LTC 323-2013 External Auditor's Annual Audit Report MIAMI BEACH
OFFICE OF THE CITY MANAGER
NO. LTC # do /3
LETT R TO COMMISSION
TO: Mayor Matti Herrera Bower and Me bers of th City Commission
FROM: Jimmy L. Morales, City Manager
DATE: September 6, 2013 ,
SUBJECT: External. Auditor's (McGladrey Pullen) Annual Audit Report on the City of
Miami Beach (the City) for the p riod ended.September 30, 2012
Attached for your information is the external auditor's report on the City for the fiscal year ended
September 30, 2012. This package includes the following:
A. The Report to the Mayor and Members of the City Commission, discussing the Auditor's
required communications to the Mayor and City Commission, -summary of recorded
audit adjustments, accounting estimates and, recently issued governmental accounting
standards.
The Report also includes the following:
• Exhibit A - Certain written communications between management and the Auditors —
Representation letters;
• Exhibit B - McGladrey & Pullen's Single Audit Reports in Accordance with OMB
Circular A -133 and the Florida Single Audit Act; and
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'Exhibit B - McGladrey & Pullen's management letter, in accordance with the Rules of
the Auditor General of the State of Florida.
B. The City's Comprehensive Annual Financial Report (CAFR) for the fiscal year ended.
September 30, 2012.
If you have any questions or need additional information please contact Patricia Walker at 305 -
673 -7574.
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® of Beach, Florida,
Report to the Honorable Mayor and the Members of
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September 1 2012
MEN
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McGladrey® Assurance n Tax®Consulting
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• McGladrey LLP
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McGladrey
September 5, 2013
• The City of Miami Beach, Florida
1700 Convention Center Drive
Miami Beach, Florida 33139
Attention: The Honorable Mayor and Members of the City Commission
• We are pleased to present this report related to our audits of the financial statements of the City of Miami
Beach, Florida (the"City"), Miami Beach Redevelopment Agency("RDA"), a component unit of the City of
Miami Beach, Florida and Parking System Enterprise Fund ("Parking Fund") of the City of Miami Beach,
Florida for the year ended September 30, 2012. In addition to our reports on the aforementioned financial
• statements we have provided under separate cover, a letter, dated April 26, 2013, concerning whether
• there were any significant deficiencies and material weaknesses in internal control that we noted during
our audit of the City's basic financial statements for the year ended September 30, 2012. Our report on
the basic financial statements of the City was modified to include a reference to other auditors. This
report summarizes certain matters required by professional standards to be communicated to you in your
oversight responsibility for the City's, RDA, and Parking Fund financial reporting process. Also included is
a summary of recently issued accounting standards that may affect future financial reporting by the City.
This report is intended solely for the information and use of the Mayor and Members of the City
Commission and management and is not intended to be and should not be used by anyone other than
these specified parties. It will be our pleasure to respond to any questions you have about this report.
We appreciate the opportunity to continue to be of service to the City.
• Member of the RSM International network of Independent accounting,tax and consulting firms.
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Contents
Required Communications.........................................................................................................................1-2
• Summary of Accounting Estimates......................................................................................................3-4
• Summary of Recorded Audit Adjustments .............................................................................................5
• Recently Issued Accounting Standards...............................................................................................6-7
• Exhibit A—Certain Written Communications Between Management and Our Firm
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• Exhibit B—Single Audit Reports in Accordance with OMB-Circular A-133 and the Florida
Single Audit Act and Management Letter in Accordancee with the Rules of the Auditor
• General of the State of Florida
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Required Communications
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• Statement on Auditing Standards No. 114 requires the auditor to communicate certain matters to keep
those charged with governance adequately informed about matters related to the financial statement
• audit that are, in our professional judgment, significant and relevant to the responsibilities of those
charged with governance in overseeing the financial reporting process. The following summarizes these
communications.
• Area Comments
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Auditor's Responsibility Under Our responsibility under auditing standards generally accepted
• Professional Standards in the United States of America Government Auditing
Standards issued by the Comptroller General of the United
States; the provisions of the Single Audit Act; OMB Circular A-
133; OMB's Compliance Supplement, has been described to
• you in our arrangement letter dated October 26, 2012.
• Our audit was conducted in accordance with auditing
• standards generally accepted in the United States of America
and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller
General of the United States, to obtain reasonable, rather than
absolute assurance about whether the financial statements
are free of material misstatements.
• We have issued an unqualified opinion on the City's financial
• statements as of and for the year ended September 30, 2012,
dated April 26, 2013.
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• Accounting Practices Adoption of,or Change in,Accounting Policies
• Management has the ultimate responsibility for the
• appropriateness of the accounting policies used by the City.
In the current year, the City did not adopt any new
• Governmental Accounting Standards Board (GASB)
• Statements nor have there been any changes in existing
significant accounting policies during the current period.
• Significant or Unusual Transactions
• We did not identify any significant or unusual transactions or
• significant accounting policies in controversial or emerging
• areas for which there is a lack of authoritative guidance or
consensus.
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• Alternative Treatments Discussed with Management
• We did not discuss with management any alternative
• treatments within generally accepted accounting principles for
accounting policies and practices related to material items
• during the current audit period.
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• Area Comments
Management's Judgments and Summary information about the process used by management
Accounting Estimates in formulating particularly sensitive accounting estimates and
about our conclusions regarding the reasonableness of those
• estimates is in the attached "Summary of Accounting
Estimates."
• Financial Statement Disclosures In our meeting with you we will discuss the following items as
they relate to the neutrality, consistency, and clarity of the
disclosures in the financial statements:
• Adoption of accounting standards
• Results of the Single Audit
Audit Adjustments Audit adjustments recorded by the City are shown on the
• attached"Summary of Recorded Audit Adjustments."
Uncorrected Misstatements Uncorrected misstatements are included with the
Representation Letter attached as Exhibit A.
Disagreements with Management We encountered no disagreements with management over the
• application of significant accounting principles, the basis for
management's judgments on any significant matters, the
scope of the audit, or significant disclosures to be included in
• the financial statements.
Consultations with Other We are not aware of consultations management had with other
Accountants accountants about accounting or auditing matters.
Significant Issues Discussed with No significant issues arising from the audit were discussed or
Management were the subject of correspondence with management.
Difficulties Encountered in We did not encounter any difficulties in dealing with
• Performing the Audit management during the audit.
• Certain Written Communications Copies of certain written communications between our firm
Between Management and Our and the management of the City are attached as Exhibit A.
Firm
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® The City of Miami Beach, Florida
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Summary Of Accounting Estimates
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® Year Ended September 30, 2012
® Accounting estimates are an integral part of the preparation of financial statements and are based upon
® management's current judgment. The process used by management encompasses their knowledge and
® experience about past and current events and certain assumptions about future events. You may wish to
monitor the process used throughout the year to determine and record these accounting estimates. The
® following describes the significant accounting estimates reflected in the City's September 30, 2012
financial statements:
® Area Accountiing • • • 'Comments
• Depreciation of Depreciation on capital Capital assets are We have audited the
• Capital Asset assets is provided using recorded at historical underlying data
the straight-line method. cost or estimated supporting the estimate
® Leasehold historical cost and and reviewed
® improvements are depreciated using the management's
amortized on a straight- straight-line method methodology which
® line basis over the over the estimated appears reasonable and
® shorter of the lease term useful lives of the was consistently applied
or estimated useful life related assets. and have declared the
® of the assets. resulting estimate to be
reasonable.
® Allowance for All trade and other Receivables are We have audited the
® Doubtful Accounts receivables are reported analyzed for their underlying data
at net realizable value. collectability based on supporting the estimate
® the creditors'ability to and management's
® pay(i.e. financial methodology which
condition, credit history, appears reasonable and
® and current economic was consistently applied
® conditions). and have declared the
resulting estimate to be
® reasonable.
0 Other post- The net OPEB The City has informed We have audited the
employment benefit obligation/(asset) us they used all the underlying data
® reported for the relevant facts available supporting the estimate
• difference between the to them at the time to and management's
annual required determine the methodology which
0 contribution and the assumptions used by appears reasonable and
® actual contributions the actuary in was consistently applied
made by the City. calculating the City's and have declared the
• Annual Required resulting estimate to be
Contribution and have reasonable.
® approved the results of
® the actuarial
determination.
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• Area Accounting Policy Estimation Process
Actuarial The City is partially self- Management with input We have audited the
Assumptions and insured for general and from its risk actuary underlying data
auto liability, property, developed the actuarial supporting the estimate
• Methodology Used for workers'compensation, assumptions based on and management's
the Self-insurance and employees' health relevant criteria. methodology which
Program (Risk and dental. The Management reviewed appears reasonable and
Management) accrued liability for and approved the was consistently applied
estimated claims financial statement and have declared the
represents an estimate estimates derived from resulting estimate to be
• of the eventual loss on the risk actuarial report. reasonable.
claims including claims
incurred but not yet
reported.
• Pension Plans A net pension The City has informed We have audited the
obligation/(asset)is us that they used all the underlying data
• reported for the relevant facts available supporting the estimate
difference between the to determine the and management's
annual required assumptions used by methodology which
• contribution and the the actuary in appears reasonable and
actual contributions calculating the City's was consistently applied
• made by the City. Annual Required and have declared the
Contribution and have resulting estimate to be
approved the results of reasonable.
the actuarial
determination.
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• The City of Miami Beach, Florida
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Summary of Recorded Audit Adjustments
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• Year Ended September 30, 2012
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Number Date Name Account No Debit Credit
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1 09/30/2012 A/R-Rent/Leases-City 480-7000-115165-AS ENT03 (311,186)
• 1 09/30/2012 A/R-Rent/Leases-City 480-7000-115165-AS ENT03 194,882
• 1 09/30/2012 Permits,Rentals and Other REV-PERM, RENT,OTH ENT03 311,186
• 1 09/30/2012 Permits,Rentals and Other REV-PERM, RENT,OTH ENT03 (194,882)
• To correct entry recorded for parking lease revenue straight line calculation.
• Entry is intended to reverse 12-105 and record correct amount.
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• 2 09/30/2012 Accounts Receivable 465-7000-115170-AS ENT07 2,514
2 09/30/2012 Permits,Rentals and Other REV-PERM, RENT,OTH ENT07 (2,514)
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• Entry to correct straight-line calculation for Cadiac RDA lease.
• 3 09/30/2012 Federal Grants REV-FED GRANT CPF01 577,147
• 3 09/30/2012 Due from Federal Government 303-7000-133001-AS CPF01 (577,147)
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• To reverse JE 12-094 for accrual originally recorded in FY 2012 for grant
receivable.Revenue has not been collected as of 3/17/13.
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® The it Y of Miami Beach, Florida
® Year Ended September 30, 2012
® Recently Issued Accounting Standards
® The Governmental Accounting tandards Board GASB has issued several Statements not et
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® implemented by the City. The City's management has not yet determined the effect these Statements will
® have on the City's financial statements. However, the City plans to implement all standards by the
required dates. The Statements which might impact the City are as follows:
GASB Statement No. 60,Accounting and This Statement, issued November 2010, will be
® Financial Reporting for Service effective for the City beginning with its fiscal year
® Concession Arrangements. ending 2013 (effective for periods beginning after
December 15, 2011). This Statement addresses how
to account for and report service concession
® arrangements (SCAs), a type of public-private or
public-public partnership that state and local
® governments are increasingly entering into.
® GASB Statement No. 61, Financial The Statement, issued November 2010, will be
® Reporting Entity. Omnibus effective for the City beginning with its fiscal year
ending 2013 (effective for periods beginning after June
® 15, 2012.) The objective of this Statement is to modify
certain requirements for inclusion of component units
® in the financial reporting entity. This Statement also
® amends the criteria for reporting component units as if
they were part of the primary government (that is,
® blending) in certain circumstances. This Statement
® also clarifies the reporting of equity interests in legally
separate organizations. It requires a primary
® government to report its equity interest in a component
unit as an asset.
GAS13 Statement No. 62, Codification of This Statement, issued December 2010, will be
® Accounting and Financial Reporting effective for the City beginning with its fiscal year
® Guidance Contained in Pre-November 30, ending September 30, 2013. The objective of this
1989 FASB and AICPA Pronouncements Statement is to incorporate into the GASB's
® authoritative literature certain accounting and financial
® reporting guidance that is included in the following
pronouncements issued on or before November 30,
® 1989, which does not conflict with or contradict GASB
pronouncements: (1) Financial Accounting Standards
Board (FASB) Statements and Interpretations; (2)
® Accounting Principles Board Opinions; and (3)
Accounting Research Bulletins of the American
® Institute of Certified Public Accountants' (AICPA)
® Committee on Accounting Procedure.
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® GASB Statement No. 63, Financial This Statement, issued June 2011, will be effective for
Reporting of Deferred Outflow,Deferred the City beginning with its fiscal year ending
® Inflows of Financial Resources and Net September 30, 2013. The objective of this Statement
® Position is to provide a framework that specifies where
deferred outflows of resources and deferred inflows of
® resources—as well as assets and liabilities—should
® be displayed. The Statement also discusses how net
position—no longer net assets—should be displayed.
® Ultimately, this new framework will serve to
standardize the presentation of deferred balances and
their effects on a government's net position and
® address uncertainty related to their display.
® GASB Statement No. 65, Items Previously This Statement, issued April 2012,. will be effective for
Reported as Assets and Liabilities the City beginning with its fiscal year ending
• September 30, 2014. The Statement clarifies the
appropriate reporting of deferred outflows and
deferred inflows of resources to ensure consistency in
® financial reporting.
® GASB Statement No. 66, Technical This Statement, issued April 2012, will be effective for
® Corrections 2012 the City beginning with its fiscal year ending
September 30, 2014. The Statement enhances the
® usefulness of financial reports by resolving conflicting
accounting and financial reporting guidance that could
® diminish the consistency of financial reporting.
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GASB Statement No. 67, Financial
This Statement, issued June 2012, will be effective for
® Reporting for Pension Plans-an the City beginning with its fiscal year ending
® amendment of GASB Statement No. 25 September 30, 2014. The Statement improves
financial reporting by state and local governmental
® pension plans.
® GASB Statement No. 68,Accounting and This Statement, issued June 2012, will be effective for
® Financial Reporting for Pension-an the City beginning with its fiscal year ending
amendment of GASB Statement No. 27 September 30, 2015. The Statement improves
® accounting and financial reporting by state and local
® governments for pensions.
• This Statement, issued January 2013, will be effective
GASB Statement No. 69, ry
Government Combinations and Disposals for the City beginning with its fiscal year ending
® of Government Operations September 30, 2014. This Statement establishes
accounting and financial reporting standards related to
® government combinations and disposals of
® government operations.
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• - MIAMI BEACH
• City of Miami Beach, 1700 Convention Center Drive,Miami Beach,Florida 33139,www.miamibeachH.gov
• Jimmy L. Morales, City Manager
• Tel:305-673-7010,Fax: 305-673-7782
• April 26, 2013
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• McGladrey, LLP
801 Brickell Avenue, suite 1050
• Miami, FI 33131
• To Whom It May Concern:
•
• In connection with your audit of the financial statements of the governmental activities, the
business-type activities, the aggregate discretely presented component units, each major
• fund, and the aggregate remaining fund information of the City of Miami Beach, Florida, (the
• "City") as of and for the year ended September 30, 2012, we confirm that we are responsible
• for the fair presentation in the financial statements of financial position, changes in financial
position, and cash flows in conformity with accounting principles generally accepted in the
• United States of America.
We confirm to the best of our knowledge and belief, as of the date of this letter, the following
• representations made to you during your audit.
1. The financial statements referred to above are fairly presented in conformity with
• accounting principles generally accepted in the United States of America.
• 2. We have identified for you all organizations that are part of this reporting entity or
• with which we have a relationship, as these organizations are defined in Section
2100 of the Governmental Accounting Standards Board Codification of
• Governmental Accounting and Financial Reporting Standards that are Component
• units. The City's Blended Component Units and two Discrete Component Units are
• properly presented in the financial statements.
3. We are not a component unit of any other government, as this term is defined in
• Section 2100 of the Governmental Accounting Standards Board's Codification of
• Governmental Accounting and Financial Reporting Standards.
• 4. We do not meet the definition of another organization, as defined in Section 2100 of
the Governmental Accounting Standards Board's Codification of Governmental
Accounting and Financial Reporting Standards.
• 5. We do not have a joint venture relationship with any other organization, as defined in
• Section 2100 of the Governmental Accounting Standards Board's Codification of
• Governmental Accounting and Financial Reporting Standards.
• 6. We are not a jointly governed organization, as this term is defined in Section 2100 of
the Governmental Accounting Standards Board's Codification of Governmental
• Accounting and Financial Reporting Standards.
• 7. We have identified for you all of our funds, governmental functions, and identifiable
• business-type activities.
• 8. We have properly classified all funds and activities.
• 9. We have properly determined and reported the major governmental and enterprise
funds based on the required quantitative criteria. 1i'1
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Page 2 of 7
• 10.We are responsible for compliance with laws and regulations applicable to the City
® including adopting, approving, and amending budgets.
® 11.We have identified and disclosed to you all laws and regulations that we are aware of
that has a direct and material effect on the determination of financial statement
® amounts including legal and contractual provisions for reporting specific activities in
® separate funds.
® 12.We have made available to you:
a. All financial records and related data of all funds and activities, including those of
all special funds, programs, departments, projects, activities, etc., in existence at
® any time during the period covered by your audit.
® b. All minutes of the meetings of the goveming board and committees of board
® members or summaries of actions of recent meetings for which minutes have not
® yet been prepared.
c. All communications from grantors, lenders, or other funding sources concerning
noncompliance with:
® (1) Statutory, regulatory or contractual provisions or requirements.
® (2) Financial reporting practices that could have a material effect on the financial
® statements.
® 13. We have no knowledge of fraud or suspected fraud affecting the entity involving:
® a. Management or employees who have significant roles in the internal control.
® b. Others where the fraud could have a material effect on the financial statements.
® 14. We have not received any communications from employees, former employees,
® regulators, vendors or others of any allegations of fraud or suspected fraud materially
affecting the City.
® 15.We acknowledge our responsibility for the design and implementation of programs
® and controls to provide reasonable assurance that fraud is prevented and detected.
® 16.We are aware of no significant deficiencies, including material weaknesses, in the
® design or operation of internal controls that could adversely affect the entity's ability
to record, process, summarize, and report financial data, except as reported in your
® compliance and internal control letters.
® 17.There have been no communications from regulatory agencies concerning
® noncompliance with, or deficiencies in, financial reporting practices.
® 18.We have no plans or intentions to engage in any activity that may materially affect
® the carrying value or classification of assets and liabilities.
® 19. The following have been properly recorded and/or disclosed in the financial
statements, where applicable:
® a. Related party transactions, including those as defined in Section 2100 of the
Governmental Accounting Standards Board's Codification of Governmental
Accounting and Financial Reporting Standards, and interfund transactions,
including interfund accounts and advances receivable and payable, sale and
purchase transactions, interfund transfers, long-term loans, leasing
® arrangements and guarantees, all of which have been recorded in accordance
with the economic substance of the transaction and appropriately classified and
® reported.
® Wa oro committed to providing excellent public scrvico and solely to all who live,work,and play in our vibrant, tropical,historic community. e���
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b. Security agreements in effect under the Uniform Commercial Code.
c. Any other liens or encumbrances on assets or revenues or any assets or
• revenues which were pledged as collateral for any liability or which were
subordinated in any way.
d. The fair value of investments.
e. Amounts of contractual obligations for construction and purchase of real property
or equipment not included in the liabilities or encumbrances recorded on the
• books.
• f. Any liabilities which are subordinated in any way to any other actual or possible
• liabilities.
• g. Debt issue provisions and bond refunding amounts.
• h. All leases and material amounts of rental obligations under long-term leases.
i. All significant estimates known to management which are required to be
disclosed in accordance with the AICPA's Statement of Position 94-6, Disclosure
of Certain Significant Risks and Uncertainties. Significant estimates are
estimates at the balance sheet date which could change materially within the
next year.
j. Risk financing activities.
k. Deposits and investment securities categories of risk.
I. Pollution remediation obligations as required under GASB Statement No. 49.
m. Defined benefit plans and other post employment benefit plans.
n. Line of credit or similar arrangements.
o. Authorized but unissued bonds and/or notes.
p. Net positions and fund balance classifications.
20. We are responsible for making the accounting estimates included in the financial
statements. Those estimates reflect our judgment based on our knowledge and
• experience about past and current events and our assumptions about conditions we
expect to exist and courses of action we expect to take. In that regard, adequate
provisions have been made:
a. To reduce receivables to their estimated net collectable amounts.
b. For risk retention, including uninsured losses or loss retentions (deductibles)
• attributable to events occurring through September 30, 2012 and/or for expected
retroactive insurance premium adjustments applicable to periods through
September 30, 2012.
c. For pension obligations, post-retirement benefits other than pensions and
• deferred compensation agreements attributable to employee services rendered
• through September 30, 2012.
• No provision is required:
• a. To reduce obsolete, damaged, or excess inventories to their estimated net
realizable values.
b. To reduce investments, intangibles, and other assets which have permanently
declined in value to their realizable values.
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We are committed to providing excelloni public service and soloty to all who live,work,and play in our vibrant, tropical,historic community.
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• McGladrey,LLP
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21. There are no:
a. Material transactions that have not been properly recorded in the accounting
• records underlying the financial statements. For purposes of this representation,
we consider items to be material, regardless of their size if they involve the
misstatement or omission of accounting information that in light of surrounding
circumstances makes it probable that the judgment of a reasonable person
relying on the information would be changed or influenced by the omission or
misstatement.
b. Violations or possible violations of laws or regulations whose effects should be
considered for disclosure in the financial statements or as a basis for recording a
loss contingency. In that regard, we specifically represent that we have not been
designated as, or alleged to be, a "potentially responsible party" by the Federal
Environmental Protection Agency or any equivalent state agencies in connection
• with any environmental contamination.
• c. Unasserted claims or assessments beyond what we included in the City's self
insurance program, that our lawyer has advised us are probable of assertion and
i must be disclosed in accordance with Statement of Financial Accounting
• Standards No. 5 and/or GASB Statement No. 10.
• d. Guarantees, whether written or oral, under which the Government is contingently
liable.
e. Arrangements with financial institutions involving compensating balances or other ,
arrangements involving restrictions on cash balances.
f. Agreements to repurchase assets previously sold.
g. Debt issue repurchase options or agreements, or sinking fund debt repurchase
ordinance requirements.
• h. Special and extraordinary items.
• i. Impairment of capital assets.
• j. Material losses to be sustained in the fulfillment of, or from the inability to fulfill,
any service commitments.
k. Material losses to be sustained as a result of purchase commitments.
I. Arbitrage liabilities.
m. Derivative financial instruments.
n. Material environmental clean-up obligations.
22. It is management's decision not to disclose the following GASB Statements which
have been issued, but not yet adopted, due to the fact that these statements will not
have a material effect on the financial statements of the City until fiscal year 2013,
• 2014 and 2015:
- GASB Statement No. 60, "Accounting and Reporting for Service Concession
• Arrangements,"
- GASB Statement No. 61, "The Financial Reporting Entity. Omnibus"
- GASB Statement No. 62, "Codification of Accounting and Financial Reporting
• Guidance Contained in Pre-November 30, 1989 FASB and AICPA
Pronouncements"
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• W_o ore commillod to providing oxcellow public service and saf6ty to all who live,work,and play in our vibrant,tropical,historic community
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® - GASB Statement No. 63, "Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources, and Net Position"
- GASB Statement No. 65, "Items Previously Reported as Assets and Liabilities"
® - GASB Statement No. 66, "Technical Corrections — 2012 (an amendment of
GASB Statements No. 10 and No. 62)"
® - GASB Statement No. 67, "Financial Reporting for Pension Plans (an
amendment of GASB Statement No. 25)"
® - GASB Statement No. 68, "Accounting and Financial Reporting for Pensions
® (an amendment of GASB Statement No. 27)"
- GASB Statement No. 69, "Government Combinations and Disposals of
Government Operations"
® 23. In connection with your audit, conducted in accordance with Government Auditing
® Standards, we confirm:
® a. We are responsible for:
® i. Compliance with the laws, regulations, and provisions of contracts and grant
® agreements applicable to the City.
® ii. Establishing and maintaining effective internal control over financial
® reporting.
® b. We have identified and disclosed to you:
i. All laws, regulations, and provisions of contracts and grant agreements that
have a direct and material effect on the determinations of financial statement
® amounts or other financial data significant to audit objectives.
® ii. Violations (and possible violations) of laws, regulations, and provisions of
® contracts and grant agreements whose effects should be considered for
disclosure in the auditor repository or noncompliance.
® c. We have no violations of provisions of contracts or grant agreements that have
® been reported.
d. We have a process to track the status of audit findings and recommendations.
® e. We have identified for you previous financial audits, performance audits, or other
® studies related to the objectives of the audit being undertaken and the corrective
action taken to address significant findings and recommendations.
® I
® 24. We have no direct or indirect, legal or moral, obligation for any debt of any
organization, public or private or to special assessment bond holders that is not
® disclosed in the financial statement.
® 25. We have satisfactory title to all owned assets.
® 26. We have complied with all aspects of contractual agreements that would have a
® material effect on the financial statements in the event of noncompliance.
® 27. Net asset components (invested in capital assets, net of related debt; restricted
® included and not limited to excess building permit fees; and unrestricted) are properly
classified and, if applicable, approved.
® 28. GASB 54 establishes fund balance classifications (nonspendable, restricted,
® committed, assigned and unassigned) that comprise a hierarchy based primarily on
® the extent to which a government is bound to observe constraints imposed upon the
use of the resources reported in governmental funds. Fund balance for 5 J'
® We are committed to providing excellent public servico and safely to all who live,work,and play in our vibrant,trapicol,historic community
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® governmental funds in each of the aforementioned categories is properly classified
® and disclosed in accordance with GASB 54 and if applicable, approved.
® 29. Expenses have been appropriately classified in or allocated to functions and
® programs in the statement of activities, and allocations have been made on a
reasonable basis.
30. Revenues are appropriately classified in the statement of activities within program
® revenues and general revenues.
® 31. Capital assets, including infrastructure assets, are properly capitalized, reported, and
® depreciated.
® 32. Required supplementary information is properly measured and presented.
® 33. There are no unasserted claims or assessments that our lawyers have advised us
are probable of assertion and must be disclosed in accordance with Statement of
® Financial Accounting Standards No. 5 and/or GASB Statement No. 10.
® 34. The City has complied with the provisions of Section 218.415, Florida Statutes
® regarding the investment of public funds.
® 35. The City is not in a state of emergency based upon the conditions described in
Section 218.503(1), Florida Statutes.
® 36. Management has assessed the financial condition of the City and noted no
® deteriorating financial condition.
® 37. During the course of your audit, you may have accumulated records containing data
® which should be reflected in our books and records. All such data have been so
reflected. Accordingly, copies of such records in your possession are no longer
needed by us.
® 38. At September 30, 2012 we had the following uncorrected misstatements:
® 1. $303,280 is required to adjust the overstatement of expenditures related to the South
Beach Local Services Agreement with Miami-Dade County Transit. This expenditure
® should have been recorded in the Half Cent Transit Surtax fund in fiscal year 2011
but was recorded in fiscal year 2012. Charges from the County was for the period
® July 2011 through September 2011. The invoice was received by the City in March
® 2012 and payment was made in April 2012.
® This unrecorded adjustment will result in an understatement of the accounts payable
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balance, and an overstatement of the fund balance/ net assets in the government-
wide statements and the aggregate non-major fund statement at September 30,
2011 and an overstatement of the expenses/expenditure and understatement of the
® fund balance/ net assets in the government-wide statements and the aggregate non-
major fund statements at September 30, 2012.
® 2. $71,860 is required to adjust the overstatement of revenue related to an October
2011 lease payment that recognized as revenue in fiscal year 2011. This revenue
should have been recorded in the general fund and statement of activities in fiscal
® year 2012.
This unrecorded adjustment will result in an overstatement of the fund balance/ net
assets in the government-wide statements and general fund statements at
® September 30, 2011 and an understatement of the revenue and fund balance/ net
assets in the government-wide statements and general fund statements at b�1
® We are commillcd to providing exc0ont public service and safe to all who live, work,and l in our vibrant, tropical,historic community.
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September 30, 2012.
We believe that the effects of the uncorrected misstatements aggregated by you and
summarized above are immaterial, both individually and in the aggregate to the
financial statements taken as a whole. For purposes of this representation, we
• consider items to be material, regardless of their size, if they involve the
misstatement or omission of accounting information that, in light of surrounding
circumstances, makes it probable that the judgment of a reasonable person relying
• on the information would be changed or influenced by the omission or misstatement.
The City of Miami B ach, Florida
Jim L. Mo al s
City anage
Patricia D.Walker
Chief Financial Officer
• Allison R. Williams
Chief Accountant
• We arc committed to providing excelient public service and safety to oil who live,work,and play in our vibrant, tlopicol,historic community ��
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• MIAMI BEACH
• City of Miami Beach, 1700 Convention Center Drive,Miami Beach,Florida 33139,www.miamibeachfl.gov
• FINANCE DEPARTMENT
Tel:305-673-7000 Fax:305.673.7795
• June 10, 2013
McGladre y LLP
• .
801 Brickell Avenue, suite 1050
• Miami, FI 33131
In connection with your audit of federal awards and state financial assistance of City of Miami Beach,Florida
• (the"City"),for the year ended September 30,2012 conducted in accordance with the Office of Management
• and Budget(OMB) Circular A-133,we confirm the following:
• 1. We are responsible for complying, and have complied,with the requirements of OMB Circular A-133.
• 2. We are responsible for the schedule of expenditures of federal awards (the Schedule), and we have
prepared the Schedule in accordance with OMB Circular A-133 section 310.b. We have included
expenditures made during the period being audited for all awards provided by federal in the form of grants,
federal cost-reimbursement contracts, loans, loan guarantees, property (including donated surplus
• property,cooperative agreements,interest subsidies,insurance,food commodities,direct appropriations,
• and other assistance). We further acknowledge that:
• The methods of measurement or presentation have not changed from those used in the prior period
or, if the methods of measurement have changed,we have provided you with the reasons for such
• changes.
We are responsible for understanding and complying with the compliance requirements related to
• the preparation of the schedule.
• 3. We are responsible for establishing and maintaining,and except for those items noted in your report,we
have established and maintained, effective internal control over compliance for federal programs that
• provides reasonable assurance that the City is managing federal awards in compliance with laws,
regulations, and the provisions of contracts or grant agreements that could have a material effect on our
• federal programs.
• 4. We are responsible for understanding and complying with the requirements of laws, regulations,and the
provisions of contracts and grant agreements related to each of the City's federal programs, and have
• complied,in all material respects,with those requirements.
5. We have identified and disclosed to you the requirements of laws, regulations, and the provisions of
• contracts and grant agreements that are considered to have a direct and material effect on each major
federal program.
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® 6. We have provided you with our interpretations of any compliance requirements that have varying
® interpretations.
7. We have made available all contracts and grant agreements(including amendments,if any)and any other
correspondence that has taken place with federal or pass-through entities related to federal programs.
® 8. We have identified and disclosed to you all amounts questioned and any known noncompliance with the
® requirements of federal awards including those resulting from other audits or program reviews.
® 9. We have charged costs to federal awards in accordance with applicable cost principles.
® 10. We have made available to you all documentation related to the compliance requirements, including
® information related to federal program and claims for advances and reimbursements.
® 11. Federal program and claims for advances and reimbursements are supported by the books and records
® from which the basic financial statements have been prepared.
® 12. The copies of federal program financial reports provided to you are true copies of the reports submitted,or
® electronically transmitted, to the federal or pass-through entity, as applicable.
® 13. Except to the extent of findings noted in your report,we have monitored subrecipients to determine that
® they have expended pass-through assistance in accordance with applicable laws and regulations and have
® met the requirements of Circular A-133
® 14. We have issued management decisions on a timely basis after our receipt of subrecipients' auditor's
reports that identified noncompliance with laws, regulations, or the provisions of contracts or grant
® agreements, and we have ensured that subrecipients have taken the appropriate and timely corrective
® action on findings.
® 15. We have considered the results of subrecipient audits and have made any necessary adjustments to the
® books and records of the City.
® 16. We are responsible for and have accurately prepared the summary schedule of prior audit findings to
® include all findings required to be included by OMB Circular A-133.
® 17. We have provided you with all information on the status of the follow-up on prior audit findings by federal
® and state awarding agencies and pass-through entities, including all management decisions.
18. We have disclosed to you any communications from grantors and pass-through entities concerning
® possible noncompliance with the direct and material compliance requirements,including communications
® received from the end of the period covered by the compliance audit to the date of your report. i
® 19. We have disclosed to you the findings received and related corrective actions taken for previous audits,
® attestation engagements, and internal or external monitoring that directly relate to the objectives of the
® compliance audit, including findings received and corrective actions taken from the end of the period
® covered by the compliance audit to the date of your report.
® 20. We have disclosed the nature of any subsequent events that provide additional evidence with respect to
conditions that existed at the end of the reporting period that affect noncompliance during the reporting
® period.
® 21. We are responsible for taking corrective action on audit findings of the compliance audit,
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22. We have accurately completed the appropriate sections of the data collection form.
23. We have disclosed all contracts or other agreements with service organizations.
24. We have disclosed to you all communications from service organizations relating to noncompliance at
those organizations.
25. We have disclosed all known noncompliance with direct and occurring subsequent to the period for which
compliance is audited.
26. We have disclosed whether any changes in internal control over compliance or other factors that might
• significantly affect internal control, including any corrective action taken by management with regard to
significant deficiencies in internal control over compliance (including material weaknesses in internal
control over compliance), have occurred subsequent of the date as of which compliance is audited.
• The City of Miami Beach, Florida
athie G. Brooks
Assistant City Manager
Patricia D.Walker
• Chief Financial Officer
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• We are committed to providing excellent public service and safety to oil who five,work,and play in our vibrant,tropical,historic community.
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MIAMI BEACH
• City of Miami Beach, 1700 Convention Center Drive,Miami Beach,Florida 33139,www.miamibeachfl.gov
• FINANCE DEPARTMENT
• Tel: 305-673-7466, Fax: 305-673-7795
May 22, 2013
McGladrey LLP
801 Brickell Avenue, Suite. 1050
Miami, Fl 33131
In connection with your audit of the basic financial statements of the Miami Beach
Redevelopment Agency (the "Agency"), a component unit of the City of Miami
Beach, Florida, (the "City") as of and for the year ended September 30, 2012, we
• confirm that we are responsible for the fair presentation in the financial statements of
financial position, changes in financial position, and where applicable cash flows in
conformity with accounting principles generally accepted in the United States of
America.
We confirm to the best of our knowledge and belief, as of the date of this letter, the
following representations made to you during your audit.
• 1. The financial statements referred to above are fairly presented in conformity
with accounting principles generally accepted in the United States of America.
2. We are a component unit of the City of Miami Beach, Florida as this term is
defined in Section 2100 of the Governmental Accounting Standards Board's
Codification of Governmental Accounting and Financial Reporting Standards.
3. We have identified for you all of our funds, governmental functions, and
identifiable business-type activities.
4. We have properly classified all funds and activities.
5. We have properly determined and reported the major governmental and
• enterprise funds based on the required quantitative criteria.
• 6. We are responsible for compliance with laws and regulations applicable to the
• Agency including adopting, approving, and amending budgets.
• 7. We have identified and disclosed to you all known laws and regulations that
have a direct and material effect on the determination of financial statement
amounts including legal and contractual provisions for reporting specific
activities in separate funds.
8. We have made available to you:
a. All financial records and related data of all funds and activities, including
• those of all special funds, programs, departments, projects, activities, etc.,
in existence at any time during the period covered by your audit.
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• We fall comma?d to povid,nq excniiew l;,lb.'fc:st-wic:o and srihc;ly io all who live vwrk and ploy cn cur vibrom liopc7' �,f51onc cr)lnnlflnfhi
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b. All minutes of the meetings of the governing board and committees of
® board members or summaries of actions of recent meetings for which
minutes have not yet been prepared.
® 9. We have no knowledge of material fraud or suspected fraud affecting the
® entity involving:
a. Management or employees who have significant roles in the internal
® control.
® b. Others where the fraud could have a material effect on the financial
statements.
10.We have not received any communications from employees, former
employees, regulators, vendors or others of any allegations of fraud or
suspected fraud affecting the Agency.
® 11.We acknowledge our responsibility for the design and implementation of
® programs and controls to provide reasonable assurance that fraud is
prevented and detected.
® 12.We are aware of no significant deficiencies, including material weaknesses, in
the design or operation of internal controls that could adversely affect the
entity's ability to record, process, summarize, and report financial data, except
® as reported in your compliance and internal control letters,
® 13.There have been no communications from regulatory agencies concerning
noncompliance with, or deficiencies in, financial reporting practices.
® 14.We have no plans or intentions to engage in any activity that may materially
affect the carrying value or classification of assets and liabilities.
15.The following have been properly recorded and/or disclosed in the financial
® statements, where applicable:
a. Related party transactions, including those with the primary government
having accountability for Agency, as defined in Section 2100 of the
® Governmental Accounting Standards Board's Codification of
Governmental Accounting and Financial Reporting Standards, and
® interfund transactions, including interfund accounts and advances
receivable and payable, sale and purchase transactions, interfund
transfers, long-term loans, leasing arrangements and guarantees, all of
which have been recorded in accordance with the economic substance of
® the transaction and appropriately classified and reported.
b. The fair value of investments.
® c. All leases and material amounts of rental obligations under long-term
leases.
d. All significant estimates known to management which are required to be
disclosed in accordance with the AICPA's Statement of Position 94-6,
Disclosure of Certain Significant Risks and Uncertainties. Significant
estimates are estimates at the balance sheet date which could change
® materially within the next year.
We ora comindled Io providing exce!it"M pub!ic:9ewic'r:and salety w rill who uve. kvork and play iri our vibrant Iic icu,' hisioric cr,inmun
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e. Risk financing activities.
f. Deposits and investment securities categories of risk.
16,There are no:
a. Material transactions that have not been properly recorded in the
accounting records underlying the financial statements. For purposes of
this representation, we consider items to be material, regardless of their
• size if they involve the misstatement or omission of accounting information
that in light of surrounding circumstances makes it probable that the
judgment of a reasonable person relying on the information would be
changed or influenced by the omission or misstatement.
b. Violations or possible violations of laws or regulations whose effects
• should be considered for disclosure in the financial statements or as a
basis for recording a loss contingency. In that regard, we specifically
represent that we have not been designated as, or alleged to be, a
"potentially responsible party" by the Federal Environmental Protection
Agency or any equivalent state agencies in connection with any
environmental contamination.
C. Other material liabilities or gain or loss contingencies that are required to
be accrued or disclosed by Statement of Financial Accounting Standards
No. 5 and/or GAS Statement No. 10.
d. Debt issue repurchase options or agreements, or sinking fund debt
• repurchase ordinance requirements.
S e. Derivative financial instruments,
f. Arbitrage liability.
g. Impairment of capital assets
h. Significant estimates and material concentrations refer to volumes of
• business, revenues, available sources of supply, or markets for which
events could occur which would significantly disrupt normal finances within
the next year.
i. Extraordinary items.
j. Long term leases where the Agency is the lessee.
k. Conduit debt.
I. Material environmental clean-up obligations.
m. Material losses to be sustained in the fulfillment of, or from the inability to
fulfill, any service commitments.
n. Material losses to be sustained as a result of purchase commitments.
o. Communications from grantors, lenders, or other funding sources
concerning noncompliance with:
(1) Statutory, regulatory or contractual provisions or requirements. �rr
We ote cmnmilled to provrdir excellent public-seiwcN and solef to all who live %o rk and play in our vibrant Iro.icat historic community 1'
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® (2) Financial reporting practices that could have a material effect on the
® financial statements
® 17.We have no direct or indirect, legal or moral, obligation for any debt of any
® organization, public or private or to special assessment bond holders that is
® not disclosed in the financial statements, have occurred subsequent to the
financial statement date.
® 18.We have satisfactory title to all owned assets.
19.We have complied with all aspects of contractual agreements that would have
® a material effect on the financial statements in the event of noncompliance.
20.Net asset components (invested in capital assets, net of related debt;
® restricted; and unrestricted) are properly classified and, if applicable,
® approved.
® 21.Revenues are appropriately classified in the statement of activities within
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® program revenues and general revenues.
® 22.GASB 54 establishes fund balance classifications (nonspendable, restricted,
committed, assigned and unassigned) that comprise a hierarchy based
® primarily on the extent to which a government is bound to observe constraints
® imposed upon the use of the resources reported in governmental funds.
Fund balance for governmental funds in each of the aforementioned
categories is properly classified and disclosed in accordance with GASB 54
® and if applicable, approved.
® 23.Expenses have been appropriately classified in or allocated to functions and
• programs in the statement of activities, and allocations have been made on a
® reasonable basis.
® 24.There are no unasserted claims or assessments that our lawyers have
advised us are probable of assertion and must be disclosed in accordance
with Statement of Financial Accounting Standards No. 5 and/or GASB
® Statement No. 10.
® 25.Capital assets, including infrastructure assets, are properly capitalized,
reported, and depreciated.
26.Required supplementary information is properly measured and presented.
® 27:We are responsible for making the accounting estimates included in the
financial statements. Those estimates reflect our judgment based on our
• knowledge and experience about past and current events and our
® assumptions about conditions we expect to exist and courses of action we
® expect to take. In that regard, adequate provisions have been made.
® a. To reduce receivables to their estimated net collectable amounts.
• b. For risk retention, including uninsured losses or loss retentions
® (deductibles) attributable to events occurring through September 30, 2012
and/or for expected retroactive insurance premium adjustments applicable
to periods through September 30, 2012.
We,l:a c omm tterl k)p,av,d,ng. excell;,nl fwblu:StJIVICO and salc;ly lu r-,!1,n4iu',vP work and ploy,n pt,r v,✓•,rgnl hoFurcl halc,nc cc!mm,rn l?• l(/
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® No provision is required:
a. To reduce obsolete, damaged, or excess inventories to their estimated net
® realizable values.
® b. To reduce investments, intangibles, and other assets which have
® permanently declined in value to their realizable values.
28. It is management's decision not to disclose the following GASB Statements
® which have been issued, but not yet adopted, due to the fact that these
® statements will not have a material effect on the financial statements of the
Agency until fiscal year 2013, 2014 and 2015:
® - GASB Statement No. 60, "Accounting and Reporting for Service
® Concession Arrangements,"
GASB Statement No. 61, "The Financial Reporting Entity. Omnibus"
® - GASB Statement No. 62, "Codification of Accounting and Financial
® Reporting Guidance Contained in Pre-November 30, 1969 FASB and
® AICPA Pronouncements"
GASB Statement No. 63, "Financial Reporting of Deferred Outflows of
® Resources, Deferred Inflows of Resources, and Net Position"
® - GASB Statement No. 65, "Items Previously Reported as Assets and
® Liabilities"
GASB Statement No. 66, "Technical Corrections — 2012 (an
• amendment of GASB Statements No. 10 and No. 62)"
® - GASB Statement No. 67, "Financial Reporting for Pension Plans (an
® amendment of GASB Statement No. 25)"
GASB Statement No. 68, "Accounting and Financial Reporting for
Pensions (an amendment of GASB Statement No. 27)"
® - GASB Statement No. 69, "Government Combinations and Disposals of
® Government Operations"
29.In connection with your audit, conducted in accordance with Government
® Auditing Standards, we confirm:
® a. We are responsible for:
® i. Compliance with the laws, regulations, and provisions of contracts and
® grant agreements applicable to the City.
® ii. Establishing and maintaining effective internal control over financial
® reporting.
® b. We have identified and disclosed to you:
® i. All known laws, regulations, and provisions of contracts and grant
agreements that have a direct and material effect on the
® determinations of financial statement amounts or other financial data
® significant to audit objectives.
® S
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ii. Known violations (and possible violations) of laws, regulations, and provisions
of contracts and grant agreements whose effects should be considered for
disclosure in the auditor repository or noncompliance.
c. We have no violations of provisions of contracts or grant agreements that
have been reported.
d. We have a process to track the status of audit findings and
recommendations.
e. We have identified for you previous financial audits, performance audits,
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or other studies related to the objectives of the audit being undertaken
and the corrective action taken to address significant findings and
recommendations.
The City of Miami Beach, Florida
Patricia D. Walker
• Chief Financial Officer
Allison R. Williams
Chief Accountant
• Sara Patino IJ
Financial Analyst III
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We care commilled to piovid�ng excellent public:sexvice and safety ka all who live work, rind la in our v+brunt l,o ,col hisrooc c ommi nn
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City of Miami Beath, 1700 Convention Center Drive,Miami.Bedch, Florida 331.39,www.m,iomibeachfl.gov
�I FINANCE DEPARTMENT
® Tel; 305-673-7466 Fox: 305-673-7795
i
May 21,2013
McGladrey&Pullen;LLP
801 Brickell Avenue
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Suite, 1050
Miami, FL 33131
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In connection with your audit of the basic financial statements of the Parking Enterprise Fund of the City of Miami
Beach, Florida(the"Fund"), as of and for the year ended September 30, 2012,we confirm that we are.responsible for
f the fair presentation in the financial statements of financial position, changes in financial position, and cash flows in
conformity with accounting principles generally accepted in the United States of America.
We confirm to the best of our knowledge and belief, as of the date of this letter, the following representations made to
you during your audit.
• 1. The financial. statements referred to above -are fair) resented in conformi with accountin principles
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generally accepted in the United States of America.
® 2. We are a major enterprise fund of'the City of Miami Beach, Florida as this term is defined in Section 2100 of
® the Governmental Accounting Standards Board's Codification of Governmental Accounting and Financial
® Reporting Standards.
® 3: We have Identified for you all of our activities.
4. We are responsible for compliance with laws and regulations applicable to the Fund Including adopting,
approving, and amending budgets.
® 5. We have identified and disclosed to you all laws and regulations that have a direct and material effect on the j
® determination of financial statement amounts including legal and contractual provisions for reporting specific E
® activities in separate funds.
6. We have made available to you:
® a. All financial records and related data of the fund, including those programs, departments, projects,
activities,etc.,in existence at any time during the period covered by your audit.
® b. All minutes of the meetings of the governing board and committees of board members or summaries
® of actions of recent meetings for which minutes have not yet been prepared.
7. We have no knowledge of fraud or suspected fraud affecting the fund involving:
® a. Management or employees who have significant roles in the internal control,
® b. Others where the fraud could have a material effect on the financial statements.
® 8. We acknowledge our responsibility for the design and implementation of programs and controls to provide
reasonable assurance that fraud is prevented and detected..
'® Vile cite carmmitted to providing.excellent public service and sa/eh to all wlio five,.avor.k and play in our vibrant. do i co1.hisiotic community.
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® 9. We have no knowledge of any allegations of fraud or suspected fraud affecting the Fund received in
communications from employees,former employees,regulators,vendors or others.
® 10. We are aware of no. si' nific_ant deficiencies, including material weaknesses, in the desi n or operation of
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internal controls that could adversely affect the entity's ability to record, process, summarize, and report
® financial data.
11. There have been no communications from regulatory agencies concerning noncompliance with,or deficiencies
® in,financial reporting practices.
®; 12. We-have. no plans or intentions to engage in any activity that may materially affect the carrying value or
classification of assets and liabilities.
® 13. The following ave been properly recorded and/or disclosed in the financial statements:
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®� a. Related party transactions, including those with the primary govemment having accountability: for
Fund, as defined in Section 2100 of the Governmental Accounting Standards Board's Codification of
Governmental Accounting and Financial Reporting Standards, and interfund transactions, including
interfund accounts and advances receivable and payable, sale and purchase:transactions, interfund !
E �
transfers, long-term loans, leasing arrangements and guarantees, all of.which have been recorded in
accordance with.the economic substance of the.transaction and appropriately classified and reported.
®, I
E b. Debt issue provisions.
®E c. Risk financing activities.
l d. Deposits and investment securities categories risk,which are the responsibility of the City.
e. All leases and material amounts of rental obligations under long-term leases.
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f. The fair value of investments.
14. We are responsible for making the accounting estimates included in the financial statements. Those estimates
reflect our judgment based on our knowledge and experience about past and current events and our
assumptions about conditions we expect to exist and courses of action We expect to take. In that regard,
® adequate provisions have been made.
® a. To reduce receivables to their estimated net collectable amounts. r
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® b. To reduce investments, intangibles, and other assets which have permanently declined in value to r
their realizable values.
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c. For any material loss to be sustained in the fulfillment of, or from the inability to fulfill, any service F
® commitments.
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® d. For any material loss to be sustained.as a result of purchase commitments.
® 15. There are no: i
® a. Material transactions that have not been ro erl recorded in the accounting records underlying the
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® financial statements.
® b. For purposes of this representation, we consider items to be material, regardless of their size, if they
® involve the misstatement or omission of accounting information that, in light of surrounding
circumstances,makes it probable that the judgment of a reasonable person relying on the information
® would be changed or influenced by the omission or misstatement.
® c. Violations or possible violations of Laws or regulations whose effects should be considered for
® disclosure in the financial statements or as a basis for recording a loss contingency. In that regard,
we specifically represent that we have not been designated as, or alleged to be, a "potentially
® We are committed to providing excellent public:.service and safety to oil svho live,work-,and play in our Obrant, tropical,historic community.
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Oil
I responsible party" by the Federal Environmental Protection Agency or any equivalent state agencies
in connection With any environmental contamination.
d. Other material liabilities orgain or loss contingencies that are'required.to be accrued or disclosed by
®` Statement of Financial Accounting Standards'No.5 and/or GASB Statement No. 10.
e. Guarantees whether written or oral under which the Government contin` eritl" -liable.
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f. Arrangements with financial institutions involving compensating balances or other arrangements
®i involving restrictions on cash balances.
g. Agreements to repurchase assets previously sold.
h. Line.of credit or similar arrangements.
i.. Debt issue repurchase options or agreements, or sinking fund debt repurchase ordinance
®' requirements.
® j. Authorized but unissued bonds and/or notes.
®' k. Special and extraordinary items.
I. Impairment of capital assets.
• m. Material losses to be sustained in the fulfillment of, or from the inability to fulfill, any service
® commitments..
® n. Material losses to be sustained as.a result of purchase commitments.
o. Arbitrage liabilities.
® p. Derivative financial instruments.
®! q. Communications from grantors, lenders,or other funding sources concerning noncompliance with:
® (1) Statutory, regulatory or contractual provisions or requirements.
® (2) Financial reporting practices that could have a material effect on the financial statements.
® 16. There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and
most be disclosed in accordance with Statement of Financial Accounting Standards No. 5 and/or GASB
Statement'No. 10..
®� 17. We have no direct or indirect, legal or moral,obligation for an debt of an organization,public or private,or to
® 9 Y Y 9 p p
special assessment bond holders that is not disclosed in the financial statement.
18. We have satisfactory title to all owned assets.
® 19. We have complied with all aspects of contractual agreements that would have a material effect on the financial
® statements in the event of noncompliance.
® 20. Net asset components(invested in capital assets, net of related debt;,restricted;and unrestricted)are properly
® classified.
® 21. Capital assets,including infrastructure assets,are properly capitalized,reported,and depreciated.
22. We are responsible for and have reviewed and approved the proposed adjustments to the trial balances
identified during the audit,which are included in the summarized schedule of posted adjustments and will post
all adjustments accordingly. We have reviewed,approved,and are responsible for overseeing the preparation
® and completion of the basic financial statements and related notes. j
• We are commilted to providing eXrej!eni public service and safety to or who live,work:and pray in our Obtont,fropical,historic community.
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23. In connection with your audit,conducted in accordance with Government Auditing Standards,we confirm:
a. We are responsible for:
i. Compliance with the laws, regulations, and provisions of contracts and grant agreements applicable
to the City.
ii. Establishing and maintaining effective internal control over financial reporting.
b. We have identified and disclosed to you:
i. All laws, regulations, and provisions of contracts and grant agreements that have a direct and
• material effect on the determinations of financial statement amounts or other financial data significant
• to audit objectives.
• ii. Violations (and possible violations) of laws, regulations, and provisions of contracts and grant
• agreements whose effects should be considered for disclosure in the auditor repository or
noncompliance.
• c. We have no violations of provisions of contracts or grant agreements that have been reported.
• d. We have a process to track the status of audit findings and recommendations.
e. We have identified for you previous financial audits, performance audits, or other studies related to the
objectives of the audit being undertaken and the corrective action taken to address significant findings
• and recommendations,if applicable.
• No events or transactions, other than those disclosed in the financial statements, have occurred subsequent to the
• financial statement date that would require adjustment to,or disclosure in,the financial statements.
• During the course of your audit, you may have accumulated records containing data which should be reflected in our
books and records. All such data have been so reflected. Accordingly, copies of such records in your possession are
• no longer needed by us.
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• The City of Miami Beach, Florida
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• Patricia D.Walker
Chief Financial Officer
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• Allison R.Williams
Chief Accountant
• We are c omrmtted lo ptovrd ng exce"2nf and safety k)all %ho`rve v.ork and p ay n(hrr v,brunt trovca% h,stonc cxnmundy 4Y
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� Exhibit B — Single Audit Reports in
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• City of Miami Beach, Florida
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• Single Audit Reports in Accordance With OMB Circular A-133
• September 30, 2012
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McGladrey•
Assurance■Tax■Consulting
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Contents
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 1 —2
Independent Auditor's Report
• on Compliance With Requirements That Could Have a Direct
and Material Effect on Each Major Program
• and on Internal Control Over Compliance in Accordance
• With OMB Circular A-133 3-5
• Schedule of Expenditures of Federal Awards 6-7
Notes to Schedule of Expenditures of Federal Awards 8
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• Schedule of Findings and Questioned Costs 9- 13
Schedule of Prior Year Audit Findings 14- 15
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® flf cGladreY LLP
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® >.� McGladrey
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® 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
® The Honorable Mayor and City Commissioners
• City of Miami Beach, Florida
® We have audited the financial statements of the governmental activities, the business-type activities, the
aggregate discretely presented component units, each major fund, and the aggregate remaining fund
® information of the City of Miami Beach, Florida (the "City") as of and for the year ended September 30,
2012,which collectively comprise the City's basic financial statements and have issued our report thereon
® dated April 26, 2013. Our report includes a reference to other auditors. We conducted our audit in
® accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
® General of the United States. Other auditors audited the financial statements of the Visitor and
® Convention Authority; the Miami Beach Convention Center as managed by Global Spectrum ("Global
Spectrum"); the City of Miami Beach Florida Employees' Retirement Plan; the City of Miami Beach Florida
® Pension Fund for Firefighters and Police Officers; the Firemen's Relief and Pension Fund; and the
® Policemen's Relief and Pension Fund, as described in our report on the City's financial statements. This
report does not include the results of the other auditors'testing of internal controls over financial reporting
® or compliance and other matters that are reported on separately by those auditors. The financial
statements of Global Spectrum, the City of Miami Beach Florida Employees' Retirement Plan; the City.of
® Miami Beach Florida Pension Fund for Firefighters and Police Officers; and the Miami Beach Policeman's
® Relief and Pension Fund, audited by other auditors, were not audited in accordance with Government
Auditing Standards.
•
Internal Control Over Financial Reporting
® Management of the City is responsible for establishing and maintaining effective internal control over
financial reporting. In planning and performing our audit, we considered the City's internal control over
• financial reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness
of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the
• effectiveness of the City's internal control over financial reporting.
® A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
® detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
® misstatement of the entity's financial statements will not be prevented, or detected and corrected on a
® timely basis.
® Our consideration of internal control over financial reporting was for the limited purpose described in the
first paragraph of this section and was not designed to identify all deficiencies in internal control over
® financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not
• identify any deficiencies in internal control over financial reporting that we consider to be material
weaknesses, as defined above.
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® Member of the RSM Intematlanal network of independent accounling,tax and consutting firms.
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on
the determination of financial statement amounts. However, providing an opinion on compliance with
those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
We noted certain matters that we reported to management of the City in a separate letter dated April 26,
2013.
This report is intended solely for the information and use of the Honorable Mayor, the Members of the
City Commission, management of the City, the Auditor General of the State of Florida, federal and state
awarding agencies and pass-through entities, and is not intended to be, and should not be used by
anyone other than these specified parties.
Miami, Florida
April 26, 2013
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® McGladrey LLP
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• Independent Auditor's Report
® on Compliance With Requirements That Could Have a Direct
and Material effect on Each Major Program
® and on Internal Control Over Compliance in Accordance
® With OMB Circular A-133
® The Honorable Mayor and City Commissioners
® City of Miami Beach, Florida
® Compliance
• We have audited the City of Miami Beach, Florida's (the "City") compliance with the types of compliance
® requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and
material effect on each of the City's major federal programs for the year ended September 30, 2012. The
® City's major federal programs are identified in the summary of auditor's results section of the
accompanying schedule of findings and questioned costs. Compliance with the requirements of laws,
® regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of
• the City's management. Our responsibility is to express an opinion on the City's compliance based on
our audit.
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We conducted our audit of compliance in accordance with auditing standards generally accepted in the
® United States of America; the standards applicable to financial audits contained in Government Auditing
® Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133, require
• that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the
® types of compliance requirements referred to above that could have a direct and material effect on a
® major federal program occurred. An audit includes examining, on a test basis, evidence about the City's
compliance with those requirements and performing such other procedures as we considered necessary
® in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit
• does not provide a legal determination on the City's compliance with those requirements.
® In our opinion, the City complied, in all material respects, with the compliance requirements referred to
above that could have a direct and material effect on each of its major federal programs for the year
® ended September 30, 2012. However, the results of our auditing procedures disclosed instances of
noncompliance with those requirements, which are required to be reported in accordance with OMB
® Circular A-133, and which are described in the accompanying schedule of findings and questioned costs
• as items CF 2012-01, and CF 2012-02.
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• Member of the RSM International network of Independent accounting,tax and consulting firms.
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® Internal Control Over Compliance
® Management of the City is responsible for establishing and maintaining effective internal control over
® compliance with the requirements of laws, regulations, contracts, and grants applicable to federal
® programs. In planning and performing our audit, we considered the City's internal control over
compliance with requirements that could have a direct and material effect on a major federal program to
® determine the auditing procedures for the purpose of expressing our opinion on compliance and to test
® and report on internal control over compliance in accordance with OMB circular A-133, but not for the
purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly,
® we do not express an opinion on the effectiveness of the City's internal control over compliance.
® A deficiency in internal control over compliance exists when the design or operation of a control over
® compliance does not allow management or employees, in the normal course of performing their assigned
functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a
® federal program on a timely basis. A material weakness in internal control over compliance is a
® deficiency, or combination of deficiencies, in internal control over compliance, such that there is a
® reasonable possibility that material noncompliance with a type of compliance requirement of a federal
program will not be prevented, or detected and corrected, on a timely basis.
• Our consideration of internal control over compliance was for the limited purpose described in the first
® paragraph of this section and was not designed to identify all deficiencies in internal control over
® compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not
identify any deficiencies over compliance that we consider to be material weaknesses, as defined above.
• However, we identified a certain deficiency in internal control over compliance that we consider to be a
significant deficiency as described in the accompanying Schedule of Findings and Questioned Costs, as
® item IC 2012-01. A significant deficiency in internal control over compliance is a deficiency, or a
® combination of deficiencies, in internal control over compliance with a type of compliance requirement of
a federal program that is less severe than a material weakness in internal control over compliance, yet
® important enough to merit attention by those charged with governance.
® The City's responses to the findings identified in our audit are described in the accompanying schedule of
• findings and questioned costs. We did not audit the City's responses and, accordingly, we express no
® opinion on the responses.
Schedule of Expenditures of Federal Awards
® We have audited the financial statements of the governmental activities, the business-type activities, the
® aggregate discretely presented component units, each major fund, and the aggregate remaining fund
information of the City as of and for the year ended September 30, 2012 and have issued our report
thereon dated April 26, 2013, which contained an unqualified opinion on those financial statements. Our
report was modified to include a reference to other auditors. Our audit was conducted for the purpose of
® forming our opinions on the financial statements that collectively comprise the City's basic financial
® statements. The accompanying schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial
statements. Such information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the financial statements. The
information has been subjected to the auditing procedures applied in the audit of the financial statements
• and certain additional procedures, including comparing and reconciling such information directly to the
® underlying accounting and other records used to prepare the financial statements or to the financial
statements themselves, and other additional procedures in accordance with auditing standards generally
® accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards
® is fairly stated in all material respects in relation to the financial statements as a whole.
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This report is intended solely for the information and use of the Honorable Mayor, the Members of the
• City Commission, management of the City, the Auditor General of the State of Florida, federal and state
awarding agencies, and pass-through entities, and is not intended to be and should not be used by
• anyone other than these specified parties.
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• Miami, Florida
• June 10, 2013, except for the Schedule of Expenditures
of Federal Awards which is dated April 26, 2013.
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® City of Miami Beach, Florida
Schedule of Expenditures of Federal Awards
® Year Ended September 30,2012
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• Federal/Pass-Through Entity CFDA Grant/Contract
Program Title Number Number Expenditures
Federal Grants:
U.S.Department of Housing and Urban Development:
• Direct Programs:
Community Development Block Grant/Entitlement Grants 14.218 B-11-MC-12-0014 $1,712,174
® Community Development Block Grant/Entitlement Grants(NSP3) 14.218 B-11-MN-12-0039 35,125
1,747,299
® Home Investment Partnership Program 14.239 M-11-MC-12-0212 219,593
Community Development Block Grants—Section 108 Loan Guarantees 14.248 B-94-MC-12-0014 5,914
• Economic Development Initiative—Special Project,Neighborhood Initiative and
Miscellaneous Grants(EDI) 14.251 B-08SP-FL-0543 347,820
® ARRA-Community Development Block Grant Recovery ARRA Entitlement Grants
(CDBG-R)Recovery Act Funded 14.253 B-09-MY-12-0014 51,324
® ARRA-Homeless Prevention and Rapid Rehousing Program 14.257 S09-MY-12-0007 137,796
Pass-through Dept.Community Affairs—Pass through—Miami Dade County:
® 14.235 FL0177B40001104& 49,749
Supportive Housing Program FL0177134D001003
® Pass-through Department of Community Affairs:
Community Development Block Grants—Neighborhood Stabilization Program 14.228 10DB-4X-11-23-02-F16 1,335,917
® Total U.S.Department of Housing and
® Urban Development 3,895,412
U.S.Department of Justice:
® Direct Program:
• Part E-Developing,Testing and Demonstrating Promising New
Programs—Teen Club 16.541 2008-JL-FX-0481 39,135
• Congressionally Recommended Awards—Teen Club 2010 16.753 2010-DD-BX-0435 198,658
Edward Byrne Memorial Justice Assistance Grant Program—JAG 16.738 2010-DJ-BX-0161 40,508
® Edward Byrne Memorial Justice Assistance Grant Program—JAG(FY11) 16.738 2011-DJ-BX-2189 79,359
Edward Byrne Memorial Justice Assistance Grant Program—JAG(FY2008) 16.738 2008-DJ-BX-0683 37,000
® 156,867
ARRA—Edward Byrne Memorial Justice Assistance(JAG—CAD/RMS) 16.804 2009SB-B9-2634 1,289
® Federal Equitable Sharing Agreement 16.000 FL0130700 411,528
® Community Oriented Policing Services:
Public Safety Partnership and Community Policing Grants—Child Sexual Predator Program 16.710 2009CSWX0004 151,774
® National Institute of Justice:
National Institute of Justice Research,Evaluation,and Development—Police Homicide Cold Case 16.560 2009-DN-BX-K009 36,038
® Bulletproofvest Partnership/Body Armor Safety Initiative
Bulletproof Vest Partnership Program 16.607 OMB# 1121-0235 6,448
® Pass-Through State of Florida/Miami-Dade County.
• Edward Byrne Memorial Justice Assistance Grant Program—Criminal
Justice Records Improvement 16.738 N/A 11,605
Pass-Through State of Florida/Office of the Attorney General:
Crime Victim Assistance—VOCA 16.575 V11027 58,220
® Total U.S.Department of Justice 1,071,562
(Continued)
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• City of Miami Beach, Florida
Schedule of Expenditures of Federal Awards(Continued)
• Year Ended September 30,2012
• Federal/Pass-Through Entity CFDA Grant/Contract
Program Title Number Number Expenditures
• U.S.Department of Energy:
Direct Program:
• ARRA-Energy Efficiency and Conservation Block Grant 81.128 DE-SC0003489 $ 88,819
Total U.S.Department of Energy 88,819
• U.S.Department of Transportation:
Pass-through State of Florida:
• Florida Department of Transportation
Highway Planning and Construction—Middle Beach Recreational Corridor Phase 1 20.205 APG78 3,500
• Highway Planning and Construction—Middle Beach Recreational Corridor Phase 2 20.205 APT97 31,568
Highway Planning and Construction—Venetian Causeway 20.205 APG95 310,755
• Highway Planning and Construction—West Avenue Bridge 20.205 APJ33 363,034
Highway Planning and Construction—South Beach Neigh.Trail 20.205 APH49 73,789
Highway Planning and Construction—Dade Boulevard Bike 20.205 AP817 2,009,155
Highway Planning and Construction—Collins Canal Seawall 20.205 AP718 1,358,785
ARRA-Highway Planning and Construction—Dickens Avenue Lap Project 20.205 426629-3(APS 85) 568,981
• ARRA-Highway Planning and Construction—Byron Avenue 20.205 426629-4(APS 86) 245,001
ARRA-Highway Planning and Construction—Indian Creek Drive 20.205 426500-1(AP037) 74,429
• Total U.S.Department of Transportation 5,038,997
• U.S.Department of Homeland Security:
Pass-through United Way of Miami-Dade
• Emergency Food and Shelter National Board Program-EFS Phase 29 97.024 159400-076 17,913
17,913
• Pass-through State of Florida:
Florida Department of Community Affairs
• Pass-through Miami Dade County
Office of Domestic Preparedness
Homeland Security Grant Program—Urban Areas
• Security Initiative 2007 97.067 09DS-24-11-23-02-011 7,720
Homeland Security Grant Program—Urban Areas
• Security Initiative 2008 97.067 10DS-48-11-23-02-195 94,921
102,641
• Pass-through State of Florida:
Florida Department of Community Affairs
• Disaster Grants-Public Assistance—FEMA—Disaster Relief Funding Agreement 97.036 06-WL-&K-11-23-02-567& 143,888
Hazard Mitigation Grant 97.039 08HM-6G-11-23-02-060 155,126
• Emergency Preparedness Demonstration Program(EOC Grant) 97.001 11 DS-37-11-23-02-198 777,492
Total State-Pass-Florida Dept.of Community Affairs 1,179,147
• Pass-through State of Florida:
Florida Division of Emergency Management
• Pass-through City of Miami
Homeland Security Grant Program—Urban Areas Security Initiative 2009 97.067 11 DS-32-11-23-02-233 50,702
• Pass-through State of Florida:
Florida Department of Financial Services
• Homeland Security Grant Program—State Homeland Security 97.067 10DS-39-13-00-16-414 4,009
Total U.S.Department of Homeland Security 1,251,771
• National Endowment for the Arts:
Direct Program:
• Promotion of the Arts Grants to Organization and Individuals 45.024 11-6200-7031 350
Total National Endowment of the Arts 350
• Total Expenditures of Federal Awards $11,346,911
• N/A—Not Available
See Notes to Schedule of Expenditures of Federal Awards
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® City of Miami Beach, Florida
® Notes to the Schedule of Expenditures of Federal Awards
® 1. General
® The accompanying Schedule of Expenditures of Federal Awards (the "Schedule") presents the
® expenditure activity of all federal awards of the City of Miami Beach, Florida (the"City")for the year ended
® September 30, 2012. The City's reporting entity is defined in Note 1 of the City's basic financial
statements. All federal awards received directly from federal agencies, as well as amounts passed
• through other government agencies are included in the accompanying Schedule of Expenditures of
Federal Awards and is presented in accordance with the requirements of the Office of Management and
® Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations.
® Because the schedule presents only a selected portion of the operations of the City, it is not intended to
® and does not present the financial position, changes in net assets or cash flows of the City.
® 2. Basis of Accounting
® The accompanying Schedule of Expenditures of Federal Awards is presented using the modified accrual
basis of accounting for grants which are accounted for in the governmental fund types and on the accrual
® basis of accounting for grants which are accounted for in the proprietary fund types. Amounts are
® recognized following the cost principles contained in OMB Circular A-122, wherein certain types of
expenditures are not allowable or are limited as to reimbursement. Therefore, some amounts presented
• in this schedule may differ from amounts presented in or used in the preparation of the basic financial
® statements.
® 3. Sub-recipient Awards
Of the federal awards presented in the Schedule, the City provided the following amounts to sub-
recipients:
® Amount
® CFDA Provided
Name of Program Number to Subrecipient
® Federal:
® Community Development Block Grant 14.218 $ 1,134,552
Community Development Block Grant-Neighborhood Stabilization Program 14.228 1,209,900
® Home Program 14.239 120,365
® ARRA-CDBG-R 14.253 35,963
Community Development Block Grant-Neighborhood Stabilization Program 3 14.218 26,636
Economic Development Initiative-Special Project,Neighborhood Initiative (EDI) 14.251 317,242
® Total Federal $ 2,844,658
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® City of Miami Beach, Florida
® Schedule of Findings and Questioned Costs
® Federal Awards Programs
® Section I—Summary of Auditor's Results
Financial Statements
® Type of auditor's report issued: Unqualified
®
Internal control over financial reporting:
Material weakness(es)identified? Yes X No
Significant deficiency(ies)identified that are
® not considered to be material weakness(es)? Yes X No
Noncompliance material to financial statements noted? Yes X No
Federal Awards
® Internal control over major program:
Material weakness(es)identified? Yes X No
Significant deficiency(ies)identified that are not considered
to be material weakness(es)? X Yes None reported
Type of auditor's report issued on compliance for
® major programs: Unqualified
Any audit findings disclosed that are required
® to be reported in accordance with Section 510(a)
® of Circular A-133? X Yes No
Identification of major program:
Federal CFDA No. Name of Federal Program or Cluster
14.218 and 14.253 U.S.Department of Housing and Urban Development:
ARRA-Community Development Block Grant(CDBG)
® 14.228 U.S.Department of Housing and Urban Development:
® CDBG-Neighborhood Stabilization Program
14.251 U.S.Department of Housing and Urban Development:
Economic Development Initiative-Special Project,Neighborhood
Initiative and Miscellaneous Grants(EDI)
16.000 U.S.Department of Justice:
® Federal Equitable Sharing Agreement
20.205 U.S.Department of Transportation:
ARRA-Highway Planning and Construction
® 97.001 Pass-through State of Florida Department of Community Affairs:
® Emergency Preparedness Demonstration Program(EOC Grant)
Dollar threshold used to distinguish between type
A and type B programs: $340,407
® Auditee qualified as low-risk auditee? X Yes No
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City of Miami Beach, Florida
Schedule of Findings and Questioned Costs(Continued)
® Federal Awards Programs
Section II—Financial Statement Findings
• A. Internal Control
None reported.
® B. Compliance
None reported
® Section III—Federal Awards and State Financial Assistance Findings and Questioned Costs
® A. Internal Control over Compliance
Federal Awards
® IC 2012-01 Allowable Costs
U.S. Department of Housing and Urban Development(HUD)—
® Community Development Block Grant"CDBG" (CFDA No. 14.218& 14.253)
® U.S. Department of Housing and Urban Development
® Community Development Block Grants-Neighborhood Stabilization Program (NSP) (CFDA
® No. 14.228)
• U.S. Department of Housing and Urban Development
Economic Development Initiative-Special Project(CFDA No. 14.251)
• Criteria: OMB Circular A-87 requires that in situations where employees work on multiple grants,
® their salary distribution must be supported by personnel activity reports or similar documents
® delineating the hours worked on each grant and other activities. In addition, the personnel activity
reports should be prepared at least monthly and must include the employee's signature. In
® situations where all of an individual's salary is charged to a federal program, certifications should
be prepared at least bi-annually to support the amounts charged to the federal program. In
® addition, 2 CFR part 215 requires that non-federal entities receiving federal awards to establish
® and maintain internal control designed to reasonably ensure compliance with federal laws,
regulations, and program compliance requirements.
® Condition: We noted personnel activity reports delineating the hours worked by employees on
each grant or certifications for those employees that work solely on one grant, are completed.
However, individuals whose salaries were charged to the federal program did not physically sign
the personnel activity report or certifications completed.
® Questioned costs: $16,960
® Context: For all 48 salaries and wage selections selected for testing we noted the City did not
® physically sign the certifications for employees working on the Federal program.
® Effect: Failure to maintain complete certifications could result in disallowance by the grantor of
payroll expenditures. Without adequate internal controls over program costs, management faces
® the risk of submitting reimbursement requests for unallowable costs.
® 10
® City of Miami Beach, Florida
Schedule of Findings and Questioned Costs(Continued)
® Federal Awards Programs
® Cause: The City does not have a formal process in place to ensure that all individuals whose
salaries are charged to federal programs and included in the personnel activity reports or
® certifications are signed by each employee. Further, there does not appear to be effective
internal controls over payroll to ensure compliance with Federal requirements.
® Recommendation: We recommend that the City establish a formal policy and procedure relating
to the payroll certification process. The policy should include notifying division heads of the
® process and ensuring that they are aware of the provisions, which includes the following: (1) If
only a portion of the individual's salary is charged to the program, an after-the-fact payroll
® distribution should be maintained with the employee's signature. (2) If all of the employee's
® salary is charged to the program, the required certification should be prepared at least semi-
annually with the employee's signature.
Views of responsible officials and planned corrective action: The Real Estate and Housing
® Development Department in the City amended the Policy and Procedure for the payroll
® certification process to ensure employee signs off on payroll certification. The Policy and
• Procedure for the payroll certification process states:
® 1. Employees expected to work solely on a single Federal award or cost objective, charges for
their salaries and wages will be supported by a payroll certification. Certifications will cover
the period worked solely on the program by the employee and prepared at least semi-
annually.
® 2. Employees working on multiple activities or cost objectives, a distribution of their salary and
wages will be supported by payroll timesheets which include the following:
® • Multiple activities portion/percentage of the employee salary charged to the programs
® • Sole activity 100% of the employee's salary charged to the program, and if so a
certification sheet will be filed semi annually
• Training,vacation and sick days accounted for the employee.
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® City of Miami Beach, Florida
I
Schedule of Findings and Questioned Costs (Continued)
® Federal Awards Programs
® B. Compliance Findings
® Federal Awards
® CF 2012-01 Allowable Costs
U.S. Department of Housing and Urban Development(HUD)—
® Community Development Block Grant"CDBG" (CFDA No. 14.218& 14.253)
® U.S. Department of Housing and Urban Development
® Community Development Block Grants-Neighborhood Stabilization Program (NSP) (CFDA
® No. 14.228)
® U.S. Department of Housing and Urban Development
Economic Development Initiative-Special Project(CFDA No. 14.251)
® See IC 2012-01
® Views of responsible officials and planned corrective actions: See IC 2012-01 for detailed views
® of responsible officials and planned corrective action.
® CF 2012-02—Reporting
U.S. Department of Transportation
® ARRA Highway Planning and Construction (CFDA No. 20.205)
® Criteria: Pursuant to the reporting requirements for the American Recovery and Investment Act
2009 (ARRA): "Contractors and consultants must report their required monthly employment data
® for employees, hours, and payroll wages, as well as for their subcontractors/subconsultants."
® The employment data must be entered into Florida Department of Transportation (FDOT)'s ARRA
Employment Reporting system by the 10th of each month for the prior month.
® Condition: We noted that the monthly reports for October 2011 and February 2012 were not
submitted timely for one project.
® Questioned costs: Undeterminable.
® Context: Two out of the three monthly reports selected for testing were not submitted timely.
® Cause: Although the City has a procedure in place to ensure reporting requirements under
ARRA Section 1512 are being adhered to, there was a delay in the approval process, leading to
® late submissions of reports.
® Recommendation: We recommend that grant personnel responsible for ARRA report submission
® become fully knowledgeable of the reporting and submission requirements and approve reports
® timely.
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• City of Miami Beach, Florida
Schedule of Findings and Questioned Costs(Continued)
Federal Awards Programs
Views of responsible officials and planned corrective action: In order to ensure such an oversight
does not reoccur, the Capital Improvement Projects (CIP) department in the City has established
• internal deadlines. The monthly ARRA reports are required to be submitted by the CIP's
consultant, by the 10th of each month regardless if there was activity or not.
• The CIP department has also advised the contractors that the City will stop payments on the
ARRA projects if they do not comply with the ARRA reporting requirements.
• Furthermore, timeliness of reporting required monthly ARRA reports has significantly improved as
of the date of this audit. The CIP department is in constant communication with the contractors to
• ensure timely, accurate and complete information is provided for timely reporting to the Florida
Department of Transportation (FDOT).
• 13
® City of Miami Beach, Florida
Schedule of Prior Year Audit Findings
® Federal Awards Programs
® Finding# Finding Title Status Explanation
® IC 2011-01 Allowable Costs(CFDA No.14.218 and 14.253)
® and CF
2011-02
® Not Corrected See similar finding at IC 2012-01 and CF
® There were no procedures in place over 2012-01.
payroll to monitor and ensure that personnel
® activity reports delineating the hours worked
by employees on each grant or certifications
® for those employees that work solely on one
grant,are completed.There were individuals
® whose salaries were charged to the federal
® program that did not have certifications
completed.In addition,there were no
® personnel activity reports or similar
documents delineating the hours worked on
® each grant and other activities for employees
that worked on multiple grants.
® IC 2011-02 Subrecipient Monitoring(CFDA No.14.228)
® Monthly reports were not submitted in a timely Corrected The City corrected the specific finding in
® manner by the sub-recipient to the City. fiscal year 2012.
® CF 2011-02 Procurement(CFDA No.14.218 and 14.253)
The City did not comply with the provisions of Corrected The City corrected the specific finding in
the American Recovery and Reinvestment Act fiscal year 2012.
® of 2009(ARRA)to include language within
the contract between their sub-recipient,who
® received ARRA funding under the Community
Development Block Grant(14.253)to state
® that they must comply with the Buy American
provisions of ARRA(Section 1605 of Title
® XVI).
® CF 2011-03 Reporting(CFDA No.20.205)
® Monthly reports for March 2011 and May 2011 Corrected The City corrected the specific finding in
® were not submitted timely for one project. fiscal year 2012.
® 14
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® City of Miami Beach, Florida
® Schedule of Prior Year Audit Findings
Federal Awards Programs (Continued)
® IC 2010-06 Reporting(CSFA No.52.901)
and CF
® 2010-03
® Corrected The City corrected the specific finding in
There was no procedure in place to monitor fiscal year 2011.
® and ensure compliance with the reporting
® requirements of the SHIP Program. As a
result,the required report was submitted two
® days late by the City to FHFC.
® CF 2009-01 Subrecipient Monitoring(CFDA No.14.218)
® Monthly reports were not prepared and/or Corrected The City corrected the specific finding in
submitted in a timely manner by the fiscal year 2011.
® subrecipients to the City as required by the
subrecipient agreements. In addition,no
® evidence of monitoring visits were found in
® several subrecipient's files.
® 15
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• City of Miami Beach,
• Florida
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• Management Letter in Accordance with the
• Rules of the Auditor General of the State of
• Florida
• September 30, 2012
McGladrey•
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Assurance m Tax Consulting
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® Contents
® Management Letter in Accordance with the
® Rules of the Auditor General of the State of Florida 1 -2
® Appendix A—Current Year's Recommendations to Improve Financial Management,
® Accounting Procedures and Internal Controls 3-4
® Appendix B—Prior Year's Recommendations to Improve Financial Management,
® Accounting Procedures and Internal Controls 5
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McGfadrey LLP
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McGladrey
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• Management Letter in Accordance with the
• Rules of the Auditor General of the State of Florida
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To the Honorable Mayor and City Commissioners
City of Miami Beach, Florida
• We have audited the financial statements of the governmental activities, the business-type activities, the
aggregate discretely presented component units, each major fund, and the aggregate remaining fund
• information of the City of Miami Beach, Florida(the "City")as of and for the year ended September 30,
2012, which collectively comprise the City's basic financial statements, and have issued our report
thereon dated April 26, 2013. Our report was modified to include a reference to other auditors.
• We conducted our audit in accordance with auditing standards generally accepted in the United States of
• America;the standards applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States; and OMB Circular A-133,Audits of States, Local
Governments and Non-Profit Organizations. The financial statements of the Miami Beach Convention
Center as managed by Global Spectrum, the City of Miami Beach Florida Employees' Retirement Plan,
the City of Miami Beach Florida Pension Fund for Firefighters and Police Officers, and the Miami Beach
Policeman's Relief and Pension Fund were not audited in accordance with Government Auditing
Standards. We have issued our 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, and Independent Auditor's Report on Compliance With
Requirements That Could Have a Direct and Material Effect on Each Major Federal Program and on
Internal Control Over Compliance in Accordance With OMB Circular A-133 and the Schedule of Findings
and Questioned Costs. Disclosures in those reports and schedule,which are dated April 26, 2013, should
be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the
• Auditor General,which governs the conduct of local govemmental entity audits performed in the State of
Florida. This letter includes the following information which is not included in the aforementioned
auditors' reports or schedules.
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Section 10.554(1)(i)1., Rules of the Auditor General, requires a statement as to whether or not corrective
actions have been taken to address findings and recommendations made in the preceding annual financial
audit report. Corrective actions have been taken to address findings and recommendations made in the
preceding annual financial audit report, except for those reported below under the heading "Prior Year's
Recommendations to Improve Financial Management,Accounting Procedures and Internal Controls"
• listed in Appendix B.
• Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the
• provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection
with our audit, we determined that the City complied with Section 218.415, Florida Statutes, relating to
• local government investment policies.
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• .Member of the KSM Intematlonal network of Independent accounting.tax and consuhing firms.
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Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management letter
any recommendations to improve financial management.The recommendations to improve the City's
financial management have been addressed in Appendix A—Current Year's Recommendations to
• Improve Financial Management,Accounting Procedures and Internal Controls to this report.
Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of provisions of
contracts or grant agreements, or abuse that have occurred, or are likely to have occurred,that have an
• effect on the financial statements that is less than material but more than inconsequential. In connection
with our audit,we did not have any such findings.
• Section 10.554(1)(i)5., Rules of the Auditor General provides that the auditor may, based on professional
judgment,report the following matters that have an inconsequential effect on financial statements,
considering both quantitative and qualitative factors: (1)violations of provisions of contracts or grant
agreements, fraud, illegal acts, or abuse, and(2)deficiencies in internal control that are not significant
deficiencies. In connection with our audit, we did not have any such findings.
• Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal
• authority for the primary government and each component unit of the reporting entity be disclosed in this
management letter, unless disclosed in the notes to the financial statements. The information is
disclosed in Note 1A to the financial statements.
Section 10.554(1)(i)7.a., Rules of the Auditor General, requires a statement be included as to whether or not
• the local governmental entity has met one or more of the conditions described in Section 218.503(1),
Florida Statutes, and identification of the specific condition met. In connection with our audit,we
• determined that the City did not meet any of the conditions described in Section 218.503(1), Florida
Statutes.
Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether the annual
financial report for the City for the fiscal year ended September 30, 2012, filed with the Florida
Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with
• the annual financial audit report for the fiscal year ended September 30, 2012. In connection with our
• audit, we determined that these two reports were in agreement.
• Pursuant to Sections 10.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, we applied financial
condition assessment procedures. It is management's responsibility to monitor the City's financial
condition,and our financial condition assessment was based in part on representations made by
• management and the review of financial information provided by same.
Pursuant to Chapter 119, Florida Statutes this management letter is a public record and its distribution is
not limited. Auditing standards generally accepted in the United States of America require us to indicate
that this letter is intended solely for the information and use of the Honorable Mayor, City Commissioners,
• management of the City, the State of Florida Office of the Auditor General,federal and state awarding
agencies, and pass-through entities, and is not intended to be and should not be used by anyone other
• than these specified parties.
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Miami, Florida
• April 26, 2013
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• City of Miami Beach, Florida
• Appendix A
Current Year's Recommendations to Improve Financial Management,
Accounting Procedures and Internal Controls
• Year Ended September 30,2012
No. Current Year's Observations
2012-1 Self-Insurance Fund Deficit and
• Actuarial Discount Rate of the
• Self-Insurance Program
• 2012-1 Self-Insurance Fund Deficit and Actuarial Discount Rate
Criteria: Proprietary funds(which include internal service funds)should be accounted for on a cost
• reimbursement basis.Also, actuarial assumptions used to estimate the City's self insurance liability
should be reasonable and reflect current market related conditions.
Condition: The City's self-insurance fund reported a net asset deficit of approximately$7.9 million, as of
September 30, 2011. In the current year, the City experienced a reduction in the deficit balance, from an
• amount of approximately$7.9 million to$3.9 million, as of September 30, 2012, mainly through increased
interfund charges for services along with an actuarial adjustment.We also noted that embedded within
that reduction, was the usage of a discount rate of 4% in its computation of the loss reserve amount.
• However, the risk fund does not have marketable type investments with long-term yields earning rates
compensable to such amounts.
• Cause: The usage of a discount rate that is not compensable with the fund's investments long-term yield.
• Effect: The usage of a discounts rate that does not correspond to the fund's investment earning ability
would misstate the liability and result in the City's inability to have enough resources accumulated to fully
liquidate insurable liabilities as they become due.
Recommendation: We recommend that the City re-evaluate the discount rate utilized for the computation
of the loss reserve amount. The discount rate utilized should be compensable with the risk fund's long-
term yield investment earnings rate to ensure the City will have enough resources accumulated to
liquidate insurable liabilities as they become due.
• Current Year's Views of responsible officials and planned corrective actions: The deficit in the Risk
Management self insurance fund decreased from $7.927 million at September 30, 2011, to$3.962 million
• at September 30, 2012, a decrease of$3.964 million. This net decrease was driven by the actuarial
determined liability which decreased by$1.961 million for pending insurance claims and incurred but not
• reported claims(IBNR)combined.
At September 30, 2012, the City had$14.875 million in IBNR liabilities and $11.798 million in pending
• insurance claims liabilities. The cash balance available for paying claims at September 30, 2012,was
$19.659 million.We feel that this is sufficient to liquidate any insurable liabilities that become due with the
next fiscal year.
It is the City's intention to continue to increase revenues and thus reduce the deficit in future years. In
• addition, the City considers, subject to commission budget approval, an annual contribution to reduce the
• Fund's deficit.
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• City of Miami Beach, Florida
• Appendix A
Current Year's Recommendations to Improve Financial Management,
Accounting Procedures and Internal Controls
• Year Ended September 30,2012
As with all other local governments,the last several fiscal years have been challenging due to continued
• declines in property values through January 2010 and increased pension contribution requirements
primarily because pension investments have not met actuarial assumptions in the three of the last four
years. As a result, while the City has increased funding for the Risk Management Fund in its annual
• operating budget for the short-term, the City has elected to use year-end surplus in the General Fund as
carry-forward to future fiscal years, rather than to fund deficit increases in the self insurance fund. It is
• anticipated that property values will stabilize in the coming years and then resume normal historical
increases and that investment returns will return to historical levels,thereby reducing the stress on the
budget. It is therefore anticipated that, in the longer term,the City will once again be in the position to
• reduce the risk deficit as it has done in prior years.
• In FY 2010 the City decreased the rate for discounting loss reserves from 6%to 5%and in FY 2011 from
• 5%to 4%. The City plans to consider further decreasing the rate to 3.5% in FY 2013.
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• City of Miami Beach, Florida
• Appendix B
Prior Year's Recommendations to Improve Financial Management,
Accounting Procedures and Internal Controls
• Year Ended September 30,2012
• Observation is Comment No
• No. Prior Years'Observations Still Relevant Longer Relevant
2011-1 Self-Insurance Fund Deficit X
See current year's comment at 2012-1
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