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HomeMy WebLinkAbout2019 05 13 Regular 500 - 2018 Comprehensive Annual Financial Report REGULAR AGENDA ITEM 500 1959 CITY COMMISSION AGENDA I MAY 13, 2019 1 REGULAR MEETING TITLE 2018 Comprehensive Annual Financial Report SUM MARY The presentation of the Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2018 by the auditors McDirmit Davis & Company, LLC. The CAM is prepared and presented to give the City Commission, citizens, and other users a greater understanding of the City's financial standing. Our 2018 financial statements received an unqualified opinion (best possible) by the auditors. Additionally, the 2018 CAM will be submitted to the Government Finance Officers Association (GFOA) for consideration for their Certificate of Achievement award as we believe it continues to conform to the program's stringent requirements. The City's CAFR has previously been awarded the GFOA's Certificate of Achievement award for the past 17 years. RECOMMENDATION Staff recommends that the Commission accept the Comprehensive Annual Financial Report (CAFR) as presented for the Fiscal Year Ended September 30,2018. MCDIRMIT /// DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS Honorable Mayor and City Commissioners City of Winter Springs, Florida We have audited the financial statements of City of Winter Springs as of and for the year ended September 30, 2018, and have issued our report thereon dated May 13, 2019. Professional standards require that we advise you of the following matters relating to our audit. Our Responsibility in Relation to the Financial Statement Audit As communicated in our engagement letter dated September 18, 2018, our responsibility, as described by professional standards, is to form and express an opinion(s) about whether the financial statements that have been prepared by management with your oversight are presented fairly, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your respective responsibilities. Our responsibility, as prescribed by professional standards, is to plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes 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 entity's internal control over financial reporting. Accordingly, as part of our audit, we considered the internal control of City of Winter Springs solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. We are also responsible for communicating significant matters related to the audit that are, in our professional judgment, relevant to your responsibilities in overseeing the financial reporting process. However, we are not required to design procedures for the purpose of identifying other matters to communicate to you. Planned Scope and Timing of the Audit We conducted our audit consistent with the planned scope and timing we previously communicated to you. Compliance with All Ethics Requirements Regarding Independence The engagement team, others in our firm, as appropriate, our firm, have complied with all relevant ethical requirements regarding independence. Qualitative Aspects of the Entity's Significant Accounting Practices Significant Accounting Policies Management has the responsibility to select and use appropriate accounting policies. A summary of significant accounting policies adopted by the City are described in Note 1 to the financial statements. As described in Note 1 to the financial statements, during the year, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. Accordingly, the cumulative effect of the accounting change as of the beginning of the year has been reported in the Statement of Activities. No matters have come to our attention that would require us, under professional standards, to inform you about (1) the methods used to account for significant unusual transactions and (2) the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. MCDIRmi'r DAviS&COMPANY,LLC 934 N.MAGNOLIA AVENUE,SUITE 100 ORLANDO,FLORIDA 32803 T:407-843-5406 1 F:407-649-9339 1 WWW.MCDIRMITDAVIS.COM Page l 1 Significant Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's current judgments. Those judgments are normally based on knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ markedly from management's current judgments. The most sensitive accounting estimates affecting the financial statements are: Management's estimate for the allowance for doubtful accounts is based on historical loss levels, and an analysis of the individual accounts. We evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimation for the allowance for depreciation is based on the estimated useful lives of the capital assets. We evaluated the reasonableness of the useful lives as well as the depreciation methods in determining that it is reasonable in relation to the financial statements taken as a whole. Management's allocation of the net pension liability, deferred inflows/outflows and pension expense is based on the participating employees' contributions made. We evaluated the reasonableness of the allocation methods in determining that it is reasonable in relation to the financial statements taken as a whole. Financial Statement Disclosures Certain financial statement disclosures involve significant judgment and are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting City of Winter Springs's financial statements relate to the recording of investments at fair value. Significant Difficulties Encountered During the Audit We encountered no significant difficulties in dealing with management relating to the performance of the audit. Uncorrected and Corrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter, which could be significant to City of Winter Springs's financial statements or the auditor's report. No such disagreements arose during the course of the audit. Representations Requested from Management We have requested certain written representations from management, which are included in the attached letter dated May 3, 2019. Management's Consultations with Other Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing and accounting matters. Page 12 Other Significant Matters, Findings, or Issues In the normal course of our professional association with City of Winter Springs, we generally discuss a variety of matters, including the application of accounting principles and auditing standards, operating and regulatory conditions affecting the entity, and operational plans and strategies that may affect the risks of material misstatement. None of the matters discussed resulted in a condition to our retention as City of Winter Springs's auditors. This report is intended solely for the use of management, the City Commission 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. Very truly yours, q ��zct Dav4z & � 4 LL0, Orlando, Florida May 3, 2019 Page 13 XNTfRS ok - z p� CITY OF WINTER SPRINGS, FLORIDA H * 1126 EAST STATE ROAD 434 U U1 WINTER SPRINGS, FLORIDA 32708-2799 • 1959 • Telephone(407)327-5957 -'4, sboyle@winterspringsfl.org Gp�wE S¢J May 3, 2019 McDirmit Davis&Company, LLC 934 N. Magnolia Avenue, Suite 100 Orlando, FL 32803 This representation letter is provided in connection with your audit of the financial statements of the City of Winter Springs, Florida as of September 30, 2018, then ended, and the related notes to the financial statements,for the purpose of expressing opinions on whether the basic financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows, where applicable, of the various opinion units of the City of Winter Springs, Florida in accordance with accounting principles generally accepted for governments in the United States of America(U.S. GAAP). Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered necessary for the purpose of appropriately informing ourselves as of May 3, 2019. Financial Statements • We have fulfilled our responsibilities, as set out in the terms of the audit engagement dated September 18, 2018, for the preparation and fair presentation of the financial statements of the various opinion units referred to above in accordance with U.S. GAAP. • We acknowledge our responsibility for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. • We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud. • We acknowledge our responsibility for compliance with the laws, regulations, and provisions of contracts and grant agreements. • We have reviewed, approved, and taken responsibility for the financial statements and related notes. • We have a process to track the status of audit findings and recommendations. • We have identified and communicated to you all previous audits, attestation engagements, and other studies related to the audit objectives and whether related recommendations have been implemented. • Significant assumptions used by us in making accounting estimates, including those measured at fair value, are reasonable. • Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of U.S. GAAP. • All events subsequent to the date of the financial statements and for which U.S. GAAP requires adjustment or disclosure have been adjusted or disclosed. • There is no summary of uncorrected misstatements since all adjustments proposed by the auditor, material and immaterial, have been recorded. • The effects of all known actual or possible litigation and claims have been accounted for and disclosed in accordance with U.S. GAAP. • All component units, as well as joint ventures with an equity interest, are included and other joint ventures and related organizations are properly disclosed. • All funds and activities are properly classified. • All funds that meet the quantitative criteria in GASB Statement No. 34, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments,and GASB Statement No. 37, Basic Financial Statements—and Management's Discussion and Analysis—for State and Local Governments: Omnibus as amended, and GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, for presentation as major are identified and presented as such and all other funds that are presented as major are considered important to financial statement users. • All components of net position, nonspendable fund balance, and restricted, committed, assigned, and unassigned fund balance are properly classified and, if applicable, approved. • Our policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position/fund balance are available is appropriately disclosed and net position/fund balance is properly recognized under the policy. • All revenues within the statement of activities have been properly classified as program revenues, general revenues, contributions to term or permanent endowments, or contributions to permanent fund principal. • All expenses have been properly classified in or allocated to functions and programs in the statement of activities, and allocations, if any, have been made on a reasonable basis. • All interfund and intra-entity transactions and balances have been properly classified and reported. • Special items and extraordinary items have been properly classified and reported. • Deposit and investment risks have been properly and fully disclosed. • Capital assets, including infrastructure assets, are properly capitalized, reported, and if applicable, depreciated. • All required supplementary information is measured and presented within the prescribed guidelines. • With regard to investments and other instruments reported at fair value: – The underlying assumptions are reasonable and they appropriately reflect management's intent and ability to carry out its stated courses of action. – The measurement methods and related assumptions used in determining fair value are appropriate in the circumstances and have been consistently applied. – The disclosures related to fair values are complete, adequate, and in conformity with U.S. GAAP. – There are no subsequent events that require adjustments to the fair value measurements and disclosures included in the financial statements. Information Provided • We have provided you with: – Access to all information, of which we are aware that is relevant to the preparation and fair presentation of the financial statements of the various opinion units referred to above, such as records, documentation, meeting minutes, and other matters; – Additional information that you have requested from us for the purpose of the audit; and – Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence. • All transactions have been recorded in the accounting records and are reflected in the financial statements. • We have disclosed to you the results of our assessment of the risk that the financial statements may be materially misstated as a result of fraud. • We have no knowledge of any fraud or suspected fraud that affects the entity and involves: - Management; - Employees who have significant roles in internal control; or - Others where the fraud could have a material effect on the financial statements. • We have no knowledge of any allegations of fraud, or suspected fraud, affecting the entity's financial statements communicated by employees, former employees, vendors, regulators, or others. • We are not aware of any pending or threatened litigation and claims whose effects should be considered when preparing the financial statements. • We have disclosed to you the identity of the entity's related parties and all the related party relationships and transactions of which we are aware. • There have been no communications from regulatory agencies concerning noncompliance with or deficiencies in accounting, internal control, or financial reporting practices. • City of Winter Springs has no plans or intentions that may materially affect the carrying value or classification of assets and liabilities. • We have disclosed to you all guarantees,whether written or oral, under which City of Winter Springs is contingently liable. • We have disclosed to you all nonexchange financial guarantees, under which we are obligated and have declared liabilities and disclosed properly in accordance with GASB Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees, for those guarantees where it is more likely than not that the entity will make a payment on any guarantee. • For nonexchange financial guarantees where we have declared liabilities,the amount of the liability recognized is the discounted present value of the best estimate of the future outflows expected to be incurred as a result of the guarantee.Where there was no best estimate but a range of estimated future outflows has been established, we have recognized the minimum amount within the range. • We have disclosed to you all significant estimates and material concentrations known to management that are required to be disclosed in accordance with GASB Statement No.62(GASB- 62), Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 9989 FASB and AICPA Pronouncements. Significant estimates are estimates at the balance sheet date that could change materially within the next year. Concentrations refer to volumes of business, revenues,available sources of supply,or markets or geographic areas for which events could occur that would significantly disrupt normal finances within the next year. • We have identified and disclosed to you the laws, regulations,and provisions of contracts and grant agreements that could have a direct and material effect on financial statement amounts, including legal and contractual provisions for reporting specific activities in separate funds. • There are no: - Violations or possible violations of laws or regulations, or provisions of contracts or grant agreements whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency, including applicable budget laws and regulations. - Unasserted claims or assessments that our lawyer has advised are probable of assertion and must be disclosed in accordance with GASB-62. - Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by GASB-62 - Continuing disclosure consent decree agreements or filings with the Securities and Exchange Commission and we have filed updates on a timely basis in accordance with the agreements (Rule 240, 15c2-12). • City of Winter Springs has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset or future revenue been pledged as collateral, except as disclosed to you. • We have complied with all aspects of grant agreements and other contractual agreements that would have a material effect on the financial statements in the event of noncompliance. Pension and Postretirement Benefits 0 An actuary has been used to measure pension liabilities and costs. • We believe that the actuarial assumptions and methods used to measure pension and other postemployment benefit liabilities and costs for financial accounting purposes are appropriate in the circumstances. • With regard to nonaudit services performed by you (financial statement preparation), we acknowledge and accept our responsibility to: • Assume all management responsibilities; • Assign a competent individual to oversee the services; • Evaluate the adequacy and results of the services performed; and • Accept responsibility for the result of the services. Signed: Signed: Shawn Boyle qwQueen Acting City Manager Ci ontroller