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*1280 FDEP WW590101City of Sanford, Florida Florida Department of Environmental Protection Loan No. WW590101 Special Purpose Statement of Loan Revenues and Expenditures — Budget and Actual November 30, 2010 Through September 23, 2011 City of Sanford, Florida Florida Department of Environmental Protection Loan No. WW590101 Table of Contents Page Number Independent Auditor's Report Special Purpose Statement of Loan Revenues and Expenditures — Budget and Actual 2 Notes to Special Purpose Statement of Loan Revenues and Expenditures — Budget and Actual Independent Auditor's Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Special Purpose Financial Statements Performed in Accordance with Government Auditing Standards 4 The Honorable Mayor and Members of the City Commission City of Sanford, Florida We have audited the accompanying special purpose statement of loan revenues and expenditures — budget and actual of the City of Sanford, Florida (the "City "), Florida Department of Environmental Protection ( "FDEP ") Loan No. WW590101, for the period November 30, 2010 through September 23, 2011. This special purpose financial statement is the responsibility of the City's management. Our responsibility is to express an opinion on this special purpose financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the special purpose financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures and significant estimates made by management, as well as evaluating the overall special purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying special purpose financial statement was prepared for the purpose of complying with the rules and regulations of FDEP, as discussed in Note 1, and is not intended to be a presentation in conformity with accounting principles generally accepted in the United States of America. In our opinion, the special purpose statement of loan revenues and expenditures — budget and actual referred to above presents fairly, in all material respects, the loan revenues and expenditures — budget and actual of the City, FDEP Loan No. WW590101, for the period November 30, 2010 through September 23, 2011 on the basis of accounting described in Note 2. In accordance with Government Auditing Standards, we have also issued our report dated June 22, 2012, on our consideration of the Department'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 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. MOORE STEPHENS LOVELACE, P.A. Certified Public Accountants Orlando, Florida June 22, 2012 -1- City of Sanford, Florida Florida Water Pollution Control Financing Corporation Loan No. WW590101 Special Purpose Statement of Loan Revenues and Expenditures - Budget and Actual November 30, 2010 Through September 23, 2011 Budget Actual Loan Revenues: State of Florida $ 205,020 $ 205,020 Expenditures: Construction 201,000 201,000 Loan service fee 4,020 4,020 205,020 205,020 The accompanying notes are an integral part of this financial statement. -2- City of Sanford, Florida Florida Department of Environmental Protection Loan No. WW590101 Notes to Special Purpose Statement of Loan Revenues and Expenditures — Budget and Actual November 30, 2010 Through September 23, 2011 Note 1— General The City of Sanford, Florida (the "City "), is a political subdivision of the State of Florida located in Seminole County. The City provides a full complement of municipal services. The City's Utilities Department (the "Department ") operates as an enterprise fund of the City. The Department functions as a self - supporting, government enterprise fund. The Department maintains construction in progress and loans payable accounts to account for the construction of the City's various construction projects relating to its stormwater resource facilities and the receipt of loan proceeds. The City has completed the following projects: Restoration of Underground Pipe and to Provide Manhole Rehabilitation. Funding for these projects was provided by the Clean Water State Revolving Loan Fund (Loan No. WW590101) through the Florida Department of Environmental Protection ( "FDEP "). The construction Loan Agreement with FDEP requires a separate audit of the project under Chapter 403.1835, Florida Statutes. The Loan Agreement includes various covenants, and requires a project - specific audit of the loan - related revenues and expenditures. Note 2 — Basis of Accounting The special purpose statement of loan revenues and expenditures — budget and actual was prepared on the basis of accounting prescribed by FDEP in order to comply with the Loan Agreement described above between the City and FDEP. Under this basis, loan proceeds are recognized as revenues when monies are received. Expenditures are recognized when incurred. Administrative, planning, and engineering costs represent allowances stated in the Loan Agreement and are recognized as expenditures upon reimbursement. The special purpose statement of loan revenues and expenditures — budget and actual covers only the projects described in the Loan Agreement and is not representative of the City or the Department taken as a whole. Note 3 — Contingency The loan revenue amounts from FDEP are subject to audit and adjustment. If any expenditure were disallowed by FDEP as a result of an audit, any claim for reimbursement to FDEP would become a liability of the City. In the opinion of management, all loan expenditures are in compliance with the terms of the Loan Agreement and Chapter 62 -503 of the Florida Administrative Code. -3- INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF SPECIAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS The Honorable Mayor and Members of the City Commission City of Sanford, Florida We have audited the special purpose statement of loan revenues and expenditures — budget and actual of the City of Sanford, Florida (the "City "), Florida Department of Environmental Protection ( "FDEP ") Loan No. WW590101, for the period November 30, 2010 through September 23, 2011, and have issued our report thereon dated June 22, 2012. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting Management of the City is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City'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 the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be 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. -4- The Honorable Mayor and Members of the City Commission City of Sanford, Florida Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's special purpose financial statement is 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. This report is intended solely for the information and use of the City and FDEP and is not intended to be, and should not be, used by anyone other than these specified parties. MOORE STEPHENS LOVELACE, P.A. Certified Public Accountants Orlando, Florida June 22, 2012 -5-