regular Salaries 2006 07/13/2012 $ 22 — $ 22 and 14.253) CDBG(CFDA No. 14.218 Regular Salaries 2006 07/13/2012 $ 108 — $ 108 and 14.253) CDBG(CFDA No. 14.218 Retirement Regular 2006 07/13/2012 $ 1 — $ 1 and 14.253) DRI(CFDA No. 14.228) Social Security Match 3942 10/07/2011 $ 6 — $ 6 HPRP(CFDA No. 14.257) Regular Salaries 4527 10/07/2011 $ 214 — $ 214 HPRP(CFDA No. 14.257) Regular Salaries 3942 10/07/2011 $ 633 — $ 633 HPRP(CFDA No.14.257) Retirement Regular 4516 11/04/2011 $ 52 — $ 52 SFP(CFDA No. 10.559) Social Security Match 5555 09/09/2011 $ 51 — $ 51 SFP(CFDA No. 10.559) Retirement Regular 5555 09/09/2011 $ 41 — $ 41 Total $ 1,137 Non Payroll Expenditures: The documentation provided by the County did not support the expenditure. Amount per Amount WBS Expenditure per Grant Program Type of Expenditures Elementary Detail Invoice Difference CDBG(CFDA No. 14.218 and 14.253) IGC-Intergovernmental 33050.8.6 $30 N/A $30 Charge Total $30 Questioned costs $1,167. Cause/Effect Payroll allocations to grant programs were not supported by detailed time records. As such, these payroll costs are unsupported. This could result in reimbursement for unallowable or unsubstantiated costs. 1302-1025260 188 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Recommendation We recommend that the County implement effective internal control processes to confirm that actual time worked by an employee is charged to the grant programs. Views of responsible officials and planned corrective actions Programs: CCE, CDBG, DRI and HPRP Management concurs with the recommendation. Housing, Human and Veteran Services (HHVS) continues to follow the established procedure for charging grants staff time via biweekly timesheets, signed by the employee and management to reflect actual time spent on the grants. Internal controls have been strengthened to prevent and/or verify that formulas have not been inadvertently changed to create unintentional errors. The department has implemented one spreadsheet to be used by all staff members. Account strings and formulas are verified by the accounting supervisor prior to forwarding to Human Resources for entry into the accounting system (SAP). During May 2012, all time keepers were retrained on proper time keeping processes by the Human Resources Department. HHVS is in the process of finalizing formal written procedures to be used as a guide and training to continue to strengthen internal controls. OMB will assist in the review of these procedures and provide job aides as needs are identified. During FY 2013, the County formed a subcommittee to assist HHVS to formalize business operations into protocols and written procedures. The committee meets weekly. The payroll process has been identified as a top priority. Human Resource personnel are in attendance to ensure current practices and policies are understood. OMB is in attendance to ensure audit finding concerns are addressed through proper internal controls. It should also be noted that the majority of instances found noncompliant were during the first half of the fiscal year prior to management's restructure of OMB oversight. Program:SFP The Parks Department has performed a thorough review of records and concurs there exists no other documentation for the time period in question. The Department was recently reviewed for its time keeping practices by the Clerk of Courts internal auditors and corrective action has been taken to ensure complete and accurate records are kept for time worked by each employee. Specifically, the department has developed a system that establishes a central, ongoing post-audit of payroll records for each payroll period to ensure standardization of time entry. This centralized post-audit includes: 1302-1025260 189 Collier County, Florida Schedule of Findings and Questioned Costs (continued) 1. Schedules for all cost centers in the department are posted and maintained electronically. 2. Time cards are matched to what has been entered into SAP. 3. All entries are checked for completeness (e.g.; appropriate signatures, inclusion of leave slips, proper coding, etc.). 4. The Program Supervisor and Regional Manager are contacted immediately if any discrepancy is uncovered. 5. A log is kept which details the audit and files for each pay period. 6. All new and re-hires are now paid by direct deposit only. In addition, all time keepers were retrained on May 2012 on proper time keeping processes by the Human Resources Department and a staff member was hired June, 2012 to complete post- audit on all payroll time submissions to ensure proper documents are retained, information is entered correctly and corrective action is taken immediately in case of any discrepancies. Program: CDBG(NSP)Non payroll: Management concurs with the recommendation. The County's Real Property Department staff provides services to the Neighborhood Stabilization Program. Service costs are allocated among the appropriate properties and administrative allowances. In this particular instance, the Internal Governmental Charge (IGC) invoice billed $953.29 for five staff members' time. All costs were allowable; however, HHVS inadvertently allocated the wrong employee hourly rate which resulted in a lower costs per hour allocation of$30.00 instead of$43.86. HHVS has corrected the IGC allocation which resulted in an additional amount of $208 to be charged to the NSP program. OMB has implemented long term resolution during FY 2012. Audit risk has been cured by the development of an annual single internal service rate for Real Property Department services. The rate methodology was developed in compliance with OMB Circular A-87. The IGC cited for noncompliant backup were for services performed prior to OMB plan development. OMB will also develop an IGC standard processing protocol to ensure IGC are appropriately reviewed to ensure accuracy. 1302-1025260 190 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Finding 2012-2 Federal Program/State Project Information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. ARRA B-09-UY-12-0016, Award Year—2009 Award No. B 11-UC-12-0016, Award Year—2011 Award No. B-11-UN-12-0003, Award Year—2011 Community Development Block Grant/State's Program(DRI) CFDA No. 14.228 Award No. 08DB-D3-09-21-01-A03, Award Year—2008 Award No. 10-DB-D4-09-21-01-K09, Award Year—2010 Award No. 12-DB-P5-09-21-01-K 39, Award Year—2012 Highway Planning and Construction(Federal-Aid Highway Program) CFDA No. 20.205 Award No. 42087111401/A4377, Award Year— 1998 Award No. 41623713801/AQ076, Award Year—2010 Award No. 42683613801/AQ258, Award Year—2010 Award No. 42793615801/AQ383, Award Year—2010 Award No. 427934-1-58-01, Award Year—2011 Award No. 420871-1-14-01/PL-0313 (048)/A4377, Award Year—2012 1302-1025260 191 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Florida Department of Transportation: Public Transit Block Grant Program CSFA No. 55.010 Award No. 410139-1/A0W93, Award Year—2008 Criteria or specific requirement (including statutory, regulatory, or other citation) Cash Management: In accordance with OMB Circular A-102 Common Rule, the County's methods and procedures for transferring funds should minimize the time elapsing between the transfer to the County of grant funds and when the disbursement was paid by the County. Condition/Context We selected 60 cash drawdowns totaling $7,351,178 from a population of 167 drawdowns totaling $10,097,868 as follows: Population Sample Selected Number of Amount of Number of Amount of Cash Cash Cash Cash Grant Program CFDA/CFSA# Drawdowns Drawdowns Drawdowns Drawdowns CDBG 14.218/14.253 50 $ 2,354,710 20 $ 1,366,852 DRI 14.228 21 2,080,607 8 2,007,721 HPC 20.205 12 1,227,643 4 849,927 PTBG 55.01 3 1,213,600 2 1,079,509 SAL 45.030 2 203,263 2 203,263 SHIP 52.901 2 430,987 1 403,533 CTD 55.001 13 654,350 5 260,561 CCE 65.010 12 609,670 4 243,904 SFP 10.559 4 165,880 3 165,074 HPRP 14.257 35 298,552 8 205,594 FTC 20.500/20.507 13 858,605 3 565,239 Total 167 $ 10,097,868 60 $ 7,351,178 We noted several instances listed below where there was a significant time lag between when the County paid for grant expenditures and when the disbursement was requested for reimbursement. 1302-1025260 192 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Date of Oldest Expenditure Paid by Amount of Cash Date of Request for County in Cash Difference in Grant Drawdown Cash Drawdown Drawdown Days NSP(CDBG) $114,467 7/27/12 8/25/2011 337 NSP(CDBG) 210,025 7/27/12 4/8/2010 841 NSP(CDBG) 70,290 7/27/12 10/8/2010 658 NSP (CDBG) 6,251 7/27/12 11/19/2010 616 CDBG 48,023 1/13/2012 5/6/2011 252 CDBG 59,326 1/13/2012 5/6/2011 252 DRI 52,4821 1/23/2012 12/3/2010 416 HPC 267,580 6/7/2012 2/10/12 118 PTBG 844,849 11/18/2011 1/5/2011 317 PTBG 234,660 8/15/2012 1/20/2012 208 Questioned costs N/A. Cause/Effect Drawdown or reimbursement requests were submitted to the grantor significantly past the time that the County paid for the qualifying expenditures. There is a lack of a process to minimize the time between disbursement and reimbursement request. This could adversely affect County cash flows as well result in the grantor not reimbursing the County for reimbursements requested within a reasonable time frame. Recommendation The County should implement procedures that minimize the time elapsing between the request for a cash drawdown and the time that the disbursements are paid by the County. Views of responsible officials and planned corrective actions Management concurs with the recommendation. Management's general protocol is to periodically request reimbursement on a quarterly basis and has a written protocol as such. However, during the course of any fiscal year, staffing levels and responsibilities fluctuate and 1302-1025260 193 Collier County, Florida Schedule of Findings and Questioned Costs (continued) meeting required deadlines take precedence. As a result, reimbursements requests are delayed on those grant programs where the grantor contract does not explicitly cite a required interval to invoice. The action not to draw has no adverse affect on the grantor programs; however management acknowledges the need to maintain a schedule to regularly request reimbursement whenever possible. Over the prior year, improvements have been made and the dollar value of outstanding draws tested was reduced by 38.5%. The following offers additional conditions that delayed reimbursement requests on individual programs audited. CDBG Program: The CDBG entitlement program has been in arrears in draw requests. Department accounting staff and OMB are working together to bring these requests up to date on all contracts and establish a regular schedule. The draw delay finding is cited on older grant contracts in comparison to the prior year. Draw requests on the most current contracts are up to date and shows management's commitment and progress to increase the frequency of draws. NSP Program: The delay in regular draw requests was largely due to significant staffing changes. NSP draws are performed in a required Disaster Recovery Grant Reporting (DRGR) system with the creation and approval of vouchers by separate individuals. In November 2011, the HHVS staff member who created the draw vouchers moved to a different position and ended employment with the County. The remaining employee with DRGR access had approval rights but could not create draw vouchers. The only person who can change rights in the DRGR system is the assigned DRGR system Administrator who also resigned from the County. In February 2012, a new Manager was hired for NSP and became the assigned DRGR Administrator. Obtaining DRGR rights, hiring vacant staffing positions (July 2012), and obtaining appropriate training for the DRGR system took time and further delayed a draw request. Staff proactively sought one-on-one training for the DRGR system to perform a draw on 7/27/12 prior to formal training obtained by both program and fiscal staff in August and September of 2012. A dedicated accountant has been hired full time and works with OMB to ensure reconciliation of the financial system to the DRGR system. Drawdowns are now done on a regular basis throughout the year unless program income prevents such drawdowns from occurring. DRI Program— Over the course of the current and prior fiscal years, the Department went through several fiscal and program staffing changes and restructuring. During FY 2012, draw reimbursements were brought up-to-date. The draw found noncompliant was the first draw completed in FY 2012. Since this time, the frequency of draws has increased and subsequent draws have been made and posted on 5/2/12, 8/17/12, 10/22/12, 12/19/12 and 1/18/13. 1302-1025260 194 Collier County, Florida Schedule of Findings and Questioned Costs (continued) SBGP Program—While reimbursement is generally performed quarterly, this action was delayed due to transition of staffing who prepare the request. The reimbursement requires a reconciliation of the entire Collier Area Transit (CAT) operational expenditures and revenues, making the request a time intensive process compared to other reimbursement processes. Management did contact the grantor agency to confirm reimbursement required intervals. FDOT District One confirmed Collier County is in line with other agency's frequency of 1-2 time intervals per year. HPC Program— This finding is related to the Lake Trafford Turn Lane project. Periodic draws have historically been completed (FY11 Q4, FY12 Q1 and a combined FY12 Q2/Q3). As of 3/12/12, the project was assessed liquidated damages. Conservatively, management's decision was to request reimbursement after final liquidated damages were assessed and properly posted within the financial system. Once this occurred (11/26/12), the project was close to completion and management's decision was to wait for the grantor agency to perform a customary EEO review to validate that all documentation was provided by the contractor and compliance is met. Once all documentation is deemed successful, final retainage is released. FDOT has performed their final review as of 11/28/12. A final invoice will be prepared to meet the requirement for submittal of a final reimbursement within 120 days of project completion. Finding 2012-3 Federal program information U.S. Department of Agriculture Florida Department of Education Summer Food Service Program for Children CFDA No. 10.559 Award No. 04-0804, Award Year—2011 Award No. 04-0804, Award Year—2012 Criteria or specific requirement (including statutory, regulatory, or other citation) Allowable Costs; Cash Management: In accordance with OMB Circular A-102 Common Rule, the related expenditures should be in compliance with the applicable funding techniques as described in the agreement and when awards are funded on a reimbursement basis, the costs for which reimbursement was requested were paid prior to the date of the reimbursement request. In addition, in accordance with OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments (A-87), costs need to be supported by adequate documentation. 1302-1025260 195 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Condition/Context We noted that the meals served on a daily basis are tracked manually at each site, and the daily manual tracking sheets are sent to the Parks and Recreation Administration office. Personnel at the office enter the manual data into a monthly manual tracking spreadsheet, which is then used to summarize the total meals served to prepare the monthly reimbursement requests. For testing purposes, we obtained the daily tracking sheets for two sites from a population of 11 sites (Lely Elementary and Golden Gate for June 2012 and July 2012), the Park and Recreation's manual tracking sheets for the months selected above and the reimbursement requests. The amounts recorded on the daily tracking sheets did not agree to the monthly manual tracking sheets held by the Parks and Recreation office. In addition, as illustrated in the table below, we could not trace the amounts on the monthly tracking sheets to the reimbursement request submitted to the Florida Depaitinent of Agriculture. As such, we were unable to determine whether the tracking sheets appropriately reflected the number of meals delivered, and whether the reimbursement requests submitted were correct. Below is a summary of our testing: Manual Manual Tracking Reimbursement Tracking Reimbursement Total Locations Date Sheets Request Variance Sheets Request Variance Variance Breakfast Breakfast Lunch Lunch Lely Elementary Jun-12 1479 1479 0 1643 1658 15 15 Golden Gate Jun-I2 1774 1789 15 1806 1821 15 30 Lely Elementary Jul-12 1550 1574 24 1668 I692 24 48 Golden Gate Jul-12 2349 2373 24 2574 2598 24 48 Total 7152 7215 63 7691 7769 78 141 Questioned costs We extrapolated the exceptions over the cash drawdowns population and noted that the extrapolated amount is less than $10,000. Illustrated below is a schedule of questioned costs related to our testing: Reimbursement Variances (from Rates table above) Questioned Costs Breakfast 1.8975 63 $ 120 Lunch 3.325 78 259 Total $ 379 1302-1025260 196 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Cause/Effect Reimbursement requests were submitted to the grantor that could not be fully substantiated with evidence that they were qualifying meals served. There is no process for reconciling meals served information prior to reimbursement payment. This could result in reimbursement for unsubstantiated meals served. Recommendation We recommend that the personnel administering the grant program implement procedures to ensure that reimbursement requests are supported by actual meals served. Views of responsible officials and planned corrective actions Management concurs with the recommendation. The differences in amounts used by program staff was based upon a misinterpretation of the 2% Seconds Rule associated with the Summer Food Service Program. The Summer Food Service Project Administrative Guide (page 42) states that "a limited number of second meals served as a unit can be claimed for reimbursement as long as the total number of second meals does not exceed 2% of first meals served by the sponsor,for all sites during the claiming period". Staff misinterpreted this provision to count 2% for each site daily versus monthly. State Auditors associated with the Summer Food Service Program identified this issue as well and the department has established a corrective action with the Department of Agriculture, where the 2% of the second meal will be counted at the end of each month to ensure accuracy. As a result, subsequent revisions did not tie to the summary of meals or final reimbursement request due to the fact that the staff did not adjust the backup documentation to tie to the request after the States requested corrections. The Parks Depai tment recently filled an Operation Analyst position as of July 2012 that has been identified as a Grants Controller pursuant to the OMB Grants Program Management plan to assist in oversight of single audit compliance. During the end of FY 2012 and FY 2013, OMB began to meet with the Grants Controller to discuss countywide internal controls and standardized grant protocols that will be fully implemented to Parks including the 2013 Summer Food Program. OMB will work with staff to develop a monthly monitor review process to ensure monthly tracking reports reconcile to the reimbursement request and any subsequent revisions to the reimbursement request to support a successful audit trail. 1302-1025260 197 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Finding 2012-4 State project information Florida Housing Finance Corporation (the Corporation) State Housing Initiatives Partnership Program (SHIP) CSFA No. 52.901 Award No. FY08-09, Award Year—2008 Criteria or specific requirement(including statutory, regulatory or other citation) Eligibility: The SHIP Program Manual requires each award recipient to perform income verification for each program participant. In order for the County to determine each applicant's assets (cash on hand/checking account balance), the SHIP program manual calls for the County to average the balance for the last six months on the applicant's checking account. Condition/Context During our testing, we noted that the County calculated the applicant's net worth inaccurately. Instead of averaging the checking account balance over the six months preceding the application, the County used only the last three months to perform the calculation for three applicants (selections 1 through 3 in the schedule below). For another applicant (schedule 4 below), we noted that the County did not average the last six months but instead added them. We selected 16 applicants from a population of 63. The 4 selections where the County did not properly calculate the applicant's net worth are summarized in the table below: Application Selections Number Closing Date 1 10-023 11/17/2011 2 10-034 6/20/2012 3 10-050 6/20/2012 4 11-012 09/28/2012 Questioned costs N/A 1302-1025260 198 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Cause/Effect There is a lack of process to ensure that each application is reviewed by a second level reviewer. Failure by the County to calculate each applicant's net worth accurately can result in the qualification of ineligible participants in the program. Recommendation We recommend that the County implement a second level of review to confirm that errors and inconsistencies are caught on time and that all program participants are eligible. Views of responsible officials and planned corrective actions An eligibility checklist process to ensure compliance is met accordingly with the SHIP manual requirements was implemented in March 2012. As part of this improvement, the requirement to average 6 months of checking account balances is now documented and has been the appropriate standard since that time. As of December 2012, the procedure has been revised to add a second documented review. Finding 2012-5 Federal program information U.S. Department of Agriculture Florida Department of Education Summer Food Service Program for Children CFDA No. 10.559 Award No. 04-0804, Award Year—2011 Award No. 04-0804, Award Year—2012 Criteria or specific requirement(including statutory, regulatory, or other citation) Period of Availability: According to the Summer Food Service Program for Children Agreement No.04-0804, all obligations/expenditures must occur and be recorded within the period of availability of June 13, 2011 to August 11, 2011. 1302-1025260 199 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Condition/Context We selected 9 expenditures for testing from a population of 52. We noted that two expenditures were incurred and paid in June 2012 and July 2012 which is outside of the period of availability (June 13, 2011 to August 11, 2011 —WBS Element 33154). Below is a summary of our findings: Selected Expenditure Expend GL Posting Selections# Amount Expense Purpose Award Period Date 8 $ 952.70 Jun 12 Fleet Billing 6/13/11-8/11/11 07/01/2012 9 $ 1,318.07 Jul 12 Fleet Billing 6/13/11-8/11/11 07/31/2012 Questioned costs $2,271. Cause/Effect There is a lack of process to confirm that transactions and underlying obligations are recorded during the period of availability. This could result in reimbursement for unallowable costs incurred outside of the period of availability. Recommendation The County should implement procedures that require that expenditures are reviewed timely to confirm that they are incurred within the period of availability. Views of responsible officials and planned corrective actions Management concurs with the recommendation. Expenditures were Internal Government Charges (IGC) from eligible fleet costs associated with the 2012 Summer Food Services Program. Staff did not communicate effectively the new project number to the internal Fleet Department for 2012 Summer Food Program. Consequently, 2012 eligible fuel expenditures were processed to the 2011 project number. The SFSP does allow for prior year excess unit reimbursement revenue to be utilized for current year expenditures. The Parks Department recently filled an Operation Analyst position as of July 2012 that has been identified as a Grants Controller pursuant the OMB Grants Program Management plan to assist in oversight of single audit compliance. During the end of FY 2012 and FY 2013, OMB began to meet with the Grants 1302-1025260 200 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Controller to discuss internal controls and standardized grant protocols that will be fully integrated into the 2013 Summer Food Program. Corrective actions will include: • Development of a standard written protocol for IGC type invoices and a communication plan to provide current information to internal departments serving the Summer Food Program. • Process closeout budget amendments and/or lock down prior year projects to prevent charges from occurring as an internal control. Finding 2012-6 Federal program information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. ARRA B-09-UY-12-0016, Award Year—2009 Award No. B 11-UC-12-0016, Award Year—2011 Award No. B-11-UN-12-0003, Award Year—2011 Criteria or specific requirement (including statutory, regulatory, or other citation) Procurement, Suspension, and Debarment: Verify that contract files exist and ascertain if appropriate cost or price analysis was performed in connection with procurement actions, including contract modifications and that this analysis supported the procurement action (CFR Section 215.45). Further, test whether the non-federal entities performed a verification check for covered transactions, by checking the EPLS, collecting a certification from the entity, or adding a clause or condition to the covered transaction with the entity. 1302-1025260 201 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Condition/Context During our testing, we noted that there was a contract modification related to one of the 11 vendors that we selected from a population of 33 vendors. The document provided by the County was dated the day of our request. We therefore could not ascertain whether the required review and approval was conducted prior to the procurement. In addition, we noted no documentation evidencing that the County had checked the EPLS for one of the vendors selected for testing (GA Food Service of Pinellas County). We further noted that a certification from the vendor was not collected or clause or condition included in the contract as follows: Invoice Invoice Item Number Number Description of Amount Selected Issues Identified A 101239 29,548.09 Builder's Risk Insurance for NSP No EPLS check was Properties performed B 103286 84,987.00 Construction Project:34116– Improper approval 5283 24th Ave SW—Unit A/B of a change order Questioned costs N/A. Cause/Effect These two exceptions are not in compliance with the County's procurement policy and are not in compliance with the procurement, suspension, and debarment requirements of OMB Circular A-102 since no evidence of review was provided and an EPLS check was not performed. As a result, the contract may have been awarded to a different contractor and payments may be made to a suspended or debarred party. Therefore, internal controls over the procurement, suspension, and debarment requirement were not operating effectively. Recommendation The County should perform the required verification by checking the EPLS (and documenting evidence of the verification, when it was performed and by whom), collecting a certification from the entity, or adding a clause or condition to the contract with that entity in accordance with the federal requirements. Also, the County should keep proper documentation on file to support that all procurements were approved properly and in a timely fashion. 1302-1025260 202 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Views of responsible officials and planned corrective actions Management concurs with the recommendation. In further review of contract files, it was identified that a change order was not required for this modification or contract 09-5248 as this was a "purchase order" generated event versus a work order due to the terms of the contract. The department did not realize that a change order process was not necessary and created a Change Modification Form to be executed by the Purchasing Department. In the future, forms inadvertently filled out will be clearly identified as incorrect. Department staff will be required to provide the correct forms per policy and procedures to be maintained as part of the procurement record. On January 9, 2012, purchasing staff communicated that the Change Order Modification was not necessary. HHVS documented this in a memo as part of an email request to reduce the purchase order as the net change resulted in a $.50 credit. Purchasing did not remove the Change Order Modification from the transaction in SAP. The Purchasing staff member who made the advisement underwent serious medical conditions during the summer and fall 2012 and was out of work until she passed away in October and therefore, staff was not able to consult with her. After Ernst&Young documentation was requested, Purchasing staff decided to exercise the most conservative action and "sign-off' on the Change Order Modification in the abundance of caution (since the change order modification form was technically used). Purchasing dated the sign-off the day of the request to communicate the document had not been executed prior to the request from E&Y. It should be noted, had an increase in cost occurred, the Purchasing Department would have required a requisition modification that would have been work flowed through the department for administrative and budget approval. With respect to the EPLS exception, Management concurs with the recommendation. It should be noted that this is a repeat finding on the GA Foods contract for the CCE grant program that was left in 2008. A certification of debarment was subsequently collected from GA Foods at the time of contract renewal on December 9, 2010. These services were rebid in FY12 and GA Foods was the winning bidder. A proper EPLS verification is on file and was performed prior to award on January 12, 2012 concurrent with our current procedure and OMB Circular 102 requirements. 1302-1025260 203 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Finding 2012-7 State project information Florida Department of Elder Affairs: Community Care for the Elderly CSFA No. 65.010 Award No. CCE203.10; Award Year—2010 Award No. CCE 203.11, Award Year—2011 Award No. CCE 203.12, Award Year—2012 Criteria or specific requirement (including statutory, regulatory, or other citation) The County is required to submit semi-annual Service Cost Reports to the Agency every February and August 15th. The report reflects the actual costs of providing each service by program, which provides information for planning and negotiating unit rates. Condition/Context We noted that the County failed to submit a service cost report during the entire 2012 fiscal year. Questioned costs N/A. Cause/Effect The County does not have a process in place to identify required reports and submission dates. Failure to submit the required semiannual reports resulted in noncompliance with the reporting requirements of the grant program. Recommendation The County should establish policies and procedures to confirm that all required reports are prepared and filed in a timely manner, including developing a checklist of required reports and due dates. 1302-1025260 204 Collier County, Florida Schedule of Findings and Questioned Costs (continued) Views of responsible officials and planned corrective actions Management concurs with the recommendation. OMB has a reporting matrix in development to assist the Department in management of required reports and deadlines. In this instance, staffing vacancies prevented submission of the required reports in the normal format and the required timeline. Management worked with the grantor agency for alternatives to the reporting deadlines but did not obtain documented grantor approvals prior to the deadlines. At the time the first submittal was due on 2/15/12, one position served as both the Department Accounting Supervisor and the lead accountant for the human services program (including CCE) and prepared the Service Cost Report (SCR). This staff person was on maternity leave during the due date of the first report. Not knowing how to complete the SCR template, staff provided SAP expenditure reports in lieu of a SCR on 2/15/12 and the grantor agency verbally accepted this submittal. The Accounting Supervisor later resigned on 6/02/12 and consequently, new staff needed training in order to properly prepare the report. Management separated the accounting function of the human service grants from the Accounting Supervisor position and reassigned an existing full time Accountant on 6/25/12 to oversee the human service grants. On 8/14/12, after a verbal discussion and pursuant to the grantor agency request, staff provided a formal request for training in order to submit the 8/15/12 SCR. The grantor agency verbally agreed to waive submission on reporting until training could be provided. Staff inadvertently did not obtain a written allowance for this action. The granted waiver was documented within a monitoring report issued on 12/12/12 by the grantor agency. Training was provided by the grantor agency on 11/13/12. The prior period report due 08/15/12 was submitted on 02/15/13 along with the first FY 2013 report also due 02/15/13. This finding has been remedied. Management considers this an isolated incidence with the realignment of staff resources, cross training and additional oversight of OMB to assist in management of report deadlines, including successful documentation of actions taken to meet required deadlines. 1302-1025260 205 Collier County, Florida Summary Schedule of Prior Audit Findings For the Year Ended September 30, 2012 The current status of findings for the years ended September 30, 2011 and 2010, related to major federal programs and state projects is as follows: Finding 2011-1 Federal Program Information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-08-UC-12-0016,Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. ARRA B-09-UY-12-0016,Award Year—2009 Community Development Block Grant/State's Program and Non-Entitlement Grants in Hawaii (State-Administered Small Cities Program) (DRI) CFDA No. 14.228 Award No. 08DB-D3-09-21-01-A03, Award Year—2008 Award No. 10-DB-D4-09-21-01-K09, Award Year—2010 ARRA: Homelessness Prevention and Rapid Re-Housing Program(HPRP) CFDA No. ARRA— 14.257 Award No. ARRA S09-UY-12-0024, Award Year—2009 Criteria Allowable Costs; Cash Management: In accordance with OMB Circular A-102 Common Rule, the County's methods and procedures for transferring funds should minimize the time elapsing between the transfer to the County of grant funds and when the disbursement was paid by the County. In addition, when awards are funded on a reimbursement basis, costs for which reimbursement was requested should be paid prior to the date of the reimbursement request. 1302-1025260 206 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Condition/Context For the CDBG— Entitlement Grants Cluster program and the Community Development Block/Grant State's Program and Non-Entitlement Grants in Hawaii (State-Administered Small Cities Program) (DRI), we noted several instances listed below where there was a significant time lag between when the County paid for disbursements and when the disbursement was requested for reimbursement. Date of Oldest Expenditure Paid by Amount of Date of Request County in Cash for Cash Cash Difference Grant Drawdown Drawdown Drawdown in Days NSP (CDBG) $1,052,304.06 6/2/2011 1/31/2010 487 NSP (CDBG) 818,750.63 7/1/2011 6/24/2010 372 NSP (CDBG) 179,100.35 7/1/2011 7/8/2010 358 CDBG 233,839.26 2/24/2011 7/9/2010 230 CDBG 125,762.40 2/15/2011 9/28/2010 140 CDBG 319,009.64 2/15/2011 9/28/2010 140 CDBG 74,448.22 2/24/2011 4/24/2009 671 CDBG 55,000.00 2/15/2011 11/18/2010 89 CDBG 100,427.62 9/21/2011 4/28/2011 146 CDBG 103,474.00 9/23/2011 4/13/2011 163 DRI 40,741.48 3/3/2011 7/9/2010 237 Further for the CDBG— Entitlement Grants Cluster program, we noted items were certified to be 100% complete by contractors, were requested for full payment in signed affidavits, and authorized for full payment by Housing, Human &Veteran Services (HHVS) staff, who certified on the disbursement authorization form that a site inspection was conducted and the work was 100% complete, without all work having been completed for 24 homes, as observed during physical inspections of the NSP properties by the Internal Audit Department of the Clerk of the Circuit Court. The bid line value for incomplete work ranged from $1,038 to $12,101 across all findings, and was not specific to one contractor. 1302-1025260 207 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Also, upon Internal Audit's review of new air conditioning systems installed versus the bid specifications, it was noted that four systems did not conform to the bid requirements and one could not be verified. The systems in question required SEER and/or heat kilowatt ratings that were higher than the actual ratings of the systems installed by the contractors. The purpose of using certain minimum Energy Star and SEER ratings for A/C systems used in the rehabilitation process is to confirm the utility bills will remain affordable for the homeowner, as required by HUD grant guidelines. Other substitutions were also noted, for example: a sink base cabinet was not removed and replaced per specifications in order to save the granite counter top from being damaged. The project manager and contractor decided to install a new tub in one of the bathrooms as a substitute for the work not performed in the kitchen, but a change order was never completed; therefore,the substitution was not approved. In addition, Internal Audit noted in their investigation report that five homeowners received lawn care services for three months after their purchase of an NSP property with a value of$1,380. The HHVS department found the error and requested the funds be reimbursed to the county for the services from each homeowner in letters dated February 4, 2011. To date, no funds have been reimbursed to the County from the homeowners; however, it was further noted that the contractor was never paid for these services by the County. During our compliance testing over the activities allowed or disallowed/allowable costs/costs principles attributes, we noted 10 expenditures that were for rehabilitation work for properties that were physically inspected by Internal Audit where the work was not completed or unapproved substitutions were made. Also, we noted per review of the details for the cash draw downs, that part of the request for reimbursement were for rehabilitation expenditures on properties that were investigated by Internal Audit and determined to have questioned costs associated with them for work that was paid for, but was not complete. Finally, for the "ARRA: Homelessness Prevention and Rapid Re-Housing Program (HPRP),"we noted that for one drawdown request dated July 5, 2011, the drawdown request was made prior to the check date of the initial expenditure, which was July 6, 2011. As such, the funds were not expended prior to the drawdown request. 1302-1025260 208 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Questioned Costs For the CDBG— Entitlement Grants Cluster program, we noted total questioned costs of $158,559. Further, for the ARRA: Homelessness Prevention and Rapid Re-Housing grant program, we noted total questioned costs of$16,370. Cause/Effect Drawdown or reimbursement requests were submitted to the grantor significantly past the time that the County paid for the qualifying expenditures. There is a lack of a process to minimize the time between disbursement and reimbursement request. In addition, drawdown or reimbursement requests were submitted to the grantor prior to the County incurring and paying for qualifying expenditures. This could result in reimbursement for unallowable or unsupported costs. Overall, these resulted in noncompliance with the cash management requirements of the grant programs. In addition, expenditures were paid by the County for rehabilitation work that was incomplete. Internal controls over rehabilitation activities and the related approval process were not designed or operating effectively. Signing statements saying that work is 100% complete when it is not could result in funds being expended and requested for reimbursement for work that is not completed. Recommendation The County should implement procedures that minimize the time elapsing between the request for a cash drawdown and the time that the disbursements are paid by the County and that the personnel administering the grant program comply with the County's established process, whereby qualifying expenditures are incurred and paid for prior to requesting reimbursement from the grantor. Also, the County should implement internal control procedures to inspect all work prior to authorizing any payment requests to confirm that contractors have completed all work according to the bid specifications. Current Status Drawdowns: OMB has developed a written internal control to establish protocols to perform drawdowns at regularly scheduled intervals. Due to continued staffing changes, vacancies, restructuring and mid-year implementation of OMB countywide oversight of grants compliance, progress has been made but not completely eliminated during FY 2012. The CDBG program's most active grants contracts have been brought up to date during FY 2012 and only older grant 1302-1025260 209 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) contracts remained in noncompliance. The NSP grant program as of July 2012 has regularly scheduled draws performed. The DRI grant program as of May 2012 has regularly scheduled draws performed. Authorizing Payment: Internal controls have been strengthened to ensure signed statements attesting work as 100% complete for rehabilitation activities are true and accurate. The Disbursement Authorization Form that accompanies all vendor invoices submitted for payment now include photos to document that work has been completed as stated. The photos taken by responsible staff are attached to the Disbursement Authorization Form. The invoice, authorization form and photos are reviewed by the Grants Coordinator prior to their signature for payment approval. A second attestation is then obtained by the Manager, Federal and State Grants as a second verification that the statements are true and accurate. Once signatures have been obtained, the invoice is then processed for payment. Finding 2011-2 Federal Program Information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-04-UC-12-0016, Award Year—2004 Award No. B-02-UC-12-0016,Award Year—2002 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. B-09-UC-12-0016, Award Year—2009 Award No. ARRA B-09-UY-12-0016, Award Year—2009 Community Development Block Grant/State's Program and Non-Entitlement Grants in Hawaii (State-Administered Small Cities Program) (DRI) CFDA No. 14.228 Award No. 08DB-D3-09-21-01-A03, Award Year—2008 Award No. 10-DB-D4-09-21-01-K09, Award Year—2010 Florida Housing Finance Corporation(the Corporation) State Housing Initiatives Partnership Program (SHIP) CSFA No. 52.901 Award No. FY08-09, Award Year—2008 1302-1025260 210 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Criteria Reporting. For the CDBG— Entitlement Grants Cluster program, per the NSP program regulations contained in the Federal Register, each grantee must submit a quarterly performance report, as HUD prescribes, no later than 30 days following the end of each quarter, beginning 30 days after the completion of the first full calendar quarter after grant award and continuing until the end of the 15th month after initial receipt of grant funds. In addition to this quarterly performance reporting, each grantee will report monthly on its NSP obligations and expenditures beginning 30 days after the end of the 15th month following receipt of funds, and continuing until reported total obligations are equal to or greater than the total NSP grant. After HUD has accepted a report from a grantee showing such obligation of funds, the monthly reporting requirement will end and quarterly reports will continue until all NSP funds (including program income) have been expended and those expenditures are included in a report to HUD. The County received federal program funds as a sub-grantee of the State under the Community Development Block/Grant State's Program and Non-Entitlement Grants in Hawaii (State- Administered Small Cities Program) (DRI). Per review of the State's reporting guidelines, the sub-grantee is required to submit a monthly status report. For the State Housing Initiatives Partnership Program (SHIP), we noted the following reporting requirements: • In accordance with Section 420.9075(10), Florida Statutes, each county or eligible municipality shall submit to the Corporation by September 15 of each year a report of its affordable housing programs and accomplishments through June 30, immediately preceding submittal of the report. • Annual report for the Closeout Fiscal Year(2010/2011). • The local SHIP administrator's tracking system and annual reports must exactly match the information recorded in the local city or county's general ledger. • SHIP administrators, therefore, are required to regularly reconcile their tracking system with the local finance department's general ledger. They should meet with the director of their finance department to create a process that will confirm compliance with the single audit act. 1302-1025260 211 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Condition/Context For the CDBG— Entitlement Grants Cluster program, we selected quarterly reports for the NSP program to test and noted that the reports were submitted by the County and then rejected to be modified as the amounts reported did not agree to the County's general ledger; therefore, the reports could not be audited. We noted that for six of our testing selections for the Community Development Block/Grant State's Program and Non-Entitlement Grants in Hawaii (State-Administered Small Cities Program), which were for months prior to July 2011, the monthly status reports were not reconciled to the general ledger and a reconciliation was not provided. Subsequent to July 2011, we noted that these reports were reconciled to the general ledger. Finally, for the SHIP grant program, the County received a letter from the Florida Housing Finance Corporation stating that the County was not in compliance with SHIP statutory guidelines as the Annual Report was not submitted by the deadline. Further, we obtained a copy of the Annual Report and noted that the financial information included in the report was not reconciled to the County's general ledger. Accordingly, we were unable to validate the amount of expenditures reported in the Annual Report. Questioned Costs N/A Cause/Effect The reports submitted were not subjected to a thorough supervisory review to confirm accuracy and completeness, including verification that amounts reported agreed to the accounting records or were appropriately reconciled, if necessary. This could result in incorrect and/or inconsistent information between the reports filed and the underlying financial records and indicates that the County may not be in compliance with the provisions of the grant programs. Further, the SHIP grant program Annual Report was not submitted by the deadline. Internal controls with respect to reporting were not operating effectively. Recommendation The County should implement internal control procedures that require that reports be reconciled to the general ledger and reviewed and approved prior to being filed with the grantor. In addition, procedures should be in place to confirm that the reports are submitted by the deadline. 1302-1025260 212 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Current Status A technical advisor was hired to bring the required SHIP (52.901) annual reports into compliance. Staff responsible for reporting have received training from the technical advisor and will continue to receive technical support to draft and submit future reports. In order to properly account for future activity from past activity reconciled, a new SHIP fund has been established. Both Funds are monitored by OMB on a regular basis to ensure that established protocols of recording receipts, both grantor and program income is properly posted. Future reports will be reviewed and approved by OMB prior to submission. All reports have been reviewed and passed the FY 2012 audit review. This finding is remediated. In addition, OMB has established an internal control protocol to reconcile the general ledger by individual grant contract. A standard general ledger(GL) spreadsheet template has been developed to reconcile revenues postings to expenditure postings on a project to date basis. The spreadsheet is used as a monitoring and review tool for OMB to approve report submissions. Finding 2011-3 Federal Program Information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-04-UC-12-0016,Award Year—2004 Award No. B-02-UC-12-0016, Award Year—2002 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. B-09-UC-12-0016, Award Year—2009 Award No. ARRA B-09-UY-12-0016, Award Year—2009 ARRA: Homelessness Prevention and Rapid Re-Housing Program(HPRP) CFDA No. ARRA— 14.257 Award No. ARRA 509-UY-12-0024, Award Year—2009 1302-1025260 213 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Criteria Sub-recipient Monitoring: OMB Circular A-133 requires that the County maintain internal controls over sub-recipients to confirm that sub-recipient activities are monitored, audit findings are resolved, and the impact of any noncompliance on the County is evaluated. Additionally, the County should perform procedures to provide reasonable assurance that the sub-recipient obtained required audits and takes appropriate corrective action on audit findings. Condition/Context Per review of two sub-recipient files under CDBG, we noted that the 2009 audits that had been obtained showed that both sub-recipients had findings in their single audits; however, the County did not address management responses and corrective actions related to the audit findings and how they may affect the funding that the County sub-awards them under the grant program. In addition, we noted that other audits since the 2009 audits had either not been obtained or disclosed findings that were not appropriately addressed. For the HPRP grant program, the County was not obtaining and reviewing audits of sub- recipients, although, the sub-recipient stated that they had audited financial statements as part of their application for the grant sub-award. Therefore, the County did not comply with the sub-recipient monitoring requirements of OMB Circular A-133 and did not have proper internal controls in place over the process. Questioned Costs N/A Cause/Effect County personnel administering the grant program were not aware of the specific sub-recipient monitoring requirements of OMB Circular A-133. Failure to perform proper monitoring activities can result in noncompliance with sub-recipient monitoring requirements of OMB Circular A-133 and misuse/misappropriation of grant funding. 1302-1025260 214 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Recommendation We recommend that the County implement internal control policies and procedures to ensure that proper monitoring of sub-recipients occur on an ongoing basis, including the timely submission of audit reports and resolution of any audit findings. Current Status An internal control for subrecipient monitoring has been developed and implemented by OMB and HHVS staff This will include a master schedule of all subrecipients' fiscal year end dates to monitor the appropriate times to request single audit reports based on the subrecipients' fiscal year end. OMB has developed a form for subrecipients to complete in the collection of audit reports to assist in monitoring. As new subrecipient agreements are awarded, this form will also become an exhibit of the agreement. Reviews will be documented through the development of a standard review form completed by HHVS staff Subrecipients that are cited findings are required to submit a corrective action plan. OMB will provide reviews of audit reports as requested. Finding 2011-4 Federal Program Information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-04-UC-12-0016, Award Year—2004 Award No. B-02-UC-12-0016, Award Year—2002 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. B-09-UC-12-0016, Award Year—2009 Award No. ARRA B-09-UY-12-0016, Award Year—2009 1302-1025260 215 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Community Development Block Grant/State's Program and Non-Entitlement Grants in Hawaii (State-Administered Small Cities Program) (DRI) CFDA No. 14.228 Award No. 08DB-D3-09-21-01-A03, Award Year—2008 Award No. 10-DB-D4-09-21-01-K09, Award Year—2010 Criteria Special Tests and Provisions: When CDBG funds or CDBG-R funds are used for rehabilitation, the grantee must confirm that work is properly completed per 24 CFR Section 570.506. Any NSP-assisted rehabilitation of a foreclosed-upon home or residential property shall be completed to the extent necessary to comply with applicable laws, codes, and other requirements relating to housing safety, quality, or habitability, in order to sell, rent, or redevelop such homes and properties. Condition/Context We noted for one of the properties in our testing, 3061 Areca Avenue, there was no evidence that a pre-rehabilitation inspection was conducted describing the deficiencies to be corrected. Further, we noted 11 properties in our testing, 3061 Areca Avenue, 3402 Seminole Avenue, 3502 Caloosa St., 2224 50th Terrace SW, 4420 19th Avenue SW, 4471 32nd Avenue SW, 3870 4th Avenue NE, 4814 30th Place SW, 5300 17th Place SW, 2975 4th St. NE, and 3671 18th Avenue NE, that were certified to be 100% complete by contractors, were requested for full payment in signed affidavits, and authorized for full payment by Housing, Human & Veteran Services staff, who certified on the disbursement authorization form that a site inspection was conducted and the work was 100% complete, without all work having been completed, as observed during physical inspections of the properties by the Internal Audit Department of the Clerk of the Circuit Court. Questioned Costs N/A 1302-1025260 216 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Cause/Effect County personnel did not thoroughly inspect all work prior to authorizing any payment requests; therefore, the County did not have effective internal controls in place over this process. Signing statements certifying that work is 100% complete without having performed a sufficient inspection could result in funds being dispersed and requested for reimbursement for work not performed. Recommendation The County should implement internal control procedures to inspect all work prior to authorizing any payment requests to confirm that contractors completed all work according to the bid specifications, contract specifications, and carried out the work in accordance with rehabilitation standards per 24 CFR Section 570.506. Current Status Internal controls have been strengthened to ensure signed statements attesting work as 100% complete for rehabilitation activities are true and accurate. The Disbursement Authorization Form that accompanies all vendor invoices submitted for payment now include photos to document that work has been completed as stated. The photos taken by responsible staff are attached to the Disbursement Authorization Form. The invoice, authorization form and photos are reviewed by the Grants Coordinator prior to their signature for payment approval. A second attestation is then obtained by the Manager, Federal and State Grants as a second verification that the statements are true and accurate. Once signatures have been obtained, the invoice is then processed for payment. 1302-1025260 217 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Finding 2011-5 Federal Program Information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-04-UC-12-0016, Award Year—2004 Award No. B-02-UC-12-0016, Award Year—2002 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. B-09-UC-12-0016,Award Year—2009 Award No. ARRA B-09-UY-12-0016, Award Year—2009 Criteria Procurement, Suspension and Debarment: Verify that procurements provide full and open competition pursuant to the requirements of OMB Circular A-102. Condition/Context We noted one of our testing selections was part of a group bidding process for the rehabilitation of five homes where draft specifications were given to contractors for bidding, and then later revised after the bids were awarded to one contractor. These were titled "pencil bids" by the Housing Department Rehabilitation Specialist who later made revisions to bid specifications and allowed the winning contractor to adjust its line item pricing. It was further noted that the winning contractor increased certain line items within the bid even when the specifications on the final bid were unchanged from the first set. The bid totals for the jobs did not increase or decrease; only line items within the bid were changed. Further, this was also found by the Internal Audit Department of the Clerk of the Circuit Court in their investigation over 24 NSP properties owned by the County to rehabilitate as there were instances of invoices that were paid for work that was not complete (see finding 2011-2). Questioned Costs N/A 1302-1025260 218 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Cause/Effect This process is considered to be in violation of the County's procurement policy and not in compliance with the procurement, suspension, and debarment requirements of OMB Circular A-102 since all contractors were not given the opportunity to competitively bid on the same set of specifications. If all interested parties were given the opportunity to re-bid on the final specifications, the job(s) may have been awarded to a different contractor at a lower cost. Therefore, internal controls over the procurement, suspension, and debarment requirement were not operating effectively. Recommendation We recommend that the County implement proper internal controls to confirm that the bid process is competitive and fair to all interested parties by allowing them to bid on the same specifications as required by the County's procurement policy and OMB Circular A-102. Current Status Beginning in February of 2012, OMB and Purchasing met to establish coordination on grant related procurement activities. On February 1, 2012, Purchasing issued correspondence to advise all purchasing staff to coordinate with OMB to review grant solicitations. Before the grant requisition workflow is implemented, an interim process has been established for Purchasing to request OMB review of requisitions on an "as needed basis". OMB and Purchasing worked collaboratively during FY2012 to identify the need for a dedicated Purchasing procurement agent that will be the main point of contract for grant procurements working with OMB to ensure single audit compliance. This position is in process of hiring during FY 2013. Long term resolution to ensure successful procurement compliance will be initiated through a grants requisition workflow process whereby all grant related requisitions will workflow through OMB for formal review prior to release. During review, OMB will verify that procurement was carried out to the terms of the individual grantor agreement and program requirements including but not limited to open competition and debarment. This process has been successfully tested and initiated in the Growth Management Division which has managed 40 plus active grants annually. The first phase to identify workflow approvals was completed after the HHVS reorganization and full implementation is planned for FY 2013 1302-1025260 219 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Finding 2011-6 Federal Program Information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-04-UC-12-0016, Award Year—2004 Award No. B-02-UC-12-0016, Award Year—2002 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. B-09-UC-12-0016, Award Year—2009 Award No. ARRA B-09-UY-12-0016, Award Year—2009 Criteria Program Income and Cash Management: Revenue received by a state, unit of general local government, or sub-recipient (as defined at 24 CFR 570.500(c)) that is directly generated from the use of CDBG funds (which term includes NSP grant funds) constitutes CDBG program income. To confirm consistency of treatment of such revenue, the definition of program income at 24 CFR Section 570.500(a) shall be applied to amounts received by states, units of general local government, and sub-recipients. However, Section 2301(d)(4) imposes certain limitations and requirements that necessitate an alternative requirement to govern the use of program income generated by activities carried out pursuant to Section 2301(c). The limitations and requirements are based on the NSP activity that generated the program income and on the date the income is received. In addition, Section 2301(d)(4)requires any revenue from the sale,rental, redevelopment, rehabilitation, or any other eligible use of NSP funds to be provided to and used by the state or unit of local general government. This includes revenue received by a private individual or other entity that is not a sub-recipient. Program income received before July 30, 2013, may be retained by the state or unit of general local government if it is treated as additional CDBG funds and used in accordance with the requirements of Section 2301. Furthermore, as provided under 24 CFR Section 85.21 for entitlements, grantees, and sub-recipients shall disburse program income before requesting additional cash withdrawals from the U.S. Treasury. 1302-1025260 220 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Condition/Context At the end of fiscal year 2010, there was a total of$725,320.37 of program income that had not been considered and adjusted against future cash draws that was generated from CDBG activities. During fiscal year 2011, we noted there were three CDBG cash drawdowns that occurred during fiscal year 2011. Per review of the first draw, the date of the request for reimbursement was on June 2, 2011. Based on this date and review of the program income population for CDBG, we noted additional program income received during fiscal year 2011 as of 6/2/11 of$259,378.63, resulting in a total amount of program income (fiscal year 2010 and fiscal year 2011) prior to this cash draw of $984,699.00. We noted per review of the cash drawdown details that the County only applied $725,315.86 of program income to the request as oppose to the whole amount reflected in the general ledger of$984,699.00. Further, the last two cash draws related to CDBG during fiscal year 2011 were requested on July 1, 2011, and did not have any program income that was drawn against. Questioned Costs $259,378.63 Cause/Effect It appears that CDBG program income not adjusted from (reduced) future cash draws. Internal controls with respect to program income were not operating effectively. Recommendation We recommend that the County implement procedures to verify that program income received is properly adjusted to future cash draw downs. Current Status OMB has developed a written internal control to establish protocols to perform drawdowns that provides an additional layer of oversight prior to submissions to ensure • Program income has been properly accounted for and applied to reduce the requested draw amount, • A project to date general ledger reconciliation is performed, 1302-1025260 221 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) • Payments have cleared to prevent advance reimbursement and • Match and inkind requirements have been met. HHVS now routes all draw requests via email to the assigned OMB Grants Accountant to receive approvals via email prior to submission or request for draw. This protocol will be implemented countywide over time. Finding 2011-7 State Program Information Florida Fish and Wildlife Conservation Commission Florida Boating Improvement Program CSFA No. 77.006 Award No. 08079, Award Year—2008 Criteria Matching: Per Florida Boating Improvement Program guidelines, applicants must furnish some form of noncash match (in-kind service) to the project. Noncash match may include the cost of administrative/contract management, engineering/construction management, labor, materials, and equipment provided through in-house resources of the Applicant. Applicants may not provide more than 5% of the total project cost for project administration and 10% of the total project cost for project engineering/construction management. Condition/Context We noted that there were in-kind contributions of $20,000 and $60,000 for administration and project management, respectively, included in the final submitted report for the FBIP grant program. However, we were unable to obtain evidence to substantiate the valuation and calculation of the in-kind contributions. 1302-1025260 222 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Questioned Costs $80,000 Cause/Effect The final report submitted was not adequately reviewed to confirm accuracy and completeness, including verification that in-kind contribution amounts reported were appropriately substantiated by accounting records. Internal controls with respect to matching were not operating effectively. Recommendation The County should implement internal control procedures that require that amounts included in final submitted reports be adequately substantiated and reconciled to the accounting records and reviewed and approved prior to being filed with the grantor. Current Status OMB has developed a written internal control to establish protocols to perform drawdowns that provides an additional layer of oversight prior to submissions to ensure • Program income has been properly accounted for and applied to reduce the requested draw amount, • A project to date general ledger reconciliation is performed, • Payments have cleared to prevent advance reimbursement and • Match and inkind requirements have been met. Coastal Zone Management (CZM) has been reorganized under the Growth Management Division where OMB countywide protocols were originally developed and implemented successfully since FY 2008. CZM now routes all draw requests to the assigned OMB Grants Accountant to receive approval via signature or email prior to submission or request for draw. This protocol will be implemented countywide over time. 1302-1025260 223 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Finding 2011-8 Federal/State Program Information Federal Agencies/Program: U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No.'s 14.218, ARRA-14.253 Award No. B-04-UC-12-0016,Award Year—2004 Award No. B-02-UC-12-0016, Award Year—2002 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-10-UC-12-0016, Award Year—2010 Award No. B-09-UC-12-0016, Award Year—2009 Award No. ARRA B-09-UY-12-0016, Award Year—2009 Community Development Block Grant/State's Program and Non-Entitlement Grants in Hawaii (State-Administered Small Cities Program) (DRI) CFDA No. 14.228 Award No. 08DB-D3-09-21-01-A03, Award Year—2008 Award No. 10-DB-D4-09-21-01-K09, Award Year—2010 State Agencies/Programs: Florida Department of Elder Affairs Community Care for the Elderly(CCE) CSFA No. 65.010 Award No. CCE 203.11, Award Year—2011 Award No.CCE 203.10, Award Year—2010 1302-1025260 224 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Florida Housing Finance Corporation State Housing Initiatives Partnership Program (SHIP) CSFA No. 52.901 Award No. FY08-09, Award Year—2008 Criteria Allowable Costs: Compensation for personnel services rendered in connection with federal awards must be documented and supported as described in OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments (A-87). Additionally, pursuant to the SHIP Program Manual and the State of Florida's Part Four Compliance Supplement for the CCE program, administrative costs for the SHIP and CCE state programs should also be in conformance with A-87. According to A-87, the standards regarding time distribution are in addition to the payroll documentation and require the following: • Charges to federal awards for salaries and wages, whether treated as direct or indirect costs, will be based on payrolls documented in accordance with the generally accepted practice of the governmental unit and approved by responsible official(s) of the governmental unit. • Where employees are expected to work solely on a single federal award or cost objective, charges for their salaries and wages will be supported by periodic certifications that the employees worked solely on the program for the period covered by the certification. These certifications will be prepared at least semiannually and will be signed by the employee or supervisory official having firsthand knowledge of the work performed by the employee. • Where employees work on multiple activities or cost objectives, a distribution of their salaries or wages will be supported by personnel activity reports or equivalent documentation that meets the following standards (unless a statistical system or other substitute system has been approved by the cognizant federal agency): 1302-1025260 225 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) a) Must reflect an after-the-fact distribution of the actual activity of each employee, b) Must account for the total activity for which each employee is compensated, c) Must be prepared at least monthly and must coincide with one or more pay periods, and d) Must be signed by the employee. e) Budget estimates or other distribution percentages determined before the services are performed do not qualify as support for charges to federal awards but may be used for interim accounting purposes. Condition/Context During our testing over payroll, we could not obtain sufficient evidence that the time allocated toward grant programs per time sheets was actual time the employee spent working on the grant programs. Questioned Costs Total salaries and related costs for the fiscal year 2011 time period are summarized as follows: CDBG(CFDA No. 14.218) $ 577,627 DRI(CFDA No. 14.228) $ 162,652 SHIP (CSFA NO. 52.901) $ 37,822 CCE (CSFA No. 65.010) $ 251,771 Cause/Effect Payroll allocations to grant programs were not supported by detailed time records. As such, these payroll costs are unsupported. This could result in reimbursement for unallowable or unsubstantiated costs. Recommendation We recommend that the County implement effective internal controls to confirm that actual time worked by an employee is charged to the grant programs. 1302-1025260 226 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Current Status Housing, Human and Veteran Services (HHVS) continues to follow the established procedure for charging grants staff time via biweekly timesheets, signed by the employee and management to reflect actual time spent on the grants. Internal controls have been strengthened to prevent and/or verify that formulas have not been inadvertently changed to create the unintentional errors that generated the audit finding. The department has implemented one spreadsheet to be used by all staff members. Account strings and formulas are verified by the lead accountants for each program prior to forwarding to Human Resources for entry into the accounting system(SAP). During May 2012, all time keepers were retrained on proper time keeping processes by the Human Resources Department. HHVS is in process of finalizing formal written procedures to be used as a guide and training to continue to strengthen internal controls. OMB will assist in review of these procedures and provide job aides as needs are identified. During FY 2013, the County formed a subcommittee to assist HHVS to formalize business operations into protocols and written procedures. The committee meets weekly. The payroll process has been identified as a top priority. Human Resource personnel are in attendance to ensure current practices and policies are understood. OMB is in attendance to ensure audit finding concerns are addressed through proper internal controls. Finding 2011-9 State Program Information Florida Fish and Wildlife Conservation Commission Florida Boating Improvement Program CSFA No. 77.006 Award No. 08079, Award Year—2008 Criteria Reporting: Per review of the State's reporting guidelines, the sub-grantee is required to submit monthly progress reports from the award date of the grant until such time as the Contractor's Certification of Completion is signed by the contractor and submitted to the Florida Fish and Wildlife Conservation Commission. The compliance supplement requires that performance reports are complete and accurate, which includes a requirement that amounts reported be in agreement with accounting records that support the audited financial statements and the SEFA. 1302-1025260 227 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Condition/Context We noted during our review and testing of the final invoice that the Contractor's Certification of Completion, which was signed by the contractor, was submitted to the Florida Fish and Wildlife Conservation Commission on November 9, 2011; however, no progress reports were submitted after January 2011, during which month construction was completed. As such, no monthly progress reports were submitted for approximately 10 months. Questioned Costs N/A Cause/Effect Failure to submit the required monthly progress reports resulted in noncompliance with the reporting requirements of the grant program. Internal controls with respect to reporting were not operating effectively. Recommendation The County should establish policies and procedures necessary to confirm that all required reports are prepared and filed in a timely manner, including developing a checklist of required reports and due dates. Current Status OMB has established a review and approval process of required grantor reports prior to submittal. In support of this process, a standard general ledger (GL) reconciliation template has been implemented to reconcile revenues postings to expenditure postings on a project to date basis. The spreadsheet is used as a monitoring and review tool to approve draw and report submissions. A GL spreadsheet will be established for each grantor agreement maintained by the OMB. To date, report review has been rolled out to those Depai tments with findings and/or comments with a phased rollout countywide. 13024025260 228 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Finding 2011-10 Federal Program Information U.S. Department of Agriculture Florida Department of Education Summer Food Service Program for Children CFDA No. 10.559 Award No. 04-0804, Award Year—2011 Criteria Allowable Costs: Compensation for personnel services rendered in connection with federal awards must be documented and supported as described in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments (A-87). Condition/Context We noted upon review of payroll time cards from the Parks and Recreation Department, the County Clerk's Finance Department identified and investigated an error noted in the computation and data entry of overtime hours worked by Summer Food Program personnel. We note that the fiscal technician that was inputting the time for the Summer Food Program was responsible for entering the hours worked by each employee. The fiscal technician would enter and approve in the SAP general ledger system for payroll processing and payment, the data provided by the manual time card signed by the employee and supervisor of the program. The fiscal technician, when entering overtime hours into the system, multiplied all overtime hours by 1.5, as they were unaware that the County's payroll system automatically calculated the increase in rate for hours classified as overtime hours. Additionally, we noted that an overpayment for the time resulted in additional employer taxes and Florida Retirement System contributions, as these expenditures are calculated as a percentage of total pay. Questioned Costs $8,517 1302-1025260 229 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Cause/Effect The cause is due to a clerical error going undetected due to the lack of effective supervisory oversight, which resulted in an overcharge of payroll costs to the program. As such, unallowable costs were charged to the program. In addition, permissions for both entering data and approving time in the SAP system were granted to this employee. Recommendation We recommend an additional level of review, to compare the hours per the manual time cards to the timekeeper's entry into the system, and that the timekeeper's access to the payroll module should not also include approval of time entry. We also recommend proper training of payroll personnel. Current Status The department has implemented a policy to ensure the segregation of duties between time keepers who enter the data and the staff who have permission to approve payroll. These permissions are also segregated within the SAP time-keeping system. Additionally, the department has developed a system that establishes a central, ongoing post-audit of payroll records for each payroll period to ensure standardization of time entry. This centralized post- audit includes: 1. Schedules for all cost centers in the department are posted and maintained electronically 2. Time cards are matched to the schedules 3. Time cards are matched to what has been entered into SAP 4. All entries are checked for completeness (e.g.; appropriate signatures, inclusion of leave slips, proper coding, etc.) 5. The Program Supervisor and Regional Manager are contacted immediately if any discrepancy is uncovered. 6. A log is kept which details the audit and files for each pay period. 7. All new and re-hires are now paid by direct deposit only 1302-1025260 23 0 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Finally, all time keepers were retrained on May 2012 on proper time keeping processes and a staff member was hired on June, 2012 to complete post-audit on all payroll time submissions to ensure proper documents are retained, information is entered correctly and corrective action is taken immediately in case of any discrepancies. The Department standardized its timesheet for all employees and began implementation of the new time report effective February 2013. All time keepers have been trained on the new timesheet. Finding 2011-11 Federal Program Information U.S. Department of Agriculture Florida Department of Education Summer Food Service Program for Children CFDA No. 10.559 Award No. 04-0804, Award Year—2011 Criteria Allowable Costs; Cash Management: In accordance with OMB Circular A-102 Common Rule, the related expenditures should be in compliance with the applicable funding techniques as described in the agreement and when awards are funded on a reimbursement basis, the costs for which reimbursement was requested were paid prior to the date of the reimbursement request. In addition, in accordance with OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments (A-87), costs need to be supported by adequate documentation. Condition/Context We note that the meals served on a daily basis are tracked manually at each meal site, and the manual tracking sheets are sent to the Parks and Recreation Administration Office. Personnel at the office enter the manual data into an excel spreadsheet, which is then used to summarize the total meals served and to prepare the cash drawdown requests. We obtained the Excel tracking spreadsheet for the month of June 2011, and while clerically testing it, we noted that the total number of meals served, plus the total number of meals left over, was more than the total number of meals delivered for the Naples locations. Additionally, we noted that the total number of meals left over for both locations were not equal to the total number of meals delivered during the period, less the number of meals served. As such, we were unable to determine whether the 1302-1025260 231 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Excel tracking spreadsheet appropriately reflected the number of meals delivered or the number of meals served. Further, we were unable to obtain sufficient evidence to verify the number of meals served and reported, and therefore reimbursed, during July 2011 and August 2011. Questioned Costs Unable to determine. Cause/Effect Drawdown or reimbursement requests were submitted to the grantor that could not be fully substantiated with evidence that they were qualifying paid expenditures. This could result in reimbursement for unsubstantiated meals served. Recommendation We recommend that the personnel administering the grant program implement procedures to ensure that reimbursement requests are supported by actual meals served. Current Status The Parks Department recently filled an Operation Analyst position as of July 2012 that has been identified as a Grants Controller pursuant to the OMB Grants Program Management plan to assist in oversight of single audit compliance. During the end of FY 2012 and FY 2013, OMB began to meet with the Grants Controller to discuss county-wide internal controls and standardized grant protocols that will be fully implemented to Parks including the 2013 Summer Food Program. OMB will work with staff to develop a monthly monitoring review process to ensure monthly tracking reports reconcile to the reimbursement request and any subsequent revisions to the reimbursement request support a successful audit trail. Finding 2010-1 State Program Information Florida Housing Finance Corporation(the Corporation) State Housing Initiatives Partnership Program (SHIP) CSFA No. 52.901 Award No. FY08-09, Award Year—2008 1302-1025260 232 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Compliance Requirement: Reporting Condition/Context The financial information included in the submitted Annual Report was not reconciled to the County's general ledger. Accordingly, we were unable to validate the amount of expenditures and program income reported in the Annual Report. Recommendation The County should implement procedures that require that the statutory reports be reconciled to the general ledger and reviewed and approved prior to being filed with the State. Views of Responsible Officials and Planned Corrective Action Management concurs with the recommendations of the auditors. On July 1, 2010, Collier County entered into a contract with the Florida Housing Coalition, the technical assistance provider for Florida Housing Finance Corporation. The purpose was to receive assistance in reconciling the annual reports to the general ledger and establishing leading practices to capture, reconcile, and report data. Current Status A technical advisor was hired to bring the required SHIP (52.901) annual reports into compliance. Staff responsible for reporting have received training from the technical advisor and will continue to receive technical support to draft and submit future reports. In order to properly account for future activity from past activity reconciled, a new SHIP fund has been established. Both Funds are monitored by OMB on a regular basis to ensure that established protocols of recording receipts, both grantor and program income is properly posted. Future reports will be reviewed and approved by OMB prior to submission. All reports have been reviewed and passed the FY 2012 audit review. This finding is therefore remediated. In addition, OMB has established an internal control protocol to reconcile the general ledger by individual grant contract. A standard general ledger (GL) spreadsheet template has been developed to reconcile revenue postings to expenditure postings on a project to date basis. The spreadsheet is used as a monitoring and review tool to approve both drawdown requests and report submissions. 1302-1025260 233 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Finding 2010-2 Federal Program Information U.S. Department of the Interior Payments in Lieu of Taxes (PILT) CFDA No. 15.226 Compliance Requirement: Reporting Condition/Context The County was not aware of the requirement noted above and did not certify to the Department that it had made an appropriate distribution of the funds within 120 days of receiving payments. Recommendation The County should implement procedures to identify all types of reporting requirements indicated in the federal regulations and to confirm all such reports or certifications are submitted as required and on a timely basis. Views of Responsible Officials and Planned Corrective Action The Clerk's Department of Finance and Accounting (Finance) determined that this program was considered a federal grant in July 2010. At that time, Finance contacted the Department of Interior and was told that there were no reporting requirements for this program. All funds were properly distributed. Upon reviewing CFR 44.5(d) with the auditors, it was determined that a certification confirming the appropriate distribution of funds was required. The confirmation was sent and this requirement had been added to the PILT procedures for future years. Current Status The Clerk's Department continues this reporting in a timely manner as required by the guidelines. 1302-1025260 234 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Finding 2010-3 Federal Program Information U.S. Department of Homeland Security Disaster Grants—Public Assistance (Presidentially Declared Disasters) CFDA No. 97.036 Award No. 08-FA-B9-09-21-00-509, Award Year—2009 Compliance Requirement: Procurement, Suspension and Debarment Condition/Context We selected the largest vendor included in the population, which comprised the majority of the expenditures incurred under the federal program for testing. The expenditures were incurred during prior years although the federal reimbursement was sought and received in the current year. We noted no documentation evidencing that the County had checked the EPLS, and a certification from the vendor was not collected or clause or condition included in the contract. We noted that the County's current policy it to document the EPLS check; however, as this vendor contract pertained to prior years, there was no documentation of the EPLS check being performed. Recommendation The County should perform the required verification by checking the EPLS (and documenting evidence of the verification, when it was performed and by whom), collecting a certification from the entity, or adding a clause or condition to the contract with that entity in accordance with the federal requirements. 1302-1025260 235 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Views of Responsible Officials and Planned Corrective Action Management concurs with and has successfully implemented the procedure of performing EPLS checks on all vendors associated with grant activities. This contract was procured in July of 2005, prior to any damage done to Naples beaches and initial submission to FEMA for reimbursement. This contract bid process was intended for payment under nongrant revenue sources and accordingly, our procurement procedures do not require debarment checks for nongrant-related vendors. The bid process did include the following language with regards to Public Entity Crimes: `By its submitting a Bid, Bidder acknowledges and agrees to and represents it is in compliance with the terms of Section 287.133(2)(a) of the Florida Statutes." Said statute prohibits a vendor from bidding on a contract when they have been convicted of a public entity crime. An after-the-fact EPLS check was performed on this vendor for the period of January 1, 2005 through and including September 30, 2010, and was found to be in good standing. At the time, the County submits their second request for scope change with FEMA regarding the increased beach costs, all vendors submitted for reimbursement will be checked after-the-fact. Current Status Coastal Zone Management (CZM) has been reorganized under the Growth Management Division where OMB countywide protocols were originally developed and implemented successfully since FY 2008. As of 10/01/13, CZM now routes all requisitions requests through the grants requisition process which allows OMB to ensure single procurements requirements are met including EPLS requirements. In addition, new solicitations are forwarded to OMB by Purchasing for a compliance review. Purchasing and OMB have collaboratively worked together beginning in February 2012 to establish EPLS verification protocols on all new solicitations as a precautionary measure in the event County contract is approved by a federal or state agency for use after the fact of solicitation in events of disaster emergency and public assistance grants. Finding 2010-4 Federal Program Information U.S. Department of Homeland Security Disaster Grants—Public Assistance(Presidentially Declared Disasters) CFDA No. 97.036 Award No. 08-FA-B9-09-21-00-509, Award Year—2009 1302-1025260 236 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Compliance Requirement: Reporting Condition/Context For one of the two quarterly reports selected for testing on a large project, we noted amounts were not reported accurately for the anticipated final amount and the amount expended to date. The accounting records reflected a total amount of $12.9 million, whereas the report reflected $3.1 million. Further, we selected the next quarterly report and noted that the amounts reported were the same and had not been updated to reflect the actual activity based on the County's accounting records. Recommendation We recommend that all reports submitted to grantor agencies be subjected to a thorough supervisory review for accuracy and completeness prior to submission. Views of Responsible Officials and Planned Corrective Action The Florida Public Assistance quarterly reporting is done electronically without any intermittent check points for review. Management will work around this by having staff create a spreadsheet prior to quarterly reporting submission and submit to Management for approval. Staff inquired about submitting revised quarterly reports for the periods in question and was advised that there are no options for doing this within the system. Current Status OMB has established protocols to ensure segregation of duties for submittal of required grantor reports. Protocol requires a documented approval by a separate staff member from the preparer of the report. 1302-1025260 237 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Finding 2010-5 Federal Program Information U.S. Department of Homeland Security Disaster Grants—Public Assistance (Presidentially Declared Disasters) CFDA No. 97.036 Award No. 08-FA-B9-09-21-00-509, Award Year—2009 Compliance Requirement: Allowable Activities/Costs Condition/Context The large project PW that was finalized during fiscal year 2010 and which set forth the allowable activities and costs for the project included approximately $10.5 million for costs associated with one vendor and $2.2 million related to various other vendor-related costs. The County was reimbursed under the federal program for the full amount of the approved PW (approximately $3.1 million was collected in prior years and approximately $9.7 million was collected during fiscal year 2010). For the other vendors included in the PW totaling $2.2 million, we selected three of the largest vendors to test covering more than 60% of the other vendor total amount. We noted that for one of the vendors selected, the amount billed by the vendor and paid by the County was less than the amount in the PW by $27,997, which at the federal reimbursable share per the PW of 55% equates to $15,398. Recommendation We recommend that the County implement procedures to confirm that amounts reimbursed are based upon actual expenditures incurred. Views of Responsible Officials and Planned Corrective Action As discussed in previous meetings, this Project Worksheet 2700 (PW) was the scope change and Collier County was allowed a much larger reimbursement for the damages done to Collier County Beaches. This is an ongoing process and involves three Named Events (Tropical Storm Gabrielle on September 12, 2001; Hurricane Katrina on August 29, 2005; and Hurricane Wilma on October 24, 2005). At September 20, 2010, Collier County was half way through this process. 1302-1025260 238 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) The invoice selected for testing on this project was incorrectly referenced in the written discussion on PW 2700 by State personnel at $682,000, the PO amount. There is a spreadsheet that FEMA, State personnel, and Collier personnel are working with for the entire $33.9 million dollar scope change. The actual invoice amount of$654,002.73 is included on the spreadsheet. Current Status OMB has developed a written internal control to establish protocols to perform draw downs that provides an additional layer of oversight prior to submissions to ensure: • Program income has been properly accounted for and applied to reduce the requested draw amount, • A project to date general ledger reconciliation is performed, • Payments have cleared to prevent advance reimbursement and • Match and in-kind requirements have been met. Coastal Zone Management (CZM) has been reorganized under the Growth Management Division where OMB countywide protocols were originally developed and implemented successfully since FY 2008. CZM now routes all draw requests to the assigned OMB Grants Accountant to receive approval via signature or email prior to submission or request for draw. Finding 2010-6 Federal Program Information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No. 14.218 and CFDA No. ARRA-14.253 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-07-UC-12-0016, Award Year—2007 Award No. B-08-UC-12-0016,Award Year—2008 Award No. B-09-UC-12-0016, Award Year—2009 Award No. B-10-UC-120016, Award Year—2010 Award No. ARRA B-09-UY-12-0016,Award Year—2009 1302-1025260 239 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Compliance Requirement: Program Income Condition/Context We noted a total of approximately $732,000 of program income generated during fiscal year 2010 under the Neighborhood Stabilization Program(NSP), which is part of the CDBG program. Per review of the general ledger expenditure detail provided, we noted that the program income had been applied against specific program expenditures in determining the net amount of program expenditures reported in the SEFA. From the detail of program income provided, we selected a sample of specific program income transactions for testing and the first selection of approximately$66,000 was recorded in May 2010. The remaining five selections included in our sample were recorded during September 2010. There were no NSP program cash draws made subsequent to the receipt of the program income recorded in September 2010. We attempted to ascertain whether the amounts received as program income in May 2010 were properly offset against program expenditures in determining the amount of federal funds drawn for the next draw request occurring subsequent to the date the program income was received in order to satisfy the requirement that program income is used before requesting additional cash draws. However, we were informed that the May 2010 program income of $66,000 had not been deducting in subsequent cash draw requests made during fiscal year 2010. Recommendation We recommend that the County implement procedures to verify that program income received is properly offset against expenditures incurred when making draw requests under the federal program. Views of Responsible Officials and Planned Corrective Action Collier County concurs with the recommendation. Prior to making a request to draw new funds under NSP, County fiscal staff will submit evidence to the program administrator that all program income received will be, or has been, offset against expenditures. This requirement will apply regardless of what NSP activity generated the program income or what activity Collier County seeks to draw down against available program funds. Current Status OMB provides an additional layer of oversight when Health Human and Veteran Services (HHVS) Department staff performs draws by performing a documented review prior to submission to ensure: 1302-1025260 240 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) • Program income has been properly accounted for and applied to reduce the requested draw amount, • A project to date general ledger reconciliation is performed, • Payments have cleared to prevent advance reimbursement and • Match and in-kind requirements have been met. OMB has established a standard GL spreadsheet template that reconciles revenue postings to expenditure postings on a project to date basis. The spreadsheet is used as a monitoring and review tool to approve draw and report submissions. Finding 2010-7 Federal Program Information U.S. Department of Housing and Urban Development CDBG—Entitlement Grants Cluster(CDBG) CFDA No. 14.218 and CFDA No. ARRA-14.253 Award No. B-08-UN-12-0003, Award Year—2009 Award No. B-07-UC-12-0016, Award Year—2007 Award No. B-08-UC-12-0016, Award Year—2008 Award No. B-09-UC-12-0016, Award Year—2009 Award No. B-10-UC-120016, Award Year—2010 Award No. ARRA B-09-UY-12-0016, Award Year—2009 Compliance Requirement: Reporting Condition/Context We selected two quarterly reports for the NSP program to test and noted that amounts reported for expenditures did not agree to the County's general ledger and a reconciliation was not provided. Recommendation The County should implement procedures that require that the NSP reports be reconciled to the general ledger and reviewed and approved prior to being filed with the grantor. 1302-1025260 241 Collier County, Florida Summary Schedule of Prior Audit Findings (continued) Current Status OMB has established a review and approval process of required grantor reports prior to submittal. In support of this process, a standard general ledger (GL) reconciliation template has been implemented to reconcile revenue postings to expenditure postings on a project to date basis. The spreadsheet is used as a monitoring and review tool to approve draw and report submissions. A GL spreadsheet will be established for each grantor agreement maintained by the OMB. To date, report review has been rolled out to those Departments with findings and/or comments with a phased rollout countywide. 1302-1025260 242 • I =� ERNST&YOUNG Ernst&Young LLP Suite 500 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Management Letter and State Reporting Requirements Members of the Board of County Commissioners Collier County,Florida: We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of Collier County, Florida as of and for the year ended September 30, 2012, which collectively comprise Collier County, Florida's basic financial statements and have issued our report thereon dated March 6,2013. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. We have issued our Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards, Report of Independent Certified Public Accountants on Compliance with Requirements That Could Have a Direct and Material Effect on each Major Federal Program and State Project and on Internal Control over Compliance in Accordance with OMB Circular A-133, Section 215.97, Florida Statutes and Chapter 10.550, Rules of the Auditor General, and Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated March 6, 2013, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General,which govern the conduct of local governmental entity audits performed in the State of Florida. We have the following suggestions for improvement in accounting procedures and controls. 1302-1025260 1 A member firm of Ernst&Young Global Limited I Eli ERNST&YOUNG A. CURRENT YEAR FINDINGS AND RECOMMENDATIONS Single Audit Related ML Comments 2012 — 1: Subrecipient Monitoring - U.S. Department of Housing and Urban Development: CDBG — Entitlement Grants Cluster (CFDA Nos. 14.218 and 14.253) and Community Development Block Grant/ State's Program(CFDA No. 14.228) Observation Ernst&Young notes that the County received a monitoring report on May 21, 2012 over the CDBG grant program from HUD which had findings over the County's subrecipient agreements. The findings were: (1) The agreements did not have the correct number of years required for retention. Some of the agreements had six years and others only had three years, whereas the number of required retention years is four years. (2) Some of the specific provisions mentioned in the agreements did not encompass the entire provision as indicated in 24 CFR 570.503. The monitoring report did acknowledge that the agreements do refer to the CDBG regulations at 24 CFR Part 570 as a general basis for compliance with the requirements. However, some of the required provisions as Subpart K were not included. We note that the agreement with Collier County Public Schools contains a retention period of 6 years and only references the 24 CFR Part 570. The agreement with City of Naples contains a retention period of three years and only references the 24 CFR Part 570. The agreement with David Lawrence contains a retention period of three years and only references the 24 CFR Part 570. The agreement with Goodwill Industries contains a retention period of six years and only references the 24 CFR Part 570. And finally, the agreement with Big Cypress contains a retention period of three years and only references the 24 CFR Part 570. Recommendation We recommend that the County revised all aforementioned subrecipients agreements in order to ensure compliance with HUD. Management's Response As part of corrective actions, an updated subrecipient template was developed for CDBG grant programs as outlined in the response to the grantor agency's review. The template was developed and reviewed with collaboration of the OMB Grants Compliance Office to ensure all current provisions were cited within the agreement. The template is currently in use for all new sub awards. Annually,the template will be reviewed for any changes in HUD provisions as part of the customary funding cycle. Further remedial actions were taken to correct past agreements. On 12/11/12, the Department brought forth eight(8) subrecipient agreement modifications for BCC approval to correctly cite the retention period (Items 16.D.7 and 16.D.9). 1302-1025260 2 A member firm of Ernst&Young Global Limited II 1 (11111111III1w Ell ERNST&YOUNG 2012 — 2: Employee Timesheets - U.S. Department of Housing and Urban Development: CDBG — Entitlement Grants Cluster (14.218, 14.253); Community Development Block Grant/ State's Program (14.228) and Florida Housing Finance Corporation: State Housing Initiatives Partnership Program (SHIP—52.901). Observation During our testing of payroll-related expenditures, we noted 4 timesheets out of a total of 186 timesheets tested throughout all major federal and state programs (totaling 0.11% of payroll expenditures charged to each program)that were submitted by employees were not properly signed by either the employee or their supervisor. Where the timesheet was missing the signature of the employee, we noted the timesheet had been approved by the employee's supervisor supporting the charge. Further, OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, requires that time sheets be signed by each employee to support time charged to specific grant programs. Recommendation We recommend that the County put into place necessary procedures to ensure that all timesheets are properly signed(by both the employee and his/her direct supervisor). Management's Response During FY 2013, the County established a committee to provide assistance to HHVS to formalizing business operations into protocols and written procedures. The payroll process has been identified as a top priority. Human Resource personnel are in attendance to ensure current practices and policies are understood. OMB is in attendance to ensure audit compliance is understood and finding concerns are addressed through proper internal controls. Timesheet signatures were discussed at the 2/07/13 meeting with all pertinent staff to ensure the importance of properly signed timesheets is understood as well as clarify the role each signatory prior to submitting the timesheet for processing. Based on our review of the exceptions,we noted that the impact of these exceptions to each major federal program and state project, individually and in aggregate, was not significant and below our questioned cost threshold. 1302-1025260 3 A member firm of Ernst&Young Global Limited I El ERNST&YOUNG 2011-1 Grant Compliance Observation During our testing of the County's various federal and state grant programs, we noted non-compliance over the management of several grant programs in the following areas: • Payroll allocation and processing errors • Subrecipient documentation and monitoring • Eligibility • Treatment of change orders • General reporting • ARRA Section 1512 reporting • Period of availability Recommendation We recommend enhanced training of employees in grant compliance and more thorough supervisory review of grant transactions, documentation and reporting. We also recommend the County consider implementing a central grant management or grant compliance office of individuals to more effectively monitor grant compliance. Management's Response Management concurs with the recommendation of the auditors. In light of continuing audit findings, internal audit review and other actions management was made aware of, the County replaced the prior Director in Housing, Human and Veteran Services (HHVS) with a top management team member in late August 2011 to restructure the entire HHVS Department and implement effective controls, processes and procedures. Realizing that this alone was not enough and wanting to effect changes throughout the entire organization, County Manager, Leo Ochs, submitted a grants reorganization plan to the Board of County Commissioners on January 30, 2012. In effect, all administrative grant compliance functions were centralized at the corporate level under the Office of Management and Budget(OMB). 1302-1025260 4 A member firm of Ernst&Young Global Limited P111111111 1I11IIII1III =� FRNST&YOUNG This centralization will allow the entire organization to benefit from the substantial grants accounting and compliance expertise that exist within that operation. While responsibilities for grant program management and service delivery will remain with the operating units, the key areas of grant compliance such as cash management, procurement, monitoring, reconciliation, and reporting will be centrally managed and monitored across the agency. OMB will implement this centralized grants management model in several phases over time. The immediate focus is bringing obvious noncompliant activities, such as identified in this Single Audit Report and prior years' reports back into adherence with grantor requirements. OMB staff will become fully imbedded in the Agency's day to day administrative grant functions and existing grants accountants serving under the Administrative Services Division will be reassigned to the OMB. These employees will be deployed in key operating units to implement consistent business processes and internal controls and carry out corrective actions. Current Status The implementation of centralizing grants management has resulted in improvements over the prior year. Centralized processes continue to be developed and rolled out countywide to Departments with the priority given to those Departments with the greatest need. Need is measured not only by the quantity of noncompliant matters but the severity of noncompliance as well. Collier County continues to move forward to a position of proactive compliance which allows established internal controls in FY 2012 to be strengthened. The progress can be observed in management's responses whereby a number of noncompliant items were remediated during the year either by independent actions of Department staff working with OMB or by review of Collier's independent auditors and taking immediate action. In FY2013, OMB will focus on growing a culture of single audit awareness and foster team management of grants compliance between program and fiscal staff in order to promote checks and balances,efficient oversight and ultimately ensure compliance to the greatest extent. 1302-1025260 5 A member firm of Ernst&Young Global Limited JIIII11h1 IlIt � °I ERNST&YOUNG C. OTHER REQUIRED COMMUNICATIONS The Rules of the Auditor General, Section 10.554 (1)(i)(1), require that we address in the management letter whether or not corrective actions have been taken to address significant findings and recommendations made in the preceding annual financial audit report. The status of recommendations made in the preceding annual financial audit is included above. In connection with our audit, we noted no instances of noncompliance with Section 218.415, Florida Statutes regarding the investment of public funds. The Rules of the Auditor General, Section 10.554(1)(i)(3),require that we address in a management letter any recommendations to improve Collier County, Florida's financial management, accounting procedures, and internal controls. Current year recommendations to improve Collier County, Florida's financial management,accounting procedures,or internal controls are included above. The Rules of the Auditor General, Section 10.554(1)(i)(4),require that we address in a management letter any violations of provisions of contracts and grant agreements or abuse that have an effect on the financial statements that is less than material but more than inconsequential. The results of our audit disclosed no violations of provisions or contracts and grant agreement or abuse that would have an effect on the financial statement that is less than material but more than inconsequential. The Rules of the Auditor General, Section 10.554(1)(i)(5), require disclosure in the management letter of the following matters, if not addressed in the auditor's report on internal control over financial reporting and on compliance and other matters or in the schedule of findings and questioned costs, and are not clearly inconsequential: (a) Violations of laws, rules, regulations, and contractual provisions or abuse that have occurred, or are likely to have occurred,would have an immaterial effect on the financial statements, and were discovered within the scope of the audit; (b) Control deficiencies that are not significant deficiencies, including,but not limited to: (1) Improper or inadequate accounting procedures (e.g., the omission of required disclosures from the annual financial statements); (2) Failures to properly record financial transactions; and (3) Other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of,the auditor. 1302-1025260 6 A member firm of Ernst&Young Global Limited 1 I'III =� ERNST&YOUNG The results of our audit disclosed no violations of laws, rules, regulations, and contractual provisions or abuse, no improper or illegal expenditures, and no control deficiencies other than the internal control recommendations included above. The Rules of the Auditor General, Section 10.554(1)(i)(6), also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes to the financial statements. In that regard, Collier County, Florida was established under Chapter 107, Section 1, Florida Statutes. The legal authority for Collier County and its component units are discussed in Note 1 to the financial statements. During the course of our audit of the County, nothing came to our attention that would cause us to believe that the County was in a state of financial emergency,as defined by Section 218.503(1),Florida Statutes. As required by the Rules of the Auditor General, Section 10.554(1)(i)(7)(b), the County filed its report pursuant to Section 218.32(1)(a), Florida Statutes. Based on our review of the financial information contained in this report, no material differences were found in comparing this information to that of the basic financial statements. As required by the Rules of the Auditor General, Sections 10.554(1)(i)(7)(c) and 10.556(7), we applied financial condition assessment procedures. It is management's responsibility to monitor the County's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. This report is intended solely for the information and use of the Board of County Commissioners, management and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. f lyowritLLP March 6,2013 1302-1025260 7 A member firm of Ernst&Young Global Limited THIS PAGE INTENTIONALLY LEFT BLANK ANNUAL DEBT REPORT (UNAUDITED) Pursuant to the Collier County Debt Policy the following Tables were prepared for the fiscal year ended September 30, 2012. Table 1. Calculation of Collier County General Governmental Debt Ratio Table 2. Calculation of Collier County Enterprise Debt Ratios TABLE 1 Calculation of Collier County General Governmental Debt Ratio For the Fiscal Year Ended September 30,2012 Bondable revenues,as defined by Collier County Debt Policy: Current Ad Valorem Taxes $ 242,806,731 Governmental Impact Fees 17,265,254 Half Cent Sales Tax 29,712,986 Developmental Fees 13,057,784 State Revenue Sharing 7,968,291 5th Cent Local Option Gas Tax 4,988,238 6th Cent Local Option Gas Tax 6,523,265 Constitutional Gas Tax 3,926,124 Seventh Cent Gas Tax 1,699,985 Ninth Cent Gas Tax 1,387,266 Parks and Recreation Fees 6,960,575 Tourist Development Tax 14,898,077 Court Facilities Fees 1,158,998 Communications Services Tax 5,346,777 Total bondable revenues $ 357,700,351 Fiscal 2012 governmental debt service requirements: Series 2003 Capital Improvement Bonds Principal: $ 1,450,000 Interest: 986,072 Series 2005 Capital Improvement Bonds Principal: 6,110,000 Interest: 4,669,644 Series 2003 Gas Tax Bonds Principal: 5,975,000 Interest: 2,575,203 Series 2005 Gas Tax Bonds Principal: 1,530,000 Interest: 4,501,612 Series 2010 Special Obligation Bonds Principal: 1,690,000 Interest: 2,358,313 Series 2010B Special Obligation Bonds Principal: 2,575,000 Interest: 969,925 Series 2011 Special Obligation Bonds Principal: - Interest: 937,045 State Infrastructure Bank Loan Principal: 1,913,449 Interest: 126,551 Total fiscal 2012 governmental debt service requirements $ 38,367,814 Governmental debt ratio of fiscal year 2012 debt service requirements to total bondable revenues(13.0%maximum allowed by County policy) 10.7% Notes: Debt service is based upon current amortization tables for the fiscal year indicated. Debt prepayments are not included as debt service requirements. TABLE 2 Calculation of Collier County Enterprise Debt Ratios For the Fiscal Year Ended September 30,2012 Collier County Water and Sewer District: Total Sales Revenue $ 98,634,958 Allowance for Funds Prudently Invested 1,829,187 Miscellaneous Revenue 2,219,738 Total Operating Revenue 102,683,883 Non-Operating Revenue 1,480,762 Gross Revenue 104,164,645 Less:Operation and Maintenance Expense(excluding Depreciation and Amortization) 58,155,432 Net Revenue Available for Debt Service(1) $ 46,009,213 Total Fiscal Year 2012 Debt Service on Bonds(2) $ 11,683,132 Net Revenue Debt Service Coverage on Bonded Debt (100%Required)-(1/2) 394% Other Pledged Funds: System Development Fees $ 8,731,883 Special Assessment Proceeds 26,658 Total Pledged Funds Available for Debt Service(3) $ 54,767,754 Total Fiscal Year 2012 Debt Service on Bonds(4) $ 11,683,132 Total Pledged Funds Debt Service Coverage on Bonded Debt (125%Required)-(3/4) 469% Total Pledged Funds Available for Debt Service After Payment of Bonds(5) $ 43,084,622 Total Fiscal Year 2012 Debt Service on Subordinated Indebtedness(6) $ 9,896,954 Calculated Coverage on Subordinated Indebtedness-(5/6) 435% Total Pledged Funds Available for System Purposes $ 33,187,668 Summary Debt Statement for Fiscal Year 2012 General Governmental Debt: Collier County's Debt Policy sets the maximum allowable governmental debt ratio at 13.0%, and the County continues to operate below this self-imposed maximum. The Constitution of the State of Florida and the Florida Statutes set no legal debt limit. The governmental debt ratio is the ratio of debt service requirements to total bondable revenues, as defined by Collier County's Debt Policy. It should be noted that while ad valorem taxes are bondable for purposes of the governmental debt ratio calculation, they may only be pledged pursuant to voter referendum. The governmental debt ratio decreased from 11.1%, as of September 30, 2011, to 10.7% for the fiscal year ended September 30, 2012. The decrease in the debt ratio is primarily the result of an overall decline in annual debt service payments of 2.9%. The decrease in annual debt service payments is a result of the refinancing of portions of the Capital Improvement Bonds by the Series 2010, 2010B and 2011 Special Obligation Refunding Revenue Bonds. Within the bondable revenues, current ad valorem taxes decreased by 3.5% due mainly to a decrease in taxable assessed value for fiscal 2012. Offsetting this decrease was a 42.9% increase in governmental impact fee collections (non-water and wastewater impact fees), a 14.4% increase in developmental fees, a 4.8% increase in half cent sales tax revenues and a 7.3% increase in tourist development tax revenues over fiscal year 2011. The recent payoff of the subordinate State Infrastructure Bank loan, coupled with the apparent stabilization of general governmental revenues, will likely produce a decrease in the general governmental debt ratio for fiscal year ending 2013. Assuming no new debt issuance,this downward trend should continue. In January of 2012, Collier County refinanced portions of its outstanding Series 2003 and 2005 Capital Improvement Revenue Bonds with the Series 2011 Special Obligation Refunding Revenue Bonds. The Series 2011 bonds have a fixed interest rate and an all in true interest cost of 2.6%. The partial refinancing of the Series 2003 and 2005 bonds achieved a net present value savings on the refunded bonds of 5.05%. In June of 2012, Collier County refinanced a portion of its outstanding Series 2003 Gas Tax Revenue Bonds with the Series 2012 Gas Tax Refunding Revenue Bonds. The Series 2012 bonds have a fixed interest rate and an all in true interest cost of 2.4%. The partial refinancing of the Series 2003 bonds achieved a net present value savings on the refunded bonds of 9.2%. Governmental Debt Ratings Table: Current Ratings (as of 2/19/2013) Fitch Moody's Standard & Poor's Capital Improvement Revenue Bonds AA- A 1 AA- Gas Tax Revenue Bonds AA- A2 A Special Obligation Bonds AA Aa2 AA A rating of AA is an indication by Fitch Ratings of an investment grade instrument, but one which carries a slightly higher risk than a AAA rated bond. Fitch also uses intermediate +/- modifiers for each AA category. A rating of Aa2 is an indication by Moody's Investors Service of a high quality investment grade instrument with very low credit risk, but "their susceptibility to long-term risks appears somewhat greater" than a Aaa rated bond. A rating of Al is an indication by Moody's of an investment grade instrument with low credit risk but the bond has elements present that suggest a higher susceptibility to impairment over the long term than a Aa investment. Moody's uses intermediate modifiers of 1 (higher)to 3 (lower) within the Aa and A ranges. A rating of AA is an indication by Standard and Poor's of an investment grade instrument issued by a"quality borrower" but with slightly more risk than a AAA grade investment. A rating of A is an indication by Standard and Poor's of an investment grade instrument but one more susceptible to adverse changes in circumstances and economic conditions than AAA or AA instruments. Standard and Poor's also uses intermediate+/- modifiers for each AA category. The County's half cent sales tax revenues are pledged for the payment of all outstanding Capital Improvement Revenue bonds. Fiscal year 2012 sales tax revenues covered the current year debt service payments on all outstanding Capital Improvement Revenue bonds at 225%. The • combined gas tax revenues are pledged for the payment of all the Gas Tax Revenue bonds. Fiscal year 2012 gas tax revenues covered the current year debt service payments on all outstanding Gas Tax Revenue bonds at 127%. Collier County Enterprise Debt: Currently, the Collier County Water and Sewer District (District) is the only County enterprise activity with bonded debt outstanding. The Collier County Debt Policy does not set a maximum allowable enterprise debt ratio, but coverage requirements are set by bond covenants. Net revenues, defined as operating revenues plus non-operating revenues less operating expenses, excluding depreciation, must cover bonded debt service at 100%. Total pledged funds, defined as net revenues plus system development fees and special assessments must cover bonded debt at 125%. Net revenue coverage on bonded debt was 394% and total pledged funds coverage on bonded debt was 469% for fiscal year 2012. Net revenue available for debt service decreased during fiscal year 2012, mainly due to a 2.6% decrease in operating revenues. Operating revenues decreased due to decreased water usage during fiscal year 2012. Total pledged funds coverage on bonded debt increased during fiscal year 2012 mainly due to an increase in water and wastewater impact fees collected during fiscal year 2012. The District's calculated coverage on subordinated debt, all in the form of State Revolving Fund Loans, is 435%. The total pledged funds coverage required by the loan agreements varies between 115% and 125%, depending upon the individual loan agreement. The Collier County Water and Sewer District issued no debt during fiscal year 2012. Enterprise Debt Ratings Table: ' Current Ratings (as of 2/19/2013) Fitch Moody's Standard & Poor's* Water and Sewer Revenue Bonds AA+ Aa2 - *-Standard&Poor's does not currently rate County Water and Sewer bonds. A rating of AA is an indication by Fitch Ratings of an investment grade instrument, but one which carries a slightly higher risk than a AAA rated bond. Fitch also uses intermediate +/- modifiers for each AA category. A rating of Aa2 is an indication by Moody's Investors Service of a high quality investment grade instrument, but "their susceptibility to long-term risks appears somewhat greater" than a Aaa rated bond. Moody's uses intermediate modifiers of 1 (higher) to 3 (lower) within the Aa and A ranges. The District's current focus is the maximization of revenues within the existing rate structure, operating cost containment and risk based prioritization of capital projects. Over recent years this strategy has allowed the District to operate on a pay as you go basis, avoid additional borrowing and maintain financial stability. SPECIAL-PURPOSE FINANCIAL STATEMENTS Collier County, Florida Clerk of the Circuit Court Year Ended September 30, 2012 With Report of Independent Certified Public Accountants Ernst&Young LLP El ERNST&YOUNG Collier County, Florida Clerk of the Circuit Court Special-Purpose Financial Statements Year Ended September 30, 2012 Contents Report of Independent Certified Public Accountants 1 Special-purpose Financial Statements Special-Purpose Balance Sheet—Governmental Funds 3 Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balances—Governmental Funds 4 Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual—General Fund 5 Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual—Court Services Fund(Budgetary Basis) 6 Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual—Public Records Modernization Fund 7 Special-Purpose Balance Sheet—Agency Funds 8 Notes to Special-Purpose Financial Statements 9 Combining Information Combining Balance Sheet—Agency Funds 23 Statement of Changes in Assets and Liabilities—Agency Funds 24 Other Reports Report of Independent Certified Public Accountants on Internal Control Over Financing Reporting and on Compliance and Other Matters Based on an Audit of Special-Purpose Financial Statements Performed in Accordance With Government Auditing Standards 25 Management Letter 27 1212-1416406 lll = ERNST&Y N OU JIIIIIIIIHW G Suite 500 11 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants Honorable Dwight E. Brock, Clerk of the Circuit Court Collier County, Florida We have audited the accompanying special-purpose financial statements of each major fund and the aggregate remaining fund information of the Collier County, Florida Clerk of the Circuit Court (the Clerk of the Circuit Court), as of and for the year ended September 30, 2012 as listed in the table of contents. These special-purpose financial statements are the responsibility of the Clerk of the Circuit Court's management. Our responsibility is to express opinions on these financial statements based on our audit. The prior year summarized comparative financial information has been derived from the Clerk's special-purpose financial statements for the year ended September 30, 2011, and in our report dated December 19, 2011, we expressed unqualified opinions on the respective financial statements of each major fund and the aggregate remaining fund information. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 financial statements are free of material misstatement. We were not engaged to perform an audit of the Clerk of the Circuit Court's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Clerk of the Circuit Court's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the special-purpose financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall special-purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As discussed in Note 1, the accompanying special-purpose financial statements referred to above were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Chapter 10.577(3), Rules of the Auditor General for Local Governmental Entity Audits. These special- purpose financial statements are not intended to be a complete presentation of the Clerk of the Circuit Court's financial position and its changes in financial position, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States. Additionally, the special-purpose statements present only the Clerk of the Circuit Court and do not purport to, and do not, present fairly the financial position of Collier County, Florida, as of September 30, 2012, and the changes in its financial position, where applicable, for the year then ended, in conformity with accounting principles generally accepted in the United States. 1212-1416406 1 A member firm of Ernst&Young Global Limited -� ERN ST IIII�I� S OUNG In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the financial position of each major fund and the aggregate remaining fund information of the Clerk of the Circuit Court as of September 30, 2012, and the changes in financial position thereof and the budgetary comparisons for the general fund, court services fund and public records modernization fund for the year then ended in conformity with accounting principles generally accepted in the United States. In accordance with Government Auditing Standards, we have also issued our report dated December 18, 2012, on our consideration of the Clerk of the Circuit Court's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Our audit was conducted for the purpose of forming opinions on the special-purpose financial statements that collectively comprise the Clerk of Circuit Court's financial statements. The combining information for the agency funds is presented for purposes of additional analysis and are not a required part of the special-purpose financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the special-purpose financial statements. The information has been subjected to the auditing procedures applied in the audit of the special- purpose financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special-purpose financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States. In our opinion, the information is fairly stated in all material respects in relation to the special-purpose financial statements as a whole. This report is intended solely for the information and use of the Clerk of the Circuit Court, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. f LLP December 18, 2012 1212-1416406 2 A member firm of Ernst 8 Young Global Limited I V ‘.0 N 00 N ,-O 00 � 7- I 00 VD O O ,O C N N d' N 00 M 00 h N N 1 vD VD M 00 N O VD M v7 N M N N O DO 01 O .r. O 7 ... 0 00 M M M N N VD \O M ~ N M — 41 M 00 00 N N N V:5 Vp •-■ N M M �D ry w 6A 6A 6A 6A 0 N N 00 \0 M 7 00 I N V V1 00 00 M 00 vD N vO O1 N N N O N VD VD 0*, VD 00 v'i 0, O VD t � V O� 0 O N 0 M - V'> CN 0 00 d' M vi vi a, H O, Cr, 0 00 M 0, N N N 71- VD 0 00 M M 00 M M ,•O (� l� M N O s M M O 6A EA 6A EA C VD I I N 00 N N N N VD O m 7 in ,O vl N 01 01 .•-• 0 O SC. 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N C N N N"- _O' -6 C ," C w., , AO iw O x 4, w 0 fi'N 5 N O 0 q 77 w p U C O E 0 O D N w 5 c v " o @ 0 8 c w u°c • 2 w w C,c 4 ` A v m v i c c w o 'a. f m t_ n U a O y O > M U ° &Cv U '6 ;0. h ' • c H m ;' c U x F w w O ° e w u, w 3,° Collier County, Florida Clerk of the Circuit Court Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — General Fund Year Ended September 30, 2012 Variance With Final Budget Budget Positive Original Final Actual (Negative) Revenues: Charges for services $ 2,167,400 $ 2,715,200 $ 2,775,290 $ 60,090 Interest income 25,000 25,000 18,348 (6,652) Total revenues 2,192,400 2,740,200 2,793,638 53,438 Expenditures: General government: Personal services 5,700,700 5,287,600 5,282,900 4,700 Operating expenditures 1,337,400 1,774,500 1,752,491 22,009 Capital outlay 392,300 916,100 915,998 102 Total expenditures 7,430,400 7,978,200 7,951,389 26,811 Excess(deficiency)of revenues over (under)expenditures (5,238,000) (5,238,000) (5,157,751) 80,249 Other financing sources(uses): Transfers in: Collier County,Florida Board of County Commissioners appropriations 5,238,000 5,238,000 5,238,000 - Transfers out: Collier County,Florida Board of County Commissioners: Distribution of excess appropriations (80,249) (80,249) Total other financing sources(uses) 5,238,000 5,238,000 5,157,751 (80,249) Excess of revenues and other financing sources over expenditures - - - - Fund balance-beginning of year - - - - Fund balance-end of year $ - $ - $ - $ - See accompanying notes. 1212-1416406 5 Collier County, Florida Clerk of the Circuit Court Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Court Services Fund (Budgetary Basis) Year Ended September 30, 2012 Variance With Final Budget Budget Positive Original Final Actual (Negative) Revenues: Intergovernmental $ 6,141,163 $ 8,305,723 $ 8,041,861 $ (263,862) Total revenues 6,141,163 8,305,723 8,041,861 (263,862) Expenditures: General government: Personal services 5,751,463 6,933,392 6,722,413 210,979 Operating expenditures 389,700 595,037 502,081 92,956 Total expenditures 6,141,163 7,528,429 7,224,494 303,935 Excess of revenues over expenditures — 777,294 817,367 40,073 Other financing uses: Transfers out: Distribution of excess court revenue to the State — (777,294) (777,294) — Total other financing uses — (777,294) (777,294) — Excess of revenues and other financing uses over expenditures 40,073 40,073 Fund balance—beginning of year — — 238,975 238,975 Fund balance—end of year $ — $ — $ 279,048 $ 279,048 See accompanying notes. 1212-1416406 6 Collier County, Florida Clerk of the Circuit Court Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Public Records Modernization Fund Year Ended September 30, 2012 Variance With Final Budget Budget Positive Original Final Actual (Negative) Revenues: Charges for services $ 1,165,000 $ 1,165,000 $ 1,306,166 $ 141,166 Interest income 9,500 9,500 7,203 (2,297) Total revenues 1,174,500 1,174,500 1,313,369 138,869 Expenditures: General government: Personal services 802,400 802,400 755,287 47,113 Operating expenditures 348,189 888,189 502,072 386,117 Capital outlay 1,417,100 1,031,984 211,835 820,149 Total expenditures 2,567,689 2,722,573 1,469,194 1,253,379 Deficiency of revenues under expenditures (1,393,189) (1,548,073) (155,825) 1,392,248 Other financing sources(uses): Transfers in from the Collier County,Florida Board of County Commissioners — — — — Transfers out to other funds — — — Total other financing sources(uses) — — — — Deficiency of revenues and other financing sources(uses)under expenditures (1,393,189) (1,548,073) (155,825) 1,392,248 Fund balance—beginning of year 2,864,871 2,616,219 3,622,745 1,006,526 Fund balance—end of year $ 1,471,682 $ 1,068,146 $ 3,466,920 $ 2,398,774 See accompanying notes. 1212-1416406 7 Collier County, Florida Clerk of the Circuit Court Special-Purpose Balance Sheet — Agency Funds September 30 2012 2011 Assets Cash and cash equivalents $ 21,872,332 $ 18,905,959 Total assets $ 21,872,332 $ 18,905,959 Liabilities Due to the Collier County, Florida Board of County Commissioners $ 353,461 $ 349,252 Due to other governments 643,304 1,917,563 Deposits 20,875,567 16,639,144 Total liabilities $ 21,872,332 $ 18,905,959 See accompanying notes. 1212-1416406 8 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements Year Ended September 30, 2012 1. Summary of Significant Accounting Policies Reporting Entity The Collier County, Florida Clerk of the Circuit Court (the Clerk) is an elected constitutional officer as provided for by the Constitution of the State of Florida. The Clerk's budget is presented pursuant to Chapter 218, Florida Statutes. Additionally, a budget is submitted to the Florida Clerks of Court Operations Corporation for the court services fund. The Clerk's budget, including the public records modernization fund, is approved by the Clerk. The special-purpose financial statements presented include the general fund, special revenue funds, and agency funds of the Clerk's office. The accompanying special-purpose financial statements were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Section 10.557(3),Rules of the Auditor General for Local Governmental Entity Audits. Section 10.556(4), Rules of the Auditor General for Local Governmental Entity Audits, requires the Clerk to only present fund financial statements. Accordingly, due to the omission of government-wide financial statements and related disclosures including a management's discussion and analysis, these special-purpose financial statements do not constitute a complete presentation of the financial position of the Clerk as of September 30, 2012 and the changes in its financial position for the year then ended in conformity with Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management's Discussion and Analysis— for State and Local Governments, but otherwise constitute special-purpose financial statements prepared in conformity with accounting principles generally accepted in the United States. The financial activities of the Clerk, as a constitutional officer, are included in the Collier County, Florida Comprehensive Annual Financial Report. The general operations of the Clerk are funded by fees from third parties, appropriations from the Collier County, Florida Board of County Commissioners (Board), appropriations from the State of Florida, and interest income. Pursuant to Section 218.32(2)Florida Statutes, funds remaining in the general fund, at fiscal year-end in excess of amounts expended, are returned to the Board. Excess revenues returned to the Board are reflected as transfers out in the Clerk's general fund. Court-related operations are funded by the State via appropriations from the State of Florida, and a small child support grant; any surplus is returned to the State in August of each year. 1212-1416406 9 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Measurement Focus, Basis of Accounting, and Basis of Presentation These special-purpose fund financial statements report detailed information about the Clerk. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is reported in a separate column. Governmental Funds Governmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the special-purpose balance sheet. Operating statements for these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. The Clerk reports the following major governmental funds: General Fund— The general fund is used to account for all revenue and expenditures applicable to the general operations of the Clerk, which are not accounted for in another fund. All operating revenue not specifically restricted or designated as to use, is recorded in the general fund. Court Services Fund— This fund was established to account for court-related filing fees, service charges, fines, court costs, appropriations and expenses of the Clerk as mandated by Section 28.35,Florida Statutes. Public Records Modernization Fund— This fund is mandated by Section 28.24(12)(d), Florida Statutes, to be held in trust by the Clerk and used exclusively for equipment and maintenance of equipment, personnel training, and technical assistance in modernizing the public records system of the office. Effective July 1, 2004, an additional amount is collected pursuant to Section 28.24 (12) (e),Florida Statutes, and used exclusively for funding court-related technology needs. 1212-1416406 10 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) With the implementation of Revision 7 to Article V on July 1, 2004, the Clerk's activities are classified as court-related and non-court-related. The Clerk's general fund activity, which is classified as non-court-related, is funded through service charges for recording instruments and documents into the official records, interest income, and transfers in from the Board. Court-related activities are funded through an appropriation from the State of Florida and a small child support grant. These court fees and appropriations are to be used exclusively for funding court-related operations of the Clerk. The excess of revenues collected over expenditures is returned to the Florida Clerks of Court Operations Corporation at the close of the state fiscal year on June 30, annually. The modified accrual basis of accounting is used by governmental funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become measurable and available to finance current liabilities of the fiscal year). For this purpose, the Clerk considers revenues to be available if they are collected within 60 days after year-end. Expenditures are recorded when the related fund liability is incurred, except for certain compensated absences, which are recognized as expenditures to the extent they have matured. Charges for services, interest income, and other revenues are recognized as they are earned and become measurable and available to pay liabilities of the current period. Florida Statutes provide that the amount by which revenues and transfers exceed annual expenditures for the general fund be remitted to the Board immediately following the fiscal year for which the funding was provided or following the fiscal year during which other revenues were recognized. The amount of this distribution is recorded as a liability and as an other financing use in the accompanying special-purpose financial statements. Section 28.37, Florida Statutes, provides that all court related revenues are considered State revenue effective July 1, 2009, and are to be remitted monthly to the Department of Revenue. Capital outlays expended in governmental funds are capitalized in the basic financial statements of Collier County, Florida rather than in the governmental funds of the Clerk. 1212-1416406 11 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Additionally, the Clerk reports the following fund type: Fiduciary Funds—Agency Funds— These funds are used to account for assets held by the Clerk in a trustee capacity or as an agent for individuals, private organizations, other governments, and other funds. The agency funds are custodial in nature (assets equal liabilities), and do not involve measurement of results of operations or have a measurement focus. Agency funds are accounted for using the full accrual basis of accounting. Cash Equivalents Cash equivalents are defined as highly liquid investments with original maturities of three months or less. The Clerk does not currently hold investments. Compensated Absences Full-time employees of the Clerk are allowed to accumulate an unlimited number of hours of unused sick leave and up to 240 hours of unused vacation leave (with limited exceptions per the employee manual). Upon termination, employees receive 100% of allowable accumulated vacation hours and a percentage of unused sick leave, depending on years of service. Vacation leave and sick leave are included in operating costs of the general fund when the payments are made to employees. The Clerk is not legally required to accumulate financial resources for these unmatured obligations. Accordingly, the liability for compensated absences is not reported in the general fund of the Clerk, but rather is reported in the basic financial statements of Collier County, Florida. Prepaid Expenses The Clerk has elected to follow GASB Codification 1600.127 Other Expenditure Recognition Alternatives and expends maintenance costs as they are incurred and does not allocate the cost between periods. 1212-1416406 12 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Use of Estimates The preparation of these special-purpose financial statements requires management of the Clerk to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the special-purpose financial statements and the reported amounts of revenues and expenditures during that period. Actual results could differ from those estimates. Comparative Data The special-purpose financial statements include certain prior year summarized comparative information in total but not at the level of detail required for a complete presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the Clerk's special-purpose financial statements for the year ended September 30, 2011, from which the summarized information was derived. Fund Balance Reporting and Governmental Fund-Type Definitions Fund balances are classified either as non-spendable or as spendable. Spendable fund balances are further classified in a hierarchy based on the extent to which there are external and/or internal constraints in how fund balance amounts may be spent. Non-spendable fund balances include amounts that cannot be spent because they are not in spendable form or are legally or contractually required to be maintained intact. There were no non-spendable fund balances at the Clerk as of September 30, 2012. Spendable fund balances are classified based on a hierarchy of the Clerk's ability to control the spending of these fund balances and are reported in the following categories: restricted, committed, assigned and unassigned. The Clerk's fund balances for the Court Services and Public Records Modernization fall into this category. Fund balances maintained in the Court Services fund and Public Records Modernization fund are restricted pursuant to certain Florida Statutes and have been presented as restricted fund balances in the fund financial statements in accordance with GASB Statement No. 54. 1212-1416406 13 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 2. Budgetary Process Florida Statutes govern the preparation, adoption, and administration of the Clerk's annual budget. The Clerk prepares and approves the budget for the Clerk's non-court functions, including public records modernization fund and the budget related to the recording function based on anticipated fees. The budget of the Clerk for the general fund transfer from the Board is submitted to and approved by the Board. Pursuant to Section 28.36,Florida Statutes, a balanced court-related budget must be prepared on or before October 1 (for the period starting the next July 1 through June 30) and submitted to the Florida Clerks of Court Operations Corporation (the Corporation). If the Clerk estimates that projected revenues are insufficient to meet anticipated expenditures, the Clerk must report the revenue deficit to the Corporation. Once the Corporation verifies the revenue deficit, the Clerk can increase fees up to the maximum amounts specified by law to resolve the deficit. If a revenue deficit is still projected, a request can be submitted to release funds from the Department of Revenue Clerks of the Court Trust Fund. Effective July 1, 2009, all revenues in the court fund are State revenues and remitted monthly to the State of Florida. The court functions are funded through a State appropriation based on the budget submittal to the Corporation. The budget is prepared on a basis consistent with accounting principles generally accepted in the United States, except for the classification and presentation of the distribution of excess court revenue to the State for the Court Services Fund, which is treated as an other financing use (transfer out) for budgetary purposes and as an expenditure in the special-purpose statement of revenues, expenditures, and changes in fund balance in the court services fund. The annual budget serves as the legal authorization for expenditures. Any subsequent amendments to the Clerk's transfer budget funded by the Board must be approved by the Board, amendments to the Clerk's fee budget are at the discretion of the Clerk, and any amendments of the court budget must be approved by the Corporation for the court services fund. Expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year end. Budgetary control is maintained at the departmental major object expenditure level. Budgetary changes within major object expenditure categories are made at the discretion of the Clerk. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year,whenever legally authorized. 1212-1416406 14 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 3. Cash and Cash Equivalents At September 30, 2012, the carrying value of the Clerk's cash and cash equivalents was as follows: Carrying Type Maturity Value Credit Rating Cash on hand N/A $ 7,600 N/A Demand deposits N/A 31,759,419 N/A Total cash and cash equivalents $ 31,767,019 The Clerk maintains a cash pool for the deposits of all governmental and agency funds. Each fund type's portion of these balances is presented as cash and cash equivalents in the accompanying special-purpose financial statements. Interest income is allocated to each fund based on its proportionate balance in the pool. Cash and cash equivalents as of September 30, 2012, are reported as $9,894,687 and $21,872,332 in the governmental funds and fiduciary funds, respectively. Included in cash reported in the general fund is a $4 million deposit per an agreement for road development impact fees received from the developer which is payable in two equal installments to the Collier County Board in 2013 and 2014. Custodial Credit Risk At September 30, 2012, the Clerk's deposits were entirely covered by federal depository insurance or by collateral pledged with the State Treasurer pursuant to Chapter 280, Florida Statutes. Under this Chapter, in the event of default by a participating financial institution (a qualified public depository), all participating institutions are obligated to reimburse the governmental entity for the loss. Credit Risk The Clerk's policy is to follow the guidance in Section 219.075, Florida Statutes, regarding the deposit of funds received and the investment of surplus funds. Sections 219.075 and 218.415, Florida Statutes, authorize the Clerk to invest in Florida Prime (formerly the Local Government Surplus Funds Trust Fund) or any intergovernmental investment pool authorized pursuant to the 1212-1416406 15 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 3. Cash and Cash Equivalents (continued) Florida Inter-local Cooperation Act; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; direct obligations of the United States Treasury, federal agencies and instrumentalities, or interest-bearing time deposits or savings accounts in banks organized under the laws of the United States and doing business and situated in the State of Florida, savings and loan associations which are under state supervision, or in federal savings and loan associations located in the State of Florida and organized under federal law and federal supervision, provided that any such deposits are secured by collateral as may be prescribed by law. Additionally, Florida Statutes allow local governments to place public funds with institutions that participate in a collateral pool under the Florida Security for Public Deposits Act. The pool is administered by the State Treasurer, who may make additional assessments to ensure that no public funds will be lost. Interest Rate Risk The Clerk has no specific investment policy regarding interest rate risk and does not currently hold any investments. 4. Interest Income and Investment of County Funds Pursuant to Florida Statutes, Section 28.33, the Clerk invests all County funds in excess of those required to meet expenses. Effective July 1, 2009, Florida Statutes, Section 28.33 was amended and interest income earned on these funds is revenue to the Board. Interest income is allocated to each fund based on its proportionate balance in the pool. Interest income of$18,348 is reported in the general fund for the year ended September 30, 2012, as the portion of interest earned on Clerk funds. 5. Capital Assets Capital assets used by the governmental fund type operations are capitalized in the basic financial statements of Collier County, Florida rather than in the governmental funds of the Clerk. Upon acquisition, such assets are recorded as expenditures in the governmental funds of the Clerk and capitalized at cost in the basic financial statements of Collier County, Florida. Capital assets are valued at historical cost, or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair value on the date received. 1212-1416406 16 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 5. Capital Assets (continued) The Clerk maintains custodial responsibility for the capital assets used by the office. No depreciation has been provided on capital assets in the accompanying special-purpose financial statements. However, depreciation expense on these assets is recorded in the basic financial statements of Collier County, Florida. 6. Long-Term Liabilities The following is a summary of changes in general long-term liabilities which are reflected in the basic financial statements of Collier County, Florida: October 1,2011 Additions Deletions September 30,2012 Accrued compensated absences $ 1,711,963 $ 831,965 $ 783,292 $ 1,760,636 Of these obligations, approximately$805,667 is expected to be paid during the fiscal year ending September 30, 2013. These long-term liabilities are not reported in the special-purpose financial statements of the Clerk since they have not matured. 7. Employee Retirement Plan Substantially all full-time employees of the Clerk of the Circuit Court filling regularly established positions are eligible to participate in the State of Florida Retirement System (System), a cost-sharing multiple-employer defined benefit plan administered by the State of Florida, Division of Retirement. The System is a defined benefit plan for all state, and participating county, district school board, community college and university employees (Pension Plan). The System also offers eligible employees participation in an alternative defined contribution plan (Investment Plan). The Clerk of the Circuit Court participates in the Elected State Officers' Class. The plan is administered by the State of Florida. Contribution rates are established statewide for all participating governmental units. Accordingly, the actuarial information and related disclosures attributable to the Clerk of the Circuit Court's employees are not determinable. Employees enrolled in the plan prior to July 1, 2011, who retire at or after age 62 with 6 years of credited service, or with 30 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.60% for regular employees, 2.00% for senior management and 3.00% for county elected officials for each year of credited service times the final average 1212-1416406 17 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 7. Employee Retirement Plan (continued) compensation. Employees enrolled on or after July 1, 2011, who retire at or after age 65 with 8 years of credited service or 33 years of service regardless of age, are entitled to the retirement benefits as outlined above. Final average compensation is the employee's average of the five highest fiscal years of salary earned during credited service for those enrolled prior to July 1, 2011, and the eight highest fiscal years of salary for those hired on or after July 1, 2011. Vested employees may retire before age 62 and receive benefits that are reduced 5% for each year prior to normal retirement age. Employees participating in the Investment Plan are vested after one year of service with no age requirement. The System also provides death and disability benefits. Benefits are established by Chapter 121, Florida Statutes, and Chapter 22B, Florida Administrative Code. The Deferred Retirement Option Program (DROP) is a program that provides an alternative method for payment of retirement benefits for a specified and limited period for members of the System, effective July 1, 1998. Under this program, the employee may participate as of their normal retirement date and have their benefits accumulated in the Florida Retirement System Trust Fund, earning interest, while continuing to work for a System employer. Employees enrolled in DROP prior to July 1, 2011, earn interest on accumulated benefits in the Trust Fund at 6.5%, those enrolling on or after July 1, 2011, earn interest at 1.3%. The participation in the program does not change conditions of employment. When the DROP period ends, maximum of 60 months, employment must be terminated. At the time of termination of employment, the employee will receive payment of the accumulated DROP benefits, and begin receiving their monthly retirement benefit (in the same amount determined at retirement, plus annual cost-of- living increases). Investment Plan members are not eligible to participate in the DROP program, but Pension Plan members are eligible to roll their DROP lump sum into the Investment Plan as one of the distribution methods under the Pension Plan. The System publishes an annual report that provides ten-year historical trend information about progress made in accumulating sufficient assets to pay benefits when due. This report may be obtained by writing to the Division of Retirement Research Education and Policy Section 1317 Winewood Boulevard, Building 8, Tallahassee, Florida 32399-1560, or by calling (877) 377-1737, or accessing their Internet site at www.dms.MyFlorida.com. 1212-1416406 18 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 7. Employee Retirement Plan (continued) The Clerk of the Circuit Court is required to contribute an actuarially determined rate. Rates from October 1, 2011 through June 30, 2012, were 11.14% for county elected officials, 6.27% for senior management, 4.91% for regular employees and 4.42% for DROP employees based on covered payroll. The current rates, effective July 1, 2012, are 10.23% for county elected officials, 6.30% for senior management, 5.18% for regular employees and 5.44% for DROP employees based on covered payroll. In addition, as of July 1, 2011, employee contributions of 3.00% are required of all Pension Plan and Investment Plan members, except for those in DROP. The contribution requirements of the Clerk of the Circuit Court are established and may be amended by the State of Florida. The Clerk of the Circuit Court's employer contributions to the plan for the years ended September 30, 2012, 2011 and 2010, were $696,309, $928,246 and $925,351, respectively, equal to the required contributions for each year. 8. Related Party Transactions and Due from Other Governments The Board provided funding for the Clerk in the amount of $5,238,000. The Supervisor of Elections provided funding in the amount of a $37,000 fee for financial services performed by the Clerk. At September 30, 2012, the Clerk had a payable due to the Board of $438,939 comprised as follows: Distribution of excess fees $ 80,249 Amounts due for various services 5,229 Agency funds due 353,461 Total due to Board of County Commissioners $ 438,939 At September 30, 2012, the Board had a payable due to the Clerk of $14,578 comprised as follows: Amounts due for various services $ 14,578 Total due from Board of County Commissioners $ 14,578 1212-1416406 19 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 8. Related Party Transactions and Due from Other Governments (continued) Due from Other Governments At September 30, 2012, the Clerk has a receivable due from the Clerk Trust Fund at the Florida Clerk of Courts Operation Corporation to the Public Records Modernization Fund in the amount of$336,572. This amount is fully offset by deferred revenue, as the funds were not received within sixty days of September 30, 2012, but the amount is expected to be received within the next fiscal year. 9. Risk Management Collier County, Florida (the County) is exposed to various risks of loss, including, but not limited to general liability, health and life, property and casualty, auto and physical damage, and workers' compensation. The County is substantially self-insured and accounts for and finances its risk of uninsured losses through an internal service fund. All liabilities associated with these self-insured risks are reported in the basic financial statements of the County. During the year ended September 30, 2012, the Clerk was charged $2,801,779 by the County for participation in the risk management program. The County retains the first $500,000 per claim for workers' compensation, and has purchased outside excess coverage for up to the statutory limits for each injury and illness. The County also provides coverage for $200,000 per occurrence for general liability and auto liability coverage and has purchased outside excess coverage for up to $1 million per claim. Negligence claims in excess of the statutory limits set in Section 768.28, Florida Statutes, which provide for limited sovereign immunity of$100,000/$200,000 per occurrence can only be recovered through an act of the State Legislature. Property claims are subject to a 5% wind deductible and a $50,000 deductible for all other perils. The County retains the first $100,000 per claim/$200,000 per occurrence for public official errors and omissions and crime coverage and has purchased outside excess coverage for up to $5 million per claim. There have been no significant reductions in insurance coverage in the last year. Settled claims have not exceeded the insurance provided by third party carriers in any of the last three years. The County is self-insured for health claims covering all of its employees and their eligible dependents. The County retains the first $325,000 per covered member and has purchased outside excess coverage for all claims exceeding this amount. An actuarial valuation is performed each year to estimate the amounts needed to pay prior and future claims and to establish reserves. 1212-1416406 20 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 10. Other Postemployment Healthcare Benefits (OPEB) Plan The County follows GASB Statement 45,Accounting and Financial Reporting by Employers for Postemployment Benefits other than Pensions in accounting for its post employment benefits. Plan Description The Clerk of the Circuit Court participates in a group health care plan that covers eligible retirees, and their dependents, of the Board and all Constitutional Officers with the exception of the Sheriff. The Board administers the plan and establishes the benefits. The healthcare plan does not issue a stand-alone financial report, however additional actuarial information regarding the plan as a whole is disclosed in the notes to the financial statements of Collier County, Florida. Under Florida Statutes, retirees originally hired prior to July 1, 2011, are eligible to participate in the active medical plan by paying the active rate if they have attained age 62 and have 6 years of service or have at least 30 years of service. Employees hired on or after July 1, 2011 are eligible to participate in the active medical plan by paying the active rate if they have attained age 65 and have 8 years of service or have at least 33 years of service. Employees eligible for a reduced benefit under the Florida Retirement System prior to age 62 (65 if hired on or after July 1, 2011) are also eligible to participate in the medical plan. The Clerk of the Circuit Court provides no subsidy to the retiree, or their dependents, for group health care. Funding Policy The contribution requirements of the plan members and the employers are established and may be amended by the County. The plans are financed by the participating agencies on a pay as you go basis through the County's self-insurance internal service fund. Participating agencies contribute an additional amount per each active employee to fund retiree health care. The Clerk's office had an actuarial accrued liability of$27,139 as of September 30, 2012. The annual other postemployment benefit cost is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. An actuarial valuation on the plan as a whole was performed in January 2012. The notes to the financial statements of the County disclose additional information regarding the other post-employment benefit plan as a whole. 1212-1416406 21 Collier County, Florida Clerk of the Circuit Court Notes to Special-Purpose Financial Statements (continued) 11. Claims and Contingencies Litigation The Clerk of the Circuit Court is routinely involved as defendant, plaintiff and as a "party in interest" in carrying out its statutorily and constitutionally assigned tasks. During the year ended September 30, 2012, the Clerk was involved in approximately 92,399 collection cases. These are court actions designed to collect fees and costs imposed by the courts in criminal cases. The Clerk was involved in approximately 383 bond forfeiture actions. Those cases involve collecting forfeitures of criminal appearance bonds. There are approximately 113 actions for foreclosure of property in which the Clerk has been a named defendant. The Clerk is involved in a class action involving the constitutionality of a Florida statute relating to ownership of interest earned on monies paid into the registry of the court and an inverse condemnation allegation asserting that the Clerk has improperly retained interest accruing on funds in the court's registry. The Clerk filed a Motion to Dismiss, which was denied. The Clerk has petitioned the Second District Court of Appeals to review. Review by that Court was denied. The Clerk has filed various motions for summary judgment. Hearings have been held but a written order has not yet been entered. The trial court has not yet ruled on the viability of a class action in this matter. The Clerk has and will continue to vigorously defend this action. 1212-1416406 22 Combining Information 1212-1416406 Collier County, Florida Clerk of the Circuit Court Combining Balance Sheet—Agency Funds September 30, 2012 Jury and Clerk's Court Ordinary Agency Registry Witness Total Assets Cash and cash equivalents $ 5,751,509 $ 16,105,772 $ 15,051 $ 21,872,332 Total assets $ 5,751,509 $ 16,105,772 $ 15,051 $ 21,872,332 Liabilities Due to the Collier County,Florida Board of County Commissioners $ 353,461 $ — $ — $ 353,461 Due to other governments 628,253 — 15,051 643,304 Deposits 4,769,795 16,105,772 — 20,875,567 Total liabilities $ 5,751,509 $ 16,105,772 $ 15,051 $ 21,872,332 23 1212-1416406 Collier County, Florida Clerk of the Circuit Court Statement of Changes in Assets and Liabilities —Agency Funds Year Ended September 30, 2012 Balance Balance October 1, September 30, 2011 Additions Deletions 2012 Assets Cash and cash equivalents $ 18,905,959 $ 153,018,389 $ 150,052,016 $ 21,872,332 Total assets $ 18,905,959 $ 153,018,389 $ 150,052,016 $ 21,872,332 Liabilities Due to the Collier County,Florida Board of County Commissioners $ 349,252 $ 353,461 $ 349,252 353,461 Due to other governments 1,917,563 9,907,679 11,181,938 643,304 Deposits 16,639,144 142,757,249 138,520,826 20,875,567 Total liabilities $ 18,905,959 $ 153,018,389 $ 150,052,016 $ 21,872,332 24 1212-1416406 Other Reports 1212-1416406 I ��'ii'f'+ El C RNST&YOUNG Ernst&Young LLP Suite 500 5100 Town Center Circle tloorrowiromionomp 11111111111,111111111111111 Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Special-Purpose Financial Statements Performed in Accordance with Government Auditing Standards The Honorable Dwight E. Brock, Clerk of the Circuit Court Collier County, Florida We have audited the special-purpose financial statements of each major fund and aggregate remaining fund information of the Collier County, Florida Clerk of the Circuit Court (the Clerk of the Circuit Court) as of and for the year ended September 30, 2012, and have issued our report thereon dated December 18, 2012, which describes that such special-purpose financial statements have been prepared for the purpose of complying with Section 218.39, Florida Statutes, and Chapter 10.557(3), Rules of the Auditor General for Local Governmental Entity Audits. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal control over financial reporting Management of the Clerk of the Circuit Court is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Clerk of the Circuit Court's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the special- purpose financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Clerk of the Circuit Court's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Clerk of the Circuit Court's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. 1212-1416406 25 A member firm of Ernst&Young Global Limited w 11111111011111111 RNST&YOUNG Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and other matters As part of obtaining reasonable assurance about whether the Clerk of the Circuit Court's special- purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of the special-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 or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the Clerk of the Circuit Court in a separate letter dated December 18, 2012 This report is intended solely for the information and use of the Clerk of the Circuit Court's management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties' f yowriti.LP December 18, 2012 1212-1416406 26 A member firm of Ernst&Young Global Limited _=� ERNST&YOUNG Ernst&Young LLP I II I I Suite 500 I I 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Management Letter Honorable Dwight E. Brock, Clerk of the Circuit Court Collier County, Florida We have audited the special-purpose financial statements of each major fund and the aggregate remaining fund information of the Collier County, Florida Clerk of the Circuit Court (the Clerk of the Circuit Court) as of and for the year ended September 30, 2012, and have issued our report thereon dated December 18, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental audits performed in the state of Florida and require that certain items be addressed in this letter. We have also issued our report dated December 18, 2012, on internal control over financial reporting and on compliance and other matters based on an audit of special-purpose financial statements performed in accordance with Government Auditing Standards. Disclosures in that report should be considered in conjunction with this management letter. We have the following suggestions for improvement in accounting procedures and controls. Current Year Findings and Recommendations There were no findings or recommendations as a result of our current year audit. Prior Year Findings and Recommendations There were no findings or recommendations made during the years ended September 30, 2011 and 2010. Other Required Communications No matters of noncompliance with Section 218.415, Florida Statutes, regarding the investment of public funds were identified within the scope of our audit. The results of our audit disclosed no violations of laws, rules, regulations or contractual provisions or abuse, no improper or illegal expenditures, and no control deficiencies. 1212-1416406 27 A member firm of Ernst&Young Global Limited • 1111111111111111111 RNST&YOUNG The Clerk of the Circuit Court was established by the Constitution of the State of Florida, Article VIII, Section 1(d). Section 10.554(1)(i)8., Rules of the Auditor General, requires a statement as to whether or not the Clerk complied with Section 28.35 and 28.36, Florida Statutes, regarding the budget and performance standards certified by the Florida Clerk of Courts Operations Corporation (the Corporation). The results of our audit did not identify any instances of noncompliance that are required to be reported, with the exception of the Clerk's retention of 10 percent of all court- related fines collected by the Clerk being deposited into the Clerk's Public Records Modernization Trust Fund in accordance with Section 28.37(2), Florida Statutes. Management has reported the issue to the Corporation and the issue has been resolved. This management letter is intended solely for the information and use of the Clerk of the Circuit Court, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. 1- hi-LP December 18, 2012 1212-1416406 28 A member firm of Ernst&Young Global Limited Ernst & Young LLP Assurance I Tax I Transactions I Advisory About Ernst&Young Ernst&Young is a global leader in assurance, tax,transaction and advisory services. Worldwide,our 167,000 people are united by our shared values and an unwavering commitment to quality.We make a difference by helping our people,our clients and our wider communities achieve their potential. For more information,please visit www.ey.com Ernst&Young refers to the global organization of member firms of Ernst&Young Global Limited, each of which is a separate legal entity. Ernst&Young Global Limited,a UK company limited by guarantee,does not provide services to clients.This Report has been prepared by Ernst&Young LLP,a client serving member firm located in the United States. SPECIAL-PURPOSE FINANCIAL STATEMENTS Collier County, Florida Property Appraiser Year Ended September 30, 2012 With Report of Independent Certified Public Accountants Ernst&Young LLP El ERNST&YOUNG Collier County, Florida Property Appraiser Special-Purpose Financial Statements Year Ended September 30, 2012 Contents Report of Independent Certified Public Accountants 1 Special-Purpose Financial Statements Special-Purpose Balance Sheet— General Fund 3 Special-Purpose Statement of Revenues,Expenditures,and Changes in Fund Balance— General Fund 4 Special-Purpose Statement of Revenues,Expenditures,and Changes in Fund Balance— Budget and Actual — (Budgetary Basis)—General Fund 5 Notes to Special-Purpose Financial Statements 6 Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Special-Purpose Financial Statements Performed in Accordance with Government Auditing Standards 17 Schedule of Findings and Responses 19 Management Letter 22 1301-1000944 I ,I 11111111111111111 r�� RNST&YOUNG Ernst&Young LLP Suite 500 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants Honorable Abe Skinner, Property Appraiser Collier County, Florida We have audited the accompanying special-purpose financial statements of the general fund of the Collier County, Florida Property Appraiser(the Property Appraiser), as of and for the year ended September 30, 2012 as listed in the table of contents. These special-purpose financial statements are the responsibility of the Property Appraiser's management. Our responsibility is to express an opinion on these special-purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 special-purpose financial statements are free of material misstatement.We were not engaged to perform an audit of the Property Appraiser's internal control over financial reporting.Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Property Appraiser's internal control over financial reporting. Accordingly, we express no such opinion.An audit also includes examining,on a test basis,evidence supporting the amounts and disclosures in the special-purpose financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall special-purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1, the accompanying special-purpose financial statements referred to above were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Chapter 10.577(3), Rules of the Auditor General for Local Governmental Entity Audits. These special-purpose financial statements are not intended to be a complete presentation of the Property Appraiser's financial position and its changes in financial position, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States. Additionally, the special-purpose statements present only the Property Appraiser and do not purport to, and do not, present fairly the financial position of Collier County, Florida, as of September 30, 2012, and the changes in its financial position, where applicable, for the year then ended, in conformity with accounting principles generally accepted in the United States. 1301-1000944 1 A member firm of Ernst&Young Global Limited IRNST&YOUNG In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the financial position of the general fund of the Property Appraiser as of September 30,2012,and the changes in its financial position and the budgetary comparison for the general fund for the year then ended in conformity with accounting principles generally accepted in the United States. In accordance with Government Auditing Standards, we have also issued our report dated January 14, 2013, on our consideration of the Property Appraiser's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. This report is intended solely for the information and use of the Property Appraiser, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. January 14, 2013 1301-1000944 2 A member firm of Ernst&Young Global Limited Collier County, Florida Property Appraiser Special-Purpose Balance Sheet— General Fund September 30, 2012 Assets Cash and cash equivalents $ 1,602,285 Total assets $ 1,602,285 Liabilities and fund balance Liabilities: Accrued liabilities $ 118,856 Due to Collier County, Florida Board of County Commissioners 1,346,556 Due to other taxing districts 136,873 Total liabilities 1,602,285 Fund balance Total liabilities and fund balance $ 1,602,285 See accompanying notes. 1301-1000944 3 Collier County, Florida Property Appraiser Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance — General Fund Year Ended September 30, 2012 Revenues: Commissions and fees $ 6,366,46] Miscellaneous 836,907 Interest Revenue 1,75.5 Total revenues 7,205,123 Expenditures: General government: Personal services 4,355,639 Operating 1,461,912 Capital outlay 110,773 Distribution of excess fees to other taxing districts 136,873 Total expenditures 6,065,197 Excess of revenues over expenditures 1,139,926 Other financing uses: Distribution of excess fees to Collier County, Florida Board of County Commissioners 1,139,926 Total other financing uses 1,139,926 Excess of revenues over expenditures and other financing uses -- Fund balance, beginning of year -- Fund balance, end of year $ — See accompanying notes. 1301-1000944 4 Collier County, Florida Property Appraiser Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — (Budgetary Basis) — General Fund Year Ended September 30, 2012 Variance With Final Budget Budget Positive Original Final Actual (Negative) Revenues: Commissions and fees $ 6,366,461 $ 6,366,461 $6,366,461 $ — Interest Revenue — — 1,755 1,755 Miscellaneous — — 836,907 836,907 Total revenues 6,366,461 6,366,461 7,205,123 838,662 Expenditures: General government: Personal services 5,004,471 5,004,471 4,355,639 648,832 Operating 1,336,990 1,336,990 1,461,912 (124,922) Capital outlay 25,000 25,000 110,773 (85,773) Total expenditures 6,366,461 6,366,461 5,928,324 438,137 Excess of revenues over expenditures — — 1,276,799 1,276,799 Other financing uses: Distribution of excess fees to Collier County,Florida Board of County Commissioners 1,139,926 1,139,926 Distribution of excess fees to other taxing districts — — 136,873 136,873 Total other financing uses — — 1,276,799 1,276,799 Excess of revenues over expenditures and other financing uses $ — $ — — $ — Fund balance,beginning of year $ — Fund balance,end of year $ — See accompanying notes. 1301-1000944 5 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements September 30, 2012 1. Summary of Significant Accounting Policies Reporting Entity The Collier County, Florida Property Appraiser (the Property Appraiser) is an elected constitutional officer as provided for by the Constitution of the State of Florida. Pursuant to Chapter 129, Florida Statutes, the Property Appraiser's budget is submitted to the Florida Department of Revenue for approval, and a copy is forwarded to the Collier County,Florida Board of County Commissioners (Board). The special-purpose financial statements presented include the general fund of the Property Appraiser's office. The accompanying special-purpose financial statements were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Section 10.557(3), Rules of the Auditor General for Local Governmental Entity Audits. Section 10.556(4), Rules of the Auditor General for Local Governmental Entity Audits, requires the Collier County, Florida Property Appraiser financial statements to only present fund financial statements. Accordingly,due to the omission of government-wide financial statements and related disclosures, including a management's discussion and analysis, these special-purpose financial statements do not constitute a complete presentation of the financial position of the Collier County, Florida Property Appraiser as of September 30, 2012, and the changes in its financial position for the year then ended, in conformity with Governmental Accounting Standards Board (GASB) Statement No. 34,Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, but otherwise constitute financial statements prepared in conformity with U.S. generally accepted accounting principles. The financial activities of the Property Appraiser, as a constitutional officer, are included in the Collier County, Florida Comprehensive Annual Financial Report. Measurement Focus, Basis of Accounting, and Basis of Presentation These special-purpose fund financial statements report detailed information about the Property Appraiser. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is reported in a separate column. 1301-1000944 6 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Governmental Funds Governmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the special-purpose balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. The Property Appraiser's only governmental fund is the general fund. The general fund is used to account for the general operations of the Property Appraiser. The modified accrual basis of accounting is used by governmental funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become measurable and available to finance current liabilities of the fiscal year). For this purpose, the Property Appraiser considers revenues to be available if they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for compensated absences, which are recognized as expenditures to the extent they have matured. Substantially all of the Property Appraiser's revenue is received from taxing authorities. These moneys are virtually unrestricted and are revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenue at the time of receipt; earlier if the"susceptible to accrual" criteria are met. Miscellaneous revenue is recognized as it is earned and becomes measurable and available to pay liabilities of the current period. Florida Statutes provide that the amount by which revenues exceed annual expenditures be remitted to each governmental agency or the Board immediately following the fiscal year for which the funding was provided or following the fiscal year during which other revenue was recognized. Capital outlays expended in the general fund operations are capitalized in the basic financial statements of Collier County, Florida rather than in the governmental funds of the Property Appraiser. 1301-1000944 7 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Refund of"Excess Fees" Florida Statutes further provide that the excess of revenues over expenditures held by the Property Appraiser be distributed to each governmental agency or the Board in the same proportion as the fees paid by each governmental agency bear to total fee revenues. The amount of this distribution is recorded as a liability and as either an expenditure or other financing use-transfer out, respectively, in the accompanying special-purpose financial statements. Cash Equivalents Cash equivalents are defined as highly liquid investments with original maturities of three months or less. Compensated Absences All full-time employees of the Property Appraiser are allowed to accumulate an unlimited number of hours of unused sick time and up to 200 hours of unused vacation leave. Upon termination, employees receive 100%of allowable accumulated vacation hours and a percentage of unused sick leave, depending on years of service, not to exceed 1,040 hours. Vacation time and sick leave are included in the operating costs of the general fund when the payments are made to employees. The Property Appraiser does not, nor is legally required to accumulate financial resources for these unmatured obligations. Accordingly, the liability for compensated absences is not reported in the general fund, but rather is reported in the basic financial statements of Collier County, Florida. Prepaid Expenses The Property Appraiser has elected to follow GASB Codification 1600.127 Other Expenditure Recognition Alternatives and expends maintenance costs as they are incurred and does not allocate the cost between periods. 1301-1000944 8 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Use of Estimates The preparation of the special-purpose financial statements requires management of the Property Appraiser to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the period. Actual results could differ from those estimates. Fund Balance Reporting Fund balances are reported in classifications based on whether the amounts are spendable or non-spendable. Spendable amounts are further classified as restricted, committed, assigned or unassigned based on the extent to which there are external and/or internal constraints in how fund balance amounts may be spent. The Property Appraiser does not maintain fund balances. 2. Budgetary Process Florida Statutes govern the preparation, adoption, and administration of the Property Appraiser's annual budget. The Property Appraiser prepares a budget for the general fund and submits it to the Florida Department of Revenue for approval. A copy of the approved budget is provided to the Board. Any subsequent amendments to the Property Appraiser's total budget must be approved by the Florida Department of Revenue. The annual budget serves as the legal authorization for expenditures. Expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year end. Budget control is maintained at the departmental major object expenditure level. Budgetary changes within major object expenditure categories are made at the discretion of the Property Appraiser. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year, whenever legally authorized. 1301-1000944 9 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 2. Budgetary Process (continued) The Property Appraiser's budget is prepared under a budgetary basis of accounting that differs from generally accepted accounting principles (GAAP). Certain revenues received from non ad valorem commissions and other sources and expenditures paid for from these revenues are not recognized under the budgetary basis of accounting; however,the revenues and expenditures have been recognized under GAAP. Additionally, there is a difference between the budgetary basis of accounting and GAAP in the treatment of excess fee distributions to entities outside of the County's reporting entity. On a budgetary basis, distributions of excess fees are reported as other financing uses. On a GAAP basis, these distributions are reported as expenditures because there is a reduction in financial resources of the County. The actual results of operations in the statement of revenues, expenditures, and changes in fund balance— budget to actual — general fund are presented on a budgetary basis. Adjustments to convert the results of operations for the year ended September 30, 2012, from the budgetary basis of accounting to the GAAP basis of accounting are as follows: Miscellaneous Revenues Budgetary basis $ — Revenues and expenditures not budgeted 838,662 GAAP basis $ 838,662 During the year ended September 30,2012,the Property Appraiser exceeded the budgeted amount for operating expenditures and capital outlay mainly as a result of equipment and contractual services related expenditures which were not expected at the time of the budget preparation. These budget overages were offset by budget savings in the personnel services category, and the recognition of unbudgeted revenues, such that, overall, total expenditures were less than the total budgeted expenditure amount. 1301-1000944 10 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 3. Cash and Cash Equivalents At September 30, 2012, the carrying value of the Property Appraiser's cash and cash equivalents was as follows: Carrying Type Value Cash on hand $ 125 Deposit accounts 1,602,160 Total cash and cash equivalents $ 1,602,285 Custodial Credit Risk At September 30, 2012, the Property Appraiser's deposits were entirely covered by federal depository insurance or by collateral pledged with the state treasurer pursuant to Chapter 280, Florida Statutes. Under this chapter, in the event of default by a participating financial institution (a qualified public depository), all participating institutions are obligated to reimburse the governmental entity for the loss. Interest Rate Risk The Property Appraiser has no specific investment policy regarding interest rate risk and generally holds no investments. Credit Risk The Property Appraiser's policy is to follow the guidance in Section 219.075, Florida Statutes, regarding the deposit of funds received and the investment of surplus funds. Sections 219.075 and 218.415,Florida Statutes, authorize the Property Appraiser to invest in Florida PRIME (formerly the Local Government Surplus Funds Trust Fund) or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; direct obligations of the United States Treasury; federal agencies and instrumentalities, or interest-bearing time deposits or savings accounts in banks organized under the laws of the United States and doing business and situated in the State of Florida, savings and 1301-1000944 11 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 3. Cash and Cash Equivalents (continued) loan associations which are under state supervision, or in federal savings and loan associations located in the State of Florida and organized under federal law and federal supervision, provided that any such deposits are secured by collateral as may be prescribed by law. 4. Capital Assets Capital assets used by the Property Appraiser are reported in the basic financial statements of Collier County, Florida rather than in the general fund of the Property Appraiser. Upon acquisition, such assets are recorded as expenditures in the general fund of the Property Appraiser, and are capitalized at cost in the basic financial statements of Collier County, Florida. Capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair value on the date received. The Property Appraiser maintains custodial responsibility for the capital assets used by the office. No depreciation expense has been provided on capital assets in these special-purpose financial statements. However, depreciation expense is recorded in the basic financial statements of Collier County, Florida. 5. Long-Term Liabilities The following is a summary of changes in general long-term liabilities which are reported in the basic financial statements of Collier County, Florida: October 1, September 30, 2011 Increase Decrease 2012 Accrued compensated absences $ 309,086 $170,444 $ 214,389 $ 265,141 Of these liabilities, approximately $150,000 is expected to be paid during the fiscal year ending September 30, 2013. These long-term liabilities are not reported in the special-purpose financial statements of the Property Appraiser since they have not matured. 1301-1000944 12 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 6. Employee Retirement Plan Substantially all full-time employees of the Property Appraiser filling regularly established positions are eligible to participate in the State of Florida Retirement System (System), a cost-sharing multiple-employer public retirement system administered by the State of Florida, Division of Retirement. The System is a defined benefit plan for all state, and participating county, district school board, community college, and university employees (Pension Plan). The System also offers eligible employees participation in an alternative defined contribution plan(Investment Plan). The Property Appraiser participates in the Elected State Officers' Class. The plan is administered by the State of Florida. Contribution rates are established statewide for all participating governmental units. Accordingly, the actuarial information and related disclosures attributable to the Property Appraisers' employees are not determinable. Employees enrolled in the plan prior to July 1, 2011 who retire at or after age 62 with 6 years of credited service, or with 30 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.60%for regular employees,2.00%for senior management and 3.00% for county elected officials for each year of credited service times the final average compensation. Employees enrolled on or after July 1, 2011 who retire at or after age 65 with 8 years of credited service or 33 years of service regardless of age, are entitled to the retirement benefits as outlined above. Final average compensation is the employee's average of the five highest fiscal years of salary earned during credited service for those enrolled prior to July 1,2011 and the eight highest fiscal years of salary for those hired on or after July 1, 2011. Vested employees may retire before age 62 and receive benefits that are reduced 5.00%for each year prior to normal retirement age (65 years of age if hired on or after July 1, 2011). Employees participating in the Investment Plan are vested after one year of service with no age requirement. The System also provides death and disability benefits. Benefits are established by Chapter 121, Florida Statutes, and Chapter 22B,Florida Administrative Code. The Deferred Retirement Option Program (DROP) is a program that provides an alternative method for payment of retirement benefits for a specified and limited period for members of the System, effective July 1, 1998. Under this program, the employee may participate as of their normal retirement date and have their benefits accumulate in the Florida Retirement System Trust Fund, earning interest, while continuing to work for a System employer. Employees enrolled in DROP prior to July 1,2011 earn interest on accumulated benefits in the Trust Fund at 6.50%,those enrolling on or after July 1,2011 earn interest at 1.30%. The participation in the program does not change conditions of employment. When the DROP period ends, maximum of 60 months, employment must be terminated. At the time of termination of employment, the employee will 1301-1000944 13 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 6. Employee Retirement Plan (continued) receive payment of the accumulated DROP benefits, and begin receiving their monthly retirement benefit (in the same amount determined at retirement, plus annual cost-of-living increases). Investment Plan members are not eligible to participate in the DROP program, but Pension Plan members are eligible to roll their DROP lump sum into the Investment Plan as one of the distribution methods under the Pension Plan. The System publishes an annual report that provides ten-year historical trend information about progress made in accumulating sufficient assets to pay benefits when due. This report may be obtained by writing to the Division of Retirement Research Education and Policy Section 1317 Winewood Boulevard,Building 8,Tallahassee,Florida 32399-1560,or by calling(877)377-1737, or accessing their Internet site at www.dms.MyFlorida.com. The Property Appraiser is required to contribute an actuarially determined rate. Rates from October 1, 2011 through June 30,2012 were 11.14% for county elected officials, 6.27% for senior management, 4.91% for regular employees and 4.42% for DROP employees based on covered payroll. The current rates, effective July 1, 2012, are 10.23% for county elected officials, 6.30% for senior management, 5.18% for regular employees and 5.44% for DROP employees based on covered payroll. In addition, as of July 1, 2011, employee contributions of 3.00% are required of all Pension Plan and Investment Plan members, except for those in DROP. The contribution requirements of the Property Appraiser and may be amended by the State of Florida. The Property Appraiser's employer contributions to the plan for the years ended September 30, 2012, 2011 and 2010,were$161,054, $348,722 and$375,663,respectively,equal to the required contributions for each year. 7. Other Postemployment Healthcare Benefits (OPEB) Plan The County follows GASB Statement No. 45,Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions in accounting for its postemployment benefits. Plan Description. The Property Appraiser participates in a group health care plan that covers eligible retirees, and their dependents, of the Board and all Constitutional Officers with the exception of the Sheriff. The Board administers the plan and establishes the benefits. The healthcare plan does not issue a stand-alone financial report, however additional actuarial information regarding the plan as a whole is disclosed in the notes to the financial statements of Collier County, Florida (the County). 1301-1000944 14 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 7. Other Postemployment Healthcare Benefits (OPEB) Plan (continued) Under Florida Statutes, retirees originally hired prior to July 1, 2011 are eligible to participate in the active medical plan by paying the active rate if they have attained age 62 and have 6 years of service or have at least 30 years of service. Employees hired on or after July 1, 2011 are eligible to participate in the active medical plan by paying the active rate if they have attained age 65 and have 8 years of service or have at least 33 years of service. Employees eligible for a reduced benefit under the Florida Retirement System prior to age 62 (65 years of age if hired on or after July 1, 2011) are also eligible to participate in the medical plan. The Property Appraiser provides no subsidy to the retiree, or their dependents, for group health care. Funding Policy. The contribution requirements of the plan members and the employers are established and may be amended by the County. The plans are financed by the participating agencies on a pay as you go basis through the County's self insurance internal service fund. Participating agencies contribute an additional amount per each active employee to fund retiree health care. The Property Appraiser had an actuarial accrued liability of $16,906 as of September 30, 2012. The annual other postemployment benefit cost is calculated based on the annual required contribution of the employer(ARC), an amount actuarially determined in accordance with GASB Statement 45. The ARC represents a level of funding that, if paid by on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. An actuarial valuation on the plan as a whole was performed in January 2012. The notes to the financial statements of the County disclose additional information regarding the other post employment benefit plan as a whole. 8. Related-Party Transactions For the year ended September 30, 2012, the Board paid fees to the Property Appraiser in the amount of$5,683,676. At September 30, 2012, the Property Appraiser had a payable due to the Board of$1,346,556 comprised as follows: Distribution of excess fees $ 1,139,926 Amounts due for various services 206,630 Total due to Board of County Commissioners $ 1,346,556 1301-1000944 15 Collier County, Florida Property Appraiser Notes to Special-Purpose Financial Statements (continued) 9. Risk Management Collier County, Florida (the County) is exposed to various risks of loss including, but not limited to general liability,health and life,property and casualty, auto and physical damage, and workers' compensation. The County is substantially self-insured and accounts for and finances its risk of uninsured losses through an internal service fund. All liabilities associated with these self-insured risks are reported in the basic financial statements of the County. During the year ended September 30, 2012, the Property Appraiser was charged $875,727 by the County for participation in the risk management program. The County retains the first $500,000 per claim for workers' compensation, and has purchased outside excess coverage for up to the statutory limits for each injury and illness. The County also provides coverage for$200,000 per occurrence for general liability and auto liability coverage and has purchased outside excess coverage for up to $1 million per claim.Negligence claims in excess of the statutory limits set in Section 768.28, Florida Statutes, which provide for limited sovereign immunity of$100,000/$200,000 per occurrence can only be recovered through an act of the State Legislature. Property claims are subject to a 5%wind deductible and a$50,000 deductible for all other perils. The County retains the first $100,000 per claim/$200,000 per occurrence for public official errors and omissions and crime coverage and has purchased outside excess coverage for up to $5 million per claim. There have been no significant reductions in insurance coverage in the last year. Settled claims have not exceeded the insurance provided by third party carriers in any of the last three years. The County is self-insured for health claims covering all of its employees and their eligible dependents. The County retains the first $325,000 per covered member and has purchased outside excess coverage for all claims exceeding this amount. An actuarial valuation is performed each year to estimate the amounts needed to pay prior and future claims and to establish reserves. 10. Litigation The Property Appraiser is involved as defendant or plaintiff in certain litigation and claims arising from the ordinary course of operations. In the opinion of the Property Appraiser and legal counsel, the range of potential recoveries or liabilities will not materially affect the financial position of the Property Appraiser. 1301-1000944 16 111111111111"f Eli ERNST&YOUNG Ernst&Young LLP Suite 500 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Special-Purpose Financial Statements Performed in Accordance with Government Auditing Standards The Honorable Abe Skinner, Property Appraiser Collier County, Florida We have audited the special-purpose financial statements of the general fund of the Collier County, Florida Property Appraiser (Property Appraiser) as of and for the year ended September 30, 2012, and have issued our report thereon dated January 14, 2013, which describes that such special-purpose financial statements have been prepared for the purpose of complying with Section 218.39, Florida Statutes, and Chapter 10.557(3), Rules of the Auditor General for Local Governmental Entity Audits. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal control over financial reporting Management of the Property Appraiser is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit,we considered the Property Appraiser's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Property Appraiser's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Property Appraiser's internal control over financial reporting. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified. However, as described in the accompanying schedule of findings and responses, we identified a certain deficiency in internal control that we consider to be a material weakness. 1301-1000944 17 A member firm of Ernst 8 Young Global Limited lIIlIIJfII(lIIIIIJIIIlII'''' • El ERNST&YOUNG A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying schedule of findings and responses as item IC 2012-01, to be a material weakness. Compliance and other matters As part of obtaining reasonable assurance about whether the Property Appraiser's 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 special-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 or other matters that are required to be reported under Government Auditing Standards. We also noted certain additional matters that we reported to management of the Property Appraiser in our letter to management dated January 14, 2013. The Property Appraiser's responses to the findings identified in our audit are described in the accompanying schedule of findings and responses. We did not audit the Property Appraiser's response and accordingly, we express no opinion on it. This report is intended solely for the information and use of the Property Appraiser, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. 1444 f i-LP January 14, 2013 1301-1000944 18 A member firm of Ernst&Young Global Limited Collier County, Florida Property Appraiser Schedule of Findings and Responses September 30, 2012 Material Weakness: IC 2012-01: Financial Statement Close Process Criteria or specific requirement The financial statement close process is defined as the process where the results of various transactions are summarized, reviewed, consolidated, edited, and prepared into a variety of regulatory and management financial reports. The boundaries of this process may begin with the preparation of the preliminary trial balance and end with the preparation of the financial statements and related disclosures. The process includes closing the general ledger and preparing the trial balance, accumulating and posting journal entries and preparing the financial statements and disclosures. Condition and context We noted the following items related to the Property Appraiser's financial statement close process that, when considered in the aggregate, we consider to be a material weakness: • Inability to prepare complete and accurate financial statements for external reporting purposes in a timely manner and in accordance with applicable accounting guidance. • Inability to provide a complete and balanced trial balance for audit and financial statement preparation purposes. Nine adjustments were required to correct posting errors made during the financial statement closing process. • The calculation for the distribution of excess fees for the year ended September 30, 2012, was incorrectly based on a prior year amount, resulting in an error in the percentage distribution to the Board of County Commissioners of Collier County,Florida(BOCC)and other independent districts, which required a revised notification of distribution of excess fee amounts for each district to be provided to each affected district and the BOCC. • No process is in place to review the compensated absences balance calculation and determine if the data used to calculate the compensated absences liability is complete and accurate. • No process in place to review journal entries for proper recording in the general ledger. 1301-1000944 19 Collier County, Florida Property Appraiser Schedule of Findings and Responses (continued) • No internal control procedures that would enable the proper cutoff and timely recording of liabilities under the modified accrual basis of accounting. Expenditures that should have been accrued at fiscal year-end were not recorded. • No internal control procedures or information system functions are in place to ensure that manual journal entries are balanced. We noted three unbalanced journal entries during our journal entry review, one of which was not subsequently identified and corrected by management. • No internal control procedures or information system functions in place which ensure that expenditures made are within the limitations of the legally adopted budget(original and/or final). As no review was performed by management to ensure expenditures were made within budgetary limits, no budget amendments to address additional required expenditures were made, resulting in budgetary overages in two categories of expenditure and non-compliance with budgetary requirements. Effect Until this material weakness is remediated, there is a reasonable possibility that a material misstatement to the annual financial statements could occur and not be prevented or detected by the Property Appraiser's controls in a timely manner. Cause There is a general lack of policies and procedures in place to cover all matters required in closing the Property Appraiser's fiscal year, preparing closing journal entries, sufficient management review of adjustments and other journal entries. Also, there seems to be a lack of a sufficient complement of personnel with a level of technical accounting expertise commensurate with the Property Appraiser's financial reporting and statutory accounting requirements. Additionally, the Property Appraiser's current information system is either limited in its capabilities to provide all of the information needed by management or management is not fully utilizing the capabilities of its information system to obtain the necessary information. 1301-1000944 20 Collier County, Florida Property Appraiser Schedule of Findings and Responses (continued) Recommendation: We recommend management review its current procedures for key processes, including the financial statement closing process, and determine the appropriateness of those processes for preventing and detecting misstatements, preparing reliable accurate financial statements and ensure such processes are consistent with best practices in the industry. Once the Property Appraiser has redefined these processes, job descriptions should be developed to support these processes to ensure responsibilities and accountability are put into place for these processes. Management's response and planned corrective actions The Property Appraiser reassigned one of the office's existing directors and hired an accountant to fill the Director of Accounting position to work with the auditors to complete the work for this fiscal year. Due to the position being vacated late in the fiscal year and the lack of documentation previously maintained for that position,they were not familiar with the Property Appraiser's office processes. Management is in the process of documenting the accounting procedures. 1301-1000944 21 �1111111111111 If" =" ERNST&YOUNG Ernst&Younq LlP 1111111111 Suite 500 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Management Letter Honorable Abe Skinner, Property Appraiser Collier County, Florida We have audited the special-purpose financial statements of the general fund of the Collier County, Florida Property Appraiser (the Property Appraiser) as of and for the year ended September 30, 2012, and have issued our report thereon dated January 14, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, • which govern the conduct of local governmental audits performed in the state of Florida and require that certain items be addressed in this letter. We have also issued our report dated January 14,2013,on internal control over financial reporting and on compliance and other matters based on an audit of special-purpose financial statements performed in accordance with Government Auditing Standards. Disclosures in that report should be considered in conjunction with this management letter. We have the following suggestions for improvement in accounting procedures and controls. Current Year Findings and Recommendations 2012-01: Compensated Absences Criteria or specific requirement The Property Appraiser is responsible for calculating the accrual for compensated absences annually, in accordance with the requirements of the Government Accounting Standards Board (GASB)as described in GASB Statement No. 16,Accounting for Compensated Absences, and the requirements of the Property Appraiser's Employee Handbook. This amount is presented as a financial statement disclosure within the Property Appraiser's special-purpose financial statements. However, this amount is provided to the Collier County, Florida Board of County Commissioners to be accrued and disclosed within the basic financial statements of Collier County, Florida. 1301-1000944 22 A member firm of Ernst&Young Global Limited Ml IS ERNST&YOUNG Condition and context In connection with our testing of the Property Appraiser's accrual for compensated absences for the fiscal year ended September 30, 2012, we noted that there was no process in place for the adequate review of the compensated absences accrual calculation, as evidenced by the observations noted below: • According to the Collier County Property Appraiser's Employee Handbook, all full time employees who have been employed at the Property Appraiser for the entire fiscal year receive 15 sick days (120 hours) per year. During our testing of the PA's accrued compensated absences, we identified two employees who had accrued more than the allowable number of hours. No documentation to support a reason for the overaccrual was available. • The compensated absences accrual did not include related accruals for FICA employer taxes and pension contributions, as required by Government Accounting Standards Board Statement No. 16 Accounting for Compensated Absences. • No accrual was made for the compensated absences earned for the last eight working days of fiscal year 2012, which were not reflected in the off-time report used to calculate the accrued compensated absences balance, as the off time report was for the pay period ending September 18, 2012. • The Collier County Property Appraiser's Employee Handbook states that all employees accrue vacation and sick hours on a per pay period basis, and that the balance of unused compensated absences is to be maintained and paid out to the employee at the time of separation from employment. We noted that for two employees,no compensated absences balances are accrued or maintained.No supporting documentation was available to support the lack of accruals for these senior management employees. Effect Improper accounting for compensated absences could cause an incorrect disclosure of the amount in the Property Appraiser's financial statements, and inappropriate payouts to employees at their time of separation from employment. Cause This error likely occurred due to the lack of sufficient review of the calculation and per pay period accruals by an employee with adequate knowledge and expertise. Additionally, policy documentation was not consistent with practice, and management did not maintain alternative documentation to support inconsistencies between policy and practice. 1301-1000944 23 A member firm of Ernst&Young Global Limited 1 El ERNST&YOUNG Recommendation We recommend that management implement review procedures by appropriate individuals of the calculation and per pay period accruals to ensure that all employee compensated absences accruals and balances are complete and accurate. Additionally,we recommend that management revise the Employee Handbook to fully document the policies followed by management in practice. Management's response and planned corrective actions The Property Appraiser reassigned one of the office's existing directors and hired an accountant to fill the Director of Accounting position to work with the auditors to complete the work for this fiscal year. Due to the position being vacated late in the fiscal year and the lack of documentation previously maintained for that position,they were not familiar with the Property Appraiser's office processes. Management is in the process of documenting the accounting procedures. Prior Year Findings and Recommendations 2011: None. 2010: 2010-01 Calculation of Compensated Absences Observation The Property Appraiser is responsible for calculating the accrual for compensated absences annually. This amount is currently only a financial statement disclosure within the Property Appraiser's financial statement. However,this amount is provided to the Board of Collier County to be recorded and disclosed within the government wide financials. We note that the accrual provided by management was incorrect due to the omission of an accrual for compensated absences earned for the last seven days of fiscal 2010, which were not reflected in the off-time report used to calculate the accrued compensated absences balance, as the off time report was for the pay period ending September 21, 2010. We note that the disclosure was adjusted to reflect the additional accrual. Status Comment repeated as part of 2012-01. There were no other findings or recommendations made in the prior two years' financial statement audits. 1301-1000944 24 A member firm of Ernst&Young Global Limited 1 1111111111111'' &YO N I I II1111 U G O ther Required Communications We were not made aware of any instances of noncompliance with Section 218.415, Florida Statutes, regarding the investment of public funds in connection with our audit. In connection with our audit of the special-purpose financial statements, we were not made aware of any violations of laws, rules, regulations or contractual provisions or abuse, or improper or illegal expenditures. The Property Appraiser was established by the Constitution of the State of Florida, Article VIII, Section 1(d). This management letter is intended solely for the information and use of the Property Appraiser, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. it4 f LLi' January 14, 2013 1301-1000944 25 A member firm of Ernst&Young Global Limited Ernst& Young LLP Assurance I Tax I Transactions I Advisory About Ernst&Young Ernst&Young is a global leader in assurance, tax,transaction and advisory services. Worldwide,our 167,000 people are united by our shared values and an unwavering commitment to quality.We make a difference by helping our people,our clients and our wider communities achieve their potential. For more information,please visit www.ey.com Ernst&Young refers to the global organization of member firms of Ernst&Young Global Limited, each of which is a separate legal entity. Ernst&Young Global Limited,a UK company limited by guarantee,does not provide services to clients.This Report has been prepared by Ernst&Young LLP,a client serving member firm located in the United States. I1 ' ' ' - SPECIAL-PURPOSE FINANCIAL STATEMENTS Collier County, Florida Sheriff Year Ended September 30, 2012 With Report of Independent Certified Public Accountants Ernst&Young LLP El ERNST&YOUNG Collier County, Florida Sheriff Special-Purpose Financial Statements Year Ended September 30, 2012 Contents Report of Independent Certified Public Accountants 1 Special-Purpose Financial Statements Special-Purpose Balance Sheet—Governmental Funds 3 Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balances— Governmental Funds 4 Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance— Budget and Actual—General Fund 5 Special-Purpose Statement of Net Assets—Internal Service Fund 6 Special-Purpose Statement of Revenues, Expenses, and Changes in Net Assets— Internal Service Fund 7 Special-Purpose Statement of Cash Flows—Internal Service Fund 8 Special-Purpose Balance Sheet—Agency Funds 9 Notes to Special-Purpose Financial Statements 10 Required Supplementary Information Schedule of Funding Progress for the Retiree Health Plan 29 Combining Financial Information Special-Purpose Combining Balance Sheet—Agency Funds 30 Special-Purpose Statement of Changes in Assets and Liabilities—Agency Funds 31 Other Reports Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Special-Purpose Financial Statements Performed in Accordance With Government Auditing Standards 32 Report on Agreed-Upon Procedures Applied to Investigative Funds 34 Management Letter 36 1301-1002938 IIIIlIIIIIIlIIIIIIIIIIlII'' 11 ERNST&YOUNG Sute OOoungLLP III( 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants Honerable Kevin Rambosk, Sheriff Collier County,Florida We have audited the accompanying special-purpose financial statements of each major fund and the aggregate remaining fund information of the Collier County, Florida Sheriff(the Sheriff) as of and for the year ended September 30, 2012, as listed in the table of contents. These financial statements are the responsibility of the Sheriff's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 financial statements are free of material misstatement. We were not engaged to perform an audit of the Sheriff's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Sheriff's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As discussed in Note 1, the accompanying special-purpose financial statements referred to above were prepared for the purpose of complying with Section 218.39 Florida Statutes, and Chapter 10.557(3), Rules of the Auditor General for Local Governmental Entity Audits. These special-purpose financial statements are not intended to be a complete presentation of the Sheriff's financial position and its changes in financial position, where applicable thereof, for the year then ended, in conformity with accounting principles generally accepted in the United States. Additionally, the special-purpose financial statements present only the Sheriff and do not purport to, and do not, present fairly the financial position of Collier County, Florida as of September 30, 2012, and the changes in its financial position, where applicable, for the year then ended, in conformity with accounting principles generally accepted in the United States. In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects,the respective financial position of each major fund,and the aggregate remaining fund information of the Sheriff as of September 30, 2012, and the respective changes in financial position and, where applicable,cash flows thereof,and the budgetary comparison for the general fund for the year then ended,in conformity with accounting principles generally accepted in the United States. 1301-1002938 1 A member firm of Ernst&Young Global Limited I1IIIlIIIIIIIIIIlIIIIII'' S &YOUNG In accordance with Government Auditing Standards, we have also issued our report dated January 28, 2013, on our consideration of the Sheriff's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States require that the schedule of funding progress for the retiree health plan on page 29 be presented to supplement the special-purpose financial statements. Such information, although not a part of the special-purpose financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the special purpose financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the special-purpose financial statements, and other knowledge we obtained during our audit of the special-purpose financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the Sheriff's special-purpose financial statements. The special-purpose combining balance sheet— agency funds and special-purpose statement of changes in assets and liabilities— agency funds as of and for the year ended September 30, 2012, on pages 30 and 31 are presented for purposes of additional analysis and are not a required part of the special-purpose financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the special-purpose financial statements. The information has been subjected to the auditing procedures applied in the audit of the special-purpose financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the special-purpose financial statements or to the special-purpose financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States. In our opinion, the information is fairly stated in all material respects in relation to the special-purpose financial statements as a whole. This report is intended solely for the information and use of the Sheriff, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. gl LLP January 28,2013 1301-1002938 2 A member firm of Ernst&Young Global Limited V 7 N I M l� N 0, 00 (� cn 0, N N O l� 00 N N 00 O N M N O 0', M 01 O h 0, M (� N O N 0, h N l` oo N N O v'C t` O .M-, — � O vl M 0, 'I- v1 O N N vl Cd v's 0, l` M 0, v'> l� et O N N O N .--, 00 - ,, N . 00 O (. .. ^ EA LA 69 EA I Is N I I I 1 N I I I I I I N N 0 CI 00 00 00 00 00 OD DD= y _W O 0 00 00 00 00 6, W O cnL O o Z w cA fA FA (A 00 1 I 00 1 00 I I r. I ■ -. N 00 CA v v , O > 0N, ON, in ^ p W N M ki MI C9 69 69 C9 1.) 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OU °) co L.) cco0 ° ,0 a v a; C7U40 o aC7 a ° v cH H a xis 0 o N N 0 ° w u w U1 I:4 H w F- w O [— Collier County, Florida Sheriff Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — General Fund Year Ended September 30, 2012 Variance With Final Budget Budget Positive Original Final Actual (Negative) Revenues: Charges for services $ — $ 1,543,000 $ 1,796,871 $ 253,871 Expenditures: General government: Personal services 2,870,700 2,870,700 2,858,933 11,767 Operating expenditures 180,000 180,000 107,781 72,219 Public safety: Personal services 104,785,500 106,328,500 105,531,307 797,193 Operating expenditures 23,210,600 23,210,600 19,085,391 4,125,209 Capital outlay 926,500 926,500 2,451,805 (1,525,305) Total expenditures 131,973,300 133,516,300 130,035,217 3,481,083 Excess of expenditures over revenues (131,973,300) (131,973,300) (128,238,346) 3,734,954 Other financing sources(uses): Transfers in: Collier County,Florida Board of County Commissioners appropriations 131,973,300 131,973,300 131,973,300 — Transfers out: Distribution of excess appropriations to Collier County,Florida Board of County Commissioners — (3,734,954) (3,734,954) Total other financing sources 131,973,300 131,973,300 128,238,346 (3,734,954) Excess of revenues and other financing sources over expenditures $ — $ — — $ _ Fund balance—beginning of year — Fund balance—end of year $ — See accompanying notes. 1301-1002938 5 Collier County, Florida Sheriff Special-Purpose Statement of Net Assets — Internal Service Fund September 30, 2012 Assets Cash and cash equivalents $ 5,479,950 Investments 9,880,031 Due from other funds 500,000 Total assets $ 15,859,981 Liabilities and net assets Liabilities: Self-insurance claims payable $ 2,340,000 Net other postemployment benefit obligation 1,048,138 Total liabilities 3,388,138 Net assets: Unrestricted 12,471,843 Total liabilities and net assets $ 15,859,981 See accompanying notes. 1301-1002938 6 Collier County, Florida Sheriff Special-Purpose Statement of Revenues, Expenses, and Changes in Net Assets — Internal Service Fund Year Ended September 30, 2012 Operating revenues: Charges for services $ 18,172,571 Operating expenses: Claims and claims expenses 17,184,541 Reinsurance premiums 632,217 Net other postemployment benefit expense (92,725) Administrative and other expenses 249,175 Total operating expenses 17,973,208 Operating income 199,363 Nonoperating revenues: Interest income 55,705 Increase in fair value of investments 26,048 Change in net assets 281,116 Net assets—beginning of year 12,190,727 Net assets—end of year $ 12,471,843 See accompanying notes. 1301-1002938 7 Collier County, Florida Sheriff Special-Purpose Statement of Cash Flows —Internal Service Fund Year Ended September 30, 2012 Operating activities Cash payments for claims and claims related services $ (17,095,541) Cash payments for reinsurance premiums (480,683) Cash payments for administrative services and supplies (249,175) Cash received from other funds for services 17,897,664 Cash received from retirees for services 555,343 Net cash used in operating activities 627,608 Investing activities Investment income 55,705 Purchases and sales of securities (2,117,417) Net cash provided by investing activities (2,061,712) Net decrease in cash and cash equivalents (1,434,104) Cash and cash equivalents—beginning of year 6,914,054 Cash and cash equivalents—end of year $ 5,479,950 Reconciliation of operating income to net cash provided by operating activities Operating income $ 199,363 Adjustments to reconcile operating income to net cash provided by operating activities: Decrease in receivables 151,534 Decrease in due from other funds 280,436 Decrease in net other postemployment benefit obligation (92,725) Increase in self-insurance claims payable 89,000 Net cash provided by operating activities $ 627,608 See accompanying notes. 1301-1002938 8 Collier County, Florida Sheriff Special-Purpose Balance Sheet — Agency Funds September 30, 2012 Assets Cash and cash equivalents $ 476,968 Due from individuals and businesses 20,637 Total assets $ 497,605 Liabilities Due to other governments $ 39,589 Due to Collier County, Florida Board of County Commissioners 30,512 Due to individuals and businesses 427,504 Total liabilities $ 497,605 See accompanying notes. 1301-1002938 9 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements September 30, 2012 1. Summary of Significant Accounting Policies Reporting Entity The Collier County, Florida Sheriff(the Sheriff) is an elected constitutional officer as provided for by the Constitution of the State of Florida. Pursuant to Chapter 129, Florida Statutes, the Sheriff's budget is submitted to the Collier County, Florida Board of County Commissioners (the Board) for approval. The Sheriff is the chief law enforcement officer of Collier County, Florida (the County) and is responsible for operating the County's corrections facilities. The special-purpose financial statements include the general fund, special revenue funds, a proprietary fund (internal service fund), and agency funds of the Sheriff's office. The accompanying special-purpose financial statements were prepared for the purpose of complying with Section 218.39,Florida Statutes, and Section 10.557(3),Rules of the Auditor General for Local Governmental Entity Audits. Section 10.556(4), Rules of the Auditor General for Local Governmental Entity Audits, requires the Sheriff to only present fund financial statements. Accordingly, due to the omission of government-wide financial statements and related disclosures, including a management's discussion and analysis, these special-purpose financial statements do not constitute a complete presentation of the financial position of the Sheriff as of September 30, 2012, and the changes in its financial position and its cash flows, where applicable, for the year then ended, in conformity with Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management's Discussion and Analysis—for State and Local Governments, but otherwise constitute financial statements prepared in conformity with U.S. generally accepted accounting principles. As a result of the budgetary oversight by the Board and the financial dependency on the Board, the financial activities of the Sheriff are included in the Collier County, Florida Comprehensive Annual Financial Report. Transfers are provided by appropriations from the Board pursuant to law. Estimated receipts and budgeted fund balances must equal appropriations. The Sheriff is required to refund to the Board all excess appropriations annually; therefore, no unappropriated general fund balance is carried forward. 1301-1002938 10 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Measurement Focus, Basis of Accounting, and Basis of Presentation The special-purpose fund financial statements report detailed information about the Sheriff The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is reported in a separate column. Governmental Funds Governmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the special-purpose balance sheet. Operating statements for these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. The modified accrual basis of accounting is used by governmental funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become measurable and available to finance current liabilities of the fiscal year). For this purpose, the Sheriff considers revenues to be available if they are collected within 60 days after year-end with the exception of grants, which have a period of availability of one year. Grants are recognized as revenue as soon as all eligibility requirements have been met, except for the State Criminal Alien Assistance Program (SCAAP) (a federal grant administered by the U.S. Department of Justice). The SCAAP grant awards are calculated based on information provided to the U.S. Department of Justice regarding overtime expenses in corrections and inmate population, for a specified time frame. Awarded funds are used for future expenses within grant guidelines. Expenditures are recorded when the related fund liability is incurred, except for compensated absences, which are recognized as expenditures to the extent they have matured. Substantially all of the Sheriff's funding is appropriated by the Board. In applying the susceptible to accrual concept to intergovernmental revenue, there are essentially two types of revenue. In one, money must be expended on the specific purpose or project before any amounts will be paid to the Sheriff; therefore, revenue is recognized based upon the expenditures incurred. In the other, money are virtually unrestricted and are revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenue at the time of receipt, or earlier, if the"susceptible to accrual" criteria are met. 1301-1002938 1 1 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Other revenue is recognized as earned and becomes measurable and available to pay liabilities of the current period. Florida Statutes provide that the amount by which revenues and transfers exceed annual expenditures be remitted to the Board immediately following the fiscal year for which the funding was provided or following the fiscal year during which other revenue was recognized. The amount of this distribution is recorded as a liability and as another financing use in the accompanying special-purpose financial statements. Capital outlays expended in governmental fund operations are recorded as capital assets in the basic financial statements of Collier County, Florida rather than in the governmental funds of the Sheriff. The Sheriff has three major governmental funds: General Fund— The general fund is used to account for the general operations of the Sheriff and includes all transactions that are not accounted for in another fund. Grant Special Revenue Fund— This fund is used to account for the proceeds of federal and state grant revenues that are legally restricted to specified purposes. Prisoner Welfare Fund— This fund is used to account for the proceeds of inmate related services and is legally restricted to specified purposes, which benefit the inmate population. The Sheriff also has one non-major fund: Federal Equitable Sharing Fund— The revenue from this fund is the result of joint investigations with federal agencies that result in the equitable sharing of the net proceeds of the forfeiture. Fund balances reported in these funds are to be used for the specified purpose of the respective fund. 1301-1002938 12 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Fiduciary Funds Fiduciary Funds—Agency Funds—These funds are used to account for assets held by the Sheriff as an agent for individuals, private organizations, and other governments. Agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting. Proprietary Fund Internal Service Fund— This fund is used to account for the health and dental insurance services provided to departments and retirees of the Sheriff on a cost-reimbursement basis. Proprietary funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Cash, Cash Equivalents, and Investments Cash equivalents are defined as highly liquid investments with maturities of three months or less. Cash equivalents also include amounts deposited in Florida PRIME (formerly the Local Government Surplus Funds Trust Fund) administered by the State Board of Administration, a 2a-7 like investment pool. Shares of the investment pool are based on the pool's share price, which approximates fair value. All investments are stated at fair value. Compensated Absences All full-time employees of the Sheriff are allowed to accumulate an unlimited number of hours of unused sick time and up to 500 hours of unused vacation leave. Upon termination, employees receive 100% of allowable accumulated vacation hours and a percentage of unused sick leave, depending on years of service, not to exceed 1,000 hours. Vacation time and sick leave are included in operating costs when the payments are made to the employees. The Sheriff does not, nor is the Sheriff legally required to, accumulate expendable financial resources for these unmatured obligations. Accordingly, the liability for compensated absences is not reported in the governmental funds, but rather is reported in the basic financial statements for the County. 1301-1002938 13 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Use of Estimates The preparation of the special-purpose financial statements requires management of the Sheriff to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the special-purpose financial statements and the reported amounts of revenues and expenditures during that period. Significant items subject to such estimates and assumptions include the self-insurance claims payable. Actual results could differ from those estimates. Fund Balance Reporting and Governmental Fund-Type Definitions Fund balances are classified either as non-spendable or as spendable. Spendable fund balances are further classified in a hierarchy based on the extent to which there are external and/or internal constraints in how fund balance amounts may be spent. Non-spendable fund balances include amounts that cannot be spent because they are not in spendable form or are legally or contractually required to be maintained intact. The Sheriff did not have any non-spendable fund balances as of September 30, 2012. Spendable fund balances are classified based on a hierarchy of the Sheriff's ability to control the spending of these fund balances and are reported in the following categories: restricted, committed, assigned, and unassigned. The Sheriff's fund balances for the grant special revenue fund, prisoner welfare fund, and federal equitable sharing fund fall into this category. Fund balances maintained in the grant special revenue fund, prisoner welfare fund, and the federal equitable sharing fund are constrained for specific purposes that are externally imposed by grantors, laws, or regulations or imposed by law through constitutional provisions or enabling legislation and are therefore reported as restricted fund balances. 1301-1002938 14 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 2. Budgetary Process Florida Statutes govern the preparation, adoption, and administration of the Sheriff's annual budget. The Sheriff prepares a budget for the general fund and submits it to the Board for approval. The budget is prepared on a basis consistent with U.S. generally accepted accounting principles. Any subsequent amendments to the budget must be approved by the Board. The annual budget serves as the legal authorization for expenditures. Expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year-end. Budgetary control is maintained at the departmental major object expenditure level. Budgetary changes within the major object expenditure categories are made at the discretion of the Sheriff. The Sheriff does not budget for the grant special revenue fund as it is funded by federal and state grants and is governed by those documents. Additionally, the prisoner welfare and federal equitable sharing funds do not have legally adopted budgets. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year, whenever legally authorized. 1301-1002938 1 5 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 3. Cash, Cash Equivalents and Investments At September 30, 2012, the carrying value of the Sheriff's cash, cash equivalents, and investments was as follows: Average Carrying Type Maturity Value Credit Rating Cash on hand N/A $ 25,682 N/A Demand deposits N/A 22,333,699 N/A Local government surplus funds trust fund: Florida Prime 39.0 days 723,328 AAAm Fund B 4.08 years 13,303 Unrated Total cash and cash equivalents 23,096,012 Federal National Mortgage Assoc. Note 8/21/2017 601,903 AA+ Federal Farm Credit Bank 2/23/2018 750,854 AA+ U.S. Treasury Note 5/31/2013 501,074 AA+ Federal Home Loan Bank 2/8/2016 750,273 AA+ Federal Home Loan Mortgage Corp Note 2/28/2017 604,306 AA+ Federal Home Loan Mortgage Corp Note 3/28/2017 755,530 AA+ Federal Farm Credit Bank 5/29/2014 750,690 AA+ Federal National Mortgage Assoc Note 5/29/2015 751,115 AA+ Federal National Mortgage Assoc Note 1/26/2016 751,732 AA+ Federal National Mortgage Assoc Note 2/26/2016 751,947 AA+ Federal Home Loan Mortgage Corp Note 9/12/2017 750,728 AA+ Federal Home Loan Mortgage Corp Note 8/10/2016 705,476 AA+ Federal National Mortgage Assoc Note 9/14/2016 752,682 AA+ Federal National Mortgage Assoc Note 1/30/2017 701,721 AA+ Total investments 9,880,031 Total cash, cash equivalents, and investments $ 32,976,043 1301-1002938 16 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 3. Cash, Cash Equivalents, and Investments (continued) The total cash, cash equivalents, and investments balances at September 30, 2012,were as follows: General fund $ 10,425,422 Grant special revenue fund 4,446,222 Prisoner welfare fund 1,285,568 Federal equitable sharing fund 981,882 Internal service fund 15,359,981 Agency funds 476,968 Total $ 32,976,043 Custodial Credit Risk The policy required execution of a third-party custodial safekeeping agreement for purchased securities and collateral, and requires that securities be held in the Sheriffs name. At September 30, 2012, the Sheriff's demand deposits were entirely covered by federal depository insurance or by collateral pledged with the State Treasurer pursuant to Chapter 280, Florida Statutes. Under this Chapter, in the event of default by a participating financial institution (a qualified public depository), all participating institutions are obligated to reimburse the government entity for the loss. The investments in the Internal Service fund are part of the Florida Sheriff Multiple Employers Trust and are administered by the Hunt Insurance Group, LLC. Interest Rate Risk The Sheriff has no specific investment policy regarding interest rate risk. Credit Risk The Sheriffs policy is to follow the guidance in Section 219.075, Florida Statutes, regarding the deposit of funds received and the investment of surplus funds. Sections 219.075 and 218.415, Florida Statutes, authorize the Sheriff to invest in the local government surplus funds trust fund; obligations of the United States Treasury; federal agencies and instrumentalities or any intergovernmental pool authorized pursuant to the Florida Interlocal Corporation Act; money 1301-1002938 17 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 3. Cash, Cash Equivalents and Investments (continued) market funds registered with the Securities and Exchange Commission registered money market fund with the highest credit quality rating from a nationally recognized rating agency; direct interest-bearing time deposits or savings accounts in banks organized under the laws of the United States and doing business and situated in the state of Florida; savings and loan associations, which are under state supervision; or in federal savings and loan associations located in the State of Florida and organized under federal law and federal supervision, provided that any such deposits are secured by collateral as may be prescribed by law. Additionally, Florida Statutes allow local governments to place public funds with institutions that participate in a collateral pool under the Florida Security for Public Deposits Act. The pool is administered by the state treasurer, who may make additional assessments to ensure that no public funds will be lost. Florida PRIME (formerly the Local Government Surplus Funds Trust Fund Investment Pool) (the Pool) is administered by the State Board of Administration and consists of two separate pools. Pool A (Florida Prime) consists of money market appropriate assets, and Pool B (Fund B Surplus Trust Fund) consisted of assets that pay more slowly than expected and/or have significant credit and liquidity risk. In addition, full realization of the principal value of Fund B assets is not readily determinable. At September 30, 2012, the Sheriff had $736,631 invested in the Pool. Of this amount, $723,328 is invested in the Florida Prime, which is rated "AAAm" by Standard & Poor's Ratings Services, and $13,303 in the Fund B Surplus Funds Trust Fund, which is not rated by a nationally recognized statistical rating agency. The Pool is fully liquid and carries a weighted-average days to maturity of 39 days. Fund B is accounted for as a fluctuating NAV (net asset value) pool and the fair value factor for September 30, 2012, was 0.94896811. The Fund B amount has a weighted-average life of 4.08 years. Fund B cash holdings continue to be distributed to participants as they become available from maturities, sales, and income received. 1301-1002938 18 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 3. Cash, Cash Equivalents, and Investments (continued) Concentration of Credit Risk The Sheriff's investments are included in the internal service fund,which is used to account for the Sheriff's self-insured health plan. The Florida Sheriff's Multiple Employer Trust administers the Sheriff's self-insured health plan and has an investment policy that allows for the investment of funds that exceed one month's required funding by more than $100,000. Investments can be made in government securities. The Sheriff's portfolio managed by the self-insurance trust includes investments in U.S. government instrumentalities and demand deposits. There are also demand deposits that are not managed by the self-insurance trust, which are available dollars managed by CCSO to cover daily operations. Below details all investments at September 30,2012: Percent of Portfolio Federal Home Loan Mortgage Corporation 9% Federal Home Loan Bank 2 Federal National Mortgage Association 13 Federal Farm Credit Bank 5 U.S. Treasury Note 2 Demand Deposits 69 Total 100% 4. Capital Assets Capital assets used by the Sheriff are capitalized in the basic financial statements of the County, rather than in the governmental funds of the Sheriff. Upon acquisition, such assets are recorded as expenditures in the governmental funds of the Sheriff and are capitalized at cost in the basic financial statements of the County. Capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair value on the date received. The Sheriff maintains custodial responsibility for the capital assets used by his office. No depreciation has been provided on capital assets in these special-purpose financial statements. However, depreciation expense on these assets is recorded in the basic financial statements of the County. 1301-1002938 19 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 4. Capital Assets (continued) A summary of changes in capital assets, which are reported in the basic financial statements of Collier County, Florida, follows: Balance Balance October 1, September 30, 2011 Additions Retirements 2012 Machinery and equipment $ 64,933,808 $ 3,727,806 $ (2,197,605) $ 66,464,009 Less accumulated depreciation (52,435,041) (5,344,290) 2,163,264 (55,616,067) Machinery and equipment,net $ 12,498,767 $ (1,616,484) $ (34,341) $ 10,847,942 5. Long-Term Liabilities The following is a summary of changes in long-term liabilities, which are reported in the basic financial statements of Collier County, Florida: October 1, September 30, 2011 Increases Retirements 2012 Accrued compensated absences $ 13,540,166 $ 1,950,126 $ (2,101,448) $ 13,388,844 Of these liabilities, approximately $360,000 is expected to be paid during the fiscal year ending September 30, 2013. These long-term liabilities are not reported in the special-purpose financial statements of the Sheriff since they have not matured. 1301-1002938 20 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 6. Interfund Balances and Transfers Due from and due to other funds at September 30, 2012, were as follows: Due From Due To General Fund $ 42,921 $ 500,000 Prisoner Welfare Fund — 42,921 Internal Service Fund 500,000 — $ 542,921 $ 542,921 Interfund receivables and payables generally represent recurring activities between funds. The internal service fund provided funding to the general fund for claims in the amount of$500,000. The funds were not transferred back to reserves before September 30, 2012. 7. Related-Party Transactions The Board provided funding for the Sheriff for the year of $131,973,300. At September 30, 2012, the Sheriff had a payable due to the Board of$3,780,899 comprised of the following: General fund: Distribution of excess appropriations $ 3,734,954 Distribution of interest collected 6,740 Miscellaneous payables 8,693 Agency funds 30,512 Total $ 3,780,899 Additionally, the Sheriff had a receivable from the Board related to services provided to the County of$ 904,977 at September 30, 2012. Agency Funds The Sheriff's Office administers funds for the Collier County Sheriff's Office Explorers Program. The program is funded by donations from employees through payroll deduction and donations from outside organizations. The program is designed for students to explore the opportunity to learn about and interact with law enforcement and to help stimulate further interest in the possibility of a law enforcement career. 1301-1002938 21 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 7. Related-Party Transactions (continued) The Sheriff's Office collects donations, through payroll deduction, for The Collier County Sheriff's Office Benefit Fund Committee, Inc. (Benefit Fund Committee), a separate, non-profit 501(c)3 organization. The Benefit Fund Committee provides emergency funds for major catastrophic events such as death, serious illness, or travel due to a family crisis. Funds are available as an interest free loan to eligible employees upon a written request and approval of the Benefit Fund Committee. 8. Employee Retirement Plan Substantially all full-time and part-time employees of the Sheriff are eligible to participate in the State of Florida Retirement System (the System), a cost-sharing multiple-employer defined- benefit plan administered by the State of Florida, Division of Retirement. The System is a defined-benefit plan for all state, and participating county, district school board, community college, and university employees (Pension Plan). The System also offers eligible employees participation in an alternative defined-contribution plan (the Investment Plan). The Sheriff, certified deputies, and eligible civilian deputy positions participate in the Special Risk Class. The plan is administered by the state of Florida. Contribution rates are established statewide for all participating governmental units. Accordingly, the actuarial information and related disclosures attributable to the Sheriff's employees are not determinable. Employees hired prior to July 1, 2011, participating in the Pension Plan who retire at or after age 62 with 6 years of credited service for regular risk or with 30 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.6% for regular employees, 2% for senior management, and 3% for county elected officials of their final average compensation for each year of credited service; and for special risk, after age 55 with 6 years or with 25 years of service regardless of age, are entitled to a retirement benefit payable monthly for life, up to 3% for each year of credited service times their final average compensation. Final average compensation is the employee's average of the five highest years of salary earned during credited service. Vested employees may retire before age 62 for regular risk and 55 for special risk and receive retirement benefits that are reduced 5% for each year prior to normal retirement age. Employees hired on July 1, 2011, or later, participating in the Pension Plan who retire at or after age 65 with 8 years of credited service for regular risk or with 33 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.6% for regular employees, 2% for senior management, and 3% for county elected officials of their final average 1301-1002938 22 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 8. Employee Retirement Plan (continued) compensation for each year of credited service; for special risk, after age 60 with 8 years or with 30 years of service and age 57 or after 30 years of special risk service regardless of age, or after 33 years of any creditable service, retirement benefits are payable monthly for life. Vested employees may retire before age 65 for regular risk and 60 for special risk and receive retirement benefits that are reduced 5% for each year prior to normal retirement age. Employees participating in the investment plan are vested after one year of service with no age requirement. The System also provides death and disability benefits. Benefits are established by Chapter 121,Florida Statutes, and Chapter 22B, Florida Administrative Code. The Deferred Retirement Option Program (DROP) is a program that provides an alternative method for payment of retirement benefits for a specified and limited period for members of the System, effective July 1, 1998. Under this program, the employee may retire and have their benefits accumulate in the Florida retirement system trust fund, earning interest, while continuing to work for a System employer. The participation in the program does not change conditions of employment. When the DROP period ends, maximum of 60 months, employment must be terminated. At the time of termination of employment, the employee will receive payment of the accumulated DROP benefits and begin receiving their monthly retirement benefit (in the same amount determined at retirement,plus annual cost-of-living increases). The System publishes an annual report that provides ten-year historical trend information about progress made in accumulating sufficient assets to pay benefits when due. That report may be obtained by writing to the Division of Retirement, Department of Management Services, 1317 Winewood Boulevard, Building 8, Tallahassee, Florida 32399; by calling (850)488-5706; or accessing the division's internet site at www.frs.state.fl.us. The Sheriff is required to contribute an actuarially determined rate. Rates from October 1, 2011 through June 30, 2012, were 14.10% for special risk employees, 4.91% for regular employees, 6.27% for senior management, and 4.42% for DROP employees based on covered payroll. The current rates, effective July 1, 2012, are 14.90% for special risk employees, 5.18% for regular employees, 6.30% for senior management, and 5.44% for DROP employees based on covered payroll. Effective July 1, 2012, employees hired who are already collecting retirement through the Florida Retirement System are not eligible to receive additional retirement benefits based on their current employment. The Sheriff is still required to contribute for these employees. Rates are 3.86% for special risk employees and 1.60% for regular employees. As of September 30, 2012, there was one special risk employee in this category. 1301-1002938 23 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 8. Employee Retirement Plan (continued) The contribution requirements of the Sheriff are established and may be amended by the state of Florida. The Sheriff's contributions to the plan for the years ended September 30, 2012, 2011, and 2010, were $8,817,709, $13,153,722, and $14,482,279, respectively, equal to the required contributions for each year. Effective July 1, 2011, participating employees are required to contribute 3% of eligible wages to the Florida Retirement System (FRS). Employees hired on July 1, 2011, or later who are already collecting retirement benefits through the Florida Retirement System, and employees enrolled in DROP are not required to make this contribution. 9. Other Postemployment Benefits The Sheriff follows the provisions of GASB Statement No. 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than, Pensions, for its other postemployment benefits. Plan Description The Sheriff administers a single-employer defined-benefit plan (OPEB Plan) and can amend the benefit provisions. Prior to 2010, the Sheriff offered an OPEB Plan that subsidized the cost of health care for retirees who have six years of creditable service with the Sheriff and who receive a monthly retirement benefit from the Florida Retirement System. The Sheriff subsidizes approximately 20% for both single coverage and family coverage for qualifying individuals. In 2010, the subsidy was no longer made available to eligible retirees who chose to continue their health insurance coverage. Approximately 73% of retirees receive the subsidy. Additionally, in accordance with Florida Statute 112.0801, Sheriff's employees who retire and immediately begin receiving benefits from the FRS have the option of paying premiums to continue in the Sheriff's health insurance plan at the same group rate as for active employees. 1301-1002938 24 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 9. Other Postemployment Benefits (continued) At September 30, 2012, the date of the latest actuarial valuation, Sheriff plan participation consisted of: OPEB plan participants 1,100 Retirees receiving benefits 100 Funding Policy The Sheriff has the authority to establish and amend funding policy. The OPEB Plan is currently being funded on a pay-as-you-go basis. For the year ended September 30, 2012, the Sheriff contributed$1,192,805 to the OPEB Plan. The other postemployment benefit cost for the plan is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and amortize any unfunded actuarial liabilities over a period not to exceed 30 years. An actuarial valuation on the plan as a whole was performed as of October 1, 2012. Annual OPEB Cost and Net OPEB Obligation The annual cost (expense) of the Sheriff's OPEB Plan is calculated based on the ARC. The following table shows the components of the Sheriff's annual OPEB Plan cost for the year ended September 30, 2012, the amount actually contributed, and the changes in the net OPEB Plan obligation: Annual required contribution $ 1,122,365 Interest on net OPEB obligation 34,226 Adjustment to annual required contribution (56,511) Annual OPEB cost (expense) 1,100,080 Contributions made (1,192,805) Decrease in net OPEB obligation (92,725) Net OPEB obligation—beginning of year 1,140,863 Net OPEB obligation—end year $ 1,048,138 1301-1002938 25 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 9. Other Postemployment Benefits (continued) No trust or agency fund has been established for the plan. The Sheriff's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the year ended September 30, 2012, and the preceding years were as follows: Percentage Annual of Annual Net OPEB OPEB Cost OPEB Fiscal Year Ended Cost Contributed Obligation September 30, 2012 $ 1,100,080 108% $ 1,048,138 September 30, 2011 1,095,878 99 1,140,863 September 30, 2010 1,088,692 91 1,129,353 Funded Status and Funding Progress As of the September 30, 2012, actuarial valuation date, the OPEB Plan was 0% funded, the actuarial accrued liability for benefits was $13,291,909, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability (UAAL) of$13,291,909. The covered payroll (annual payroll of active employees covered by the OPEB Plan) was approximately $108.4 million, and the ratio of the UAAL to the covered payroll was 12.3%. Actuarial Methods and Assumptions Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the health care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. 1301-1002938 26 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 9. Other Postemployment Benefits (continued) Calculations for financial reporting purposes are based on the benefits provided under terms of the plan as understood by the employer and the plan members in effect at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The actuarial methods are: Actuarial cost method Projected Unit Credit Method Amortization method Closed Amortization period 30 years, Level Dollar Amount The actuarial assumptions are: Investment rate of return 3% Discount rate 3% Health care cost trend rate 10% for the 2012 fiscal year grading to an ultimate rate of 6% for the 2022 fiscal year 10. Self-Insurance Program The Sheriff's Office participates in the Statewide Florida Sheriff's Self-Insurance Fund (the Fund) for its professional liability insurance. The Fund is managed by representatives of the participating Sheriff offices and provides professional liability insurance to participating agencies. The Fund provides liability insurance coverage subject to the following limitations: $3,200,000 for any claim involving a single individual, $3,300,000 for any one incident or occurrence, and $10,000,000 for an annual aggregate per member. The Sheriff also participates in the Fund for workers' compensation coverage. The Florida Sheriffs' Association Workers' Compensation Insurance Trust is a limited self-insurance fund providing coverage for the first $350,000 of every claim. Reinsurance is provided through a third party for all claims exceeding $350,000 up to $10,000,000. Settled claims have not exceeded the insurance provided by third- party carriers in any of the past three years. 1301-1002938 27 Collier County, Florida Sheriff Notes to Special-Purpose Financial Statements (continued) 10. Self-Insurance Program (continued) Premiums charged to participating Sheriffs are based upon amounts believed by the Fund management to meet the estimated annual payout during the fiscal year and to pay for the estimated operating costs of the program. All liabilities associated with these self-insured risks are reported in the basic financial statements of the Fund. The Sheriff has also established a self-funded employee health plan for active employees and retirees. An internal service fund is used to account for the activities of the plan. Excess coverage has been purchased, which provides specific claim excess coverage for any one incident exceeding $200,000 up to $1,000,000. Payments to the internal service fund are based on actuarial estimates of amounts needed to pay prior year and current year claims including claims incurred but not yet reported. Changes in the balance of estimated insurance claims payable for the fiscal year ended September 30, 2012 and 2011, is as follows: New Claims Balance and Changes Claim Balance October 1 in Estimates Payments September 30 Fiscal year ended: 2011 $ 2,154,000 $ 16,901,112 $ (16,804,112) $ 2,251,000 2012 2,251,000 17,273,541 (17,184,541) 2,340,000 11. Claims and Contingencies Litigation The Sheriff is involved in various claims and legal actions arising in the ordinary course of operations. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Sheriff. Federal and State Grants Grant funds received by the Sheriff are subject to audit by grantor agencies. Audits of these grants may result in disallowed costs, which may constitute a liability of the Sheriff In the opinion of management, disallowed costs, if any, would be immaterial to the financial position of the Sheriff. 1301-1002938 28 Required Supplementary Information 1301-1002938 Collier County, Florida Sheriff Schedule of Funding Progress for the Retiree Health Plan Actuarial Accrued UAAL as a Actuarial Actuarial Liability(AAL)— Percentage of Valuation Value of Projected Unfunded Funded Covered Covered Date Assets Unit Credit AAL Ratio Payroll Payroll 10/1/2009 $ — $ 14,171,709 $ 14,171,709 0.0% $ 123,296,676 11.5% 10/1/2010 $ — $ 12,148,033 $ 12,148,033 0.0% $ 117,879,632 10.3% 10/1/2011 $ — $ 12,018,242 $ 12,018,242 0.0% $ 114,185,572 10.5% 10/1/2012 $ — $ 13,291,909 $ 13,291,909 0.0% $ 108,390,240 12.3% 1301-1002938 29 Combining Financial Information 1301-1002938 cc keno 0000 (-1 71' a 0� � V0 in in ° ° o 0 44 d r- N 0, O N 69 69 64 69 CT I 01 I I 01 rn cp h N N N N a� - - - - W 69 69 64 69 Tzt - 00 M N 00 M N ce) 01 VC, 00 00 M 00 CI w) 00 O 00 01 O 00 00 E = "I' N �O M •--1 •–■ H U 69 69 69 69 bA I I � I I . I •ai C O O O O '� C N N N N .� ... N N V1 N V) 0 ~O 69 69 69 69 0 N >1 ct O w 00 1 00 I 1 00 00 00 r-- •,-, M M CJ N r N N S it O b i. V) kr1 W � 69 69 69 69 • cA I I o U O l N O oC ,.0 - t U - '4 ' •.1i O■ N a. C U H 69 69 99 9, ct CL, rn ct cn 0 c cn b 0 .rte = 0.Icd cn o 0 C ccn "0 °JpiU :b 0 ct •0 ca N > .� O 1+ O U ..o. (n ct �. cts = 0 0 0 0 w ., 4- U 4 r cd 0 o o o dUQF-+ 4.4 QH o QO 00 N V'1 OT N ' ' `^ 1:3' M O 00 •- O p o i. CT qO N O C N M M c it N Q a) 6 • 69 69 69 req. �^ N Cr) -,"Ci • 0 y 71; CT N N CT C, N 00 -- M N N O N '-' M M N N M M 0 y N... I) A ao I a) -f M 00 00 . O O •"" O M NN � M MO N CT N M M PO Ct NO 69 69 69 69 o p M NN M ,-.4 .--, C� N 00 �O 7--+ \O N N c) r.y O oo O N N 01 - Q� E 6 00 N M r- N N CD O O � a.) r � N U bA 7:i G 0 69 69 69 69 Il 14 o O 44 U. U o a) E a. I' cd a) o ;� ° (1 z 0 CO a) -� a crzi , v) w b( o 0 C •4 09 O P cf) Cr a) > (� cd 0 chi) T3 bA N U "d N v .0 N ,, •1 ~ U ct o „ .+ . cd I. cd O O O O dUQE ).-1 (� Q � QF-+ M Other Reports 1301-1002938 1 1111111111111 �, ER Ernst&Young LLP I 1I 1I I I I I I I NST&YOUNG Suite 500 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Special-Purpose Financial Statements Performed in Accordance With Government Auditing Standards Honorable Kevin Rambosk, Sheriff Collier County, Florida We have audited the special-purpose financial statements of each major fund and the aggregate remaining fund information of the Collier County, Florida Sheriff(the Sheriff) as of and for the year ended September 30, 2012, and have issued our report thereon dated January 28, 2013, which describes that such special-purpose financial statements have been prepared for the purpose of complying with Section 218.39, Florida Statutes, and Chapter 10.577(3), Rules of the Auditor General for Local Government Entity Audits. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal control over financial reporting Management of the Sheriff is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Sheriff's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the special-purpose financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Sheriff's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Sheriff's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. 1301-1002938 32 A member firm of Ernst&Young Global Limited NST&YOUNG I Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and other matters As part of obtaining reasonable assurance about whether the Sheriff's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of 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 or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the Sheriff in a separate letter dated January 28, 2013. This report is intended solely for the information and use of the Sheriff, management, others within the entity, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. youILLP January 28, 2013 1301-1002938 33 A member firm of Ernst&Young Global Limited II ERNST&YOUNG 11111jjIIII1 Suite 500 111111111111111111111111W 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report on Agreed-Upon Procedures Applied to Investigative Funds Honorable Kevin Rambosk, Sheriff Collier County, Florida We have performed the procedures enumerated below, which were agreed to by management of the Collier County, Florida, Sheriff(the Sheriff), solely to assist you in evaluating the procedures and policies as defined by the Sheriff over its investigative funds for the year ended September 30, 2012. The Sheriff's management is responsible for the Sheriff's compliance with those procedures and policies. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of the party specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures we performed and our findings are summarized as follows: We randomly selected 25 investigative fund disbursements during the fiscal year ended September 30, 2012 (the population sampled from included transactions from October 1, 2011 through July 15, 2012), and performed the following procedures with respect to the Sheriff's policies and procedures over investigative funds: We obtained the "Disbursement for Investigation" form noting that the form was properly completed and authorized by appropriate personnel. 1. We obtained the "Purchase of Evidence/Information Voucher" noting that the form was properly completed to reflect the expenses incurred within the investigation procedures, that the investigative expenditures were properly supported, and that the use of funds was for authorized purposes. No exceptions were noted. 2. We noted that the unused funds returned, if applicable, agreed to the corresponding deposit and bank statement detail and noted that the amount deposited agreed to the amount returned per the"Receipt for Funds Received"form detail. We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on compliance. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. 1301-1002938 34 A member firm of Ernst&Young Global Limited 11 fIIJIII1huhhh'1111V El ERNST&YOUNG This report is intended solely for the information and use of the management of the Sheriff and is not intended to be and should not be used by anyone other than this specified party. , yawsti-LP January 28, 2013 1301-1002938 35 A member firm of Ernst R.Young Global Limited I NST&YOUNG Ernst&Young LLP Suite 500 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Management Letter Honorable Kevin Rambosk, Sheriff Collier County, Florida We have audited the special-purpose financial statements of each major fund and the aggregate remaining fund information of the Collier County, Florida Sheriff(the Sheriff) as of and for the year ended September 30, 2012, and have issued our report thereon dated January 28, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental audits performed in the state of Florida and require that certain items be addressed in this letter. We have also issued our report dated January 28, 2013, on internal control over financial reporting and on compliance and other matters based on an audit of special-purpose financial statements performed in accordance with Government Auditing Standards. Disclosures in that report should be considered in conjunction with this management letter. We have the following suggestions for improvement in accounting procedures and controls. A. Current Year Findings and Recommendations Financial statement preparation Observation The Sheriff's financial office is responsible for accumulating financial data for each fiscal year and to compile a set of financial statements capturing that activity. We observed during the course of the audit that there are no formal and written process documentation surrounding the financial statement close process. As a result, adjustments were necessary to accurately reflect the Sheriff's financial position, operations, and cash flows as of September 30, 2012. 1301-1002938 36 A member firm of Ernst&Young Global Limited IIIIIII�� RNST&YOUNG �I Recommendation The process for the financial statement close process should be developed and formally documented. This process should delineate the roles and responsibilities of the Sheriff's Finance Office in the preparation of the financial statements along with a review process that would detect any adjustments necessary for a fair presentation of the financial statements. A financial statement close process checklist should be developed and utilized based on the documented process. Appropriate personnel, a documented plan, and proper implementation of accounting policies will also be necessary to ensure the success of this process. Management's response While procedures are currently in place to close the fiscal year and prepare the financial statements, there is not a specific procedure to overview the entire process and do a formal review of the financial statements. A formal process will be developed and implemented for the preparation and review of the financial statement close process. B. Prior Year Findings and Recommendations None reported for the years ended September 30, 2011 or 2010. Other required communications We did not become aware of instances of noncompliance with Section 218.415, Florida Statutes, regarding the investment of public in connection with our audit. We were not made aware of violations of laws, regulations, or contractual provisions or abuse, no improper or illegal expenditures, or control deficiencies that are not significant deficiencies other than the internal control recommendations included above. The Sheriff was established by the Constitution of the State of Florida, Article VIII, Section 1(d). This management letter is intended solely for the information and use of the Sheriff, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. f you71.0 January 28, 2013 1301-1002938 37 A member firm of Ernst&Young Global Limited Ernst& Young LLP Assurance I Tax I Transactions I Advisory About Ernst&Young Ernst&Young is a global leader in assurance, tax,transaction and advisory services. Worldwide,our 167,000 people are united by our shared values and an unwavering commitment to quality.We make a difference by helping our people,our clients and our wider communities achieve their potential, For more information,please visit www.ey.com Ernst&Young refers to the global organization of member firms of Ernst&Young Global Limited, each of which is a separate legal entity. Ernst&Young Global Limited,a UK company limited by guarantee,does not provide services to clients.This Report has been prepared by Ernst&Young LLP,a client serving member firm located in the United States. SPECIAL-PURPOSE FINANCIAL STATEMENTS AND OTHER REPORTS Collier County, Florida Supervisor of Elections Year Ended September 30, 2012 With Report of Independent Certified Public Accountants Ernst&Young LLP El ERNST&YOUNG Collier County, Florida Supervisor of Elections Special-Purpose Financial Statements and Other Reports Year Ended September 30, 2012 Contents Report of Independent Certified Public Accountants 1 Special-Purpose Financial Statements Balance Sheet 3 Statement of Revenues, Expenditures, and Changes in Fund Balance 4 Statement of Revenues, Expenditures, and Changes in Fund Balance— Budget and Actual—General Fund 5 Notes to Special-Purpose Financial Statements 6 Other Reports Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Special-Purpose Financial Statements Performed in Accordance with Government Auditing Standards 17 Management Letter 19 1211-1410628 IIII�� ERNST&YOUNG Sute500 Young LLP 5100 Town Center Circle Boca Raton,Florida 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants The Honorable Jennifer J. Edwards, Supervisor of Elections Collier County, Florida We have audited the accompanying special-purpose financial statements of each major fund of the Collier County, Florida Supervisor of Elections (Supervisor), as of and for the year ended September 30, 2012 as listed in the table of contents. These financial statements are the responsibility of the Supervisor's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States 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 financial statements are free of material misstatement. We were not engaged to perform an audit of the Supervisor's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Supervisor's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the special-purpose financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall special-purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. As discussed in Note 1, the accompanying special-purpose financial statements referred to above were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Chapter 10.577(3), Rules of the Auditor General for Local Governmental Entity Audits. These special-purpose financial statements are not intended to be a complete presentation of the Supervisor's financial position and its changes in financial position, where applicable, thereof, for the year then ended in conformity with accounting principles generally accepted in the United States. Additionally, the special-purpose statements present only the Supervisor and do not purport to, and do not, present fairly the financial position of Collier County, Florida, as of September 30, 2012, and the changes in its financial position, where applicable, for the year then ended, in conformity with accounting principles generally accepted in the United States. 1211-1410628 1 A member firm of Ernst&Young Global Limited II ,ff .I ERN ST N IIII iII1II1IIi111�� S OU G In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the financial position of each major fund of the Supervisor as of September 30, 2012, and the changes in financial position thereof and the budgetary comparison for the general fund for the year then ended in conformity with accounting principles generally accepted in the United States. In accordance with Government Auditing Standards, we have also issued our report dated December 14, 2012, on our consideration of the Supervisor's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. This report is intended solely for the information and use of the Supervisor, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. itirwt , December 14, 2012 1211-1410628 2 A member firm of Ernst 8 Young Global Limited Collier County, Florida Supervisor of Elections Balance Sheet September 30, 2012 Grant General Special Total Fund Revenue 2012 Assets Cash and cash equivalents $ 299,873 $ 6,985 $ 306,858 Due from other funds — 578 578 Due from other governments — 396 396 Total assets $ 299,873 $ 7,959 $ 307,832 Liabilities and fund balance Liabilities: Accounts payable $ 17,744 $ — $ 17,744 Accrued liabilities 48,921 — 48,921 Due to Collier County, Florida Board of County Commissioners 232,630 — 232,630 Due to other funds 578 — 578 Deferred revenue — 67 67 Total liabilities 299,873 67 299,940 Fund balances: Spendable—restricted — 7,892 7,892 Unassigned Total fund balances — 7,892 7,892 Total liabilities and fund balance $ 299,873 $ 7,959 $ 307,832 See accompanying notes. 1211-1410628 3 Collier County, Florida Supervisor of Elections Statement of Revenues, Expenditures and Changes in Fund Balance For the Year Ended September 30, 2012 Grant General Special Total Fund Revenue 2012 Revenues: Intergovernmental $ — $ 106,984 $ 106,984 Interest — 111 111 Total revenues — 107,095 107,095 Expenditures: General government: Personal services 1,950,818 — 1,950,818 Operating expenditures 1,416,563 125,846 1,542,409 Capital outlay 19,270 — 19,270 Total expenditures 3,386,651 125,846 3,512,497 Excess of expenditures over revenues (3,386,651) (18,751) (3,405,402) Other financing sources (uses): Transfers in: General Fund — 11,669 11,669 Collier County, Florida Board of County Commissioners appropriations 3,540,500 — 3,540,500 Operating transfers out: Special revenue fund (11,669) — (11,669) Distribution of excess appropriations: Collier County, Florida Board of County Commissioners (142,180) (142,180) Total other financing sources 3,386,651 11,669 3,398,320 Deficiency of revenues and other financing sources under expenditures — (7,082) (7,082) Fund balance—October 1, 2011 — 14,974 14,974 Fund balance— September 30, 2012 $ — $ 7,892 $ 7,892 See accompanying notes. 1211-1410628 4 Collier County, Florida Supervisor of Elections Statement of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual — General Fund For the Year Ended September 30, 2012 Variance With Final Budget Budget Positive Original Final Actual (Negative) Revenues $ 1,000 $ 1,000 $ — $ (1,000) Expenditures: General government: Personal services 2,043,900 2,043,900 1,950,818 93,082 Operating 1,483,600 1,470,378 1,416,563 53,815 Capital outlay 14,000 20,385 19,270 1,115 Total expenditures 3,541,500 3,534,663 3,386,651 148,012 Excess of expenditures over revenues (3,540,500) (3,533,663) (3,386,651) 147,012 Other financing sources(uses): Operating transfers in: Collier County,Florida Board of County Commissioners appropriations 3,540,500 3,540,500 3,540,500 — Operating transfers out: Special Revenue Fund — (6,837) (11,669) (4,832) Distribution of excess appropriations: Collier County,Florida Board of County Commissioners — — (142,180) (142,180) Total other financing sources 3,540,500 3,533,663 3,386,651 (147,012) Excess of revenues and other financing sources over expenditures — — — — Fund balance—October 1, 2011 — — — — Fund balance—September 30,2012 $ — $ — $ — $ — See accompanying notes. 1211-1410628 5 Collier County, Florida Supervisor of Elections Notes to Financial Statements September 30, 2012 1. Summary of Significant Accounting Policies and Practices Reporting Entity The Collier County, Florida Supervisor of Elections (Supervisor) is an elected constitutional officer as provided for by the Constitution of the State of Florida. Pursuant to Chapter 129, Florida Statutes, the Supervisor's budget is submitted to the Collier County, Florida Board of County Commissioners (Board) for approval. The financial statements presented include the general fund and grant special revenue fund of the Supervisor's office. The accompanying financial statements were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Section 10.557(3), Rules of the Auditor General for Local Governmental Entity Audits. Section 10.556(4), Rules of the Auditor General for Local Governmental Entity Audits, requires the Collier County, Florida Supervisor financial statements to only present fund financial statements. Accordingly, due to the omission of government-wide financial statements and related disclosures, including a management's discussion and analysis, these financial statements do not constitute a complete presentation of the financial position of the Collier County, Florida Supervisor as of September 30, 2012, and the changes in its financial position for the year then ended, in conformity with Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements— and Management's Discussion and Analysis—for State and Local Governments, but otherwise constitute financial statements prepared in conformity with accounting principles generally accepted in the United States of America. As a result of the budgetary oversight by the Board and financial dependency on the Board, the financial activities of the Supervisor are included in the Collier County, Florida Comprehensive Annual Financial Report. Transfers are provided by appropriations from the Board pursuant to law. Estimated receipts and budgeted general fund balances must equal appropriations. The Supervisor is required to refund to the Board all excess appropriations annually; therefore, no unappropriated general fund balance is carried forward. 1211-1410628 6 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 1. Summary of Significant Accounting Policies and Practices (continued) Measurement Focus, Basis of Accounting, and Basis of Presentation Fund financial statements report detailed information about the Supervisor. The focus of governmental fund financial statements is on a major fund rather than reporting by type. Each major fund is reported in a separate column. Governmental Funds Governmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the balance sheet. Operating statements for this fund present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. The Supervisor has the following major governmental funds: General Fund— The general fund is used to account for the general operations of the Supervisor, and includes all revenues and expenditures which are not accounted for in another fund. Grant Special Revenue Fund— The grants fund is used to account for the activities of voter education and poll worker training grants from the State of Florida. The modified accrual basis of accounting is used by governmental funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become measurable and available to finance liabilities of the current fiscal year). For this purpose, the Supervisor considers revenues to be available if they are collected within 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for compensated absences, which are recognized as expenditures to the extent they have matured. The appropriations from the Board are the primary source of funds considered to be susceptible to accrual. Intergovernmental revenues are recognized when eligibility requirements are met and related amounts are available from the grantor. 1211-1410628 7 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 1. Summary of Significant Accounting Policies and Practices (continued) Interest income and other revenues are recognized as they are earned and become measurable and available to pay liabilities of the current period. Florida Statutes provide that the amount by which revenues and transfers exceed annual expenditures be remitted to the Board immediately following the fiscal year for which the funding was provided or following the fiscal year during which other revenues were recognized. The amount of this distribution is recorded as a liability and as another financing use in the accompanying financial statements. Capital outlays expended in general fund operations are capitalized in the basic financial statements of Collier County, Florida rather than in the governmental funds of the Supervisor. Cash Equivalents Cash equivalents are defined as highly liquid investments with original maturities of three months or less. Cash equivalents in the Local Government Surplus Funds Trust Fund are administered by the State Board of Administration (SBA), a 2a-7 like investment pool. Shares of the investment pool are based on the pool's share price, which approximates fair value. At September 30, 2012, the Supervisor had no amounts on deposit in the SBA. Compensated Absences All full-time employees of the Supervisor are allowed to accumulate an unlimited number of hours of unused sick time and up to 440 hours of unused vacation leave. Effective October 1, 2007, the vacation leave limit was increased to 480 hours, with Supervisor approval. Upon termination, employees receive 100% of allowable accumulated vacation hours and a percentage of unused sick leave, depending on years of service. Vacation time and sick leave are included in operating costs of the general fund when the payments are made to employees. The Supervisor does not, nor is legally required to accumulate financial resources for these unmatured obligations. Accordingly, the liability for compensated absences is not reported in the general fund of the Supervisor, but rather is reported in the basic financial statements of Collier County, Florida. 1211-1410628 8 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 1. Summary of Significant Accounting Policies and Practices (continued) Use of Estimates The preparation of the financial statements requires management of the Supervisor to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the period. Actual results could differ from those estimates. Fund Balance Reporting and Governmental Fund-Type Definitions Fund balances are reported in classifications based on whether the amounts are spendable or non- spendable. Spendable amounts are further classified as restricted, committed, assigned or unassigned based on the extent to which there are external and/or internal constraints in how fund balance amounts may be spent. Non-spendable fund balances include amounts that cannot be spent because they are not in spendable form or are legally or contractually required to be maintained intact. At September 30, 2012, the Supervisor does not have any non-spendable fund balances. Spendable fund balances are classified based on a hierarchy of the Supervisor's ability to control the spending of these fund balances and are reported in the following categories: restricted, committed, assigned and unassigned. The Supervisor's fund balances for the Grant Special Revenue Fund fall into this category. Fund balances maintained in the grant special revenue fund are restricted pursuant to specific grant agreements, and have been presented in the fund financial statements in accordance with GASB Statement No. 54. 2. Budgetary Process Florida Statutes govern the preparation, adoption and administration of the Supervisor's annual budget. The Supervisor submits a budget for the general fund to the Board for approval. The budget is prepared on a basis consistent with accounting principles generally accepted in the United States of America. The annual budget serves as the legal authorization for expenditures. Any subsequent amendments to the Supervisor's total budget must be approved by the Board. 1211-1410628 9 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 2. Budgetary Process (continued) Expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year end. Budgetary control is maintained at the departmental major object expenditure level. Budgetary changes within major object expenditure categories are made at the discretion of the Supervisor. The Supervisor does not budget for the grant special revenue fund as it is funded by State grants and is governed by those documents. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations and other legally authorized changes applicable to the fiscal year, whenever legally authorized. 3. Cash and Cash Equivalents At September 30, 2012, the carrying value of the Supervisor's cash and cash equivalents was as follows: Carrying Credit Type Value Rating Cash on hand $ 200 N/A Demand deposits 306,658 N/A Total cash and cash equivalents $ 306,858 Custodial Credit Risk At September 30, 2012, the Supervisor's deposits were entirely covered by federal depository insurance or by collateral pledged with the State Treasurer pursuant to Chapter 280, Florida Statutes. Under this chapter, in the event of default by a participating financial institution (a qualified public depository), all participating institutions are obligated to reimburse the governmental entity for the loss. 1211-1410628 10 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 3. Cash and Cash Equivalents (continued) Credit Risk The Supervisor's policy is to follow the guidance in Section 219.075,Florida Statutes, regarding the deposit of funds received and the investment of surplus funds. Sections 219.075 and 218.415, Florida Statutes, authorize the Supervisor to invest in the Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; direct obligations of the United States Treasury; federal agencies and instrumentalities or interest- bearing time deposits or savings accounts in banks organized under the laws of the United States and doing business and situated in the State of Florida, savings and loan associations which are under state supervision, or in federal savings and loan associations located in the State of Florida and organized under federal law and federal supervision, provided that any such deposits are secured by collateral as may be prescribed by law. Interest Rate Risk The Supervisor has no specific investment policy regarding interest rate risk. 4. Capital Assets Capital assets used by the Supervisor are reported in the basic financial statements of Collier County, Florida rather than in the governmental funds of the Supervisor. Upon acquisition, such assets are recorded as expenditures in the general fund of the Supervisor, and are capitalized at cost in the basic financial statements of the Board. Capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair value on the date received. The Supervisor maintains custodial responsibility for the capital assets used by the office. No depreciation expense has been provided on capital assets in these financial statements. However, depreciation expense is recorded in the basic financial statements of Collier County, Florida. 1211-1410628 1 1 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 5. Long-Term Liabilities The following is summary of changes in long-term liabilities which are reported in the basic financial statements of Collier County, Florida: October 1, September 30, 2011 Increase Retirement 2012 Accrued compensated absences $ 186,645 $ 94,355 $ 100,706 $ 180,294 Of these liabilities, approximately $126,206 is expected to be paid during the fiscal year ending September 30, 2012. These long-term liabilities are not reported in the financial statements of the Supervisor since they have not matured. 6. Employee Retirement Plans Substantially all full-time employees of the Supervisor filling regularly established positions are eligible to participate in the State of Florida Retirement System (System), a cost-sharing multiple-employer defined benefit plan administered by the State of Florida, Division of Retirement. The System is a defined benefit plan for all state, and participating county, district school board, community college and university employees (Pension Plan). The System also offers eligible employees participation in an alternative defined contribution plan (Investment Plan). The plan is administered by the State of Florida. Contribution rates are established statewide for all participating governmental units. Accordingly, the actuarial information and related disclosures attributable to the Supervisor's employees are not determinable. Employees enrolled in the plan prior to July 1, 2011 who retire at or after age 62 with 6 years of credited service, or with 30 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.60% for regular employees, 2.00% for senior management and 3.00% for county elected officials for each year of credited service times the final average compensation. Employees enrolled on or after July 1, 2011 who retire at or after age 65 with 8 years of credited service or 33 years of service regardless of age, are entitled to the retirement benefits as outlined above. Final average compensation is the employee's average of the five highest fiscal years of salary earned during credited service for those enrolled prior to July 1, 2011 and the eight highest fiscal years of salary for those hired on or after July 1, 2011. Vested employees may retire before age 62 and receive benefits that are reduced 5.00% for each year 1211-1410628 12 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 6. Employee Retirement Plans (continued) prior to normal retirement age (65 years of age if hired on or after July 1, 2011). Employees participating in the Investment Plan are vested after one year of service with no age requirement. The System also provides death and disability benefits. Benefits are established by Chapter 121, Florida Statutes, and Chapter 22B,Florida Administrative Code. The Deferred Retirement Option Program (DROP) is a program that provides an alternative method for payment of retirement benefits for a specified and limited period for members of the System, effective July 1, 1998. Under this program, the employee may participate as of their normal retirement date and have their benefits accumulate in the Florida Retirement System Trust Fund, earning interest, while continuing to work for a System employer. Employees enrolled in DROP prior to July 1, 2011 earn interest on accumulated benefits in the Trust Fund at 6.50%; those enrolling on or after July 1, 2011 earn interest at 1.30%. The participation in the program does not change conditions of employment. When the DROP period ends, maximum of 60 months, employment must be terminated. At the time of termination of employment, the employee will receive payment of the accumulated DROP benefits, and begin receiving their monthly retirement benefit (in the same amount determined at retirement, plus annual cost-of- living increases). Investment Plan members are not eligible to participate in the DROP program, but Pension Plan members are eligible to roll their DROP lump sum into the Investment Plan as one of the distribution methods under the Pension Plan. The System publishes an annual report that provides ten-year historical trend information about progress made in accumulating sufficient assets to pay benefits when due. This report may be obtained by writing to the Division of Retirement Research Education and Policy Section 1317 Winewood Boulevard, Building 8, Tallahassee, Florida 32399-1560, or by calling (877) 377-1737, or accessing their Internet site at www.dms.MyFlorida.com. The Supervisor is required to contribute an actuarially determined rate. Rates from October 1, 2011 through June 30, 2012 were 11.14% for county elected officials, 6.27% for senior management, 4.91% for regular employees and 4.42% for DROP employees based on covered payroll. The current rates, effective July 1, 2012, are 10.23% for county elected officials, 6.30% for senior management, 5.18% for regular employees and 5.44% for DROP employees based on covered payroll. In addition, as of July 1, 2011, employee contributions of 3.00% are required of all Pension Plan and Investment Plan members, except for those in DROP. The contribution requirements of the Supervisor are established and may be amended by the State of Florida. The 1211-1410628 13 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 6. Employee Retirement Plans (continued) Supervisor's employer contributions to the plan for the years ended September 30, 2012, 2011 and 2010, were $63,016, $125,995, and $135,823, respectively, equal to the required contributions for each year. 7. Other Postemployment Healthcare Benefits (OPEB) Plan Plan Description. The Supervisor participates in a group health care plan that covers eligible retirees, and their dependents, of the Board of County Commissioners and all Constitutional Officers with the exception of the Sheriff. The Board administers the plan and establishes the benefits. The healthcare plan does not issue a stand-alone financial report, however additional actuarial information regarding the plan as a whole is disclosed in the notes to the financial statements of Collier County, Florida. Under Florida Statutes, retirees originally hired prior to July 1, 2011 are eligible to participate in the active medical plan by paying the active rate if they have attained age 62 and have 6 years of service or have at least 30 years of service. Employees hired on or after July 1, 2011 are eligible to participate in the active medical plan by paying the active rate if they have attained age 65 and have 8 years of service or have at least 33 years of service. Employees eligible for a reduced benefit under the Florida Retirement System prior to age 62 (65 years of age if hired on or after July 1, 2011) are also eligible to participate in the medical plan. The Supervisor provides no subsidy to the retiree, or their dependents, for group health care. Funding Policy. The contribution requirements of the plan members and the employers are established and may be amended by the County. The plans are financed by the participating agencies on a pay as you go basis through the County's self insurance internal service fund. Participating agencies contribute an additional amount per each active employee to fund retiree health care. The Supervisor had an actuarial accrued liability of $9,890 as of September 30, 2012. The annual other postemployment benefit cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with GASB Statement 45. The ARC represents a level of funding that, if paid for on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. An actuarial valuation on the plan as a whole was performed in November 2011. The notes to the financial statements of the County disclose additional information regarding the other post employment benefit plan as a whole. 1211-1410628 14 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 8. Related-Party Transactions For the year ended September 30, 2012, the Board provided funding for the Supervisor that amounted to $3,540,500. At September 30, 2012, the Supervisor had a payable due to the Board of$232,630 comprised as follows: Distribution of excess appropriations $ 142,180 Distribution of interest earnings 1,956 Amounts due for various services 88,494 Total due to Board of County Commissioners $ 232,630 The Supervisor also remitted $37,000 to the Clerk of the Circuit Court for general accounting services. 9. Risk Management Collier County, Florida(the County) is exposed to various risks of loss including, but not limited to, general liability, health and life, property and casualty, auto and physical damage and workers' compensation. The County is substantially self-insured and accounts for and finances its risk of uninsured losses through an internal service fund. All liabilities associated with these self-insured risks are reported in the basic financial statements of the County. The Supervisor participates in the County's self-insurance program. During the year ended September 30, 2012, the Supervisor was charged $302,763 by the County for participation in the risk management program. The County provides coverage for up to $500,000 per claim for workers' compensation, and has purchased outside excess coverage for up statutory limit for each injury or illness. The County also provides coverage for up to $200,000 per claim for auto and other liability claims, and has purchased outside excess coverage for up to $1,000,000 per claim. Negligence claims in excess of the statutory limits set in Section 768.20, Florida Statutes, which provide for limited sovereign immunity of$100,000/$200,000 per occurrence can only be recovered through an act of the State Legislature. There have been no significant reductions in insurance coverage in the last year. Settled claims have not exceeded the insurance provided by third party carriers in any of the last three years. 1211-1410628 15 Collier County, Florida Supervisor of Elections Notes to Financial Statements (continued) 9. Risk Management(continued) The County is also self-insured for health claims covering all of its employees and their eligible dependents. The County retains the first $325,000 in losses per calendar year per covered member and purchases excess coverage with no maximum lifetime limit. As required by Section 112.081, Florida Statutes, retirees and their eligible dependents are provided the same health care coverage as is offered to active employees at the same premium cost (borne by the retiree) applicable to active employees. An actuarial valuation is performed each year to estimate the amounts needed to pay prior and future claims and to establish reserves (see Note 7). 10. Contingencies Grant funds received by the Supervisor are subject to audit by grantor agencies. Audits of these grants may result in disallowed costs, which may constitute a liability of the office of the Supervisor. In the opinion of management, disallowed costs, if any, would not have a significant impact on the financial position of the Supervisor. 11. Transfers Transfers between funds are for the purpose of providing matching funds to the Supervisor's grants. For the 2012 fiscal year, the amount of matching funds required was $11,669. 1211-1410628 16 Other Reports 1211-1410628 IERN T&Y OU G N Ernst&YoungLLP I(I I( S Suite 500 5100 Town Center Circle Boca Raton,Florida 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Special-Purpose Financial Statements Performed in Accordance with Government Auditing Standards The Honorable Jennifer J. Edwards, Supervisor of Elections Collier County, Florida We have audited the special-purpose financial statements of each major fund of the Collier County, Florida Supervisor of Elections (Supervisor) as of and for the year ended September 30, 2012, and have issued our report thereon dated December 14, 2012, which describes that such special-purpose financial statements have been prepared for the purpose of complying with Section 218.39, Florida Statutes, and Chapter 10.557(3), Rules of the Auditor General for Local Governmental Entity Audits. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting Management of the Supervisor is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Supervisor's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the special-purpose financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Supervisor's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Supervisor's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 1211-1410628 17 A member firm of Ernst 8 Young Global Limited Iill'II'ff �11111111 rRNST&YOUNG(11111111'1 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Supervisor's special-purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of the special-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 or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the Supervisor in a separate letter dated December 14, 2012. This report is intended solely for the information and use of the Supervisor, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. ./1/k441,tf LLi' December 14, 2012 1211-1410628 18 A member firm of Ernst&Young Global Limited tow- 11111111111111 =i ERNST&YOUNG Su tet 50&0 Young LLP 5100 Town Center Circle Boca Raton,Florida 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Management Letter Honorable Jennifer J. Edwards, Supervisor of Elections Collier County, Florida We have audited the special-purpose financial statements of each major fund of the Collier County, Florida Supervisor of Elections (Supervisor) as of and for the year ended September 30, 2012, and have issued our report thereon dated December 14, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental audits performed in the state of Florida and require that certain items be addressed in this letter. We have also issued our report dated December 14, 2012 on internal control over financial reporting and on compliance and other matters based on an audit of special-purpose financial statements performed in accordance with Government Auditing Standards. Disclosures in that report should be considered in conjunction with this management letter. We have the following suggestions for improvement in accounting procedures and controls. Current Year Findings and Recommendations There are no findings or recommendations made in the current year financial audit. Prior Year Findings and Recommendations 2011-01 Elected Official &Employee Expense Reimbursements Observation The Supervisor and the employees of the office submit expense reports for any expenses incurred in conjunction with any travel undertaken in the normal course of business. The Supervisor has elected to follow the per diem expense reimbursement amounts and policies set by the United States General Services Administration (GSA). During our prior year audit, we noted that the per diem amounts reimbursed to the Supervisor and employees were calculated and submitted for reimbursement incorrectly, whereby the total expense reimbursements for all employees for the year were less than the allowable amount. Additionally, we note that certain of the original reports reviewed in our testing lacked certain documentation as to the appropriate business purpose. 1211-1410628 19 A member firm of Ernst&Young Global Limited IIIIlIIIIIIIIfIIIIIII( S G Current Year Status Throughout the fiscal year, the Supervisor's office has maintained procedures in regards to employee travel expense reports. Each report is reviewed as to the report's accuracy, appropriate business purpose, compliance with policies, and is signed off by the Supervisor. The Supervisor's office will continue to follow these procedures in the future. There were no other findings or recommendations made during the years ended September 30, 2011 and 2010. Other Required Communications No matters of noncompliance with Section 218.415, Florida Statutes, regarding the investment of public funds were identified within the scope of our audit. The results of our audit disclosed no violations of laws, rules, regulations or contractual provisions or abuse, no improper or illegal expenditures, and no control deficiencies. The Supervisor was established by the Constitution of the State of Florida, Article VIII, Section 1(d). This management letter is intended solely for the information and use of the Supervisor, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. .,Invat r171.1.? December 14, 2012 1211-1410628 20 A member firm of Ernst&Young Global Limited Ernst& Young LLP Assurance I Tax I Transactions I Advisory About Ernst&Young Ernst&Young is a global leader in assurance, tax,transaction and advisory services. Worldwide,our 167,000 people are united by our shared values and an unwavering commitment to quality.We make a difference by helping our people,our clients and our wider communities achieve their potential. For more information,please visit www.ey.con Ernst&Young refers to the global organization of member firms of Ernst&Young Global Limited, each of which is a separate legal entity. Ernst&Young Global Limited,a UK company limited by guarantee,does not provide services to clients.This Report has been prepared by Ernst&Young LLP,a client serving member firm located in the United States. Hill ' . SPECIAL-PURPOSE FINANCIAL STATEMENTS Collier County, Florida Tax Collector Years Ended September 30, 2012 and 2011 With Report of Independent Certified Public Accountants Ernst&Young LLP El ERNST&YOUNG Collier County, Florida Tax Collector Special-Purpose Financial Statements Years Ended September 30, 2012 and 2011 Contents Report of Independent Certified Public Accountants 1 Special-Purpose Financial Statements Special-Purpose Balance Sheets—General Fund 3 Special-Purpose Statements of Revenues, Expenditures, and Changes in Fund Balance—General Fund 4 Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance—Budget and Actual —General Fund—Budgetary Basis 5 Special-Purpose Statements of Fiduciary Assets and Liabilities—Agency Funds 6 Notes to Special-Purpose Financial Statements 7 Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Special-Purpose Financial Statements Performed in Accordance with Government Auditing Standards 20 Management Letter 22 1211-1410244 I 1jj1jjj11jjihhIW =� ERNST&YOUNG Site OOoungLLP 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants The Honorable Larry H. Ray, Tax Collector Collier County, Florida We have audited the accompanying special-purpose financial statements of the general fund and the aggregate remaining fund information of the Collier County, Florida Tax Collector (the Tax Collector), as of and for the years ended September 30, 2012 and 2011, as listed in the table of contents. These special-purpose financial statements are the responsibility of the Tax Collector's management. Our responsibility is to express opinions on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States 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 financial statements are free of material misstatement. We were not engaged to perform an audit of the Tax Collector's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Tax Collector's internal control over financial reporting.Accordingly, we express no such opinion.An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the special-purpose financial statements, assessing the accounting principles used and significant estimates made by management and evaluating the overall special-purpose financial statement presentation. We believe that our audits provide a reasonable basis for our opinions. As discussed in Note 1, the accompanying special-purpose financial statements referred to above were prepared for the purpose of complying with Section 218.39, Florida Statutes, and Chapter 10.577(3), Rules of the Auditor General for Local Governmental Entity Audits. These special-purpose financial statements are not intended to be a complete presentation of the Tax Collector's financial position and its changes in financial position, where applicable, thereof, for the years then ended in conformity with accounting principles generally accepted in the United States. Additionally, the special-purpose statements present only the Tax Collector and do not purport to, and do not, present fairly the financial position of Collier County, Florida, as of September 30, 2012 and 2011, and the changes in its financial position, where applicable, for the years then ended,in conformity with accounting principles generally accepted in the United States. 1211-1410244 1 A member firm of Ernst 8 Young Global Limited I =1 ERNST&YOUNG In our opinion, the special-purpose financial statements referred to above present fairly, in all material respects, the financial position of the general fund and aggregate remaining fund information of the Tax Collector as of September 30, 2012 and 2011, and the changes in financial position thereof for the years then ended and the budgetary comparison for the general fund for the year ended September 30, 2012, in conformity with accounting principles generally accepted in the United States. In accordance with Government Auditing Standards, we have also issued our report dated December 14, 2012, on our consideration of the Tax Collector's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. This report is intended solely for the information and use of the Tax Collector, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. :•Am.ilt f yowritLa December 14, 2012 1211-1410244 2 A member firm of Ernst&Young Global Limited Collier County, Florida Tax Collector Special-Purpose Balance Sheets — General Fund September 30 2012 2011 Assets Cash and cash equivalents $ 6,406,172 $ 7,509,504 Due from other funds 60,906 50,437 Prepaid rent 20,995 20,995 Security deposit 4,628 4,628 Total assets $ 6,492,701 $ 7,585,564 Liabilities and fund balance Liabilities: Accounts payable $ 19,860 $ 9,027 Due to Other Funds 2 — Due to Collier County, Florida Board of County Commissioners 5,730,320 6,692,537 Due to other governmental agencies 742,519 884,000 Total liabilities 6,492,701 7,585,564 Fund balance — — Total liabilities and fund balance $ 6,492,701 $ 7,585,564 See accompanying notes. 1211-1410244 3 Collier County, Florida Tax Collector Special-Purpose Statements of Revenues, Expenditures, and Changes in Fund Balance — General Fund Year Ended September 30 2012 2011 Revenues: Commissions and fees $ 16,750,055 $ 18,092,412 Miscellaneous 264,002 297,709 Total revenues 17,014,057 18,390,121 Expenditures: General government: Personal services 8,899,366 9,095,954 Operating 1,602,079 1,679,341 Capital outlay 39,773 38,289 Distribution of excess commissions and fees to other governmental agencies 742,519 884,000 Total expenditures 11,283,737 11,697,584 Excess of revenues over expenditures 5,730,320 6,692,537 Other financing uses: Distribution of excess commissions and fees to Collier County, Florida Board of County Commissioners (5,730,320) (6,692,537) Total other financing uses (5,730,320) (6,692,537) Excess of revenues over expenditures and other financing uses — — Fund balance,beginning of year — — Fund balance, end of year $ — $ — See accompanying notes. 1211-1410244 4 Collier County, Florida Tax Collector Special-Purpose Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — General Fund (Budgetary Basis) Year Ended September 30, 2012 Variance With Final Budget Budget Positive Original Final Actual (Negative) Revenues: Commissions and fees $ 17,160,985 $ 16,750,055 $16,750,055 $ — Miscellaneous 275,000 264,002 264,002 — Total revenues 17,435,985 17,014,057 17,014,057 — Expenditures: General government: Personal services 9,240,587 8,899,366 8,899,366 — Operating 2,088,945 1,602,079 1,602,079 — Capital outlay 39,803 39,773 39,773 — Total expenditures 11,369,335 10,541,218 10,541,218 — Excess of revenues over expenditures 6,066,650 6,472,839 6,472,839 — Other financing uses: Distribution of excess commissions and fees to Collier County,Florida Board of County Commissioners (5,459,985) (5,730,320) (5,730,320) — Distribution of excess commissions and fees to other governmental agencies (606,665) (742,519) (742,519) — Total other financing uses (6,066,650) (6,472,839) (6,472,839) — Excess of revenues over expenditures and other financing uses — — — — Fund balance,beginning of year — — — — Fund balance,end of year $ — $ — $ — $ See accompanying notes. 1211-1410244 5 Collier County, Florida Tax Collector Special-Purpose Statements of Fiduciary Assets and Liabilities —Agency Funds September 30 2012 2011 Assets Cash and cash equivalents $ 5,660,404 $ 5,443,691 Accounts receivable 15,002 8,436 Due from other funds 2 Total assets $ 5,675,408 $ 5,452,127 Liabilities Due to other funds $ 60,906 $ 50,437 Due to Collier County, Florida Board of County Commissioners 792,000 785,320 Due to other governmental agencies 4,609,304 4,473,378 Due to individuals and businesses 213,198 142,992 Total liabilities $ 5,675,408 $ 5,452,127 See accompanying notes. 1211-1410244 6 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements September 30, 2012 1. Summary of Significant Accounting Policies Reporting Entity The Collier County, Florida Tax Collector (Tax Collector) is an elected constitutional officer as provided for by the Constitution of the State of Florida. Pursuant to Chapter 195.087, Florida Statutes, the Tax Collector's budget is submitted to the Florida Department of Revenue for approval, and a copy is forwarded to the Collier County, Florida Board of County Commissioners (Board). The special-purpose financial statements presented include the general fund and agency funds of the Tax Collector's office. The accompanying special-purpose financial statements were prepared for the purpose of complying with Section 218.39,Florida Statutes, and Section 10.557(3),Rules of the Auditor General for Local Governmental Entity Audits. Section 10.556(4), Rules of the Auditor General for Local Governmental Entity Audits, requires the Collier County, Florida Tax Collector to only present fund financial statements. Accordingly, due to the omission of government-wide financial statements and related disclosures, including a management's discussion and analysis, these special-purpose financial statements do not constitute a complete presentation of the financial position of the Collier County, Florida Tax Collector as of September 30,2012 and 2011,and the changes in its financial position for the years then ended, in conformity with Governmental Accounting Standards Board (GASB) Statement No. 34,Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments, but otherwise constitute special-purpose financial statements prepared in conformity with U.S. generally accepted accounting principles (GAAP). The financial activities of the Tax Collector, as a constitutional officer, are included in the Collier County, Florida Comprehensive Annual Financial Report. Measurement Focus, Basis of Accounting, and Basis of Presentation These special-purpose fund financial statements report detailed information about the Tax Collector. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is reported in a separate column. 1211-1410244 7 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Governmental Funds Governmental funds are accounted for using the flow of current financial resources measurement focus. Only current assets and current liabilities, generally, are included on the special-purpose balance sheets. Operating statements for these funds present increases (i.e., revenues and other financing sources)and decreases (i.e., expenditures and other financing uses) in net current assets. The Tax Collector's only governmental fund is the general fund. The general fund is used to account for the general operations of the Tax Collector and includes all transactions not accounted for in another fund. The modified accrual basis of accounting is used by governmental funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become measurable and available to finance current liabilities of the fiscal year). For this purpose, the Tax Collector considers revenues to be available if they are collected within 60 days after the end of the current period. Expenditures are recorded when the related fund liability is incurred, except for certain compensated absences, which are recognized as expenditures to the extent they have matured. Interest income and other revenue are recognized as they are earned and become measurable and available to pay liabilities of the current period. Substantially all of the Tax Collector's revenue is received from taxing authorities. These monies are virtually unrestricted and are revocable only for failure to comply with prescribed compliance requirements. These resources are reflected as revenue at the time of receipt; earlier if the "susceptible to accrual"criteria are met. Florida Statutes provide that the amount by which revenues exceed annual expenditures be remitted to each governmental agency or the Board immediately following the fiscal year for which the funding was provided or following the fiscal year during which other revenue was recognized. Capital outlays expended in the general fund operations are capitalized in the basic financial statements of Collier County, Florida (the County) rather than in the governmental funds of the Tax Collector. 1211-1410244 8 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Fiduciary Funds Agency Funds— Fiduciary funds are used to account for assets held by the Tax Collector in a trustee capacity or as an agent for individuals, private organizations, and other governments. Agency funds are custodial in nature (assets equal liabilities), and do not involve measurement of results of operations or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting. Refund of"Excess Fees" Florida Statutes further provide that the excess of revenues over expenditures held by the Tax Collector be distributed to each governmental agency or the Board in the same proportion as the fees paid by each governmental agency bear to total fee revenues. The amount of this distribution is recorded as a liability and as either an expenditure or other financing use-transfer out, respectively, in the accompanying special-purpose financial statements. Cash and Cash Equivalents Cash and cash equivalents are highly liquid investments with original maturities of three months or less. Compensated Absences All full-time employees of the Tax Collector are allowed to accumulate an unlimited number of hours of unused sick time and up to 240 hours of unused vacation leave. Upon termination, employees receive 100%of allowable accumulated vacation hours and a percentage of unused sick leave, depending on years of service. Vacation and sick leave payments are included in operating costs of the general fund when the payments are made to the employees. The Tax Collector does not, nor is he legally required to, accumulate financial resources for these unmatured obligations. Accordingly, the liability for compensated absences is not reported in the general fund, but rather is reported in the basic financial statements of Collier County, Florida. 1211-1410244 9 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Property Taxes Property taxes in Collier County are levied by the Board and other taxing authorities. The millage levies are determined on the basis of estimates of revenue needs and the total taxable valuations within the jurisdiction of the Board and other taxing authorities. No aggregate ad valorem tax millage in excess of 10 mills on the dollar can be levied by the Board against property in the County as specified in Florida Statutes Section 200.071. Each year the total taxable property valuation is established by the Collier County, Florida Property Appraiser, and the list of property assessments is submitted to the State Department of Revenue for approval. Taxes, assessed as of December 1 of each year, are due and payable on November 1 of each year or as soon thereafter as the assessment roll is opened for collection. Pursuant to Florida law, all owners of property have the responsibility of ascertaining the amount due and paying it before April 1 of the year following the year in which the tax was assessed. Chapter 197,Florida Statutes, governs property tax collections as follows: Current Taxes All property taxes become due and payable on November 1, and are delinquent on April 1 of the following year. Discounts are allowed for early payment of 4% in November; 3% in December; 2% in January; and 1% for payment in February. Unpaid Taxes—Sale of Tax Certificates The Tax Collector advertises, as required by Florida Statutes, and sells tax certificates on all real property for unpaid taxes. The taxes assessed on the property are struck off the tax roll to the purchaser of the tax certificate. Certificates not sold are struck off to the County. The Tax Collector must receive payment before the certificates are delivered. Any person owning land upon which a tax certificate has been sold may redeem the tax certificate by paying the Tax Collector the face amount of the tax certificate plus interest and other costs. Tax Deeds Two years after the purchase of a tax certificate the owner may file an application for tax deed sale. The County, as a certificate owner, exercises similar procedures. Tax deeds are issued to the highest bidder for the property which is sold at public auction. The Clerk of the Circuit Court administers these sales. 1211-1410244 10 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 1. Summary of Significant Accounting Policies (continued) Use of Estimates The preparation of these special-purpose financial statements requires management of the Tax Collector to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the period. Actual results could differ from those estimates. Fund Balance Reporting and Governmental Fund-Type Definitions Fund balances are reported in classifications based on whether the amounts are spendable or non-spendable. Spendable amounts are further classified as restricted, committed, assigned or unassigned based on the extent to which there are external and/or internal constraints in how fund balance amounts may be spent. The Tax Collector does not maintain fund balances. 2. Budgetary Process Florida Statutes govern the preparation, adoption, and administration of the Tax Collector's annual budget. The Tax Collector submits a budget for the general fund to the Florida Department of Revenue for approval. A copy of the approved budget is provided to the Board. Any subsequent amendments to the Tax Collector's total budget must be approved by the Florida Department of Revenue. The budget for the general fund is prepared on a basis generally consistent with U.S. generally accepted accounting principles. The annual budget serves as the legal authorization for expenditures. Expenditures may not legally exceed appropriations at the fund level. Appropriations lapse at year end. Budget control is maintained at the departmental major object expenditure level. Budgetary changes within major object expenditure categories are made at the discretion of the Tax Collector. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers, allocations, supplemental appropriations, and other legally authorized changes applicable to the fiscal year, whenever legally authorized. 1211-1410244 1 1 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 2. Budgetary Process (continued) There is a difference between the budgetary basis of accounting and GAAP in the treatment of excess fee distributions to entities outside of the County's reporting entity. On a budgetary basis, distributions of excess fees through this fund are reported as other financing uses. On a GAAP basis, these distributions are reported as expenditures because there is a reduction in the financial resources of the County. 3. Cash and Cash Equivalents At September 30, 2012 and 2011, the carrying value of the Tax Collector's cash and cash equivalents were as follows: 2012 2011 Carrying Carrying Credit Type Value Value Rating Cash on hand $ 32,600 $ 43,650 N/A Demand deposits 12,033,976 12,909,545 N/A Total cash and cash equivalents $ 12,066,576 $ 12,953,195 Such amounts are reported as$6,406,172 and$5,660,404 for 2012 and$7,509,504 and$5,443,691 for 2011 in the general and agency funds, respectively. Custodial Credit Risk At September 30, 2012, the Tax Collector's deposits were entirely covered by federal depository insurance or by collateral pledged with the State Treasurer pursuant to Chapter 280, Florida Statutes. Under this Chapter, in the event of default by a participating financial institution (a qualified public depository), all participating institutions are obligated to reimburse the governmental entity for the loss. Interest Rate Risk The Tax Collector has no specific investment policy regarding interest rate risk. 1211-1410244 12 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 3. Cash and Cash Equivalents (continued) Credit Risk The Tax Collector's policy is to follow the guidance in Section 219.075, Florida Statutes, regarding the deposit of funds received and the investment of surplus funds. Sections 219.075 and 218.415, Florida Statutes, authorize the Tax Collector to invest in Florida PRIME (formerly the Local Government Surplus Funds Trust Fund) or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act; Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; direct obligations of the United States Treasury; federal agencies and instrumentalities or interest-bearing time deposits or savings accounts in banks organized under the laws of the United States and doing business and situated in the state of Florida, savings and loan associations which are under state supervision, or in federal savings and loan associations located in the state of Florida and organized under federal law and federal supervision, provided that any such deposits are secured by collateral as may be prescribed by law. 4. Capital Assets Capital assets used by the Tax Collector are capitalized in the basic financial statements of Collier County,Florida rather than in the governmental funds of the Tax Collector.Upon acquisition,such assets are recorded as expenditures in the general fund of the Tax Collector, and are capitalized at cost in the basic financial statements of the Collier County, Florida. Capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are valued at their estimated fair value on the date received. The Tax Collector maintains custodial responsibility for the capital assets used by the office. No depreciation expense has been provided on capital assets in these special-purpose financial statements. However, depreciation expense on these assets is recorded in the basic financial statements of Collier County, Florida. 1211-1410244 13 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 5. Long-Term Liabilities The following is a summary of changes in long-term liabilities which are reported in the basic financial statements of Collier County, Florida: October 1 September 30 2011 Increase Decrease 2012 Accrued compensated absences $ 1,091,122 $ 457,430 $ 456,713 $ 1,091,839 October 1 September 30 2010 Increase Decrease 2011 Accrued compensated absences $ 1,101,850 $ 469,541 $ 480,269 $ 1,091,122 Of these liabilities, approximately $450,000 is expected to be paid during the fiscal year ending September 30, 2013, which will be included in the operating costs of the general fund when expended. These long-term liabilities are not reported in the special-purpose financial statements of the Tax Collector since they have not matured. 6. Employee Retirement Plans Substantially all full-time employees of the Tax Collector are eligible to participate in the State of Florida Retirement System (System), a cost-sharing multiple-employer defined benefit plan administered by the State of Florida, Division of Retirement. The System is a defined benefit plan for all state, and participating county, district school board, community college and university employees (Pension Plan). The System also offers eligible employees participation in an alternative defined contribution plan (Investment Plan). The Tax Collector participates in the Elected State Officers' Class. The plan is administered by the State of Florida. Contribution rates are established statewide for all participating governmental units. Accordingly, the actuarial information and related disclosures attributable to the Tax Collector's employees are not determinable. Employees enrolled in the plan prior to July 1, 2011, who retire at or after age 62 with 6 years of credited service, or with 30 years of service regardless of age, are entitled to a retirement benefit, payable monthly for life, equal to 1.60%for regular employees,2.00%for senior management and 3.00% for county elected officials for each year of credited service times the final average 1211-1410244 14 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 6. Employee Retirement Plans (continued) compensation. Employees enrolled on or after July 1, 2011, who retire at or after age 65 with 8 years of credited service or 33 years of service regardless of age, are entitled to the retirement benefits as outlined above. Final average compensation is the employee's average of the five highest fiscal years of salary earned during credited service for those enrolled prior to July 1,2011, and the eight highest fiscal years of salary for those hired on or after July 1, 2011. Vested employees may retire before age 62 (65 years of age if hired on or after July 1, 2011) and receive benefits that are reduced 5.00% for each year prior to normal retirement age. Employees participating in the Investment Plan are vested after one year of service with no age requirement. The System also provides death and disability benefits. Benefits are established by Chapter 121, Florida Statutes, and Chapter 22B, Florida Administrative Code. The Deferred Retirement Option Program (DROP) is a program that provides an alternative method for payment of retirement benefits for a specified and limited period for members of the System, effective July 1, 1998. Under this program, the employee may participate as of their normal retirement date and have their benefits accumulate in the Florida Retirement System Trust Fund, earning interest, while continuing to work for a System employer. Employees enrolled in DROP prior to July 1,2011 earn interest on accumulated benefits in the Trust Fund at 6.50%,those enrolling on or after July 1,2011, earn interest at 1.30%. The participation in the program does not change conditions of employment. When the DROP period ends, maximum of 60 months, employment must be terminated. At the time of termination of employment, the employee will receive payment of the accumulated DROP benefits, and begin receiving their monthly retirement benefit (in the same amount determined at retirement, plus annual cost-of-living increases). Investment Plan members are not eligible to participate in the DROP program, but Pension Plan members are eligible to roll their DROP lump sum into the Investment Plan as one of the distribution methods under the Pension Plan. The System publishes an annual report that provides ten-year historical trend information about progress made in accumulating sufficient assets to pay benefits when due. This report may be obtained by writing to the Division of Retirement Research Education and Policy Section 1317 Winewood Boulevard, Building 8, Tallahassee, Florida 32399-1560, or by calling (877) 377-1737, or accessing their Internet site at www.dms.MyFlorida.com. 1211-1410244 15 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 6. Employee Retirement Plans (continued) The Tax Collector is required to contribute an actuarially determined rate. Rates from October 1, 2011 through June 30, 2012, were 11.14% for county elected officials, 6.27% for senior management, 4.91% for regular employees and 4.42% for DROP employees based on covered payroll. The current rates, effective July 1, 2012, are 10.23% for county elected officials, 6.30% for senior management, 5.18% for regular employees and 5.44% for DROP employees based on covered payroll. In addition, as of July 1, 2011, employee contributions of 3.00% are required of all Pension Plan and Investment Plan members, except for those in DROP. The contribution requirements of the Tax Collector are established and may be amended by the State of Florida. The Tax Collector's employer contributions to the plan for the years ended September 30, 2012, 2011 and 2010, were $291,878, $574,044 and $661,722, respectively, equal to the required contributions for each year. 7. Other Postemployment Healthcare Benefits (OPEB) Plan Plan Description. The Tax Collector participates in a group health care plan that covers eligible retirees, and their dependents, of the Board and all Constitutional Officers with the exception of the Sheriff. The Board administers the plan and establishes the benefits. The healthcare plan does not issue a stand-alone financial report, however additional actuarial information regarding the plan as a whole is disclosed in the notes to the financial statements of Collier County. Under Florida Statutes, retirees originally hired prior to July 1, 2011, are eligible to participate in the active medical plan by paying the active rate if they have attained age 62 and have 6 years of service or have at least 30 years of service.Employees hired on or after July 1,2011,are eligible to participate in the active medical plan by paying the active rate if they have attained age 65 and have 8 years of service or have at least 33 years of service. Employees eligible for a reduced benefit under the Florida Retirement System prior to age 62 (65 years of age if hired on or after July 1, 2011) are also eligible to participate in the medical plan. In addition, the Tax Collector provides a 100% subsidy for retirees between the ages of 55 and 65 with more than 10 years of service and 800 hours of accumulated sick leave to remit at the time of retirement. Funding Policy. The contribution requirements of the plan members and the employers are established and may be amended by the County. The plans are financed by the participating agencies on a pay as you go basis through the County's self insurance internal service fund. Participating agencies contribute an additional amount per each active employee to fund retiree health care. The Tax Collector's agency had an actuarial accrued liability of$14,758 as of September 30, 2012. 1211-1410244 16 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 7. Other Postemployment Healthcare Benefits (OPEB) Plan (continued) The annual other postemployment benefit cost is calculated based on the annual required contribution of the employer(ARC), an amount actuarially determined in accordance with GASB Statement 45. The ARC represents a level of funding that, if paid by on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. An actuarial valuation on the plan as a whole was performed in November 2011. The notes to the financial statements of the County disclose additional information regarding the other post employment benefit plan as a whole. 8. Related-Party Transactions During the fiscal years ended September 30,2012 and 2011,the Board paid commissions and fees to the Tax Collector that amounted to $15,062,312 and $16,244,429, respectively. At September 30,2012 and 2011,the Tax Collector had a payable due to the Board of$6,522,320 and $7,477,857 respectively, comprised as follows: 2012 2011 Distribution of excess commissions and fees $ 5,730,320 $ 6,692,537 Agency funds due to the Board 792,000 785,320 $ 6,522,320 $ 7,477,857 9. Risk Management Collier County,Florida(the County)is exposed to various risks of loss including but not limited to general liability, health and life, property and casualty, auto and physical damage, and workers' compensation. The County is substantially self-insured and accounts for and finances its risk of uninsured losses through an internal service fund. All liabilities associated with these self-insured risks are reported in the basic financial statements of the County. The Tax Collector participates in the County's self-insurance program. During the years ended September 30, 2012 and 2011, the Tax Collector was charged $2,681,342 and $2,423,426, respectively, by the County for participation in the risk management program. 1211-1410244 17 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 9. Risk Management(continued) The County provides coverage for up to $500,000 per claim for workers' compensation, and has purchased outside excess coverage for up to the statutory limits for each injury or illness. The County also provides coverage for up to$200,000 per claim for auto and other liability claims,and has purchased outside excess coverage for up to $1 million per claim.Negligence claims in excess of the statutory limits set in Section 768.20,Florida Statutes, which provide for limited sovereign immunity of$100,000/$200,000 per occurrence can only be recovered through an act of the State Legislature. There have been no significant reductions in insurance coverage in the last year. Settled claims have not exceeded the insurance provided by third party carriers in any of the last three years. The County is also self-insured for health claims covering all of its employees and their eligible dependents. The County retains the first$325,000 in losses per calendar year per covered member and purchases excess coverage with no lifetime limit. As required by Section 112.081, Florida Statutes, retirees and their eligible dependents are provided the same health care coverage as is offered to active employees at the same premium cost (borne by the retiree) applicable to active employees. An actuarial valuation is performed each year to estimate the amounts needed to pay prior and future claims and to establish reserves (see Note 7). 10. Commitments and Contingencies Leases The Tax Collector has noncancelable operating leases for certain office facilities that were utilized solely by the Tax Collector for fiscal year 2012. The three current leases include options for 5 year renewals, and contain annual escalation clauses ranging from 3-5% annually. The following is a schedule of future minimum lease payments under the operating leases: Fiscal year ending September 30: 2013 $ 305,569 2014 253,942 2015 211,505 2016 160,409 2017 1211-1410244 18 Collier County, Florida Tax Collector Notes to Special-Purpose Financial Statements (continued) 10. Commitments and Contingencies (continued) Rental expense for all operating leases in the aggregate was $339,177 and $329,414 for the years ended September 30, 2012 and 2011, respectively. There were no contingent rentals or sublease rentals associated with leases in effect at September 30, 2012 or 2011. Litigation The Tax Collector is involved as a defendant or plaintiff in certain litigation and claims arising from the ordinary course of operations. In the opinion of the Tax Collector and legal counsel, the range of potential recoveries or liabilities will not materially affect the financial position of the Tax Collector. 1211-1410244 19 jIjiiI11fi1llf —p 11111111 ERNST&YOUNG Su te OOoungLLP 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Special-Purpose Financial Statements Performed in Accordance With Government Auditing Standards The Honorable Larry H. Ray, Tax Collector Collier County, Florida We have audited the special-purpose financial statements of the general fund and aggregate remaining fund information of the Collier County, Florida Tax Collector(the Tax Collector) as of and for the year ended September 30, 2012, and have issued our report thereon dated December 14, 2012, which describes that such special-purpose financial statements have been prepared for the purpose of complying with Section 218.39, Florida Statutes, and Chapter 10.557(3), Rules of the Auditor General for Local Governmental Entity Audits. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal control over financial reporting Management of the Tax Collector is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Tax Collector's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the special-purpose financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Tax Collector's internal control over financial reporting.Accordingly,we do not express an opinion on the effectiveness of the Tax Collector's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent,or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 1211-1410244 20 A member firm of Ernst&Young Global Limited 'IIIII�) NST&YOUNG I I Compliance and other matters As part of obtaining reasonable assurance about whether the Tax Collector's special-purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws,regulations,contracts and grant agreements,noncompliance with which could have a direct and material effect on the determination of the special-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 or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the Tax Collector in a separate letter dated December 14, 2012. This report is intended solely for the information and use of the Tax Collector's management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. ,14.141t f LL? December 14, 2012 1211-1410244 21 A member firm of Ernst 8 Young Global Limited (I I 1j1 ERNST&YOUNG Sute500 Young LLP 5100 Town Center Circle Boca Raton,FL 33486 Tel: +1 561 955 8000 Fax:+1 561 955 8200 www.ey.com Management Letter Honorable Larry H. Ray, Tax Collector Collier County, Florida We have audited the special-purpose financial statements of the general fund and the aggregate remaining fund information of the Collier County, Florida Tax Collector (the Tax Collector) as of and for the year ended September 30, 2012, and have issued our report thereon dated December 14, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental audits performed in the state of Florida and require that certain items be addressed in this letter. We have also issued our report dated December 14, 2012, on internal control over financial reporting and on compliance and other matters based on an audit of special-purpose financial statements performed in accordance with Government Auditing Standards. Disclosures in that report should be considered in conjunction with this management letter. We have the following suggestions for improvement in accounting procedures and controls. Current Year Findings and Recommendations Observation: The Tax Collector's office is responsible for collecting and remitting taxes as assessed on Collier County residents. Tax payments are received by the Tax Collector through various methods, including cash, check, money order, or credit cards. Payments can be made through the use of the Tax Collector's online platform or in-person at the various Tax Collector office locations throughout the County. During the course of our audit, we noted that while informal processing standards and cash receipt recognition policies for recording cash receipts in the general ledger system are followed for each type of cash receipt, no formal documentation exists to serve as a guide to be followed by all Tax Collector employees. As a result, the possibility for inconsistent processing of receipt transactions and potential errors surrounding proper cut-off for cash, liability, and commissions' revenue are introduced into the financial reporting processes. 1211-1410244 22 A member firm of Ernst&Young Global Limited 01111111111j RNST&YOUNG We suggest that the Tax Collector's office prepare a formal written policy for the recording and recognition of cash receipts. This document should outline all forms of payment accepted, and the procedures to be followed for recognizing and recording amounts in the general ledger system, specific to each payment type and the location in which it is received. This document should be distributed to all employees who are responsible for recording such receipts. Management's Response: The Tax Collector's office is currently in the process of preparing a written policy as to the recording and recognition of cash receipts. Prior Year Findings and Recommendations There were no findings or recommendations made during the years ended September 30,2011 and 2010. Other Required Communications No matters of noncompliance with Section 218.415,Florida Statutes, regarding the investment of public funds were identified within the scope of our audit. The results of our audit disclosed no violations of laws,rules,regulations or contractual provisions or abuse,no improper or illegal expenditures, and no control deficiencies. The Tax Collector was established by the Constitution of the State of Florida, Article VIII, Section 1(d). This management letter is intended solely for the information and use of the Tax Collector, management, the Board of County Commissioners of Collier County, Florida, and the Auditor General of the State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. �C�nnwt f iyafAILLP December 14, 2012 1211-1 410244 23 A member firm of Ernst&Young Global Limited Ernst& Young LLP Assurance I Tax I Transactions I Advisory About Ernst&Young Ernst.&Young a a cliobal leader in assLirance, tax,transaction and advisory services. Viioridwide.our 167,000 peopie are united by our shared vaiLies and an t.,nwavi2ting commitment to 'Niit make a difference by heping our peope,our rots and our W:;:ier communities ach,eve their potentiiai. For rnore picase vis,tt■NWW.eV.C.Orr nst "cue efcss tne piobai organizannn at crentnies nraits of Ernst& Yctinct4&on:Lmited. cach of v ''' a a separate iega;ent Ernst: viti,ann Lintea,a UK comp,:mv iimHtita Ps uarantitta..does tiot prov.ck sec vn c- cots.This Report has licoon prepared hy Erns;&'youno LLfl a v, ra ,t,Ervinci 'rate d in the Uniacci States. y »: / \ z 2\ /1// J:« • « ? ` <® . . / . . �^ \ Collier County, Flor'i'da 2012 audit results =I ERNST & YOUNG Quality In Everything We Do Confidential - Ernst & Young LLP Overview of the 2012 audit Executive summary Audit reports issued Unqualified opinion on the financial statements of the County and each Constitutional Officer Report on compliance with laws and regulations pursuant to Government Auditing Standards No material weaknesses or significant deficiencies in internal control No instances of non - compliance or other matters Management letter on internal control One current or prior year comments Includes disclosures required under the Rules of the Auditor General Collier County, Florida 2012 audit results I Page 1 Confidential - Ernst & Young LLP Overview of the 2012 audit Executive summary Auditor's responsibility under GAAS • Provide reasonable assurance • Understanding of internal controls ,. Unqualified opinion on the financial statements Critical accounting policies Disclosed in Note 1 to the financial statements Fraud and illegal acts . No such material matters identified Audit differences * Three recorded audit differences • Depreciation expense $1.8m • Depreciation expense $O.6M • FEMA funds to be returned $11.2M One unrecorded audit difference • Impact of prior years depreciation recorded in the current year $1.3M See Appendix A Material weaknesses in internal control None Disagreements with management None Serious difficulties in performing the audit • None • Excellent cooperation and assistance from management Consultations with other accountants None Independence Ernst & Young is independent of the County as defined by professional standards and Government Auditing Standards Collier County, Florida 2012 audit results I Page 2 Confidential - Ernst & Young LLP Comparison of audit results to prior year Audit adjustments (recorded and unrecorded) Significant deficiencies and material weaknesses related to controls around financial reporting Single audit findings Management letter comments C! x 13 major programs 1 qualified audit compliance opinion * 12 unqualified audit compliance opinions 7 findings; 5 significant deficiencies and 1 material weakness 0 7 I 14 major programs 5 qualified audit compliance opinions 7 unqualified audit compliance opinions 2 adverse compliance opinion 11 findings: 0 significant deficiencies and 11 material weaknesses 1 0 x 13 major programs . 2 qualified audit compliance opinions 11 unqualified audit compliance opinions 7 findings: 4 significant deficiencies and 4 material weaknesses 1 Collier County, Florida 2012 audit results I Page 3 Confidential - Ernst & Young LLP Three -year comparison Fund balance (a $71,346,611 7,977 $71,,066,638 Unreserved fund balance (b) $59,705,240 $54,458,662 $57,090,349 Total expenditures (c) $232,277,940 $ 225,471,535 $212,754,341 % of fund balance (a /c) 31% 30% 33% of unreserved fund balance (b /c) 26% 24% 27% Fund balance (a) $71,066,638 Unassigned fund balance (b) $57,090,349 Total expenditures (c) $212,754,341 % of fund balance (a/c) 33% % of unassigned fund balance (b /c) 27% $105,295,000 $93,062,000 $208,568,000 50% 45% $139,702,147 $48,751,643 $200,465,923 70% 24% Collier County, Florida 2012 audit results I Page 4 Confidential - Ernst & Young LLP Three -year comparison Total governmental activities obligations Governmental activities debt outstanding per capita Total business activities obligations Business activities debt outstanding per capita Total outstanding debt Total outstanding debt per capita MSource: www.fredlabormarketinfo.com $ 470,136,399 $ 433,233,544 $ 395,839,427 $1,417 $255,492,312 $770 $725,628,711 $2,187 $1,347 $243,531,572 $757 $676,765,116 $2,105 $1,223 $231,262,938 $714 $627,102,365 $1.937 Total governmental activities obligations Governmental activities debt outstanding per capita Total business activities obligations Business activities debt outstanding per capita Total outstanding debt Total outstanding debt per capita U )Source: www.fredlabormarketinfo.com $395,839,427 $1,223 $231,262,938 $714 $627,102,365 $1,937 $121,860,000 $374 $187,783,000 $576 $309,643,000 $950 $313,139,540 $821 $291,716,538 $765 $604,856,198 $1,586 Collier County, Florida 2012 audit results I Page 5 Confidential - Ernst & Young LLP Uncorrected and corrected misstatements Summary ofAud it Differences Client. Audit date: 30 -5 -2012 Currency: USD Collier County, Florida 2012 audit results I Page 7 -- --- - - - - -- .- 1. MOWN MOWN MOWN MOWN MOWN MOWN MOWN MOWN M MOWN MOWN OWN MOWN MOWN MOWN MOWN _------■_ -- --- - - - - -- -- --- - - - - -- -- --- - - - - -- Imc -all all -- --- - - - - -- -- --- - - - - -- Collier County, Florida 2012 audit results I Page 7 Confidential - Ernst & Young LLP Uncorrected and corrected misstatements Summary of Audit Differences Client: Audit date: 30 -Se -2012 Currency: USD Collier County, Florida 2012 audit results I Page 8 lull -- -- -- - - - -- lllllllllllllllll , llllllllllllll- -----llllllllllllllll•-lllllllllll♦- �paid by the County, �bject to the final disposition ofthe P��ding appeal ----- iti• - -_ soon -----lllllllllllllllllll.-lllllllllll♦- lllllllllllllll ♦ lllllllllllllll■ ----- lllllllllllllll■ -ii• -. lllllllllllllll ♦lllllllllllllll♦ -----lllllllllllllll■-_- Collier County, Florida 2012 audit results I Page 8 Ernst & Young Assurance I Tax I Transactions I Advisory About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited operating in the US. About Ernst & Young's Assurance Services Strong independent assurance provides a timely and constructive challenge to management, a robust and clear perspective to audit committees and critical information for investors and other stakeholders. 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