TOWN OF MALONE ANNUAL FINANCIAL REPORT SEPTEMBER … rpts/2016 malone.pdf · $'Ð\'VN Ðtr'htr'Ntr"OhWB Post Office Box 39 .5182 9th Avenue .Malone, Florida 32445 850-569-2308 .Fax

$Page 1: TOWN OF MALONE ANNUAL FINANCIAL REPORT SEPTEMBER … rpts/2016 malone.pdf · $'Ð\'VN Ðtr'htr'Ntr"OhWB Post Office Box 39 .5182 9th Avenue .Malone, Florida 32445 850-569-2308 .Fax$
TOWN OF MALONE

ANNUAL FINANCIAL REPORT

SEPTEMBER 30, 2016

TOWN OF MALONE, FLORIDA

AS OF SEPTEMBER 30, 2016

MAYOR

Gene P. Wright

COUNCIL MEMBERS AS OF SEPTEMBER 30, 2016

Brenda Welch Sallie Gibson

Greg Ford Victoria Garrett

Kenneth Campbell

TOWN CLERK

Linda Wilson

TOWN ATTORNEY

Charles M. Wynn

AUDITORS

Grimsley, Cavin & Company, P.A.

Certified Public Accountants

TABLE OF CONTENTS

i

PAGE

INDEPENDENT AUDITOR'S REPORT 1

MANAGEMENT DISCUSSION AND ANALYSIS 3

FINANCIAL STATEMENTS

STATEMENT OF NET POSITION 8

STATEMENT OF ACTIVITIES 9

BALANCE SHEET - GOVERNMENTAL FUNDS 10

RECONCILATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITION 11

STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN

FUND BALANCE - GOVERNMENTAL FUNDS 12

RECONCILATION OF THE STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES 13

STATEMENT OF NET POSITION - PROPRIETARY FUNDS 14

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET

POSITION - PROPRIETARY FUNDS 15

STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS 16

NOTES TO THE FINANCIAL STATEMENTS 17

REQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE - GENERAL FUND 28

BUDGETARY COMPARISON SCHEDULE - GAS TAX FUND 29

TABLE OF CONTENTS

ii

INDEPENDENT ACCOUNTANTS' REPORT ON COMPLIANCE WITH SECTION 218.415,

FLORIDA STATUTES, LOCAL GOVERNMENT INVESTMENT POLICIES 30

INDEPENDENT AUDITOR'S REPORT REQUIRED BY

GOVERNMENTAL AUDITING STANDARDS

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN

ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 31

SCHEDULE OF FINDINGS 33

INDEPENDENT AUDITORS REPORT TO MANAGEMENT REQUIRED

BY THE STATE OF FLORIDA 35

RESPONSE TO AUDIT FINDINGS 39

INDEPENDENT AUDITOR’S REPORT

GnnnsrEy, CAV${ c. Cowe¡ry, P.A.Ce RrrrEo Puartc AccoururRrurs

OWEN W. GRIMSLEY, C.P.A.

DALE L. CAVIN, C.P.A.

MEMBERs

FLoRtDA lNsnrurE AND

Avrn¡c¡¡r lNsÌnurc otCrnr¡¡¡to Pueuc AccouNTANTs

INDEPENDENT AUDITOR'S REPORT

Honorable Mayor and Town Council MembersTown of MaloneMalone, Florida 32445

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, thebusiness-type activities, each major fund, and the aggregate remaining fund information ofthe Town of Malone, Florida, as of and for the year ended September 30,2016, and therelated notes to the financial statements, which collectively comprise the Town of Malone,Florida's basic financial statements as listed in the table of contents.

M a n ag e m e nt' s Responsib i I ity for th e F i n a n c i a I State me nts

Management is responsible for the preparation and fair presentation of these financialstatements in accordance with accounting principles generally accepted in the United Statesof America; this includes the design, implementation, and maintenance of internal controlrelevant to the preparation and fair presentation of financial statements that are free frommaterial misstatements, whether due to fraud or error.

Au d itor' s Res po n si bi I ity

Our responsibility is to express opinions on these financial statements based on our audit.We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America and the standards applicable to financial audits contained inGovernment Auditing Standards, issued by the Comptroller General of the United States.Those standards require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment, including the assessment of the risks of material misstatement of the financialstatements, whether due to fraud or error. ln making those risk assessments, the auditorconsiders internal control relevant to the entity's preparation and fair presentation of thefinancial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theentity's internal control. Accordingly, we express no such opinion. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness ofsignificant accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

Post Office Box220 o 4243 Lafäyette Street . Marianna, Florida 32447-0220 ¡ 850-526-3910 ¡ FAX 850-482-6019

Town of MalonePage 2

We believe that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinions.

Opinions

ln our opinion, the financial statements referred to above present fairly, in all materialrespects, the respective financial position of the governmental activities, the business-typeactivities, each major fund, and the aggregate remaining fund information of the Town ofMalone, Florida as of September 3O,2016, and the respective changes in financial position,and, where applicable, cash flows thereof for the year then ended in accordance withaccounting principles generally accepted in the United States of America.

Other Matters

Required Su pplementary I nformation

Accounting principles generally accepted in the United States of America require that themanagement's discussion and analysis and budgetary comparison information on pages 3-7 and 28-29 be presented to supplement the basic financial statements. Such information,although not a part of the basic financial statements, is required by the GovernmentalAccounting Standards Board, who considers it to be an essential part of financial reportingfor placing the basic financial statements in an appropriate operational, economic, orhistorical context. We have applied certain limited procedures to the required supplementaryinformation in accordance with auditing standards generally accepted in the United Statesof America, which consisted of inquiries of management about the methods of preparing theinformation and comparing the information for consistency with management's responses toour inquiries, the basic financial statements, and other knowledge we obtained during ouraudit of the basic financial statements. We do not express an opinion or provide anyassurance on the information because the limited procedures do not provide us withsufficient evidence to express an opinion or provide any assurance.

Other Reporting Required by Government Auditing Standards

ln accordance with Government Auditing Standards, we have also issued our report datedJune 2, 2017, on our consideration of the Town of Malone, Florida's internal control overfinancial 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 reportis to describe the scope of our testing of internal control over financial reporting andcompliance and the results of that testing, and not to provide an opinion on internal controlover financial reporting or on compliance. That report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the Town ofMalone, Florida's internal control over financial reporting and compliance.

(

4i).-June 2, 2017Marianna, Florida

G msley n&Co y, P.A

2

Certified Public Accountants

$'Ð\'VN Ðtr'htr'Ntr"OhWBPost Office Box 39 . 5182 9th Avenue . Malone, Florida 32445

850-569-2308 . Fax 850-569-5885

MANAGEMENT DISCUSSION AND ANALYSIS

the Town Of Matone's discussion and analysis is designed to (a) assist the reader in focusing on significantfinancial issues, (b) provide an overview of the Town's financial activity, (c) identify changes in the lor¿¡n'sfinancial position (its ability to address the next and subsequent year challenges), (d) identify any materialdeviations from the financial plan, (the approved budget, and (e) identify individual fund issues of concerns.

Since the Management's Discussion and Analysis (MD&A) is designed to focus on current year's activities,resulting changes and currently known facts, please read it in conjunction with the lown's financial statements.

Financial Highlights

The assets o'1 the Town of Malone exceeded its liabilities at September 30, 2016 by $ 2,273,927 (nel assets).Of this amount $ 216,189 (unrestricted net assets) may be used to meet the Town's ongoing obligations tocitizens and creditors.

Town Highlights

Due to the town receiving FEMA Funds of $5,369 to repair sewer pumps, the Sewer Fund showed anincrease in revenue.

Using This Annual Report

The financial statement's focus is on both the Town as a whole (government-wide) and on the major individualfunds. Both perspectives (government-wide and major fund) allow the user to address relevant questions,broaden a basis for comparison (year to year or government to government) and enhance the Town'saccountability.

This discussion and analysis is intended to serve as an introduction to the Iown's basic financial statements,which are comprised of three components: 1) government-wide financial statements,2) fund financialstatements, and 3) notes to the financial statements.

Government'Wide Financial Statements

The government-wide financial statements are designed to provide readers with a broad overview of theTown's finances, in a manner similar to a private-sector business. The focus is on major funds, rather thanfund types. The statement for the first time combines and consolidates governmental fund current resources(short-term spendable resources) with capital assets and long-term obligations. The statements include aStatement of Net Asseis and a Statement of Activities that are designed to provide consolidated financialinformation about the governmental activities of lhe Town presented on the accrual basis of accounting.

The Statement of Net Assets presents information on all of the lown s assets and liabilities, with the differencebetween the two reported as net assets. Over time, the increases or decreases in net assets may serve as auseful indication of whether the financial position of The Town is improving or deteriorating.

J

The Statement of Activities presents information showing how the Town's net assets changed during lhe 2016fiscal year. The focus is on both the gross and net costs of various activities, both governmental and business-type that are supported by the government's general tax and other revenues. Thus, revenues and expensesare reported in this statement for some items that will only result in cash flows in the future fiscal periods (e.9.

uncollected taxes earned, and earned but unused vacation leave). This statement is intended to summarizeand simplify the user's analysis of cost of various governmental services. An increase or decrease in netassets is an indication of whether lhe Town's financial health is improving or deteriorating.

Both of the financial statements distinguish the functions of the Town lhat are principally supported by taxesand intergovernmental revenues (governmental activities). The governmental activities of lhe Town includegeneral government, public safety, streets and health and human services.

The government-wide financial statements can be found on pages 8-9 of the town's annual financial report.

Fund Financial Statements

A fund is a grouping of related accounts that is used to maintain control over the resources that have beensegregated for specific activities or objectives. The Town,like other state and local governments, uses fundaccounting to ensure and demonstrate compliance with finance-related legal requirements. All of the fundsof the Town can be divided into two categories: governmental and proprietary. Traditional uses ofgovernmentalfinancial statements willfind the fund financial statements presentation more familiar.

Governmental Funds

Governmental funds are used to account for essentially the same functions reported as governmental activitiesin the government-wide financial statements. However, unlike the government-wide financial statements,governmental fund financial statements focus on near-term inflows and outflows of spendable resources, aswell as on balances of spendable resources available at the end of the fiscal year. Such information may beuseful in evaluating the lorøn's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements,readers may better understand the long{erm impact of lhe Town's near-term financing decisions.

The Town maintains two governmental funds and information on these funds is presented in the governmentalfund Balance Sheet and in the governmentalfund Statement of Revenues, Expenditures and Changes in FundBalances.

The Town adopts an annual appropriated budget for its General Fund and Gas Tax. Budgetary comparisonstatements have been provided for these funds to demonstrate compliance with the budget and are presentedas required supplemental information. This information may be found on pages 28-29 of the annual financialreport.

The basic governmental fund financial statements can be found on pages 10-'1 3 of the annual financial report.

Proprietary Funds

The Town maintains two proprietary fund types. Enterprise funds are used to report the same functionspresented as business{ype activities in the government-wide financial statements. The Town uses anenterprise fund to account for its water, sewer and CDBG Funds. The proprietary fund statement provides thesame type of information as the government-wide financial statements, only in more detail.

The basic proprietaryfund financial statements can be found on page 14-16 of the annualfinancial report.

4

Notes to the Financial Statements

The notes provide additional information that is essential to a full understanding of the data provided in thegovernment-wide and fund financial statements. They can be found beginning on page 17 of the annualfinancial report.

lnfrastructure Assets

The Town has implemented the major model portions of GASB Statement 34. Historically, a government'slargest group of assets (infrastructure - roads, traffic signals, underground pipes not associated with a utility,etc.) have not been reported nor depreciated in governmental financial statements. This new statementrequires that these assets be valued and reported within the governmental column of government-widestatements.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

This section is used to present condensed financial information from the government-wide statements thatcompare the current year to the prior year.

Statement of Net Position

The following schedule reflects the condensed Statement of Net Position

Governmental

Activities

2015

Business-Type

Activities Total

Current and other Assets

Capital Assets

Total Assets

Current Liabilities

Non current Liabilities

Total Liabilities

NET POSMON

lnvested in capital assets

net of related debt

Restricted

Unrestricted

Total Net fusition

58,0'15

102,846

1 60,861

61 J4882,B7B

144,026

69,132

214,200

283,332

88,323

199,200

287,523

127,147

317,046

444,193

149,471

282,O78

431 ,549

185,356

969,070

2016

112,876

1.091.365

2015

247,992

1,280,860

2016

265,800

1,235,435

2015

433,348

2,249,930

2016

378,676

2,326,800

1J54,426 1,204,241 1,528,852 1,501 ,235 2,683,278 2,705,476

847,422

60,571

85,572

993.565

989,311

21,200

49,704

1.060.215

1,052,660

28,219

164,641

1.245.520

1 ,018,359

2B,868

166,485

1.213.712

1,900,082

88,790

250,213

2,007,670

50,068

216,189

__2239.495 _2,273,en_

5

Statement of Activities

The following schedule compares the revenues and expenses for the current year

STATEMENT OF ACTIVITIESFor the Fiscal Year Erded September 30, 2016

Gove rnm e ntalActiv¡ties

2015 2016

Business-TypeActivities

2015 2016Total

2015 2016RE/El.lUESProgram Revenues

Charges for ServicesOperating Grants and ContributionsCapital Grants and Contributions

ïotal Program Revenues

General RevenuesTaxes-AdvaloremTaxes-OtherMiscellaneous

Total General Revenues

Total Revenues

Ð(PENSEGovernme ntal Activities

General GovernnentRrblic SafetyHealth & SanitationTransportationCulture/Rec reationlnterest on Long-Term Debt

Bus iness -type ActivitiesWater & Sewer

Total Expenses

Transfe rs

Change in Net Fosition

Net Fosition - Beginning

Net Fosition - Ending

560,867 561,130

195,O2238,54491 ,725

1 88,1 6428,183

117,578

333,925

146,022

64,433

-.------------:210,455

153,315

25,O11

341 ,O44102,977

91 ,725

341,47928,1 83

142,589

325,291

12,805150,70572,066

235,576

13,271

140,95972,975

227,205

12,805150,70572,126

13,271

140,95973,060

178,326 535,746 512,251

8560

60

210,515

85

178,411

235,636

771,382

227,290

739,541

200,87728,O4058,533

111,06370,614

5,698

199,51237,72565,225

126,81474,O406,164

200,87728,O4058,533

111,06370,614

5,698

199,51237,72565,225

126,81474,O406J64

474 825 509,480

15 000

101 042

892

204,454

204,454

(15,000)

(8,e3s)

1,254,459

1.245.520

195,219

195,219

(15,000)

(31,808)

1,245,520

1.213.712

15,000

66,650

204,454 195,219

679,279 704,699

2,146,982 2,239,085

2.239.O85 2.273.927993 565

993,565

1.060.215

523

6

Governmental Funds

The focus of the Town's governmental funds is to provide information on near-term inflows, outflows andbalances of spendable resources. Such information is useful in assessing the Ior¡¡n s financial requirements.ln particular, unreserved fund balance may serve as a useful measure of a government's net resourcesavailable for spending at the end of the fiscal year.

As of September 30, 2016, the Town's governmental funds reported combined ending fund balances of$70,904 of this amount $43,069 was unrestricted.

Proprietary Funds

The lown's proprietary funds provide the same type of information found in the government-wide financialstatements, but in more detail.

Total net position of the water and sewer fund as of September 30, 2016 was $1 ,213,712 of which $166,485was unrestricted.

General Funds Budgetary Híghlights

The budget was amended on September 20, 2016 to show changes in line items as well as changes to theincome. This was due in part to increase or decrease in revenue and expenses that was originally budgetedfor the 2015-2016 fiscal year.

Requests for information

The lown s financial statements are designed to present users (citizens, taxpayers, customers, and creditors)with a general overview of lhe Town's finances and to demonstrate the lorøn's accountability. lf you have anyquestions about this report or need additional financial information, you may contact Linda Wilson, MaloneTown Clerk.

7

FINANCIAL STATEMENTS

Town of Malone, Florida Statement of Net Position

September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

8

Governmental Business-type

Activities Activities Total

ASSETS

Cash and Cash Equivalents 74,519$ 199,547$ 274,066$

Restricted Cash - 30,927 30,927

Accounts Receivable - 23,010 23,010

Due from other Governments 20,396 19,642 40,038

Prepaid Expenses 6,635 - 6,635

Internal Balances 11,326 (11,326) -

Inventory - 4,000 4,000

Capital Assets

Land 234,260 - 234,260

Construction in Process - 19,642 19,642

Buildings, Improvements, and Equipment, Net 857,105 1,212,917 2,070,022

Total Capital Assets 1,091,365 1,232,559 2,323,924

Bond Issue Costs, Net - 2,876 2,876

Total Assets 1,204,241 1,501,235 2,705,476

LIABILITIES

Accounts Payable and Accrued Expenses 41,972 39,935 81,907

Customer Deposits - 33,388 33,388

Long Term Liabilities

Due within one year 19,176 15,000 34,176

Due in more than one year 82,878 199,200 282,078

Total Liabilities 144,026 287,523 431,549

NET POSITION

Invested in Capital Assets, Net of Related Debt 989,311 1,018,359 2,007,670

Restricted for:

Other Purposes 21,200 - 21,200

Debt Service - 28,868 28,868

Unrestricted 49,704 166,485 216,189

Total Net Position 1,060,215$ 1,213,712$ 2,273,927$

Primary Government

The notes to the financial statements are an integral part of this statement.

Town of Malone, Florida Statement of Activities

For the Year Ending September 30, 2016 -------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

Fees, Fines and Operating Capital

Charges for Grants and Grants and Governmental Business-type

Expenses Services Contributions Contributions Activities Activities Total

Functions/Programs

Governmental Activities:

General Government 199,512$ 89,335$ 435$ -$ (109,742)$ -$ (109,742)$

Public Safety 37,725 - 25,000 10,011 (2,714) - (2,714)

Health & Sanitation 65,225 77,048 - - 11,823 - 11,823

Transportation 126,814 21,581 - 107,567 2,334 - 2,334

Culture/Recreation 74,040 200 2,748 - (71,092) - (71,092)

Interest on Long-Term Debt 6,164 - - - (6,164) - (6,164)

Total governmental activities 509,480 188,164 28,183 117,578 (175,555) - (175,555)

Business-type Activities:

Water Fund 146,539 116,235 - 19,642 - (10,662) (10,662)

Sewer Fund 48,680 37,080 5,369 - - (6,231) (6,231)

Total business activities 195,219 153,315 5,369 19,642 - (16,893) (16,893)

Total primary government 704,699$ 341,479$ 33,552$ 137,220$ (175,555)$ (16,893)$ (192,448)$

General Revenues:

Taxes:

Taxes-Advalorem 13,271 - 13,271

Taxes - Other 140,959 - 140,959

Interest Income 54 85 139

Miscellaneous 72,921 - 72,921

Transfers 15,000 (15,000) -

Total General Revenues and Transfers 242,205 (14,915) 227,290

Change in Net Position 66,650 (31,808) 34,842

Net Position - beginning 993,565 1,245,520 2,239,085

Net Position - ending 1,060,215$ 1,213,712$ 2,273,927$

Program Revenues Net (Expense) Revenue and Changes in Net Position

Primary Government

The notes to the financial statements are an integral part of this statement

Town of Malone, Florida Balance Sheet

Governmental Funds September 30, 2016

------------------------------------------------------------------------------------------------------------------------

10

Total

General Gas Tax Governmental

Fund Fund Funds

ASSETS

Cash 53,937$ 20,582$ 74,519$

Due from other Governments 19,778 618 20,396

Due from other Funds 11,326 - 11,326

Prepaids 6,635 - 6,635

Total Assets 91,676$ 21,200$ 112,876$

LIABILITIES AND FUND BALANCES

Liabilities:

Accounts Payable and Accrued Expenses 15,066$ -$ 15,066$

Accrued Leave 26,906 - 26,906

Total Liabilities 41,972 - 41,972

Fund Balances:

Nonspendable 6,635 - 6,635

Restricted:

Other Purposes - 21,200 21,200

Unassigned 43,069 - 43,069

Total Fund Balances 49,704 21,200 70,904

Total Liabilities & Fund Balances 91,676$ 21,200$ 112,876$


Town of Malone, Florida Reconciliation of Balance Sheet To the Statement of Net Position

For the Year Ending September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

11

Total Fund Balances - Total Governmental Fund 70,904$

Amounts reported for governmental activities in

the Statement of Net Position are different

because:

Capital assets used in governmental activities

are not financial resources and therefore are

not reported in the funds. 1,091,365

Some liabilities, including note payable, are

not due and payable in the current period

and therefore, are not reported in the funds. (102,054)

Total net position 1,060,215$


Town of Malone, Florida Statement of Revenues, Expenditures and Changes in Fund Balances

Governmental Funds For the Year Ending September 30, 2016

------------------------------------------------------------------------------------------------------------------------

12

Total

General Gas Tax Governmental

Fund Fund Funds

REVENUES

Taxes 113,486$ 40,744$ 154,230$

Licenses & Permits 84,240 - 84,240

Intergovernmental Revenues 217,101 - 217,101

Charges for Services 103,924 - 103,924

Miscellaneous Revenues 1,615 20 1,635

Total Revenues 520,366 40,764 561,130

EXPENDITURES

Current:

General Government 195,421 - 195,421

Public Safety 25,525 - 25,525

Health and Sanitation 65,225 - 65,225

Transportation 108,588 865 109,453

Culture/Recreation 24,552 - 24,552

Debt Service:

Principal 142,960 - 142,960

Interest 6,164 - 6,164

Capital Outlay 126,164 79,270 205,434

Total Expenditures 694,599 80,135 774,734

Excess (deficiency) of revenues over expenditures (174,233) (39,371) (213,604)

OTHER FINANCING SOURCES (USES)

Debt Proceeds 123,365 - 123,365 Transfers In 15,000 - 15,000

Total Other Financing Sources (Uses) 138,365 - 138,365

Net Change in

Fund Balances (35,868) (39,371) (75,239)

Fund Balances - beginning 85,572 60,571 146,143

Fund Balances - ending 49,704$ 21,200$ 70,904$


Town of Malone, Florida Reconciliation of the Statement of Revenues,

Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities

For the Year Ending September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

13

Net change in fund balances - total governmental funds (75,239)$

Amounts reported for governmental activities in the statement

of activities are different because:

Governmental funds report capital outlays as

expenditures. However, in the statement of

activities the cost of those assets, is allocated

over their estimated useful lives and reported as

depreciation expense. This is the amount by

which capital outlay $197,340 exceeded

depreciation $75,045 in the current period. 122,295

Debt proceeds provide current financial resources to

governmental funds, but issuing debt increases

long-term liabilities in the statement of net assets.

Repayment of debt principal is an expenditure in

the governmental funds, but the repayment reduces

long-term liabilities in the statement of net assets.

This is the amount by which repayments $142,959

exceeded proceeds $123,365 19,594

Change in net position of governmental activities 66,650$


Town of Malone, Florida Statement of Net Position – Proprietary Funds

September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

14

Water Sewer

Fund Fund Total

ASSETS

Current Assets:

Cash and Cash Equivalents 105,053$ 94,494$ 199,547$

Accounts Receivable 23,010 - 23,010

Due From Other Governments 19,642 19,642

Due From Other Funds - 3,106 3,106

Inventory 4,000 - 4,000

Total Current Assets 151,705 97,600 249,305

Noncurrent Assets:

Cash and Cash Equivalents 30,927 - 30,927

Capital Assets:

Construction in Process 19,642 - 19,642

Buildings, Improvements, and

Equipment, Net 883,958 328,959 1,212,917

Bond Issue Costs, Net 2,876 - 2,876

Total Noncurrent Assets 937,403 328,959 1,266,362

Total Assets 1,089,108 426,559 1,515,667

LIABILITIES

Current Liabilities:

Accounts Payable 21,743 336 22,079

Accrued Wages 10,799 4,320 15,119

Accrued Interest 2,737 - 2,737

Due to Other Funds 13,024 1,408 14,432

Bonds Payable, Current 15,000 - 15,000

Total Current Liabilities 63,303 6,064 69,367

Noncurrent Liabilities:

Customer Deposits 33,388 - 33,388

Bonds and Notes Payable after One Year 199,200 - 199,200

Total Noncurrent Liabilities 232,588 - 232,588

Total Liabilities 295,891 6,064 301,955

NET POSITION

Invested in Capital Assets, Net of Related Debt 689,400 328,959 1,018,359

Restricted:

Debt Service 28,868 - 28,868

Unrestricted 74,949 91,536 166,485

Total Net Position 793,217$ 420,495$ 1,213,712$

Enterprise Fund


Town of Malone, Florida Statement of Revenues, Expenses and Changes in Net Position

Proprietary Funds For the Year September 30, 2016

------------------------------------------------------------------------------------------------------------------------

15

Water Sewer

Fund Fund Total

OPERATING REVENUES:

Charges for Services 116,235$ 37,080$ 153,315$

OPERATING EXPENSES:

Salaries and Benefits 36,469 14,588 51,057

Contractual Services 16,759 7,456 24,215

Insurance 2,915 1,457 4,372

Operating Supplies and Miscellaneous 28,892 7,280 36,172

Depreciation 50,045 17,899 67,944

Amortization 107 - 107

Total Operating Expenditures 135,187 48,680 183,867

Operating Gain(Loss) (18,952) (11,600) (30,552)

Nonoperating Revenues (Expenses):


Interest Expense (11,352) - (11,352)

Total Nonoperating Revenue (Expenses) (11,307) 40 (11,267)

Income (Loss) before Contributions and Transfers (30,259) (11,560) (41,819)

Contributed Capital 19,642 5,369 25,011

Transfer Out (15,000) - (15,000)

Change in Net Position (25,617) (6,191) (31,808)

Net Position, beginning of year 818,834 426,686 1,245,520

Net Position, end of year 793,217$ 420,495$ 1,213,712$

Enterprise Fund


Town of Malone, Florida Statement of Cash Flows – Proprietary Funds

For the Year September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

16

Water Sewer

Fund Fund Total

Cash Flows from Operating Activities:

Receipts from Customers 117,402$ 37,080$ 154,482$

Payments to Suppliers (50,636) (16,878) (67,514)

Payments to Employees (36,730) (14,692) (51,422)

Net Cash provided (used) by Operating Activities 30,036 5,510 35,546

Cash Flows from Noncapital Financing Activities:

Transfers to Other Funds (15,000) - (15,000)

Loans to/from Other Funds 66 271 337

Contributed Capital - 5,369 5,369

Net cash provided (used) by Noncapital

Financing Activities (14,934) 5,640 (14,663)

Cash Flows from Capital and Related Financing

Activities:

Principal Paid on Capital Debt (14,000) - (14,000)

Interest Paid on Capital Debt (11,411) - (11,411)

Net Cash provided (used) by Capital and Related

Financing Activities (25,411) - (25,411)

Cash Flows from Investing Activities:


Net Increase in Cash and Cash Equivalents (10,264) 11,190 926

Cash and Cash Equivalents, beginning of year 146,244 83,304 229,548

Cash and Cash Equivalents, end of year 135,980$ 94,494$ 230,474$

Reconciliation of Operating Gain(Loss) to Net Cash

Used in Operating Activities:

Operating Gain(Loss) (18,952)$ (11,600)$ (30,552)$

Adjustments to Reconcile Operating Loss to Net

Cash Used in Operating Activities:

Depreciation & Amortization 50,152 17,899 68,051

Change in Assets and Liabilities:

Accounts Receivable (560) - (560)

Customer Deposits 1,727 - 1,727

Accounts and Other Payables (2,331) (789) (3,120)

Net Cash provided (used) by Operating Activities 30,036$ 5,510$ 35,546$

Enterprise Fund


NOTES TO FINANCIAL STATEMENTS

Town of Malone, Florida Notes to Financial Statements

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17

NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES Introduction The Town of Malone, Florida’s financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) applicable to state and local governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The accounting and reporting framework and the more significant accounting principles and practices are discussed in subsequent sections of this Note. The remainder of the Notes are organized to provide explanations, including required disclosures, of the Town’s financial activities for the fiscal year ended September 30, 2016. Reporting Entity The Town of Malone, Florida (the “Town”) was formed in 1909. On May 13, 1911, Chapter 6370, Laws of Florida, established the municipality of the Town of Malone, this charter was amended November 3, 1981. The Town operates under a Mayoral form of government. The Town’s major operations include fire protection, parks, recreation, transportation, and general administrative services. In addition, the Town owns and operates a water and sewer system and garbage collection system. Government-wide Financial Statements The government-wide financial statements include the statement of net assets and the statement of activities. These statements report financial information for the Town of Malone, Florida, as a whole excluding fiduciary activities. Individual funds are not displayed but the statements distinguish governmental activities, generally supported by taxes and Town general revenues, from business-type activities, generally financed in whole or in part with fees charged to external customers. The statement of activities reports the expenses of a given function offset by program revenues directly connected with the functional program. A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Program revenues include: (1) charges for services which report fees, fines and forfeitures, and other charges to users of the Town’s services; (2) operating grants and contributions which finance annual operating activities including restricted investment income; and (3) capital grants and contributions which fund the acquisition, construction, or rehabilitation of capital assets and include fees to developers. These revenues are subject to externally imposed restrictions to these program uses. Taxes and other revenue sources not properly included with program revenues are reported as general revenues. The Town does not allocate indirect costs.


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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES – Continued

Fund Financial Statements Fund financial statements are provided for the governmental and proprietary funds. Non-major governmental funds are reported in separate columns. Basis of Accounting The government-wide statements and fund financial statements for proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting generally including the reclassification or elimination of internal activity (between or within funds). However, internal eliminations do not include utility services provided to Town departments. Reimbursements are reported as reductions to expenses. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants are recognized when grantor eligibility requirements are met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to pay current liabilities. The Town considers revenues to be available if they are collected within 60 days of the end of the fiscal year. Expenditures are recorded when the related fund liability is incurred, except for debt principal and interest which are recorded as expenditures in the year due. Major revenue sources susceptible to accrual include: sales and use taxes, property taxes, intergovernmental revenues, and investment income. In general, other revenues are recognized when cash is received. When fund balance resources are available in more than one classification, it is the Town’s policy to use the most restrictive funds in the following order: restricted, committed, assigned, and unassigned as they are needed. Fund Types and Major Funds

Governmental Funds The City reports the following major governmental funds: General Fund – reports as the primary fund of the City. This fund is used to account for all financial resources not reported in other funds. Gas Tax Fund – to account for the proceeds of revenue sources that are legally restricted to use on transportation expenditures.


September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES – Continued Proprietary Funds The City reports the following major proprietary funds: Water Fund – accounts for the revenues and expenses, capital assets and debt for the water utility department of the Town. Sewer Fund – accounts for all operations associated with the sewer system of the Town. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with a proprietary fund’s principal ongoing operations. Operating expenses for the proprietary funds include the cost of personal and contractual services, supplies and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Cash and Investments Amounts shown as cash and investment include cash in the checking accounts, cash on hand, cash in savings accounts and certificates of deposits. Capital Assets and Depreciation Capital assets purchased or acquired with an original cost of $5,000 or more are reported at historical cost or estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on the straight-line basis over the following estimated useful lives: Buildings 20-50 years Water and sewer system 15-50 years Machinery and equipment 5-10 years Improvements 10-20 years Other infrastructure 10-50 years In accordance with GASB Statement No. 34, the Town began recording the acquisition of infrastructure, streets, roads, sidewalks, etc., as capital assets effective for acquisitions made after September 30, 2003. Prior infrastructure acquisitions have not been included. Property Taxes The Town votes a local millage rate for the assessment of ad valorem property taxes. This rate was set at 1 mills for the October 2015 through September 2016 budget year. The Jackson County Property Appraiser’s office includes this assessment with the countywide property tax assessments. The Jackson County Tax Collector is charged with collecting these revenues and distributing the Town its share of these collections.


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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES – Continued Property Taxes – Continued All taxes are generally due and payable on November 1 of each year. Discounts are allowed of four, three, two and one percent for payment in November through February, respectively. Delinquent taxes at April 1 are converted, by the County, into Tax Certificates. Therefore, there are no significant taxes receivable at year-end. Materials and Supplies Inventory Expendable materials and supplies of the business-type activities are recorded at cost using the first-in/first-out method at September 30, 2016. Long-Term Debt In the government-wide financial statements, outstanding debt is reported as liabilities. The governmental fund financial statements recognize the proceeds of debt as other financial sources of the current period. Fund Equity The following fund balance classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used:

• Nonspendable fund balance – amounts that are not in a spendable form (such as prepaid expenses) or are required to be maintained intact.

• Restricted fund balance – amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation.

• Unassigned fund balance – amounts that are available for any purpose; positive amounts are reported only in the general fund.

Risk Management and Insurance The Town insures itself against losses from casualty, accident and dishonesty by purchasing municipal insurance through the Florida League of Cities, Inc. The Town believes the level of insurance purchased is adequate to protect against material loss. No significant changes in coverage or claims have been made in the last year. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Budgets and Budgetary Accounting The Town uses the following procedures in establishing the budgetary data reflected in the financial statements.


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NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES – Continued Budgets and Budgetary Accounting – Continued

1. The Town adopts its budget in accordance with Chapter 166, Florida Statutes.

a. The Town follows an internal hearing process to set the proposed tentative budget.

b. Public hearings are then held to adopt a tentative budget, and a final budget, in accordance with Chapter 166, Florida Statutes.

c. Budget amendments are made in accordance with applicable Florida Statutes.

2. Budgets are reported for the General Fund and Special Revenue Funds.

3. All budgets are adopted in accordance with Generally Accepted Accounting

Principles.

4. Level of Control – Expenditures may not exceed appropriations and are controlled in the following manner:

d. The budget is controlled according to Chapter 166, Florida Statutes, at the

total fund level. e. Any Budget amendments or transfer of funds must be approved by the Town.

The budget was amended on August 25, 2016. NOTE 2 – CASH AND INVESTMENTS As discussed above, the amounts for cash include non-interest and interest bearing checking accounts, money market accounts and certificates of deposit. Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The government does not have a deposit policy for custodial credit risk. At September 30, 2016 the Town had the following cash deposits: Amounts insured by FDIC 250,000$

Amount Subject to Custodial Risk (Risk of loss due to bank failure)

Collateralized with securities pledged by the financial institution and

held in trust, but not in the Town's name 67,681

Total Deposits with Financial Institutions 317,681$


September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

22

NOTE 3 – RECEIVABLES The Town reported receivables as follows: GENERAL FUND

Due from Other Governments 19,778$

GAS TAX FUND

Due from Other Governments 618$

ENTERPRISE FUND - WATER SYSTEM

Water Fees, Refuse Fees and Sewer Fees 23,010$

Due from Other Governments 19,642

Total 42,652$ No allowances for uncollectible accounts are considered necessary NOTE 4 – INTERNAL BALANCES As of September 30, 2016, the Town had Interfund receivables and payables that resulted from various transactions as follows:

Receivable Payable Purpose

General Fund

Receivable from Water Fund 9,918$ -$ Operations

Receivable from Sewer Fund 1,408 - Payroll

Water Fund

Payable to General Fund - 9,918 Operations

Payable to Sewer Fund - 3,106 Operations

Sewer Fund

Receivable from Water Fund 3,106 - Operations

Payable to General Fund - 1,408 Payroll

14,432$ 14,432$

Transfer In Transfer Out Purpose

General Fund

Water and Sewer Fund 15,000$ -$ Operations

Water and Sewer Fund

General Fund - 15,000 Operations

15,000$ 15,000$


September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

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NOTE 5 – RESTRICTED ASSETS Certain Enterprise Fund assets are restricted by debt service and capital projects (Water Fund). Restricted Assets consist of cash and investments, which is required by resolution to be set-aside for specific purposes and is therefore unavailable for general operating purposes.

Water Fund

Cash - Debt Service 30,927$

NOTE 6 – CAPITAL ASSETS Capital asset activity for the year ending September 30, 2016 was as follows:

BEGINNING ENDING

BALANCE INCREASES DECREASES BALANCE

Governmental activities:

Capital assets, not being depreciated:

Construction in Process 11,725$ -$ 11,725$ -$

Land 234,260 - - 234,260

Total capital assets, not being depreciated: 245,985 - 11,725 234,260

Capital assets, being depreciated:

Office Furniture and equipment 353,409 10,465 - 363,874

Improvements other than buildings 903,617 198,600 - 1,102,217

Buildings 279,339 - - 279,339

Total capital assets being depreciated: 1,536,365 209,065 - 1,745,430

Less accumulated depreciation for:

Office Furniture and equipment (236,802) (19,800) - (256,602)

Improvements other than buildings (441,920) (50,142) - (492,062)

Buildings (134,558) (5,103) - (139,661)

Total Accumulated Depreciation (813,280) (75,045) - (888,325)

Total capital assets being depreciated, net 723,085 134,020 - 857,105

Governmental activities capital assets, net 969,070$ 134,020$ 11,725$ 1,091,365$ Depreciation expense was charged to governmental activities as follows:

General government 4,090$

Public safety 8,944

Transportation 12,522

Culture and recreation 49,489

Total governmental depreciation expense 75,045$


September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

24

NOTE 6 – CAPITAL ASSETS – Continued

BEGINNING ENDING

BALANCE INCREASES DECREASES BALANCE

Business Type activities:

Capital assets, not being depreciated:

Construction in Process -$ 19,642$ -$ 19,642$

Total capital assets, not being depreciated: - 19,642 - 19,642

Capital assets, being depreciated:

Distribution, collection systems, and improvements 2,631,145$ -$ -$ 2,631,145$

Equipment 39,224 - - 39,224

Total capital assets being depreciated: 2,670,369 - - 2,670,369

Less: accumulated depreciation for:

Distribution, collection systems, and improvements (1,357,148) (66,409) - (1,423,557)

Equipment (32,361) (1,534) - (33,895)

Total Accumulated Depreciation (1,389,509) (67,943) - (1,457,452)

Total capital assets being depreciated , net 1,280,860 (67,943) - 1,212,917

Total Business-Type capital assets, net 1,280,860$ (48,301)$ -$ 1,232,559$

NOTE 7 - LONG TERM DEBT

Governmental Activities

Notes payable

Note payable in monthly installments of $1,103, including interest

at 5.0%, collateralized by real estate, due June 15, 2018 in balloon

payment of $69,451. 83,947$

Note payable in 36 monthly installments of $996, including interest

at 5.0%, collateralized by real estate. 18,107

Total governmental activities 102,054$


September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

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NOTE 7 - LONG TERM DEBT – Continued Debt Service requirements to on governmental activities long-term debt at September 30, 2016 are as follows:

Due Date Principal Interest Totals

2017 19,176$ 4,731$ 23,907$

2018 82,878 2,891 85,769

102,054$ 7,622$ 109,676$

Changes in long-term governmental obligations are summarized as follows:

Beginning Ending Due within

Balance Increase Decrease Balance One year


Notes 121,648$ -$ (19,594)$ 102,054$ 19,176$

Business – Type Activities During the year ended September 30, 1988, the Town issued $434,200 Water System Revenue Bonds, Series 1988. Payments are due annually September 1, including interest at 5.0%. All bonds are held by Rural Development, a division of the United States Department of Agriculture. The following is the debt service requirements for the business type activities revenue bond at September 30, 2016:

Due Date Principal Interest Totals

2017 15,000$ 10,710$ 25,710$

2018 16,000 9,960 25,960

2019 17,000 9,160 26,160

2020 17,000 8,310 25,310

2021 18,000 7,460 25,460

2022-2026 105,000 22,710 127,710

2027 26,200 1,310 27,510

214,200$ 69,620$ 283,820$


September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

26

NOTE 7 - LONG TERM DEBT – Continued Changes in long-term business-type obligations are summarized as follows:

Beginning Ending Due within

Balance Increase Decrease Balance One year

Business-Type Activities

Bonds 228,200$ -$ (14,000)$ 214,200$ 15,000$

NOTE 8 – SHORT TERM DEBT The Town entered into a line of credit with PeoplesSouth Bank on January 1, 2016 to fund expenditures related to the Small Counties Outreach Program Grant. The line was for a max credit amount of $129,815 and expired on July 7, 2017. The draws and repayments on this line of credit are as below:

Beginning Ending

Balance Increase Decrease Balance


Line of Credit -$ 123,365$ (123,365)$ -$ NOTE 8 – BOND ORDINANCE REQUIREMENTS Proprietary Fund Type – Enterprise Fund – Water System The Bond Ordinance adopted May 12, 1987, requires the establishment of certain “trust funds” to ensure repayment of the Water System Revenue Bonds. It was amended on January 13, 2004, for the additional issuance of the 2004 Water System Revenue Bonds.

1. All cash income from the ownership and operation of the system shall be deposited into the “Revenue Fund” on or before the 15th day of each month. Transfers are to be made to certain accounts.

2. The “Sinking Fund” is to be used exclusively for the purpose of paying principal and interest on the bonds and is to be funded by transferring each month from the “Revenue Fund” one-twelfth of the next annual interest and principal requirement.


September 30, 2016 ------------------------------------------------------------------------------------------------------------------------

27

3. The “1988 Bond Reserve Account” is to be established by transferring on or before the 15th of each month from the “Reserve Fund” the sum of $264 until such time as the fund equals $27,510. The funds in this account shall be used only for paying the cost of repairing or replacing any damage to the system caused by an unforeseen catastrophe, construction improvements or extensions to increase net revenues, and paying principal and interest in the event that the Sinking Fund is insufficient to meet such payments.

4. The “Operation and Maintenance Fund” is to be used exclusively for the purpose

of receiving funds transferred monthly from the revenue fund and for paying the current expense of the system pursuant to the annual budget.

5. Excess funds not required by the above accounts are to be transferred to the

Water System Revenue Bonds Redemption Account. This account is to be used to redeem the Bonds in inverse order or to acquire outstanding bonds subject to limitations.

NOTE 9 – COMPENSATED ABSENCES Accrued Leave All full time employees of the Town are entitled to an annual vacation and sick leave with pay. The employees are generally allowed to accumulate vacation leave up to 100 hours. Sick leave may be accumulated and is paid 80% after 10 years of service upon termination. Vacation pay and sick leave payments are included in operating costs when the payments are made to the employees. The estimated commitment for annual leave at September 30, 2016 was $41,394. This amount is included in the accrued expenses of the governmental activities in the amount of $26,906 and the business-type activities in the amount of $14,488. NOTE 10 - RETIREMENT PLAN As of October 1, 1997, the Town adopted “The Retirement Plan and Trust for the Employees of the Town of Malone”. This plan is a defined contribution type plan through which the Town contributed 3.5% of each participant’s compensation for the employee’s benefit. Employees may also elect to contribute to the plan. Voluntary contributions may not exceed $18,000 per employee. The plan is administered by City Street, “Florida Municipal Pension Trust Fund”. The plan was adopted by Local Ordinance 76 dated December 9, 1997. The plan was amended on December 11, 2001, to reflect a change in the administrator. The plan may be amended, but not in such a manner to cause any reduction in amounts credited to participants. During the year ended September 30, 2016, the Town’s contributions totaled $5,284 and voluntary employee contributions totaled $ 2,688.

REQUIRED SUPPLEMENTARY INFORMATION

Required Supplementary Information Town of Malone, Florida

Budgetary Comparison Schedule – General Fund For the Year Ending September 30, 2016

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28

Actual Amounts

Original Final (GAAP Basis)

REVENUES

Taxes 128,735$ 115,484$ 113,486$

Licenses & Permits 78,664 92,014 84,240

Intergovernmental Revenues 97,295 228,674 217,101

Charges for Services 104,670 103,925 103,924

Miscellaneous Revenues 1,282 1,622 1,615

Total Revenues 410,646 541,719 520,366

EXPENDITURES

Current:

General Government 206,451 212,415 195,421

Public Safety 19,023 24,614 25,525

Health & Sanitation 69,205 69,266 65,225

Transportation 94,092 108,639 108,588

Culture/Recreation 11,573 10,474 24,552

Debt Service:

Principal 25,190 25,192 142,960

Interest - - 6,164

Capital Outlay 11,300 123,993 126,164


Excess (deficiency) of

revenues over expenditures (26,188) (32,874) (174,233)

OTHER FINANCING SOURCES (USES)

Debt Proceeds - - 123,365

Transfers In 15,000 15,000 15,000

Total Other Financing Sources (Uses) 15,000 15,000 138,365

Net Change in

Fund Balances (11,188) (17,874) (35,868)



Budgeted Amounts

Note: This schedule is prepared on the modified accrual basis of accounting. Expenditures exceeded budget appropriations by $120,006. The notes to the financial statements are an integral part of this statement.

Required Supplementary Information Town of Malone, Florida

Budgetary Comparison Schedule – Gas Tax Fund For the Year Ending September 30, 2016

------------------------------------------------------------------------------------------------------------------------

29

Actual Amounts

Original Final (GAAP Basis)

REVENUES

Taxes 35,151$ 40,726$ 40,744$

Miscellaneous Revenues 20 20 20

Total Revenues 35,171 40,746 40,764

EXPENDITURES

Transportation - 865 865

Capital Outlay 7,298 79,270 79,270


Excess (deficiency) of

revenues over expenditures 27,873 (39,389) (39,371)

Net Change in

Fund Balances 27,873 (39,389) (39,371)



Budgeted Amounts

Note: This schedule is prepared on the modified accrual basis of accounting. The notes to the financial statements are an integral part of this statement.

OWEN W, GRIMSLEY, C.P.A.


GruusrEv, Ctvnq & ConzpaNY, P.A.CrRrrrr ro PueLrc AccoururRrurs

e CavinCertified Public Accountants

MEMBERS

FroRtDA lNsÏTUTE AND

AMERTcAN lNsnrurE oF

CÊRTTFTED PuBLrc AccoUNTANTS

INDEPENDENT ACCOUNTANTS' REPORT ON COMPLIANCE WITHSECTION 218.415, FLORIDA STATUTES, LOCAL GOVERNMENT

INVESTMENT POLIC/ES


We have examined the Town of Malone, Florida's compliance with the requirements ofSection 218.415, Florida Statutes, Local Government lnvestment Policies, during the yearended September 30, 2016. Management is responsible for the Town of Malone, Florida'scompliance with those requirements. Our responsibility is to express an opinion on the Townof Malone, Florida's compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by theAmerican lnstitute of Certified Public Accountants and, accordingly, including examining, ona test basis, evidence about the Town of Malone, Florida's compliance with thoserequirement and performing such other procedures as we considered necessary in thecircumstances. We believe that our examination provides a reasonable basis for ouropinion. Our examination does not provide a legal determination on the Town of Malone,Florida's compliance with specified requirements.

ln our opinion, the Town of Malone, Florida complied, in all material respects, with theaforementioned requirements for the year ended September 30, 2016.

This report is intended solely for the information and use of management and the State ofFlorida Auditor General and is not intended to be and should not be used by anyone otherthan these specified parties.

f G,¿*& Compañy, P.A.June 2,2017

Marianna, Florida

Post Office Box220 o 4243 Lafayette Street o Marianna, Florida 32441-0220 o 850-526-3910 o FAX 850-482-60l9

30

INDEPENDENT AUDITOR’S REPORT

REQUIRED BY GOVERNMENTAL AUDITING STANDARDS

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT

OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Gnnvrsrnv, CAVN c Cotwalw, P.A.CrRrrne o PueLrc AccoururRrurs

OWEN W. GRIMSLEY, C.P.A


MEMBERS

FroRrDA lNSTrrurE AND

AMERTcAN lNsr¡TUTE oF

CERTTFTED PuBLrc AccouNTANTS

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT

OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE W]THG OV E RN M E NT AU D IT I NG S IANDARDS


We have audited, in accordance with the auditing standards generally accepted in the UnitedStates of America and the standards applicable to financial audits contained in GovernmentAuditing Standards issued by the Comptroller General of the United States, the financialstatements of the governmental activities, the business-type activities, each major fund, andthe aggregate remaining fund information of the Town of Malone, Florida, as of and for theyear ended September 30, 2016, and the related notes to the financial statements, whichcollectively comprise the Town of Malone, Florida's basic financial statements and haveissued our report thereon dated June 2,2017 -

lnternal Control Over Financial Reporting

ln planning and performing our audit of the financial statements, we considered the Town ofMalone, Florida's internal control over financial reporting (internal control) to determine theaudit procedures that are appropriate in the circumstances for the purpose of expressing ouropinions on the financial statements, but not for the purpose of expressing an opinion on theeffectiveness of the Town of Malone, Florida's internal control. Accordingly, we do notexpress an opinion on the effectiveness of the Town of Malone, Florida's internal control.

Our consideration of internal control was for the limited purpose described in the precedingparagraph and was not designed to identify all deficiencies in internal control that might bematerial weaknesses or significant deficiencies and therefore, material weaknesses orsignificant deficiencies may exist that were not identified. However, as described in theaccompanying schedule of findings, we identified certain deficiencies in internal controlthatwe considered to be material weaknesses and significant deficiencies.

Post Office Box220 o 4243 Lafayette Street . Marianna, Florida 32441-0220 r 850-526-3910 o FAX 850-482-6019

31


A deficiency in internal control exists when the design or operation of a control does notallow management or employees, in the normal course of performing their assignedfunctions, to prevent, or detect and correct, misstatements on a timely basis. A materialweakness is a deficiency, or a combination of deficiencies, in internal control such that thereis a reasonable possibility that a material misstatement of the entity's financial statementswill not be prevented, or detected and corrected on a timely basis. We consider thedeficiency described in the accompanying schedule of findings as item 07-001 to be amaterial weakness.

A significant deficiency is a deficiency, or a combination of deficiencies, in internal controlthat is less severe than a material weakness, yet important enough to merit attention bythose charged with governance. We considerthe deficiency described in the accompanyingschedule of findings as item 04-001 to be a significant deficiency.

Gompliance and Other Matters

As part of obtaining reasonable assurance about whether the Town of Malone, Florida'sfinancial statements are free from material misstatement, we performed tests of itscompliance with certain provisions of laws, regulations, contracts, and grant agreements,noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit, and accordingly, we do not express such anopinion. The results of our tests disclosed instances of noncompliance or other matters thatare required to be reported under Government Auditing Standards and which are describedin the accompanying schedule of findings as item 16-001 .

Town of Malone, Florida's Response to Findings

The Town of Malone, Florida's response to the findings identified in our audit is described inthe accompanying section titled Response to Findings. The Town of Malone, Florida'sresponse was not subjected to the auditing procedures applied in the audit of the financialstatements 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 controland compliance and the results of that testing, and not to provide an opinion on theeffectiveness of the entity's internal control or on compliance. This report is an integral partof an audit performed in accordance with Government Auditing Standards in considering theentity's internal control and compliance. Accordingly, this communication is not suitable forany other purpose.

June 2,2017Marianna, Florida

e vin

32

Certified Public AccountantsP.A.

SCHEDULE OF FINDINGS

Town of Malone Schedule of Findings September 30, 2016

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33

04-001 Criteria – Custody of assets, record keeping and recording of assets should have adequate separation. Condition – Due to the size of the organization, proper separation of duties may not be feasible. Effect – Internal controls lack proper checks and balances due to the size of the organization. Cause – This is a small bookkeeping system. Recommendation – Management should remain very active and involved in the day-to-day operations. Controls should be established to provide checks and balances. 07-001 Criteria – An entity’s system of internal control over financial reporting should include controls over the prevention, detection and correction of misstatements in the audited financial statements. Condition – The Town relies on the external auditor to assist with preparing and explaining financial statements in conformity with generally accepted accounting principles. Effect – Since the auditor cannot be a part of an entity’s system of internal accounting control, the Town’s system of internal accounting control over the financial reporting is not sufficient by itself to prevent, detect or correct misstatements in the audited financial statements. Cause – The Town has a small accounting staff necessitated by the overall small size of the entity. They do not consider it cost effective to develop and maintain a system of internal accounting control sufficient to prepare financial statements in accordance with generally accepted accounting principles, nor to maintain internal staff with sufficient knowledge to develop and maintain controls to prevent, detect or correct misstatements in audited financial statements. Recommendation – The Town should continue to consider the effects of the cost of developing and benefits of implementing such a system as compared with understanding that due to the size of their accounting department, they will continue to need external assistance with the preparation and understanding of financial statements in accordance with generally accepted accounting principles.

Town of Malone Schedule of Findings September 30, 2016

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16-001 Criteria – Per Florida Statute, Chapter 166, the adopted budget must regulate expenditures of the municipality, and an officer of a municipal government may not expend or contract for expenditures in any fiscal year except pursuant to the adopt budget. Condition – The Town over-expended their general fund budget. Effect – the Town is in technical violation of Florida Statute, Chapter 166. Cause – The Town did not budget for expenditures related to the Line of Credit that was needed for the SCOP Grant project that was underway during the fiscal year. Recommendation – The Town should ensure the budget is adequate to cover all expenditures in order to be in compliance with Florida Statute, Chapter 166.

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INDEPENDENT AUDITOR’S REPORT TO MANAGEMENT REQUIRED BY THE STATE OF FLORIDA

GnnvrSrpv, CAVII & COMPANIY, P.A.Ce nrrre o Puartc Accoururnrurs

OWEN W. GRIMSLEY, C.P.A.


MEMBERS

FLoRTDA lNsrrurE AND

AvÊnrcn¡¡ lNsïturE oF

CÊRlrFtED PuBLtc AccouNlANTs

INDEPENDENT AUDITOR'S REPORT TO MANAGEMENTREQUIRED BY THE STATE OF FLORIDA

Honorable Mayor and City Council MembersTown of MaloneMalone, Florida 32445

Report on the Financial Statements

We have audited the financial statements of the Town of Malone, Florida, as of and for thefiscal year ended September 30, 2016, and have issued our report thereon dated June 2,

2017.

Auditor's Responsibility

We conducted our audit in accordance with auditing standards generally accepted in theUnited States of America; the standards applicable to financial audits contained in

Government Auditing Standards" issued by the Comptroller General of the United States;and Chapter 10.550, Rules of the Auditor General.

Other Reports and Schedule

We have issued our lndependent Auditor's Report on lnternal Control over FinancialReporting and Compliance and Other Matters Based on an Audit of the Financial StatementsPerformed in Accordance with Government Auditing Standards; Schedule of Findings; andlndependent Accountant's Report on an examination conducted in accordance with AICPAProfessionat Standards, Section 601, regarding compliance requirements in accordancewith Chapter 10.550, Rules of the Auditor General. Disclosures in those reports andschedule, which are dated June 2, 2017, should be considered in conjunction with thismanagement letter.

Prior Audit Findings

Section 10.554(1Xi)1 ., Rules of the Auditor General, requires that we determine whether ornot corrective actions have been taken to address findings and recommendations made in

the preceding annual financial audit report. Corrective actions have been taken to addressfindings and recommendations made in the preceding annual financial audii report exceptas noted below under the heading Prior Year Findings and Recommendations.

Post Office Box 220 o 4243 Lafayette Street . Marianna, Florida 32447-0220 ¡ 850-526-3910 o FAX 850-482-6019

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Schedule of Findings items:

Management letter items:

Official Title and Legal Authority

Section 10.554(1Xi)4., Rules of the Auditor General, requires that the name or official titleand legal authority for the primary government and each component unit of the reportingentity be disclosed in the management letter, unless disclosed in the notes to the financialstatements. This information is disclosed in the notes to the financial statements.

Financial Condition

Section 10.554(1 )(i)s.a. and 10.556(7), Rules of the Auditor General, requires that we applyappropriate procedures and report the results of our determination as to whether or not theTown of Malone, Florida has met one or more of the conditions described in Section218.503(1), Florida Statutes, and identification of the specific condition(s) met. ln connectionwith our audit, we determined that the Town of Malone, Florida did not meet any of theconditions described in Section 218.503(1), Florida Statutes.

Tabulation of Uncorrected Audit FindinqsCurrent Year

Findinq #2014-15 FY

Findinq #2013-14 FY

Findinq #04-001 04-001 04-00107-001 07-001 07-00116-001 N/A N/A

Tabulation of Uncorrected Audit FindinqsCurrent

YearFinding #

2014-15 FYFinding #

2013-14 FYFindinq #

14-001 14-001 14-OO1

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Pursuant to Section 10.554(1 )(i)5.c. and 10.556(8), Rules of the Auditor General, we appliedfinancial condition assessment procedures. lt is management's responsibility to monitor theTown of Malone, Florida's financial condition, and our financial condition assessment wasbased in part on representations made by management and the review of financialinformation provided by same.

Annual Financial Report

Section 10.554(1Xi)s.b. and 10.556(7), Rules of the Auditor General, requires that we applyappropriate procedures and report the results of our determination as to whether the annualfinancial report for the Town of Malone, Florida for the financial year ended September 30,2016, filed with the Florida Department of Financial Services pursuant to Section218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for thefiscal year ended September 30, 2016. ln connection with our audit, we determined thatthese two reports were in agreement.

Other Matters

Section 10.554(1Xi)2., Rules of the Auditor General, requires that we address in themanagement letter any recommendation to improve financial management. ln connectionwith our audit, see finding 14-001 for our recommendation.

Section 10.554(1Xi)3., Rules of the Auditor General, requires that we addressnoncompliance with provisions of contracts or grant agreements, or abuse, that haveoccurred, or are likely to have occurred, that have an effect on the financial statements thatis less than material but which warrants the attention of those charged with governance. lnconnection with our audit, we did not have any such findings.

Purpose of this Letter

Our management letter is intended solely for the information and use of the LegislativeAuditing committee, members of the Florida Senate and the Florida House ofRepresentatives, the Florida Auditor General, Federal and other granting agencies, theTown Council, and applicable management, and is not intended to be and should not beused by anyone other than these specified parties.

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Prior Year Findings:

14-001: lt was noted during the audit that several new asset purchases were not includedon the Town's Asset lnventory. Assets should be added to the inventory after purchase inaccordance with Town policies and procedures to ensure adequate control over assets. Thisitem remains.

Current Year Findings:

None

Grimsley, Cavin & P.AJune 2,2017Marianna, Florida Certified Public Accountants

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RESPONSE TO AUDIT FINDINGS

$-Ð\e?R'W Ðm' m4flAK"ÐþWffiPost Office Box 39 " 5182 9thAvenue " Malone, Florida 32445

850-569-23û8 " Fax 850-563-5885

June 8, 2017

Auditor General

Claude Pepper Building Room 401

Ll West Madison Street

Tallahassee, FL 32399

Re: Audit for Fiscal Year 2015-201-6Auditor General;

ln accordance with the requirements of the Auditor General, we are submitting the followingresponses to the independent auditor's findings in their audit of our financial statement for theyear end September 2016.

lndependent Auditor's report on lnternal Control over Financial Reporting and on Complíanceond other matters.

Prior yea/s Comments:

04-0L Segreqation of Duties - Mayor and Town Council will continue to be active and involvedin the day-to-day operation of the town's finances.

07-L lnternal,Accountine Control - The Town of Malone does not consider it cost effective todevelop and maintain a system of internal accounting control sufficient to preparefinancial statements in accordance with generally accepted accounting principles ormaintain internal staff.

Independent Auditor's Report to Monagement

Prior yearrs Comments:

L4-7 lnventorv - The Town is aware that last two years and this year's audit indicates that weare still having problems with the town's asset purchases. The Mayor and Town Councilhas implemented a change in the department that maintains the inventory for the Townof Malone to correct the problem in the future.

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Page 2

Audit Response for Fiscal Year 2015-2016

Current Year Findings:

None

Sincerely,

¿¿j,øo*.

Linda Wilson

Town Clerk

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Documents

TOWN OF MALONE ANNUAL FINANCIAL REPORT SEPTEMBER … rpts/2016 malone.pdf · $'Ð\'VN Ðtr'htr'Ntr"OhWB Post Office Box 39 .5182 9th Avenue .Malone, Florida 32445 850-569-2308 .Fax