town of inglis, florida rpts/2016 inglis.pdftown of inglis, florida management’s discussion and...

Town of Inglis, Florida

Audit Report

September 30, 2016


Table of ContentsSeptember 30, 2016

REPORTIndependent Auditor’s Report 1

MANAGEMENT’S DISCUSSION AND ANALYSIS 3

BASIC FINANCIAL STATEMENTSGovernment wide Financial Statements:

Statement of Net Position 7

Statement of Activities 8

Governmental Fund Financial Statements:

Balance Sheet 9

Reconciliation of the Balance Sheet to the Statement of Net Position 10

Statement of Revenues, Expenditures and Changes in Fund Balances 11

Reconciliation of the Statement of Revenues, Expenditures and Changesin Fund Balances to the Statement of Activities 12

Proprietary Fund Financial Statements:

Statement of Net Position 13

Statement of Revenues, Expenses and Changes in Fund Net Position 14

Statement of Cash Flows 15

Notes to Financial Statements 16

REQUIRED SUPPLEMENTARY INFORMATIONSchedule of Revenues, Expenditures and Changes in Fund Balances – Budget

and Actual – General Fund 32

Notes to Budgetary Comparison Schedule 33

Schedules of Proportionate Share of Net Pension Liability 34

Schedules of Employer Contributions 35

ADDITIONAL ELEMENTS REQUIRED BY THE RULES OF THE AUDITOR GENERALManagement Letter 36

Independent Accountant’s Report on Compliance with Section 218.415, FloridaStatutes 38

Independent Auditor’s Report on Internal Control Over Financial Reportingand on Compliance and Other Matters Based on an Audit of FinancialStatements Performed in Accordance with Government Auditing Standards 39

Schedule of Findings 41

Corrective Action Plan

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INDEPENDENT AUDITOR’S REPORT

The Honorable Mayor andTown Commission


Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the Town of Inglis,Florida (the “Town”) as of and for the year ended September 30, 2016, and the related notes to thefinancial statements, which collectively comprise the Town’s basic financial statements as listed in thetable of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includesthe design, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud orerror.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica 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 andperform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness ofsignificant accounting estimates made by management, as well as evaluating the overall presentation ofthe financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinions.

Carr, Riggs & Ingram, LLC4010 N.W. 25th PlaceGainesville, Florida 32606P.O. Box 13494Gainesville, Florida 32604

(352) 372-6300(352) 375-1583 (fax)www.cricpa.com

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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, therespective financial position of the governmental activities, the business type activities, each majorfund, and the aggregate remaining fund information of the Town, as of September 30, 2016, and therespective changes in financial position and, where applicable, cash flows thereof for the year thenended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’sdiscussion and analysis, budgetary comparison information, and pension trend information bepresented to supplement the basic financial statements. Such information, although not a part of thebasic financial statements, is required by the Governmental Accounting Standards Board, who considersit to be an essential part of financial reporting for placing the basic financial statements in anappropriate operational, economic, or historical context. We have applied certain limited procedures tothe required supplementary information in accordance with auditing standards generally accepted inthe United States of America, which consisted of inquiries of management about the methods ofpreparing the information and comparing the information for consistency with management’s responsesto our inquiries, the basic financial statements, and other knowledge we obtained during our audit ofthe basic financial statements. We do not express an opinion or provide any assurance on theinformation because the limited procedures do not provide us with sufficient evidence to express anopinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 14, 2017,on our consideration of the Town’s internal control over financial reporting and on our tests of itscompliance with certain provisions of laws, regulations, contracts, and grant agreements and othermatters. The purpose of that report is to describe the scope of our testing of internal control overfinancial reporting and compliance and the results of that testing, and not to provide an opinion oninternal control over financial reporting or on compliance. That report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the Town’s internalcontrol over financial reporting and compliance.

Gainesville, FloridaJune 14, 2017


Management’s Discussion and Analysis

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This discussion and analysis of the Town of Inglis’ financial performance provides an overview of theTown’s financial activities for the fiscal year ended September 30, 2016. Please read it in conjunctionwith the Town’s financial statements, which follow this section.

OVERVIEW OF THE BASIC FINANCIAL STATEMENTS

This annual report contains government wide financial statements that report on the Town’s activitiesas a whole and fund financial statements that report on the Town’s individual funds.

Government wide Financial Statements

The first financial statement is the Statement of Net Position. This statement includes all of the Town’sassets, liabilities, and deferred items using the accrual basis of accounting. Accrual accounting is similarto the accounting used by most private sector companies. All of the current year revenues and expensesare recorded, regardless of when cash is received or paid. Net position – the difference between assets,liabilities, and deferred items – can be used to measure the Town’s financial position.

The second financial statement is the Statement of Activities. This statement is also shown using theaccrual basis of accounting. It shows the increases and decreases in net position during the fiscal year.Over time, the increases or decreases in net position are useful indicators of whether the Town’sfinancial health is improving or deteriorating. However, other non financial factors, such as roadconditions or changes in the tax base, must also be considered when assessing the overall health of theTown.

In these statements the Town’s activities are divided as follows:

Governmental activities – Most of the Town’s basic services are reported here, includingadministration, police and fire services, road and bridge, maintenance, and garbage. Taxes andcharges for services finance most of these activities.

Business type activities – These activities are financed in whole or in part by fees charged toexternal parties for good or services. The activities of the water system are reported as a businesstype activity.

Fund Financial Statements

Following the government wide financial statements are the fund financial statements. They providemore detailed information about the Town’s funds.

Governmental funds – The General Fund and Road and Bridge Fund are the Town’s governmentalfunds. These funds are accounted for using modified accrual accounting. Modified accrualaccounting focuses on available cash and other financial assets that can readily be converted tocash. This provides a shorter term view of the governmental funds’ financial position.Reconciliation is provided with these statements, which helps to explain the difference betweenthe fund financial statements and the government wide financial statements.

Proprietary funds – The Water Fund is the Town’s only proprietary fund. Proprietary funds arereported using the accrual basis of accounting and accordingly, there is a correlation between theamounts reported in the fund financial statements and the amounts reported in the governmentwide financial statements.



Governmental Business typeActivities Activities Total

2015 2016 2015 2016 2015 2016

AssetsNon capital assets 925,114$ 1,067,491$ 993,723$ 1,079,083$ 1,918,837$ 2,146,574$Capital assets 954,597 863,776 2,756,332 2,584,269 3,710,929 3,448,045

Total assets 1,879,711 1,931,267 3,750,055 3,663,352 5,629,766 5,594,619

Deferred outflows 27,096 74,473 13,346 36,681 40,442 111,154

LiabilitiesCurrent liabilities 27,169 100,520 95,770 96,432 122,939 196,952Long term liabilities 88,567 148,247 238,202 259,726 326,769 407,973

Total liabilities 115,736 248,767 333,972 356,158 449,708 604,925

Deferred inflows 188,314 147,916 90,024 70,684 278,338 218,600

Net positionNet investment in capital assets 954,597 863,776 2,552,025 2,387,615 3,506,622 3,251,391Restricted 104,850 108,054 4,813 4,818 109,663 112,872Unrestricted 543,310 637,227 782,567 880,758 1,325,877 1,517,985

Total net position 1,602,757$ 1,609,057$ 3,339,405$ 3,273,191$ 4,942,162$ 4,882,248$

Governmental Business typeActivities Activities Total

2015 2016 2015 2016 2015 2016

Program revenuesCharges for services 75,975$ 100,355$ 460,082$ 455,011$ 536,057$ 555,366$Operating grants & contributions 85,308 615,139 85,308 615,139Capital grants & contributions 95,000 95,000

General revenuesProperty taxes 291,270 294,825 291,270 294,825Other 494,676 487,748 494,676 487,748Miscellaneous 18,229 63,009 18,229 63,009Investment earnings 1,016 976 635 3,159 1,651 4,135

Total revenues 1,061,474 1,562,052 460,717 458,170 1,522,191 2,020,222

Program expensesGeneral government 366,500 373,238 366,500 373,238Public safety 452,590 493,593 452,590 493,593Physical environment 17,135 16,750 17,135 16,750Transportation 63,346 32,518 63,346 32,518Economic environment 34,924 590,676 34,924 590,676Human services 26,035 26,230 26,035 26,230Culture and recreation 58,446 79,473 58,446 79,473Water 571,184 492,905 571,184 492,905

Total expenses 1,018,976 1,612,478 571,184 492,905 1,590,160 2,105,383

Transfers 15,465 31,479 (15,465) (31,479)

Change in net position 57,963 6,300 (125,932) (66,214) (67,969) (59,914)

Beginning net position, as restated 1,544,794 1,602,757 3,465,337 3,339,405 5,010,131 4,942,162

Ending net position 1,602,757$ 1,609,057$ 3,339,405$ 3,273,191$ 4,942,162$ 4,882,248$

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OVERALL FINANCIAL POSITION AND RESULTS OF OPERATIONS

Governmental Activities

The governmental activities generated $1,562,052 of revenues, transfers in of $31,479 and incurred$1,587,231 of expenses. This resulted in a $6,300 increase in net position.

Business type Activities

Revenues of the Water Fund were $458,170 compared to expenses of $492,905 and transfers out of$31,479. This resulted in decreased net position for the year of $66,214.

THE TOWN’S INDIVIDUAL FUNDS

General Fund

The General Fund’s fund balance increased by $73,678 from $797,202 to $870,880.

Water Fund

The Water Fund’s net position decreased by $66,214, from $3,339,405 to $3,273,191.

BUDGETARY HIGHLIGHTS

There was no significant difference between the original and final budget.

Revenues of the General Fund were more than budgeted amounts by $56,929.

General Fund expenditures were below budgeted amounts by $364,429.

CAPITAL ASSETS

The Town had no significant capital asset activity during the year. Please refer to a note in theaccompanying financial statements entitled Capital Asset Activity for more detail.

DEBT ADMINISTRATION

No new debt was incurred and the Town’s notes payable debt decreased by $7,653, during the currentyear. Please refer to a note to the accompanying financial statements entitled Long term Obligations formore detailed information about the Town’s long term debt activity.



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ECONOMIC FACTORS

We are not currently aware of any conditions that are expected to have a significant effect on theTown’s financial position or results of operations.

CONTACTING THE TOWN’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and creditors with ageneral overview of the Town’s finances and to show the Town’s accountability for the money itreceives. If you have any questions about this report or need additional financial information, contactTown Hall at P O Drawer 429; Inglis, FL 34449.


Statement of Net PositionSeptember 30, 2016

GovernmentalActivities

Business typeActivities Total

AssetsCash and equivalents 466,710$ 754,495$ 1,221,205$Investment in certificates of deposit 464,385 217,118 681,503Accounts receivable 18,772 63,086 81,858Assessments receivable 33,536 33,536Due from other governments 116,548 116,548Internal balances 1,076 (1,076)Restricted cash and equivalents 11,924 11,924Capital assets:

Non depreciable 253,377 253,377Depreciable, net 610,399 2,584,269 3,194,668

Total assets 1,931,267 3,663,352 5,594,619

Deferred outflowsPension related 74,473 36,681 111,154

LiabilitiesAccounts payable and accrued liabilities 84,152 742 84,894Deposits 81,620 81,620Accrued interest 2,032 2,032Noncurrent liabilities:

Due within one year 16,368 11,213 27,581Due in more than one year 148,247 260,551 408,798

Total liabilities 248,767 356,158 604,925

Deferred inflows of resourcesPension related 143,511 70,684 214,195Advance collections 4,405 4,405

Total deferred inflows 147,916 70,684 218,600

Net positionNet investment in capital assets 863,776 2,387,615 3,251,391Restricted for transportation 104,230 104,230Restricted for stormwater 3,824 3,824Restricted for debt service 4,818 4,818Unrestricted 637,227 880,758 1,517,985

Total net position 1,609,057$ 3,273,191$ 4,882,248$

See accompanying notes.

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Statement of ActivitiesYear ended September 30, 2016

Net (Expense) Revenue andProgram Revenues Change in Net Position

Operating CapitalCharges Grants Grants Govern Business

for and and mental TypeExpenses Services Contributions Contributions Activities Activities Total

Functions/programsGovernmental activities:

General government 359,352$ 14,832$ $ $ (344,520)$ $ (344,520)$Public safety 483,495 84,298 (399,197) (399,197)Physical environment 16,750 (16,750) (16,750)Transportation 32,518 13,257 (19,261) (19,261)Economic environment 590,676 586,509 (4,167) (4,167)Human services 24,967 (24,967) (24,967)Culture and recreation 79,473 1,225 15,373 (62,875) (62,875)Total governmental activities 1,587,231 100,355 615,139 (871,737) (871,737)

Business type activities:Water 492,905 455,011 (37,894) (37,894)Total 2,080,136$ 555,366$ 615,139$ $ (871,737) (37,894) (909,631)

General revenues:Property taxes 294,825 294,825Fire and stormwater assessments 50,681 50,681Sales tax and other shared revenues 103,124 103,124Discretionary sales surtaxes 102,889 102,889Franchise fees 98,966 98,966Utility taxes 94,873 94,873Communications service tax 37,215 37,215Investment earnings 976 3,159 4,135Miscellaneous 63,009 63,009

Transfers 31,479 (31,479)Total general revenues and transfers 878,037 (28,320) 849,717

Change in net position 6,300 (66,214) (59,914)Net position beginning of year 1,602,757 3,339,405 4,942,162Net position end of year 1,609,057$ 3,273,191$ 4,882,248$

See accompanying notes.8


Balance SheetGovernmental FundsSeptember 30, 2016

GeneralFund

Nonmajor Roadand Bridge

Fund

TotalGovernmental

Funds

AssetsCash and equivalents 361,704$ 105,006$ 466,710$Investment in certificates of deposit 464,385 464,385Accounts receivable 18,772 18,772Due from other governments 115,495 1,053 116,548Due from other funds 1,076 1,995 3,071

Total assets 961,432$ 108,054$ 1,069,486$

LiabilitiesAccounts payable and accrued liabilities 84,152$ $ 84,152$Due to other funds 1,995 1,995

Total liabilities 86,147 86,147

Deferred inflows of resourcesAdvance collections 4,405 4,405

Fund balancesRestricted for transportation 104,230 104,230Restricted for stormwater 3,824 3,824Assigned for future expenditures 265,180 265,180Assigned for fire protection 12,413 12,413Unassigned 593,287 593,287

Total fund balances 870,880 108,054 978,934

Total liabilities, deferred inflows, and fund balances 961,432$ 108,054$ 1,069,486$


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Reconciliation of the Balance Sheet to the Statement of Net PositionGovernmental FundsSeptember 30, 2016

Fund balances total governmental funds 978,934$

Amounts reported for governmental activities in the statement of netposition are different because:

Capital assets used in governmental activities are not reported inthe governmental funds.

Capital assets – net 863,776

Deferred outflows and inflows associated with pensions are notreported in the governmental funds.

Deferred outflows 74,473Deferred inflows (143,511)

Long term liabilities are not reported in the governmental funds.Net pension liability (147,430)Compensated absences (17,185)

Net position of governmental activities 1,609,057$


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Statement of Revenues, Expenditures and Changes in Fund BalancesGovernmental Funds

Year ended September 30, 2016

GeneralFund

Nonmajor Roadand Bridge

Fund

TotalGovernmental

Funds

RevenuesTaxes 537,663$ 13,257$ 550,920$Permits, fees & special assessments 156,806 156,806Intergovernmental 673,240 16,393 689,633Charges for services 82,548 82,548Fines and forfeitures 1,484 1,484Miscellaneous 80,528 133 80,661

Total revenues 1,532,269 29,783 1,562,052

ExpendituresCurrent:

General government 352,796 352,796Public safety 470,807 470,807Transportation 26,579 26,579Economic environment 590,676 590,676Human services 25,612 25,612Culture and recreation 50,179 50,179

Total expenditures 1,490,070 26,579 1,516,649

Excess of revenues over (under)expenditures 42,199 3,204 45,403

Other financing sources(uses)Transfers in (out) 31,479 31,479

Net change in fund balances 73,678 3,204 76,882

Fund balances beginning of year 797,202 104,850 902,052

Fund balances end of year 870,880$ 108,054$ 978,934$


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Reconciliation of the Statement of Revenues, Expenditures and Changes inFund Balances to the Statement of Activities

Governmental FundsYear ended September 30, 2016

Net change in fund balances total governmental funds 76,882$

Amounts reported for governmental activities in the statement of activitiesare different because:

Governmental funds report capital outlays as expenditures. However,

Acquisitions of capital assets 10,701Current year depreciation expense (101,522)

Some expenses reported in the statement of activities do not require the

Compensated absences (5,008)

The net change in net pension liability and deferred outflows and inflows are reported in thestatement of activities, but not in the governmental funds.

Change in net pension liability (61,395)Change in deferred outflows related to pensions 44,441Change in deferred inflows related to pensions 39,265Deferred outflow for contributions subsequent to the measurement date 2,936

Change in net position of governmental activities 6,300$

in the statement of activities the cost of those assets is depreciated over their estimateduseful lives.

use of current financial resources and therefore are not reported as expenditures ingovernmental funds.


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Statement of Net PositionProprietary Funds

September 30, 2016

WaterFund

Current assetsCash and equivalents 754,495$Investment in certificates of deposit 217,118Accounts receivable 63,086Assessments receivable 33,536

Total current assets 1,068,235

Noncurrent assetsRestricted cash and equivalents 11,924Capital assets, net 2,584,269

Total noncurrent assets 2,596,193

Total assets 3,664,428

Deferred outflowsPension related 36,681

Current liabilitiesAccounts payable and accrued liabilities 742Customer deposits 81,620Due to other funds 1,076Accrued interest 2,032Current portion of long term liabilities 11,213

Total current liabilities 96,683

Noncurrent liabilities 260,551

Total liabilities 357,234

Deferred InflowsPension related 70,684

Net positionNet investment in capital assets 2,387,615Restricted for debt service 4,818Unrestricted 880,758

Total net position 3,273,191$


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Statement of Revenues, Expenses and Changes in Fund Net PositionProprietary Funds


WaterFund

Operating revenuesUser fees 455,011$

Operating expensesPersonal services 130,640Operating expenses 184,109Depreciation 172,063

Total operating expenses 486,812

Operating loss (31,801)

Nonoperating revenues (expenses)Investment earnings 3,159Interest expense (6,093)

Total nonoperating revenues (expenses) (2,934)

Loss before transfers (34,735)

Transfers out (31,479)

Change in net position (66,214)

Net position beginning of year 3,339,405

Net position end of year 3,273,191$


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Statement of Cash FlowsProprietary Funds


WaterFund

Operating activitiesReceipts from customers 447,644$Payments to suppliers (235,407)Payments to employees (93,187)

Net cash provided by operating activities 119,050

Noncapital financing activitiesTransfers out (31,479)

Capital and related financing activitiesAcquisitions of capital assetsPrincipal paid on debt (7,653)Interest paid on debt (6,174)

Net cash used by capital and related financing activities (13,827)

Investing activitiesInterest received 3,159Acquisition of investments (536)

Net cash provided by investing activities 2,623

Change in cash and equivalents 76,367

Cash and equivalents beginning of year 690,052

Cash and equivalents end of year 766,419$

Operating loss (31,801)$Depreciation 172,063Change in:

Receivables (8,457)Accounts payable and accrued liabilities (2,599)Deferred outflows (23,335)Deferred inflows (19,340)Net pension liability 30,240Compensated absences 1,189Customer deposits 1,090

Net cash provided by operating activities 119,050$


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Notes to Financial Statements

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity

The Town is a political subdivision of the State of Florida established by Chapter 55 30853, Laws ofFlorida. It is governed by an elected Mayor and Town Commission. As required by generally acceptedaccounting principles, the accompanying financial statements present the Town as a primarygovernment. Component units are entities for which a primary government is considered to befinancially accountable, or entities that would be misleading to exclude.

There are no component units included in the Town’s financial reporting entity.

The Town did not participate in any joint ventures during the fiscal year.

Basis of Presentation

The financial statements of the Town have been prepared in accordance with generally acceptedaccounting principles (GAAP) as applicable to governmental units. The Governmental AccountingStandards Board (GASB) is the standard setting body for governmental accounting and financialreporting principles. The more significant of the Town’s accounting policies are hereafter described.

Reporting Model

The Town follows GASB Statement No. 34, Basic Financial Statements – and Management’s Discussionand Analysis – for State and Local Governments, as amended.

Government wide Financial Statements

The government wide financial statements (i.e., the statement of net position and the statement ofactivities) report information on all of the nonfiduciary activities of the Town. For the most part, theeffect of interfund activity has been removed from these statements. Governmental activities, whichnormally are supported by taxes and intergovernmental revenues, are reported separately frombusiness type activities, which rely to a significant extent on fees charged to external parties.

The statement of activities demonstrates the degree to which the direct expenses of a given functionare offset by program revenues. Direct expenses are those that are clearly identifiable with a specificfunction. Program revenues include: charges for services that are directly related to a given function;and grants and contributions that are restricted to meeting the operational or capital requirements of aparticular function. Taxes and other revenues not properly included among program revenues arereported instead as general revenues.

Fund Financial Statements

Separate financial statements are provided for governmental funds and proprietary funds. Majorindividual governmental and enterprise funds are reported as separate columns in the fund financialstatements, but all nonmajor funds are aggregated and displayed in a single column. The governmentalfund financial statements include reconciliations with brief explanations to better identify therelationship between the government wide statements and the statements for the governmental funds.



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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Town reports the following major governmental fund:

General Fund – the primary operating fund, used to account for and report all activities notaccounted for and reported in another fund.

The Town reports the following major enterprise fund:

Water Fund – to account for the assets, operation and maintenance of the Town owned watersystem.

Measurement Focus and Basis of Accounting

The government wide financial statements are reported using the economic resources measurementfocus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues arerecorded when earned and expenses are recorded at the time liabilities are incurred, regardless of thetiming of related cash flows.

Property taxes are recognized as revenues in the year for which they are levied. Grants and similar itemsare recognized as revenue as soon as all eligibility requirements imposed by the provider have beenmet.

Governmental funds are accounted for using the current financial resources measurement focus and themodified accrual basis of accounting. Revenues are recognized when they become measurable andavailable as net current assets. For this purpose, the Town considers revenues to be available if they arecollected within 60 days of the end of the current fiscal year.

Intergovernmental revenues constitute the most significant source of revenue considered susceptible toaccrual. In governmental funds, expenditures are generally recognized when the related liability isincurred. However, debt service expenditures, and expenditures related to compensated absences andclaims and judgments, are recorded only when payment is due.

Cash and Cash Equivalents

For purposes of the Statement of Cash Flows, the Town considers all highly liquid investments with anoriginal maturity of three months or less when purchased to be cash equivalents.

Deposits and Investments

The Town’s cash and equivalents and investments consist of legally authorized demand deposits andcertificates of deposit. The institutions in which these deposits are kept are certified as Qualified PublicDepositories under the Florida Public Deposits Act. Therefore, these balances on deposit atSeptember 30, 2016 are insured or collateralized through the Bureau of Collateral Management, FloridaDepartment of Financial Services.



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As its investment policy, the Town follows Section 218.415, Florida Statutes, which authorizes the Townto invest excess public funds in the following:

Direct obligations of the U.S. Treasury;Savings accounts and certificates of deposit in qualified public depositories;The Local Government Surplus Funds Trust Fund and authorized intergovernmental pools;Securities and Exchange Commission registered money market funds with the highest creditquality rating.

Accounts Receivable

Receivables are stated at net realizable value, reduced by an allowance for uncollectible accounts,where appropriate. Accounts receivable of the Enterprise Fund are net of an $62,000 allowance.

Capital Assets

Capital assets are recorded at historical cost or estimated historical cost, except for contributed assetswhich are recorded at acquisition value at the date of contribution. The Town uses a capitalizationthreshold of $1,000 for all classes of capital assets.

In accordance with GASB Statement No. 34, the Town has elected not to report general infrastructureassets acquired prior to October 1, 2003.

Depreciation of capital assets is provided using the straight line method over the estimated useful livesof the assets, which range as follows:

Years

Buildings and improvements 30Equipment 3 – 10Water system 15 – 50Plant assets and equipment 20 – 50Infrastructure 40

For its business type activities, the Town’s policy is to capitalize construction period interest costs onprojects funded specifically through debt financing. No interest costs were capitalized during the year.

Compensated Absences

The Town’s policy is to allow limited vesting of employee vacation pay and accumulated sick leave. Inthe governmental fund financial statements, a liability has not been reported because it will not beliquidated with expendable available financial resources. A liability for compensated absences is accruedwhen incurred in the government wide and proprietary fund financial statements.



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Deferred Outflows/Inflows of Resources

A deferred outflow of resources is a consumption of net assets that is applicable to a future reportingperiod.

A deferred inflow of resources is an acquisition of net assets that is applicable to a future reportingperiod.

Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflowsof resources related to pensions, and pension expense, information about the fiduciary net position ofthe Florida Retirement System Pension Plan and Health Insurance Subsidy Program and additionsto/deductions from the plans’ fiduciary net position have been determined on the same basis as theyare reported by the plans. For this purpose, benefit payments (including refunds of employeecontributions) are recognized when due and payable in accordance with the benefit terms. Investmentsare reported at fair value.

Property Taxes

Details of the Town’s tax calendar are presented below:

Lien date January 1Levy date October 1Discount period November FebruaryNo discount period MarchDelinquent date April 1

Operating Revenues and Expenses

The enterprise funds distinguish operating revenues and expenses form nonoperating items. Operatingrevenues and expenses generally result from providing services and producing and delivering goods inconnection with an enterprise fund’s principal ongoing operations. Operating expenses for enterprisefunds 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 nonoperating revenues andexpenses.

Restricted Net Position

In the accompanying government wide and proprietary funds’ statements of net position, restricted netposition is subject to restrictions beyond the Town’s control. The restriction is either externally imposed(for instance, by creditors, grantors, contributors, or laws/regulations of other governments) or isimposed by law through constitutional provisions or enabling legislation.

The Town has no net position restricted by enabling legislation at year end.

When both restricted and unrestricted resources are available for use, it is the Town’s policy to userestricted resources first, then unrestricted resources as they are needed.



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Fund Balance

The Town follows the provisions of GASB Statement No. 54, Fund Balance Reporting and GovernmentalFund Type Definitions to classify fund balances for governmental funds into specifically definedclassifications. The classifications comprise a hierarchy based primarily on the extent to which the Townis bound to honor constraints on the specific purposes for which amounts in the funds can be spent.

The fund balance classifications specified in GASB Statement No. 54 are as follows:

Nonspendable Fund Balance – Nonspendable fund balances are amounts that cannot be spentbecause they are either (a) not in spendable form or (b) legally or contractually required to bemaintained intact.

Restricted Fund Balance – Restricted fund balances are restricted when constraints placed on theuse of resources are either: (a) externally imposed by creditors, grantors, contributors, or laws orregulations of other governments; or (b) imposed by law through constitutional provisions orenabling legislation.

Committed Fund Balance – Committed fund balances are amounts that can only be used for specificpurposes as a result of constraints imposed by formal action of the Town’s highest level of decisionmaking authority, which is an ordinance. Committed amounts cannot be used for any purposeunless the Town removes those constraints by taking the same type of action.

Assigned Fund Balance – Assigned fund balances are amounts that are constrained by the Town’sintent to be used for specific purposes, but are neither restricted nor committed. Intent is expressedby (a) the commission or (b) a body or official to which the commission has delegated the authorityto assign amounts to be used for specific purposes.

Unassigned Fund Balance – Unassigned fund balance is the residual classification for the GeneralFund.

The Town’s policy is to expend resources in the following order: restricted, committed, assigned andunassigned.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principlesrequires management to make various estimates. Actual results could differ from those estimates.



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NOTE 2 – INTERFUND BALANCES AND TRANSFERS

Interfund balances and transfers are summarized below. They resulted from the normal course of operations. Interfund balances are expected to be repaid within one year.

Interfund InterfundReceivable Payable

General fund $ 1,076 $ 1,995 Water fund ‐ 1,076 Road and bridge fund 1,995 ‐

Totals $ 3,071 $ 3,071

Transfer TransferIn Out

General fund $ 31,479 $ ‐ Water fund ‐ 31,479

Totals $ 31,479 $ 31,479



22

NOTE 3 – CAPITAL ASSET ACTIVITY

During the year ended September 30, 2016, the following changes in capital assets occurred:

Balance Ba lanceOctober 1, September 30,

2015 Increases Decreases 2016

Governmental activitiesCapita l assets not being depreciated:

Land $ 253,377 $ $ $ 253,377

Capita l assets being depreciated:Improvements 332,963 7,705 340,668Infrastructure 31,075 31,075Bui ldings 663,676 663,676Bui lding improvements 74,786 74,786Equipment 576,334 2,996 579,330Vehicles 419,145 419,145

Tota l capi ta l assets being depreciated 2,097,979 10,701 2,108,680

Less accumulated depreciation for:Improvements 216,341 18,107 234,448Infrastructure 3,566 777 4,343Bui ldings 403,800 15,187 418,987Bui lding improvements 39,942 5,161 45,103Equipment 448,583 46,496 495,079Vehicles 284,527 15,794 300,321

Tota l accumulated depreciation 1,396,759 101,522 1,498,281

Tota l capi ta l assets being depreciated, net 701,220 (90,821) 610,399

Governmental activi ties capi ta l assets , net $ 954,597 $ (90,821) $ $ 863,776

Balance Ba lanceOctober 1, September 30,

2015 Increases Decreases 2016

Business type activitiesCapita l assets being depreciated:

Improvements $ 35,854 $ $ $ 35,854Equipment 70,101 70,101Water plant 5,316,018 5,316,018

Tota l capi ta l assets being depreciated 5,421,973 5,421,973

Less accumulated depreciation for:Improvements 27,211 2,248 29,459Equipment 24,099 11,925 36,024Water plant 2,614,331 157,890 2,772,221

Tota l accumulated depreciation 2,665,641 172,063 2,837,704

Bus iness type activi ties capi ta l assets , net $ 2,756,332 $ (172,063) $ $ 2,584,269



‐23‐

NOTE 3 – CAPITAL ASSET ACTIVITY (CONTINUED)

Depreciation expense was charged to functions as follows:

Governmental activities:General government 23,139$ Public safety 22,786 Physical environment 16,750 Transportation 5,939 Human services 618 Culture and recreation 32,290

Total depreciation expense – governmental activities 101,522$

Business‐type activities:Water 172,063$

NOTE 4 – LONG‐TERM OBLIGATIONS

Following is a summary of changes in long‐term obligations:

Governmental Activities

Balance Balance DueOctober 1, September 30, Within

2015 Additions Deductions 2016 One Year

Compensated absences 12,177$ 13,105$ 8,097$ 17,185$ 14,693$ Net pension liability 86,035 61,395 ‐ 147,430 1,675

Total 98,212$ 74,500$ 8,097$ 164,615$ 16,368$

Business‐type Activities

Balance Balance DueOctober 1, September 30, Within

2015 Additions Deductions 2016 One Year

Notes payable $ 204,307 $ ‐ $ 7,653 $ 196,654 $ 7,893 Net pension liability 42,375 30,240 ‐ 72,615 825 Compensated absences 1,306 6,679 5,490 2,495 2,495

Total $ 247,988 $ 36,919 $ 13,143 $ 271,764 $ 11,213



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NOTE 4 – LONG TERM OBLIGATIONS (CONTINUED)


Notes Payable, 3.27% and 3.05% respectively, to the State Revolving Fund. Apayment of $4,036 is due on May 15 and November 15 of each year. 100,436$

Notes Payable, 2.84% and 2.98%, respectively, to the State Revolving Fund. Apayment of $2,941 is due on June 15 and December 15 of each year.

96,218

Total 196,654$

Aggregate maturities of long term debt are as follows:

Year EndingSeptember 30, Principal Interest

2017 7,893$ 5,934$2018 8,138 5,6892019 8,391 5,4362020 8,651 5,1762021 8,920 4,907

2022 2026 48,935 20,2012027 2031 57,027 12,1082032 2036 32,270 4,5452037 2039 16,429 838

Totals $ 196,654 $ 64,834


NOTE 5 – RESTRICTED FOR DEBT SERVICE

Net position restricted for debt service at September 30, 2016, is comprised of the following:

I & S ReserveFund Fund Total

Assets restricted for debt service $ 7,106 $ 4,818 11,924$

Payable from restricted assets 7,106 7,106

Restricted for debt service $ $ 4,818 4,818$



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NOTE 6 – STATE OF FLORIDA PENSION PLANS

Defined Benefit Plans The Town participates in two defined benefit pension plans that are administered by the State of Florida, Department of Management Services, Division of Retirement. The plans provide retirement, disability or death benefits to retirees or their designated beneficiaries. Chapter 121, Florida Statutes, establishes the authority for benefit provisions. Changes to the law can only occur through an act of the Florida Legislature. The State of Florida issues a publicly available financial report that includes financial statements and required supplementary information for the plans. That report is available from the Florida Department of Management Services’ website (www.dms.myflorida.com). The Florida Retirement System (FRS) Pension Plan is a cost‐sharing, multiple‐employer defined benefit pension plan with a Deferred Retirement Option Program (DROP) available for eligible employees. The FRS was established and is administered in accordance with Chapter 121, Florida Statutes. Retirees receive a lifetime pension benefit with joint and survivor payment options. FRS membership is compulsory for employees filling regularly established positions in a state agency, county agency, state university, state college, or district school board, unless restricted from FRS membership under Sections 121.053 or 121.122, Florida Statutes, or allowed to participate in a defined contribution plan in lieu of FRS membership. Participation by cities, municipalities, special districts, charter schools and metropolitan planning organizations is optional.

The Retiree Health Insurance Subsidy (HIS) Program is a cost‐sharing, multiple‐employer defined benefit pension plan established and administered in accordance with Section 112.363, Florida Statutes. The benefit is a monthly payment to assist retirees of the state‐administered retirement systems in paying their health insurance costs. To be eligible to receive a HIS benefit, a retiree under a state administered retirement system must provide proof of eligible health insurance coverage, which can include Medicare.

Benefits Provided

Benefits under the FRS Pension Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement plan and/or class to which the member belonged when the service credit was earned.

Eligible retirees and beneficiaries receive a monthly HIS payment equal to the number of years of service credited at retirement multiplied by $5. The minimum payment is $30 and the maximum payment is $150 per month, pursuant to Section 112.363, Florida Statutes.



‐26‐

NOTE 6 – STATE OF FLORIDA PENSION PLANS (CONTINUED)

Contributions

The contribution requirements of plan members and the employer are established and may be amended by the Florida Legislature. Employees are required to contribute 3.00% of their salary to the FRS. The employer’s contribution rates as of September 30, 2016, were as follows:

FRS HISRegular class 5.86% 1.66%Special risk class 20.91% 1.66%Senior management service class 20.11% 1.66%Elected officials 40.81% 1.66%DROP from FRS 11.33% 1.66%

The employer’s contributions for the year ended September 30, 2016, were $13,726 to the FRS and $3,994 to the HIS.

Pension Liabilities and Pension Expense

In its financial statements for the year ended September 30, 2016, the Town reported a liability for its proportionate shares of the net pension liabilities. The net pension liabilities were measured as of June 30, 2016, and the total pension liabilities used to calculate the net pension liability were determined by an actuarial valuation dated July 1, 2016. The Town’s proportions of the net pension liabilities were based on the Town’s share of contributions to the pension plans relative to the contributions of all participating entities, actuarially determined.

FRS HISNet pension liability 133,760$ 86,285$

Proportion at:Current measurement date 0.0005% 0.0007%Prior measurement date 0.0005% 0.0007%

Pension expense (benefit) (16,655)$ (3,308)$



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Deferred Outflows/Inflows of Resources Related to Pensions

At September 30, 2016, the Town reported deferred outflows of resources and deferred inflows ofresources related to pensions from the following sources:

Deferred Deferred Deferred DeferredOutflows Inflows Outflows Inflows

of Resources of Resources of Resources of ResourcesDifferences between expected and actual experience 10,242$ 1,245$ $ 197$Changes of assumptions 8,092 13,540Net difference between projected and actual earnings

on pension plan investments 61,534 26,959 44Changes in proportion and differences between employer

contributions and proportionate share of contributions 7,346 134,277 5,974 51,517Employer contributions subsequent to the measurement date 3,407 975

Total 90,621$ 162,481$ 20,533$ 51,714$

FRS HIS

Deferred outflows of resources related to employer contributions paid subsequent to the measurementdate and prior to the employer’s fiscal year end will be recognized as a reduction of the net pensionliability in the reporting period ending September 30, 2017. Other pension related amounts reported asdeferred outflows of resources and deferred inflows of resources will be recognized in pension expenseas follows:

Year ending September 30, FRS HIS2017 (29,817)$ (8,067)$2018 (29,817) (8,067)2019 (16,384) (8,067)2020 (1,479) (8,067)2021 1,170 (2,090)Thereafter 1,060 2,202Total (75,267)$ (32,156)$



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Actuarial Assumptions

The total pension liability for each of the defined benefit plans, measured as of June 30, 2016, wasdetermined by an actuarial valuation dated July 1, 2016, using the individual entry age normal actuarialcost method and the following significant actuarial assumptions:

Mortality assumptions for both plans were based on the Generational RP 2000 with Projection Scale BB.

For both plans, the actuarial assumptions used in the valuation dated July 1, 2016 were based on theresults of an actuarial experience study for the period July 1, 2008, through June 30, 2013.

The following changes in key actuarial assumptions occurred in 2016:

FRS: The long term expected rate of return and the discount rate used to determine the totalpension liability decreased from 7.65% to 7.60%.

HIS: The municipal bond index rate and the discount rate used to determine the total pensionliability decreased from 3.80% to 2.85%.

The long term expected investment rate of return was not based on historical returns, but instead wasbased on a forward looking capital market economic model. Each asset class assumption is based on aconsistent set of underlying assumptions, and includes an adjustment for the inflation assumption. Forthe FRS Pension Plan, the table below summarizes the consulting actuary’s assumptions based on thelong term target asset allocation. The reduced investment return assumption of 7.60 percent, which wasadopted by the Florida Retirement System Actuarial Assumption Conference, conflicts with theconsulting actuary’s judgment of a reasonable assumption as defined by Actuarial Standards of PracticeNo. 27.

FRS HISInflation 2.60% 2.60%Salary increases 3.25% 3.25%Investment rate of return 7.60% N/ADiscount rate 7.60% 2.85%



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CompoundAnnual Annual

Target Arithmetic (Geometric)Asset Class Allocation Return Return

Cash 1% 3.0% 3.0%Fixed income 18% 4.7% 4.6%Global equity 53% 8.1% 6.8%Real estate 10% 6.4% 5.8%Private equity 6% 11.5% 7.8%Strategic investments 12% 6.1% 5.6%

100%

Discount Rate

The discount rate used to measure the total pension liability for the FRS Pension Plan was 7.60%. FRS’fiduciary net position was projected to be available to make all projected future benefit payments ofcurrent active and inactive employees. Therefore, the discount rate for calculating the total pensionliability is equal to the long term expected rate of return.

Because the HIS Program is essentially funded on a pay as you go basis, a municipal bond rate of 2.85%was used to determine the total pension liability for the program. The Bond Buyer General ObligationBond 20 Bond Municipal Bond Index was used as the applicable municipal bond index.

Sensitivity Analysis

The following tables demonstrate the sensitivity of the net pension liability to changes in the discountrate. The sensitivity analysis shows the impact to the employer’s proportionate share of the net pensionliability if the discount rate was 1.00% higher or 1.00% lower than the current discount rate.

1% Decrease

CurrentDiscountRate 1% Increase 1% Decrease

CurrentDiscountRate 1% Increase

(6.60%) (7.60%) (8.60%) (1.85%) (2.85%) (3.85%)

Employer's proportionate share

of the net pens ion l iabi l i ty 246,261$ 133,760$ 40,118$ 98,988$ 86,285$ 75,742$

FRS HIS



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Pension Plans’ Fiduciary Net Position

Detailed information about the pension plans’ fiduciary net position is available in the State’s separatelyissued financial reports.

Defined Contribution Plan

Pursuant to Chapter 121, Florida Statutes, the Florida Legislature created the Florida RetirementInvestment Plan (“FRS Investment Plan”), a defined contribution pension plan qualified under Section401(a) of the Internal Revenue Code. The FRS Investment Plan is an alternative available to members ofthe Florida Retirement System in lieu of the defined benefit plan. There is a uniform contribution ratecovering both the defined benefit and defined contribution plans, depending on membership class.Required employer contributions made to the plan during the year ended September 30, 2016, totaledapproximately $1,400.

NOTE 7 – OTHER POSTEMPLOYMENT BENEFITS

The Town provides other postemployment benefits (OPEB) to its employees by providing retirementhealthcare benefits through the Florida Retirement System’s HIS Plan

NOTE 8 – RISK MANAGEMENT

The Town is exposed to various risks of loss for which it carries commercial insurance. There have beenno insurance settlements in excess of insurance coverages in the last three years.

NOTE 9 – CONTINGENCIES

The Town is sometimes involved in litigation resulting from the normal course of operations. The resultsof pending litigation are not determinable; however, the Town believes that such litigation will not havea material adverse effect on the Town’s financial condition.

NOTE 10 – FUTURE ACCOUNTING PRONOUNCEMENTS

The Governmental Accounting Standards Board has issued statements that will become effective in2017. The statements address:

Certain pension issues;Other postemployment benefit (OPEB) plans;Tax abatement disclosures; andBlending certain component units.



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NOTE 10 – FUTURE ACCOUNTING PRONOUNCEMENTS (CONTINUED)

The Town is currently evaluating the effects that these statements will have on its 2017 financialstatements.

Required Supplementary Information


Schedule of Revenues, Expenditures and Changes in Fund BalancesBudget and Actual – General FundYear ended September 30, 2016

VarianceActual with Final

Budgeted Amounts Amounts BudgetOriginal Final

RevenuesTaxes 534,792$ 534,792$ 537,663$ 2,871$Permits, fees & special assessments 150,426 150,426 156,806 6,380Intergovernmental 702,719 702,719 673,240 (29,479)Charges for services 81,698 81,698 82,548 850Fines and forfeitures 1,285 1,285 1,484 199Miscellaneous 4,420 4,420 80,528 76,108

Total revenues 1,475,340 1,475,340 1,532,269 56,929

ExpendituresCurrent:

General government 376,523 397,390 352,796 44,594Public safety 571,561 582,061 470,807 111,254Economic environment 720,000 738,000 590,676 147,324Human services 29,062 29,062 25,612 3,450Culture and recreation 57,353 64,388 50,179 14,209Contingency 100,000 43,598 43,598

Total expenditures 1,854,499 1,854,499 1,490,070 364,429

Excess of revenues over (under)expenditures (379,159) (379,159) 42,199 421,358

Other financing sources(uses)Transfers in (out) 31,479 31,479 31,479

Net change in fund balances (347,680) (347,680) 73,678 421,358

Fund balances beginning of year 692,039 692,039 797,202 105,163

Fund balances end of year 344,359$ 344,359$ 870,880$ 526,521$

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Notes to Budgetary Comparison Schedule

33

The Town adopts an annual budget for the General Fund. The Town generally follows these proceduresin establishing the budgetary data reflected in the schedule:

1. Prior to September 1, the Town Clerk submits to the Town Commission a proposed operatingbudget for the fiscal year commencing the following October 1. The operating budget includesproposed expenditures and the means of financing them.

2. A public hearing is conducted to obtain taxpayer comments.

3. Prior to September 30, the budget is legally enacted through passage of an ordinance.

4. Any revision that alters the expenditures of any fund must be approved by the TownCommission. The fund is the legal level of control.

The budget amounts presented in the accompanying financial schedules were prepared on a basis thatdoes not materially differ from the modified accrual basis of accounting.


Schedules of Proportionate Share of Net Pension LiabilityLast 10 Fiscal Years (1)

Florida Retirement System 2016 2015Employer's proportion of the net pension

liability (asset) 0.0005% 0.0005%

Employer's proportionate share of the netpension liability (asset) 133,760$ 60,440$

Employer's covered employee payroll (2) 231,274$ 202,194$

Employer's proportionate share of the netpension liability (asset) as a percentageof its covered employee payroll 57.84% 29.89%

Plan fiduciary net position as a percentageof the total pension liability 84.88% 92.00%

Health Insurance Subsidy Program 2016 2015Employer's proportion of the net pension

liability (asset) 0.0007% 0.0007%

Employer's proportionate share of the netpension liability (asset) 86,285$ 67,970$

Employer's covered employee payroll (2) 231,274$ 202,194$

Employer's proportionate share of the netpension liability (asset) as a percentageof its covered employee payroll 37.31% 33.62%

Plan fiduciary net position as a percentageof the total pension liability 0.97% 0.50%

Notes to schedules:(1) The amounts presented for each fiscal year were determined as of the measurement date, which was June 30th of thecurrent fiscal year.(2) Covered employee payroll includes defined benefit plan actives, investment plan members, and members in DROP.

GASB Statement No. 68 was implemented in 2015. Until a full 10 year trend is compiled, information for those years for which itis available will be presented.

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Schedules of Employer ContributionsLast 10 Fiscal Years

Florida Retirement System 2016 2015

Contractually required contribution 13,726$ 11,181$

Contributions in relation to thecontractually required contribution 13,726 11,181

Contribution deficiency (excess) $ $

Employer's covered employee payroll (1) 2 ,246$ 198,515$

Contributions as a percentage ofcovered employee payroll 5.6 % 5.63%

Health Insurance Subsidy Program 2016 2015

Contractually required contribution 3,994$ 2,689$

Contributions in relation to thecontractually required contribution 3,994 2,689

Contribution deficiency (excess) $ $

Employer's covered employee payroll (1) 24 ,246$ 198,515$

Contributions as a percentage ofcovered employee payroll 1. % 1.35%

Notes to schedules:(1) Covered employee payroll includes defined benefit plan actives, investment plan members,and members in DROP.

GASB Statement No. 68 was implemented in 2015. Until a full 10 year trend is compiled, information for

35

Additional Elements Required bythe Rules of the Auditor General

MANAGEMENT LETTER

36

To the Honorable Mayor andTown CommissionTown of Inglis, Florida

We have audited the financial statements of the Town of Inglis (the “Town”) as of and for the fiscal yearended September 30, 2016, and have issued our report thereon dated June 14, 2017.

We conducted our audit in accordance with auditing standards generally accepted in the United Statesof America and the standards applicable to financial audits contained in Government AuditingStandards, issued by the Comptroller General of the United States. Additionally, our audit wasconducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor General, whichgovern the conduct of local governmental entity audits performed in the State of Florida and requirethat certain items be addressed in this letter.

Prior Audit Findings

The Rules of the Auditor General require that we comment as to whether or not corrective actions havebeen taken to address findings and recommendations made in the preceding audit. If the audit findingsin the preceding audit report are uncorrected, we are required to identify those findings that were alsoincluded in the second preceding audit report. These requirements of the Rules of the Auditor Generalare addressed in the schedule of findings that accompanies this letter.

Financial Condition

As required by the Rules of the Auditor General, the scope of our audit included a review of theprovisions of Section 218.503, Florida Statutes, "Determination of Financial Emergency." In connectionwith our audit, we determined that the Town has not met one or more of the conditions described inSection 218.503(1), Florida Statutes.

Also, as required by the Rules of the Auditor General, we applied financial condition assessmentprocedures, as of the end of the fiscal year, pursuant to Rule 10.556(8). It is management’s responsibilityto monitor financial condition, and our financial condition assessment was based in part onrepresentations made by management and the review of financial information provided bymanagement. The application of such procedures did not reveal evidence of “deteriorating financialcondition” as that term is defined in Rule 10.554.



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Annual Financial Report

As required by the Rules of the Auditor General, we determined that the Town's annual financial reportfor the fiscal year ended September 30, 2016, filed with the Department of Financial Services pursuantto Section 218.32, Florida Statutes, is in substantial agreement with the audit report for the fiscal yearended September 30, 2016.

Other Matters

Our audit did not reveal any other matters that we are required to include in this management letter.

This management letter is intended solely for the information and use of the Honorable Mayor andTown Commission, management, and the Auditor General of the State of Florida and is not intended tobe and should not be used by anyone other than these specified parties.

We wish to take this opportunity to thank you and your staff for the cooperation and courtesiesextended to us during the course of the audit. Please let us know if you have any questions or commentsconcerning this letter, our accompanying reports, or other matters.

Gainesville, FloridaJune 14, 2017Gainesville Florida

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INDEPENDENT ACCOUNTANT’S REPORT ON COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES

The Honorable Mayor and Town CommissionTown of Inglis, Florida

We have examined the Town of Inglis, Florida’s (the “Town”) compliance with the requirements ofSection 218.415, Florida Statutes, Local Government Investment Policies, during the year endedSeptember 30, 2016. Management of the Town is responsible for the Town’s compliance with thoserequirements. Our responsibility is to express an opinion on the Town’s compliance based on ourexamination.

Our examination was conducted in accordance with attestation standards established by the AmericanInstitute of Certified Public Accountants. Those standards require that we plan and perform theexamination to obtain reasonable assurance about whether the Town complied, in all material respects,with the specified requirements referenced above. An examination involves performing procedures toobtain evidence about whether the Town complied with the specified requirements. The nature, timing,and extent of the procedures selected depend on our judgment, including an assessment of the risks ofmaterial noncompliance, whether due to fraud or error. We believe that the evidence we obtained issufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the Town’s compliance with specifiedrequirements.

In our opinion, the Town complied, in all material respects, with the aforementioned requirementsduring the period October 1, 2015 to September 30, 2016.

This report is intended solely for the information and use of management, and the State of FloridaAuditor General, and is not intended to be and should not be used by anyone other than these specifiedparties.


parties.

Gainesville Florida



39

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ONCOMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED INACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

The Honorable Mayor and Town CommissionTown of Inglis, Florida

We have audited, in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States, the financial statements of the governmentalactivities, the business type activities, each major fund, and the aggregate remaining fund informationof the Town of Inglis, Florida (the Town) as of and for the year ended September 30, 2016, and therelated notes to the financial statements, which collectively comprise the Town’s basic financialstatements, and have issued our report thereon dated June 14, 2017.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Town’s internalcontrol over financial reporting (internal control) to determine the audit procedures that areappropriate in the circumstances 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 Town’s internal control.Accordingly, we do not express an opinion on the effectiveness of the Town’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraphand was not designed to identify all deficiencies in internal control that might be material weaknesses orsignificant deficiencies and, therefore, material weaknesses or significant deficiencies may exist thatwere not identified. However, as described in the accompanying schedule of findings, we identified adeficiency in internal control that we consider to be a material weakness.

A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, to prevent, ordetect and correct, misstatements on a timely basis. A material weakness is a deficiency, or acombination of deficiencies, in internal control such that there is a reasonable possibility that a materialmisstatement of the entity’s financial statements will not be prevented, or detected and corrected on atimely basis. We consider the deficiency described in the accompanying schedule of findings as item2016 001 to be a material weakness.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Town’s financial statements are free ofmaterial 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 onthe determination of financial statement amounts. However, providing an opinion on compliance withthose provisions was not an objective of our audit and, accordingly, we do not express such an opinion.



40

The results of our tests disclosed no instances of noncompliance or other matters that are required to bereported under Government Auditing Standards.

The Town’s Response to Findings

The Town’s response to the findings identified in our audit is described in its accompanying letter ofresponse. The Town’s response was not subjected to the auditing procedures applied in the audit of thefinancial statements and, accordingly, we express no opinion on it.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control andcompliance and the results of that testing, and not to provide an opinion on the effectiveness of theentity’s internal control or on compliance. This report is an integral part of an audit performed inaccordance with Government Auditing Standards in considering the entity’s internal control andcompliance. Accordingly, this communication is not suitable for any other purpose.


compliance. Accordingly, this communication is not suitable for an

Gainesville, Florida


Schedule of Findings

41

2016 001 (Reported in previous audit reports as items 2015 001 and 2014 001.)

Condition – Because of a limited number of available personnel, it is not always possibleto adequately segregate certain incompatible duties so that no one employee has accessto both physical assets and the related accounting records or to all phases of atransaction. Consequently, the possibility exists that unintentional or intentional errorsor irregularities could exist and not be promptly detected.

Recommendation – To the extent possible, given the availability of personnel, the Townshould implement a system of checks and balances. Steps should be taken to separateemployee duties so that no one individual has access to both physical assets and therelated accounting records, or to all phases of a transaction.

town of inglis, florida rpts/2016 inglis.pdftown of inglis, florida management’s discussion and...

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