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HomeMy WebLinkAbout2023 09 22 Letter from Joint Legislative Auditing Committee (JLAC) - Late Annual Financial ReportKATHLEEN PASSIDOMO President of the Senate Senator Jason Brodeur Senator Tracie Davis Senator Nick DiCeglie Senator Corey Simon CERTIFIED MAIL THE FLORIDA LEGISLATURE JOINT LEGISLATIVE AUDITING COMMITTEE Representative Mike Caruso, Chair Senator Jason Pizzo, Vice Chair September 22 , 2023 RETURN RECEIPT REQUESTED The Honorable Kevin McCann, Mayor City of Winter Springs I 126 E State Road 434 Winter Springs, FL 32708-2715 Dear Mayor McCann: PAUL RENNER Speaker of the House Representative Christopher Benjamin Representative Peggy Gossett-Seidman Representative Dianne Hart Representative Rachel Saunders Plakon Representative Taylor Michael Yarkosky Based on correspondence and records from the Department of Financial Services (DFS) and the Auditor General , the City of Winter Springs is being contacted because the following required financial reports have not yet been submitted (these reports were due no later than June 30, 2023): FY 2021-22 FY 2021-22 Annual Financial Repott (AFR) Annual Financial Audit (Audit)* (*) Section 218.39( I )(b). Florida Statutes , requires an annual financial audit report from each municipality with revenues or total expenditures and expenses in excess of $250 ,000 , as reported on the fund financial statement s. Section 218.39( I )(g). Florida Statutes , require s an annual financi al audit report from each municipality with revenue s or total expenditures and expenses between $I 00 ,000 and $250 ,000 , as reported on the fund financial statements , which has not been subject to a financial audit for the 2 preceding fiscal years. The Joint Legislative Auditing Committee (Committee) is expected to meet in the late 2023 to consider taking state action against municipalities that have failed to file outstanding financial repo1ts. To avoid having state revenues withheld from your municipality, please submit the above-referenced reports to the DFS and the Auditor General, as applicable, no later than November 17, 2023. If such reports cannot be submitted by this date, please provide a detailed written status of the delinquent financial reports, including an estimated timeframe for report submission, to jlac@ leg.state.tl.us or to the address listed below no later than November 17, 2023. If earlier correspondence related to these delinquent financial reports was provided to the DFS, the Auditor General , or our office, please provide an updated written status to such correspondence. Please read the Required Action section on page two of this letter for information on filing the delinquent financial reports . Kathryn 1-1. DuBose, Coordinator 111 West Madison Street, Room 876, Claude Pepper Building, Tallahassee, Florida 32399-1400 Telephone (850) 487-4110 Fax (850) 922-5667 jlac@ leg.state.fl.us The Honorable Kevin McCann , Mayor September 22, 2023 Page 2 Related Laws (See enclosure for full text) Sections 218.32( I )(a), ( d), (e) I., and (f), Florida Statutes , require municipalities to submit an AFR and an annual financial audit repo1t (if required) to the DFS , and requires the DFS to notify the Committee of municipalities that have failed to submit an AFR . Sections 218.39( I )(b) and (g), and (7), Florida Statutes , establish the audit threshold for municipalities and requires audit repo1ts to be submitted to the Auditor General. Section 11.45(7)(a), Florida Statutes , requires the Auditor General to notify the Committee of municipalities that have failed to file an audit repo1t . Section 1 I .40(2)(a), Florida Statutes, authorizes the Committee to direct the Depaitment of Revenue and the DFS to withhold selected state revenues from municipalities that have failed to file an AFR and an annual financial audit report (if required). While certain state revenues, once withheld , are available to be distributed to the municipality if it becomes compliant by the end of the State of Florida 's fiscal year (June 30, 2024, for purposes of this letter), certain other state revenues , once withheld, will not be distributed to the municipality. One example is the local government half-cent sales tax proceeds ; see Section 218.63 , Florida Statutes. These monies will be returned to the State. Required Action File the AFR (and audit report) with the DFS: Refer to the DFS' website as follows: Department of Financial Services https://www.myfloridacfo.com/division/aa/local-governments Select "Annual Financial Reports/LOGERx" and review the information included about the Annual Financial Report (AFR). If you have specific questions regarding the filing of the AFR, please contact the Local Government Section at (850) 413-5571 or send an e-mail to locahmvlnlmvfloridacfo.com . File the audit report with the Auditor General: Refer to the Auditor General's website as follows: Auditor General https://flauditor.gov/pages/tech localgovt.html The "Local Governmental Entity Audit Report Submittal Checklist" should be completed and forwarded with the audit report. The mailing address and contact information for the Auditor General's local government audit staff are shown on page 3 of this checklist. (Note : The Checklist is the 81" item listed on the web page .) If you have specific questions regarding the submi ssion of the audit report, please contact the Auditor General's Office at (850) 412 -2892 or send an e-ma il to flaud!len local!lovt@aud .state .tl .us . For additional information about required financial reporting and the Committee 's role , you may wish to review the Committee 's website at www.leg.state.fl.us/committees/jlac; under the heading "Quick Links" select "Local Government Financial Reporting ." The Honorable Kevin McCann, Mayor September 22, 2023 Page 3 If you have any questions about this letter or wish to discuss the municipality's current situation, please do not hesitate to contact Debbie White on our staff at jlac@leg.state.fl.us or (850) 487-4110. For specific questions regarding the filing of the financial repo1ts , please contact the DFS or the Auditor General, as applicable, using the contact information provided above. Best regards , +<~lj~ -tJ. ~ Kathryn H. DuBose Coordinator Enclo sure cc: sent by Email : Philip Hursh , Interim Cit y Manager Donna Bruno , Interim Finance Director Florida Statutes (2023) related to Local Government Financial Reporting 11.40 Legislative Auditing Committee.- (2) Following notification by the Auditor General, the Department of Financial Services, the Division of Bond Finance of the State Board of Administration, the Governor or his or her designee, or the Commissioner of Education or his or her designee of the failure of a local governmental entity, district school board, charter school, or charter technical career center to comply with the applicable provisions withins. 11.45(5)-(7), s. 218.32(1), s. 218.38, ors. 218.503(3), the Legislative Auditing Committee may schedule a hearing to determine if the entity should be subject to further state action. If the committee determines that the entity should be subject to further state action, the committee shall: (a) In the case of a local governmental entity or district school board, direct the Department of Revenue and the Department of Financial Services to withhold any funds not pledged for bond debt service satisfaction which are payable to such entity until the entity complies with the law. The committee shall specify the date that such action must begin, and the directive must be received by the Department of Revenue and the Department of Financial Services 30 days before the date of the distribution mandated by law. The Department of Revenue and the Department of Financial Services may implement this paragraph. (b) In the case of a special district created by: 1. A special act, notify the President of the Senate, the Speaker of the House of Representatives, the standing committees of the Senate and the House of Representatives charged with special district oversight as determined by the presiding officers of each respective chamber, the legislators who represent a portion of the geographical jurisdiction of the special district, and the Department of Economic Opportunity that the special district has failed to comply with the law. Upon receipt of notification, the Department of Economic Opportunity shall proceed pursuant to s. 189.062 ors. 189.067. If the special district remains in noncompliance after the process set forth in s. 189.0651, or if a public hearing is not held, the Legislative Auditing Committee may request the department to proceed pursuant to s. 189.067(3). 2. A local ordinance, notify the chair or equivalent of the local general-purpose government pursuant to s. 189.0652 and the Department of Economic Opportunity that the special district has failed to comply with the law. Upon receipt of notification, the department shall proceed pursuant to s. 189.062 ors. 189.067. If the special district remains in noncompliance after the process set forth ins. 189.0652, or if a public hearing is not held, the Legislative Auditing Committee may request the department to proceed pursuant to s. 189.067(3). 3. Any manner other than a special act or local ordinance, notify the Department of Economic Opportunity that the special district has failed to comply with the law. Upon receipt of notification, the department shall proceed pursuant to s. 189.062 ors. 189.067(3). 11.45(7) AUDITOR GENERAL REPORTING REQUIREMENTS.- (a) The Auditor General shall notify the Legislative Auditing Committee of any local governmental entity, district school board, charter school, or charter technical career center that does not comply with the reporting requirements of s. 218.39. 218.32 Annual financial reports; local governmental entities.- (l)(a) Each local governmental entity that is determined to be a reporting entity, as defined by generally accepted accounting principles, and each independent special district as defined in s. 189.012, shall submit to the department a copy of its annual financial report for the previous fiscal year in a format prescribed by the department. The annual financial report must include a list of each local governmental entity included in the report and each local governmental entity that failed to provide financial information as required by paragraph (b). The chair of the governing body and the chief financial officer of each local governmental entity shall sign the annual 1 (c) Any special district with revenues or the total of expenditures and expenses in excess of $100,000, as reported on the fund financial statements. (d) Each district school board. (e) Each charter school established under s. 1002.33. (f) Each charter technical center established under s. 1002.34. (g) Each municipality with revenues or the total of expenditures and expenses between $100,000 and $250,000, as reported on the fund financial statements, which has not been subject to a financial audit pursuant to this subsection for the 2 preceding fiscal years. (h) As required bys. 163.387{8)(a), each community redevelopment agency with revenues or a total of expenditures and expenses in excess of $100,000, as reported on the trust fund financial statements. (i) Each special district with revenues or the total of expenditures and expenses between $50,000 and $100,000, as reported on the fund financial statement, which has not been subject to a financial audit pursuant to this subsection for the 2 preceding fiscal years. (7) All audits conducted pursuant to this section must be conducted in accordance with the rules of the Auditor General adopted pursuant to s. 11.45. Upon completion of the audit, the auditor shall prepare an audit report in accordance with the rules of the Auditor General. The audit report shall be filed with the Auditor General within 45 days after delivery of the audit report to the governing body of the audited entity, but no later than 9 months after the end of the audited entity's fiscal year. The audit report must include a written statement describing corrective actions to be taken in response to each of the auditor's recommendations included in the audit report. 189.062 Special procedures for inactive districts.- (1) The department shall declare inactive any special district in this state by documenting that: (a) The special district meets one of the following criteria: 1. The registered agent of the district, the chair of the governing body of the district, or the governing body of the appropriate local general-purpose government notifies the department in writing that the district has taken no action for 2 or more years; 2. The registered agent of the district, the chair of the governing body of the district, or the governing body of the appropriate local general-purpose government notifies the department in writing that the district has not had a governing body or a sufficient number of governing body members to constitute a quorum for 2 or more years; 3. The registered agent of the district, the chair of the governing body of the district, or the governing body of the appropriate local general-purpose government fails to respond to an inquiry by the department within 21 days; 4. The department determines, pursuant to s. 189.067, that the district has failed to file any of the reports listed in s. 189.066; 5. The district has not had a registered office and agent on file with the department for 1 or more years; or 6. The governing body of a special district provides documentation to the department that it has unanimously adopted a resolution declaring the special district inactive. The special district is responsible for payment of any expenses associated with its dissolution. (b) The department, special district, or local general-purpose government has published a notice of proposed declaration of inactive status in a newspaper of general circulation in the county or municipality in which the territory of the special district is located and has sent a copy of such notice by certified mail to the registered agent or chair of the governing body, if any. Such notice must include the name of the special district, the law under which it was organized and operating, a general description of the territory included in the special district, and a statement that any objections must be filed pursuant to chapter 120 within 21 days after the publication date. (c) Twenty-one days have elapsed from the publication date of the notice of proposed declaration of inactive status and no administrative appeals were filed. (2) If any special district is declared inactive pursuant to this section, the property or assets of the special district are subject to legal process for payment of any debts of the district. After the payment of all the debts of said inactive special district, the remainder of its property or assets shall escheat to the county or municipality wherein located. If, however, it shall be necessary, in order to pay any such debt, to levy any tax or taxes on the property in the territory or limits of the inactive special district, the same may be assessed and levied by order of 3 (b) A special district that is unable to meet the 60-day reporting deadline must provide written notice to the department before the expiration of the deadline stating the reason the special district is unable to comply with the deadline, the steps the special district is taking to prevent the noncompliance from reoccurring, and the estimated date that the special district will file the report with the appropriate agency. The district's written response does not constitute an extension by the department; however, the department shall forward the written response as follows: 1. If the written response refers to the reports required under s. 218.32 ors. 218.39, to the Legislative Auditing Committee for its consideration in determining whether the special district should be subject to further state action in accordance withs. 11.40(2)(b). 2. If the written response refers to the reports or information requirements listed ins. 189.066(1), to the local general-purpose government or governments for their consideration in determining whether the oversight review process set forth in s. 189.068 should be undertaken. 3. If the written response refers to the reports or information required under s. 112.63, to the Department of Management Services for its consideration in determining whether the special district should be subject to further state action in accordance withs. 112.63(4)(d)2. (2) Failure of a special district to comply with the actuarial and financial reporting requirements under s. 112.63, s. 218.32, ors. 218.39 after the procedures of subsection (1) are exhausted shall be deemed final action of the special district. The actuarial and financial reporting requirements are declared to be essential requirements of law. Remedies for noncompliance with ss. 218.32 and 218.39 shall be as provided in ss. 189.0651 and 189.0652. Remedy for noncompliance withs. 112.63 shall be as set forth in subsection (4). (3) Pursuant to s. 11.40(2)(b), the Legislative Auditing Committee may notify the department of those districts that fail to file the required reports. If the procedures described in subsection (1) have not yet been initiated, the department shall initiate such procedures upon receiving the notice from the Legislative Auditing Committee. Otherwise, within 60 days after receiving such notice, or within 60 days after the expiration of the 60-day deadline provided in subsection (1), whichever occurs later, the department, notwithstanding the provisions of chapter 120, shall file a petition for enforcement with the circuit court. The petition may request declaratory, injunctive, any other equitable relief, or any remedy provided by law. Venue for all actions pursuant to this subsection is in Leon County. The court shall award the prevailing party reasonable attorney's fees and costs unless affirmatively waived by all parties. (4) The department may enforce compliance withs. 112.63 by filing a petition for enforcement with the circuit court in and for Leon County. The petition may request declaratory, injunctive, or other equitable relief, including the appointment of a receiver, and any forfeiture or other remedy provided by law. 5