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City of Marianna Marianna_ Florida

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									      City of Marianna
      Marianna, Florida
             Basic
      Financial Statements

For the year ended September 30, 2009
                                                                        City of Marianna
                                                                         Table of Contents
                                                                        September 30, 2009



Independent Auditors’ Report on Financial Statements                                  1-2

Management’s Discussion and Analysis                                               3.1-3.11

                                  Basic Financial Statements

Government Wide Financial Statements:

  Statement of Net Assets                                                              4

  Statement of Activities                                                              5

Fund Financial Statements:

  Balance Sheet – Governmental Funds                                                   6

  Reconciliation of the Balance Sheet of Governmental Funds to
    the Statement of Net Assets                                                        7

  Statement of Revenues, Expenditures, and Changes in Fund Balances
     – Governmental Funds                                                              8

  Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund
    Balances of Governmental Funds to the Statement of Activities                      9

  Statement of Revenues, Expenditures, and Changes in Fund Balances – Budget
     and Actual – General Fund                                                        10

  Statement of Net Assets – Proprietary Funds                                         11

  Statement of Revenues, Expenses, and Changes in Net Assets – Proprietary Funds      12

  Statement of Cash Flows – Proprietary Funds                                         13

  Statement of Fiduciary Net Assets – Fiduciary Funds                                 14

  Statement of Changes In Fiduciary Net Assets – Fiduciary Funds                      15

  Notes to Financial Statements                                                     16-36
                                                                        City of Marianna
                                                                         Table of Contents
                                                                       September 30, 2009



Supplementary Information

  Independent Auditors’ Management Letter Comments                                   37-39

  Independent Auditors’ 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                         40-41

  Independent Auditors’ Report on Compliance Applicable to Each Major Program
  and State Project and on Internal Control Over Compliance In Accordance with
   OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General
                                                                                     42-43

  Schedule of Expenditures of Federal Awards and State Financial Assistance           44

  Notes to Schedule of Expenditures of Federal Awards and State Financial
  Assistance                                                                          45

  Schedule of Findings and Questioned Costs                                          46-47

  Summary Schedule of Prior Audit Findings                                           48-49

  City of Marianna, Florida’s Response to Management Letter Comments                  50
Honorable Mayor-Commissioner
and City Commissioners
City of Marianna
Page Two


The management’s discussion and analysis on pages 3.1-3.11, is not a required part of the
basic financial statements, but is supplementary information required by accounting principles
generally accepted in the United States of America. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding the methods of
measurement and presentation of the supplementary information. However, we did not audit
the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements. The accompanying schedule of
expenditures of federal awards and state financial assistance is presented for purposes of
additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits
of States, Local Governments, and Non-Profit Organizations and Chapter 10.550, Rules of the
Auditor General, and is not a required part of the basic financial statements. Such information
has been subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.




February 16, 2010
Basic Financial Statements
                                                                                                       City of Marianna
                                                                                               Statement of Net Assets

September 30, 2009

                                                                                 BUSINESS-
                                                           GOVERNMENTAL            TYPE
                                                             ACTIVITIES          ACTIVITIES                  TOTAL
Assets
   Cash and cash equivalents                           $        1,589,857    $            7,865,921     $      9,455,778
   Restricted assets
       Cash and cash equivalents                                  553,683                 1,254,929            1,808,612
   Receivables, net                                               302,600                 1,883,906            2,186,506
   Due from other funds                                         1,227,362                (1,227,362)                    -
   Due from other governments                                     586,563                   230,321              816,884
   Accrued interest receivable                                          -                    51,938               51,938
   Inventories                                                      8,000                   195,101              203,101
   Prepaid expenses                                                     -                   128,045              128,045
   Deposits                                                              -                  147,000              147,000
   Deferred charges - debt                                               -                   88,977               88,977
   Capital assets, net (see Note 7)
       Nondepreciable capital assets                            1,542,616                 1,431,690            2,974,306
       Depreciable capital assets, net                          7,026,999                46,460,861           53,487,860

                  Total assets                                 12,837,680                58,511,327           71,349,007

Liabilities
    Accounts payable                                             321,935                  2,055,894            2,377,829
    Due to other governments                                      28,488                          -               28,488
    Liabilities payable from restricted assets                         -                    259,325              259,325
    Accrued interest payable                                           -                    183,073              183,073
    Deferred revenue                                                   -                     60,000               60,000
    Long-term liabilities (see Note 8)
          Portion due or payable within one year
               Bonds payable                                           -                   437,000               437,000
               Notes payable                                     214,730                   742,311               957,041
          Portion due or payable after one year
               Bonds payable                                            -                 4,234,805            4,234,805
               Notes payable                                     400,000                 15,232,113           15,632,113
               Compensated absences payable                      345,197                    633,860              979,057

                  Total liabilities                             1,310,350                23,838,381           25,148,731

Net Assets
     Invested in capital assets, net of related debt            7,954,885                27,251,821           35,206,706
     Restricted for:
        Capital projects                                           37,646                   266,710              304,356
        Debt service                                                     -                  668,559              668,559
        Community development projects                            455,113                         -              455,113
        Other purposes                                            516,037                     1,763              517,800
     Unrestricted                                               2,563,649                 6,484,093            9,047,742

                  Total net assets                     $       11,527,330    $           34,672,946     $     46,200,276




                                       See accompanying notes to financial statements.
                                                           -4-
                                                                                                                                                                    City of Marianna
                                                                                                                                                                Statement of Activities
For the year ended September 30, 2009
                                                                                                                                        NET (EXPENSE) REVENUE AND CHANGES IN
                                                                                                                                                     NET ASSETS
                                                                                 PROGRAM REVENUES                                               PRIMARY GOVERNMENT
                                                                          CHARGES     OPERATING      CAPITAL
                                                                            FOR       GRANTS &      GRANTS &                       GOVERNMENTAL       BUSINESS-TYPE
FUNCTIONS/PROGRAMS                               EXPENSES                 SERVICES  CONTRIBUTIONS CONTRIBUTIONS                      ACTIVITIES         ACTIVITIES           TOTALS

Primary Government
Governmental Activities:
    General government                       $      1,928,744         $        555,252 $                  - $          287,131     $    (1,086,361)   $             -    $    (1,086,361)
    Public safety                                   1,998,138                  136,827                    -            298,730          (1,562,581)                 -         (1,562,581)
    Highways and streets                              731,594                         -                   -                  -            (731,594)                 -           (731,594)
    Culture and recreation                            331,689                   84,413                    -                  -            (247,276)                 -           (247,276)
    Interest on long-term debt                         39,544                         -                   -                  -             (39,544)                 -            (39,544)

            Total governmental activities           5,029,709                  776,492                    -            585,861          (3,667,356)                 -         (3,667,356)

Business Type Activities:
    Water                                           1,047,202                1,206,543                    -           1,318,498                  -         1,477,839           1,477,839
    Gas                                             1,425,146                1,708,472                    -                    -                 -           283,326             283,326
    Sewer                                           2,503,898                2,546,320                    -                   -                  -            42,422              42,422
    Airport                                           659,278                  386,218                    -             551,872                  -           278,812             278,812
    MHR                                            10,311,534               11,350,363                    -                   -                  -         1,038,829           1,038,829

            Total business-type activities         15,947,058               17,197,916                    -           1,870,370                  -         3,121,228           3,121,228

            Total primary government         $     20,976,767         $     17,974,408 $                  - $         2,456,231         (3,667,356)        3,121,228            (546,128)

                                                                General revenues
                                                                 Taxes:
                                                                   Property taxes, levied for general purposes                            651,546                   -            651,546
                                                                   Franchise and public service taxes                                   3,070,580                   -          3,070,580
                                                                 Interest and investment earnings                                             933             145,067            146,000
                                                                 Gain on disposition of capital assets                                           -              8,200              8,200
                                                                 Miscellaneous                                                            425,184             481,801            906,985
                                                                Transfers                                                               1,327,511          (1,327,511)                  -

                                                                     Total general revenues and transfers                               5,475,754           (692,443)          4,783,311

                                                                    Change in net assets before the net effect of a
                                                                      change in an accounting estimate                                  1,808,398          2,428,785           4,237,183

                                                                    Effect of change in an accounting estimate                                   -           100,000            100,000

                                                                    Change in net assets                                                1,808,398          2,528,785           4,337,183

                                                                Net assets - beginning                                                  9,718,932         32,144,161          41,863,093

                                                                Net assets - ending                                                $   11,527,330     $   34,672,946     $    46,200,276
                                                                          See accompanying notes to financial statements.
                                                                                              -5-
                                                                                                                 City of Marianna
                                                                                                                  Balance Sheet
                                                                                                             Governmental Funds

September 30, 2009

                                                                          Community                 Debt
                                                                         Redevelopment             Service
                                                      General               Agency                  Fund                 Total

Assets
   Cash and cash equivalents                      $     1,159,081         $       430,776      $             -       $   1,589,857
   Accounts receivable, net                               302,600                       -                    -             302,600
   Due from other governments                             586,563                       -                    -             586,563
   Due from other funds                                 1,831,728                  44,406                    -           1,876,134
   Inventory                                                8,000                       -                    -               8,000
   Restricted assets
       Cash and cash equivalents                          553,683                         -                  -            553,683

       Total assets                               $     4,441,655         $       475,182      $             -       $   4,916,837

Liabilities
    Accounts payable                              $       301,866         $        20,069      $             -       $    321,935
    Due to other governments                               28,488                       -                    -             28,488
    Payable to other funds                                648,772                       -                    -            648,772

       Total liabilities                                  979,126                  20,069                    -            999,195

Fund balances
Reserved for
   Capital projects                                        37,646                       -                    -             37,646
   Community development projects                               -                 455,113                    -            455,113
   Other purposes                                         516,037                       -                    -            516,037
Unreserved, reported in
   General fund                                         2,908,846                         -                  -           2,908,846

       Total fund balances                              3,462,529                 455,113                    -           3,917,642

       Total liabilities and fund balances        $     4,441,655         $       475,182      $             -       $   4,916,837




                                             See accompanying notes to financial statements.
                                                                 -6-
                                                                                        City of Marianna
                                                  Reconciliation of the Balance Sheet of Governmental
                                                                 Funds to the Statement of Net Assets

September 30, 2009

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

Total fund balances – governmental funds                                                    $    3,917,642

Capital assets used in governmental activities are not financial resources, and,
therefore, are not reported in the governmental funds.                                           8,569,615

Long-term liabilities, including notes payable, are not due and payable in the
current period, and, therefore, are not reported in the governmental funds.
Balances at September 30, 2009 were:

General obligation warrants, leases and notes payable                $        614,730
Compensated absences                                                          345,197

   Total long-term liabilities                                                                    (959,927)

Net assets of governmental activities                                                       $   11,527,330




                                 See accompanying notes to financial statements.
                                                     -7-
                                                                                                                              City of Marianna
                                                                      Statement of Revenues, Expenditures, and Changes in Fund Balances
                                                                                                                   Governmental Funds

For the year ended September 30, 2009

                                                                                         COMMUNITY                   DEBT
                                                                                       REDEVELOPMENT                SERVICE
                                                                      GENERAL             AGENCY                     FUND             TOTAL

Revenues
Property taxes, levied for general purposes                       $       651,546       $                  -    $             -   $     651,546
Other taxes                                                             2,960,923                    109,657                  -       3,070,580
Intergovernmental                                                         328,151                          -                  -         328,151
Licenses and permits                                                       84,370                          -                  -          84,370
Charges for services                                                      627,706                          -                  -         627,706
Fines and forfeitures                                                      32,948                          -                  -          32,948
Grants                                                                    585,861                          -                  -         585,861
Interest                                                                       80                        853                  -             933
Other fees and miscellaneous                                              128,501                          -                  -         128,501

        Total revenues                                                  5,400,086                    110,510                  -       5,510,596

Expenditures
Current
    General government                                                  1,800,729                     14,376                  -       1,815,105
    Public safety                                                       1,905,378                          -                  -       1,905,378
    Highways and streets                                                  649,854                          -                  -         649,854
    Culture and recreation                                                347,627                          -                  -         347,627
Capital outlay
    General government                                                     88,425                     47,000                  -         135,425
    Public safety                                                          82,890                          -                  -          82,890
    Highways and streets                                                1,006,309                          -                  -       1,006,309
    Culture and recreation                                                 37,941                          -                  -          37,941
Debt Service
    Principal                                                                    -                         -           220,917          220,917
    Interest and other charges                                                   -                         -            21,248           21,248

        Total expenditures                                              5,919,153                     61,376           242,165        6,222,694

        Excess of revenues over (under) expenditures                     (519,067)                    49,134          (242,165)        (712,098)

Other financing sources (uses)
   Transfers in                                                         1,209,021                     44,406           242,165        1,495,592
   Transfers out                                                         (157,081)                   (11,000)                -         (168,081)

        Net other financing sources (uses)                              1,051,940                     33,406           242,165        1,327,511


Net change in fund balances                                               532,873                     82,540                  -         615,413

Fund balances - beginning                                               2,929,656                    372,573                  -       3,302,229

Fund balances - ending                                            $     3,462,529       $            455,113    $             -   $   3,917,642




                                                   See accompanying notes to financial statements.
                                                                       -8-
                                                                                          City of Marianna
                           Reconciliation of the Statement of Revenues, Expenditures, and Changes in
                                 Fund Balances of Governmental Funds to the Statement of Activities

For the year ended September 30, 2009


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

        Net change in fund balances - total governmental funds                                $    615,413

        Capital outlay, reported as expenditures in governmental funds, is shown as
        capital assets in the Statement of Net Assets                                             1,262,565

        Depreciation expense on governmental capital assets is included in the
        governmental activities in the Statement of Activities.                                    (294,218)

        Repayment of long-term debt is reported as an expenditure in governmental
        funds, but as a reduction in long-term liabilities in the Statement of Net
        Assets                                                                                     220,917

        Some expenses reported in the statement of activities do not require the use of
        current financial resources and, therefore, are not reported as expenditures
        in governmental funds. These expenses include:

                        Compensated absences                                                          3,721

Change in net assets of governmental activities                                               $   1,808,398




                                    See accompanying notes to financial statements.
                                                        -9-
                                                                                                City of Marianna
                                     Statement of Revenues, Expenditures, and Changes in Fund Balances-
                                                                       Budget and Actual – General Fund

For the year ended September 30, 2009

                                                                                                            VARIANCE
                                                                                                              WITH
                                                                                             ACTUAL           FINAL
                                                                                            AMOUNTS         BUDGET-
                                                         ORIGINAL          FINAL          (BUDGETARY        POSITIVE
                                                         BUDGET           BUDGET             BASIS)        (NEGATIVE)
Revenues
 Taxes                                               $     3,322,971 $       3,615,471 $     3,612,469    $      (3,002)
 Licenses and permits                                         86,250            86,250          84,370           (1,880)
 Intergovernmental                                           230,952           336,952         328,151           (8,801)
 Charges for services                                        553,958           618,958         627,706            8,748
 Fine and forfeitures                                         17,700            31,700          32,948            1,248
 Grants                                                      553,463           584,463         585,861            1,398
 Miscellaneous revenue                                       122,000           124,607         128,581            3,974

   Total revenues                                          4,887,294         5,398,401       5,400,086           1,685

Expenditures
 General government                                        2,016,961         1,986,961       1,889,154           97,807
 Public safety                                             1,970,256         1,971,256       1,988,268          (17,012)
 Highways and streets                                      1,513,024         1,700,024       1,656,163           43,861
 Culture and recreation                                      585,069           394,774         385,568            9,206

   Total expenditures                                      6,085,310         6,053,015       5,919,153         133,862

   Excess of revenues over (under)
    expenditures                                           (1,198,016)        (654,614)       (519,067)        135,547

Other financing sources (uses)
 Transfers in                                              1,198,016         1,198,016       1,209,021          11,005
 Transfers out                                                      -         (148,000)       (157,081)         (9,081)

   Total other financing sources                           1,198,016         1,050,016       1,051,940           1,924

Net change in fund balances                                         -          395,402         532,873         137,471

Fund balance - beginning                                   2,929,656         2,929,656       2,929,656                  -

Fund balances - ending                               $     2,929,656 $       3,325,058 $     3,462,529 $       137,471




                                     See accompanying notes to financial statements.
                                                        -10-
                                                                                                         City of Marianna
                                                                                                    Statement of Net Assets
                                                                                                         Proprietary Funds

September 30, 2009

                                                               BUSINESS-TYPE ACTIVITIES/ENTERPRISE FUNDS

                                                          UTILITY                MHR              AIRPORT           Total

Assets
Current assets
    Cash and cash equivalents                         $       4,135,141     $     3,387,741   $      343,039    $    7,865,921
    Accounts receivable, net                                    640,104           1,202,373           41,429         1,883,906
    Accrued interest receivable                                  49,440                   -            2,498            51,938
    Due from other funds                                          9,153             595,413                -           604,566
    Due from other governments                                        -                   -          230,321           230,321
    Inventories                                                 126,653              68,448                -           195,101
    Prepaid expenses                                                  -             128,045                -           128,045

         Total current assets                                 4,960,491           5,382,020          617,287        10,959,798

Noncurrent assets
   Restricted assets
        Cash and cash equivalents                             1,165,983              55,920           33,026         1,254,929
   Deposits                                                     147,000                   -                -           147,000
   Deferred charges - debt                                       88,977                   -                -            88,977
   Capital assets
        Nondepreciable                                        1,075,861              50,000           305,829        1,431,690
        Depreciable, net                                     40,562,483           2,226,201         3,672,177       46,460,861

         Total noncurrent assets                             43,040,304           2,332,121         4,011,032       49,383,457

              Total assets                                   48,000,795           7,714,141         4,628,319       60,343,255

Liabilities
Current liabilities
    Accounts payable                                          1,351,234            542,917           161,743         2,055,894
    Due to other funds                                        1,827,771                  -             4,157         1,831,928
    Notes payable                                               736,812              5,499                 -           742,311
    Accrued interest payable                                    183,073                  -                 -           183,073
    Liabilities payable from restricted
          assets                                                203,405              55,920                 -         259,325
    Bonds payable - current                                     437,000                   -                 -         437,000
    Deferred revenue                                             60,000                   -                 -          60,000

         Total current liabilities                            4,799,295            604,336           165,900         5,569,531

Noncurrent liabilities
   Accrued compensated absences                                  93,830            507,357            32,673           633,860
   Notes payable                                             15,224,017              8,096                 -        15,232,113
   Revenue bonds payable, net                                 4,234,805                  -                 -         4,234,805

         Total noncurrent liabilities                        19,552,652            515,453            32,673        20,100,778

              Total liabilities                              24,351,947           1,119,789          198,573        25,670,309

Net assets
    Invested in capital assets, net of related debt          21,005,710           2,268,105         3,978,006       27,251,821
    Restricted for:
        Capital projects                                        233,684                   -           33,026           266,710
        Debt service                                            668,559                   -                -           668,559
        Other purposes                                            1,763                   -                -             1,763
    Unrestricted                                              1,739,132           4,326,247          418,714         6,484,093

              Total net assets                        $      23,648,848     $     6,594,352   $     4,429,746   $   34,672,946




                                            See accompanying notes to financial statements.
                                                               -11-
                                                                                                                     City of Marianna
                                                                Statement of Revenues, Expenses, and Changes in Net Assets
                                                                                                         Proprietary Funds

For the year ended September 30, 2009

                                                                           BUSINESS -TYPE ACTIVITIES/ENTERPRISE FUNDS


                                                                       UTILITY             MHR                AIRPORT           TOTAL

Operating revenues
   Water, sewer, and gas revenue pledged as
       security for revenue bonds                                  $    5,461,335     $            -      $           -     $    5,461,335
   Charges for services                                                         -         11,350,363            386,218         11,736,581

       Total operating revenues                                         5,461,335         11,350,363            386,218         17,197,916

Operating expenses
   Personal services                                                      889,564          7,164,172            118,331          8,172,067
   Utilities                                                              611,652            314,618             67,015            993,285
   Services and supplies                                                1,519,274          1,780,041            231,459          3,530,774
   Repairs and maintenance                                                 71,426            194,783              9,409            275,618
   Insurance premiums                                                     141,295            291,607              4,834            437,736
   Other operating expenses                                                    14            296,247             30,373            326,634
   Depreciation                                                         1,125,806            270,066            197,857          1,593,729

       Total operating expenses                                         4,359,031         10,311,534            659,278         15,329,843

       Net operating income (loss)                                      1,102,304          1,038,829            (273,060)        1,868,073

Nonoperating revenues (expenses)
   Interest income                                                         72,810                63,107            9,150           145,067
   Miscellaneous revenue                                                  487,878                   882            1,453           490,213
   Gain (loss) on sale of assets                                            8,200                     -                -             8,200
   Interest expense                                                      (617,215)                    -                -          (617,215)

       Total nonoperating revenues (expenses)                             (48,327)               63,989          10,603            26,265

       Income (loss) before contributions
           and transfers                                                1,053,977          1,102,818            (262,457)        1,894,338

   Capital contributions                                                1,310,086                     -         551,872          1,861,958

   Transfers, net                                                        (860,675)          (423,756)            (43,080)       (1,327,511)

Change in net assets before the net effect of a change
in accounting estimate                                                  1,503,388               679,062         246,335          2,428,785

Effect of change in accounting estimate                                          -              100,000                 -         100,000

Change in net assets                                                    1,503,388               779,062         246,335          2,528,785

Total net assets - beginning                                           22,145,460          5,815,290           4,183,411        32,144,161

Total net assets - ending                                          $ 23,648,848       $    6,594,352      $    4,429,746    $ 34,672,946




                                              See accompanying notes to financial statements.
                                                                 -12-
                                                                                                                     City of Marianna
                                                                                                               Statement of Cash Flows
                                                                                                                     Proprietary Funds

For the year ended September 30, 2009

                                                                           BUSINESS-TYPE ACTIVITIES/ENTERPRISE FUNDS
                                                                     UTILITY          MHR            AIRPORT        TOTAL

Operating activities
   Receipts from customers and users                             $    5,532,725        $ 11,795,617        $    397,304    $ 17,725,646
   Payments to suppliers                                             (3,205,589)         (2,553,844)           (257,789)     (6,017,222)
   Payments to employees                                               (892,577)         (7,175,198)           (117,036)     (8,184,811)
   Other receipts (payments)                                           (147,014)           (296,247)            (30,373)       (473,634)

        Net cash provided (used) by operating activities              1,287,545            1,770,328             (7,894)       3,049,979

Noncapital financing activities
   Operating subsidies and transfers to other funds                     100,256                (456,773)        (35,897)        (392,414)

Capital and related financing activities
   Proceeds from capital debt                                           536,686                  16,497               -           553,183
   Capital contributions                                              2,226,988                       -         552,101         2,779,089
   Sale of capital assets                                                 8,200                       -               -             8,200
   Purchase of capital assets                                        (1,747,717)               (126,335)       (567,155)       (2,441,207)
   Principal payments on capital debt                                (1,446,277)                 (2,902)              -        (1,449,179)
   Interest payments on capital debt                                   (560,773)                      -               -          (560,773)
   Other receipts (payments)                                            549,893                   4,756           1,453           556,102

        Net cash (used) provided by capital and related
            financing activities                                       (433,000)               (107,984)        (13,601)        (554,585)

Investing activities
    Interest and dividends                                                59,542                63,106            9,157          131,805

        Net cash provided by investing activities                         59,542                63,106            9,157          131,805

Net increase (decrease) in cash and cash equivalents                  1,014,343            1,268,677            (48,235)       2,234,785

Cash - beginning of the year                                          4,286,781            2,174,984           424,300         6,886,065

Cash - ending of the year                                        $    5,301,124        $   3,443,661       $   376,065     $   9,120,850



Reconciliation of net operating income to net cash
 provided (used) by operating activities
   Net operating income (loss)                                   $    1,102,304        $   1,038,829       $   (273,060)   $   1,868,073
   Adjustments to reconcile operating income to net cash
    provided by operating activities:
       Depreciation                                                   1,125,806                270,066         197,857         1,593,729
       (Increase) decrease in accounts receivable                        71,390                445,254          11,086           527,730
       (Increase) decrease in inventory                                  (8,671)                (6,766)              -           (15,437)
       (Increase) decrease in deposits                                 (147,000)                     -               -          (147,000)
       (Increase) decrease in prepaid insurance                                -                 5,830               -             5,830
       Increase (decrease) in accounts payable                         (847,788)                49,809          55,662          (742,317)
       Increase (decrease) in other liabilities                          (8,496)               (32,694)            561           (40,629)

        Net cash provided (used) by operating activities         $    1,287,545        $   1,770,328       $     (7,894)   $   3,049,979




                                             See accompanying notes to financial statements.
                                                                -13-
                                                                                              City of Marianna
                                                                                Statement of Fiduciary Net Assets
                                                                                                 Fiduciary Funds

September 30, 2009

                                                             PENSION TRUST                         AGENCY

                                                                          MUNICIPAL
                                                      MUNICIPAL            POLICE
                                                      FIREMAN'S           OFFICERS'
                                                       PENSION           RETIREMENT               DEFERRED
                                                     TRUST FUND          TRUST FUND             COMPENSATION

Assets
   Cash and cash equivalents                         $          526      $             10      $               -
                                                                                                               -
    Investments, at fair value:
        Money market funds                                   12,275              14,848                        -
        Corporate stocks                                    978,965           1,233,092                        -
        Other investments                                   721,641           1,136,749                  316,954

            Total investments                             1,712,881           2,384,689                  316,954

            Total assets                             $    1,713,407      $    2,384,699        $         316,954

Liabilities
    Accounts payable                                 $          450      $              -      $               -
    Deferred compensation benefits payable                        -                     -                316,954

            Total liabilities                                   450                     -                316,954

Net assets
    Held in trust for pension and other purposes     $    1,712,957      $    2,384,699        $               -




                                     See accompanying notes to financial statements.
                                                        -14-
                                                                                    City of Marianna
                                                 Statement of Changes in Fiduciary Net Assets
                                                                             Fiduciary Funds

For the year ended September 30, 2009

                                                                             PENSION TRUST
                                                                                     MUNICIPAL
                                                                        MUNICIPAL      POLICE
                                                                        FIREMAN'S    OFFICERS'
                                                                         PENSION    RETIREMENT
                                                                          TRUST        TRUST
                                                                           FUND         FUND

Additions
   Contributions
        State and City contributions                                    $    106,214       $     53,074
        Plan members                                                          28,440             26,651

            Total contributions                                              134,654             79,725

    Investment earnings
        Net increase in fair value of investments                               (42,922)         (91,338)
        Interest and dividends                                                   50,022           76,365

            Total investment earnings                                            7,100           (14,973)

            Total additions                                                  141,754             64,752


Deductions
   Benefits                                                                     68,055          138,176
   Administrative expenses                                                      22,407           23,588

            Total deductions                                                    90,462          161,764

Change in net assets                                                            51,292           (97,012)

Net assets - beginning                                                      1,661,665          2,481,711

Net assets - ending                                                     $ 1,712,957        $   2,384,699




                              See accompanying notes to financial statements.
                                                  -15-
                                                                            City of Marianna
                                                               Notes to Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The City of Marianna was incorporated in 1911 under Section 1911-6371 of the Laws of Florida.
The City operates under a Council-Manager form of government and provides the following
services as authorized by its charter: public safety (police and fire), highways and streets,
sanitation, health and social services, culture-recreation, education, public improvements,
planning and zoning, and general administrative services.

The accounting policies of the City of Marianna conform to generally accepted accounting
principles applicable to governments. The following is a summary of the more specific policies:

A. Reporting Entity

    The definition of the reporting entity is based primarily on the notion of financial
    accountability. The financial statements of the City include the funds required to account for
    those financial activities which are related to the City and are controlled by or dependent
    upon the City's legislative body. Control or dependence upon the City was determined on the
    basis of budget adoption, taxing authority and outstanding debt secured by revenues or
    general obligation of the City, and the City's legal responsibility to fund any deficits that may
    occur. On this basis, the following entity is not a part of the City of Marianna and thus, is
    excluded from the accompanying financial statements:

       Marianna Housing Authority - This authority was created by the City pursuant to State
       Statutes with commissioners of the Authority appointed by the City Commission.
       Operations are administered by the Authority and financed with Federal funds and
       rentals. Outstanding debt of the Authority is not an obligation of the City.

B. Government-Wide and Fund Financial Statements

   The basic financial statements consist of the government-wide financial statements and
   fund financial statements. Both sets of statements distinguish between governmental and
   business-type activities.       Government-wide financial statements comprised of the
   statement of net assets and the statement of changes in net assets report information on
   all of the non-fiduciary activities of the primary government. For the most part, the effect of
   inter-fund activity has been removed from these statements. Governmental activities,
   which normally are supported by taxes and intergovernmental revenues, are reported
   separately from business-type activities, which rely to a significant extent on fees and
   charges for support.

   The statement of activities demonstrates the degree to which the direct expenses of a
   given function or segments are offset by program revenues. Direct expenses are those
   that are clearly identifiable with a specific function or segment. Program revenues are
   classified into three categories: charges for services, operating grants and contributions,
   and capital grants and contributions. Charges for services refer to direct recovery from
   customers for services rendered. Grants and contributions refer to revenues restricted for
   specific programs whose use may be restricted further to operational or capital items. The
   general revenues section displays revenue collected that helps support all functions of
   government and contributes to the change in the net assets for the fiscal year.
                                               -16-
                                                                         City of Marianna
                                                             Notes to Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

   The fund financial statements follow and report additional and detailed information about
   operations for major funds individually and nonmajor funds in the aggregate for
   governmental funds. A reconciliation is provided that converts the results of governmental
   fund accounting to the government-wide presentations.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

   The government-wide financial statements are reported using the economic resources
   measurement focus and the accrual basis of accounting, as are the proprietary fund and
   fiduciary fund financial statements. Revenues are recorded when earned and expenses
   are recorded when a liability is incurred, regardless of the timing of related cash flows.
   Property taxes are recognized as revenues in the year for which they are levied. Grants
   and similar items are recognized as revenue as soon as all eligibility requirements
   imposed by the provider have been met.

   Governmental fund financial statements are reported using the current financial resources
   measurement focus and the modified accrual basis of accounting. Revenues are
   recognized as soon as they are both measurable and available. Revenues are considered
   to be available when they are collectible within the current period, considered to be sixty
   days. Expenditures generally are recorded when a liability is incurred, as under accrual
   accounting. However, debt service expenditures, as well as expenditures related to
   compensated absences and claims and judgments, are recorded only when payment is
   due.

   The following are reported as major governmental funds:

   General Fund – This is the City’s primary operating fund. It accounts for all financial
   resources of the general government, except those required to be accounted for in another
   fund.

   The City reports the following major proprietary funds:

   Utility – Accounts for the operations of the utilities (water, gas and wastewater).

   Marianna Health and Rehabilitation Center (MHR) – Accounts for the activities at the
   City’s nursing home facility.

   Airport – Accounts for activities at the municipal airport. It includes the Marianna Airport
   Authority.

   The accompanying financial statements present the City and its component units, entities
   for which the City is considered to be financially accountable. Blended component units,
   although legally separate entities, are in substance part of the City’s operation.


                                             -17-
                                                                          City of Marianna
                                                            Notes to Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

  The City reports the following blended component unit:

  Community Redevelopment Agency (CRA) - On June 9, 1993 the City adopted a
  Community Redevelopment Plan and created a Community Redevelopment Agency
  (CRA) by Ordinance #822 and Resolution 93-8. The board consists of the Mayor and four
  City Commissioners. The total area of the CRA was 0.08581 square miles. The plan was
  amended by the City Commission on June 6, 1995 by Resolution 95-5, which expanded
  the area of the CRA to 0.3993 square miles.

  Proprietary funds distinguish operating revenues and expenses from non-operating items.
  Operating revenues and expenses generally result from providing services and producing
  and delivering goods in connection with a proprietary fund’s principal ongoing operations.
  The principal operating revenues of the Proprietary Funds are charges to customers for
  sales and services. Operating expenses for the Proprietary Funds include the cost of sales
  and services, administrative expenses, and depreciation on capital assets. All revenues
  and expenses not meeting this definition are reported as non-operating revenues and
  expenses.

  Private-sector standards of accounting and financial reporting issued prior to December 1,
  1989, generally are followed in both the government-wide and proprietary fund financial
  statements to the extent that those standards do not conflict with or contradict guidance of
  the Governmental Accounting Standards Board. Governments also have the option of
  following subsequent private-sector guidance for their business-type activities and
  enterprise funds, subject to this same limitation. The City has elected not to follow
  subsequent private-sector guidance.

D. Cash and Cash Equivalents

   Cash and Cash Equivalents include amounts in demand deposits as well as short-term
   investments with a maturity date within three months of the date acquired by the government.

E. Investments

   Investments are stated at cost or amortized cost, except in the Pension Trust Funds and
   Agency Fund where Investments are stated at fair value.

F. Inventory

   Inventory is valued at the lower of cost (first-in, first-out) or market. Inventory consists of
   expendable supplies held for consumption. The cost is recorded as an expenditure at the
   time individual inventory items are purchased.




                                             -18-
                                                                         City of Marianna
                                                            Notes to Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

G. Compensated Absences

   Employees earn one day annual leave and one day sick leave per month. Any unused
   annual and sick leave at the end of each calendar year may carryforward up to a maximum
   of eighteen days and sixty days for annual and sick days respectively. Any annual leave in
   excess of eighteen days accruing to the benefit of any employee which is neither taken nor
   compensated shall lapse. After the accumulation of sixty days sick leave, an employee shall
   be paid at his or her existing wage rate for any unused sick leave which has accumulated
   during the calendar year. The liability for compensated absences reported in the
   government-wide and proprietary fund statements consists of unpaid, accumulated annual
   and sick leave balances.

H. Bond Discounts and Issue Costs

   In the proprietary funds, bond discounts, premiums, and issue costs are amortized over the
    term of the bonds using the straight-line method which, for the bond discounts and
    premiums, is not materially different than the effective interest method. Unamortized bond
    discounts and premiums are presented in the financial statements as reductions/additions in
    bonds payable and unamortized bond issue costs as deferred charges.

I. Restricted Assets

   Restricted Assets consist of cash which is required by resolution to be set aside for specific
   purposes and is therefore unavailable for general operating purposes. When both restricted
   and unrestricted net assets are available, restricted assets are applied first.

J. Proprietary Fund Policies

   Pursuant to Governmental Accounting Standards Board (GASB) Statement No. 20, the City
   of Marianna has elected not to apply the provisions of pronouncements of the Financial
   Accounting Standards Board (FASB) issued after November 30, 1989 to the City’s
   proprietary funds.

K. Capital Assets

   Capital assets, which include property, plant, equipment, and infrastructure assets (e.g.,
   roads, bridges, sidewalks, and similar items), are reported in the applicable governmental
   or business-type activities columns in the government-wide financial statements. Capital
   assets are defined by the City as assets with an initial, individual cost of more than $3,000
   and capital assets with an estimated useful life in excess of two years. Such assets are
   recorded at historical cost or estimated historical cost if purchased or constructed.
   Donated capital assets are recorded at estimated fair value at the date of donation.

   The cost of normal maintenance and repairs that do not add to the value of the asset or
   materially extend assets lives are not capitalized.


                                             -19-
                                                                          City of Marianna
                                                            Notes to Financial Statements


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    Property, plant, and equipment of the primary government is depreciated using the straight
    line method over the following estimated useful lives:

          Buildings                                                       30 – 50 years
          Electrical, sewer, water and wastewater system                  30 – 50 years
          Equipment                                                        5 – 10 years
          Infrastructure                                                       50 years

L. Estimates

   The preparation of financial statements in conformity with accounting principles generally
   accepted in the United States of America requires management to make estimates and
   assumptions that affect the reported amounts of assets and liabilities and disclosure of
   contingent assets and liabilities at the date of the financial statements and the reported
   amounts of revenues and expenses during the reporting periods. Actual results could differ
   from those estimates.

M. Subsequent Events

   The City evaluates subsequent events through the date the financial statements were
   available to be issued.


NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

A. Budgetary Information

   The City follows these procedures in establishing the budget reflected in the financial
   statements:

      1. City Manager submits to the City Council a proposed operating budget for the fiscal
         year commencing the following October 1. The operating budget includes proposed
         expenditures and the means of financing them.

      2. The budget is legally enacted through passage of an ordinance.

      3. The budget of the General Fund is prepared on the modified accrual basis of
         accounting with the following exception:

          The City includes a portion of the prior year’s fund balance represented by
          unappropriated liquid assets remaining in the fund as a budgeted revenue in the
          succeeding year. The results of operation in accordance with generally accepted
          accounting principles do no recognize the fund balance allocation as revenue, as it is
          the result of the prior period’s excess of revenues over expenditures.

      4. Budgetary control is at the department level.

                                              -20-
                                                                               City of Marianna
                                                                 Notes to Financial Statements


NOTE 3 - PROPERTY TAXES

Under Florida Law, the assessment of all properties and the collection of all county, municipal, and
school board property taxes are consolidated in the offices of the County Property Appraiser and
County Tax Collector. The laws of the State regulating tax assessment are also designed to assure
a consistent property valuation method statewide. State statutes permit municipalities to levy
property taxes at a rate of up to 10 mills. The millage rate assessed by the City for the fiscal year
ended September 30, 2009 was 2.9520.

All property is assessed according to its fair market value on January 1 of each year. Each
assessment roll is submitted to the Executive Director of the Department of Revenue for review to
determine if the rolls meet all of the appropriate requirements.

The current year taxes for the fiscal year, beginning October 1, are billed in the month of November
and are due no later than March 31. On April 1, all unpaid amounts become delinquent and are
subject to interest and penalties. Discounts are allowed for early payment at the rate of 4% in the
month of November, 3% in the month of December, 2% in the month of January, and 1% in the
month of February. The taxes paid in March are without discount.

Delinquent taxes on real property bear interest at 18% per year. On or prior to June 1 following the
tax year, certificates are sold for all delinquent taxes on real property. After sale, tax certificates
bear interest at 18% per year or at any lower rate bid by the buyer. Application for a tax deed on
any unredeemed tax certificates may be made by the certificate holder after a period of two years.

Delinquent taxes on personal property bear interest at 18% per year until the tax is satisfied either
by seizure and sale of property or by the five year statute of limitations.

Since the Jackson County Tax Collector's Office acts quickly in selling tax certificates and in
remitting such collections to the City, no delinquent or uncollected property taxes exist at year end.
The City Tax Calendar is as follows:

                 Valuation Date:       January 1
                 Levy Date:            November 1
                 Due Date:             March 31, Succeeding Year
                 Lien Date:            April 1, Succeeding Year




                                                 -21-
                                                                              City of Marianna
                                                                 Notes to Financial Statements


NOTE 4 - DEPOSITS AND INVESTMENTS

At year end, the carrying amount of the City's deposits was $11,264,926 and the bank balance was
$11,631,962. The bank balance was covered by federal depository insurance and, for the amount
in excess of such federal depository insurance, by the State of Florida's Public Deposit Act.
Provisions of the Act require that public deposits may only be made at qualified public depositories.
The Act requires each qualified public depository to deposit with the State Treasurer eligible
collateral equal to or in excess of the required collateral as determined by the provisions of the Act.
In the event of a failure by a qualified public depository, losses in excess of federal depository
insurance and proceeds from the sale of securities pledged by the defaulting depository are
assessed against the other qualified public depositories of the same type as the depository in
default. When other qualified public depositures are assessed additional amounts, they are
assessed on a pro-rata basis.

Florida Statutes authorize the City to invest in certificates of deposit, repurchase agreements
and the State Treasurer’s Investment Pool. In addition, the statutes allow the City to invest in
bonds, notes or other obligations of the United States Government, certain bonds of any state or
local government unit, and bonds issued by certain government agencies.

Credit Risk

The credit risk of certain investments, such as investment pools managed by other
governments, cannot be categorized as to credit risk because the City investments are not
evidenced by specific, identifiable investment securities.

Interest Rate Risk

At September 30, 2009, the City did not hold any investments that were considered to have
interest rate risk.

Custodial Credit Risk

At September 30, 2009, the City did not hold any deposits or investments that were considered
to have custodial credit risk.

Concentration of Credit Risk

At September 30, 2009, the City did not hold any investments that were considered to have
concentration of credit risk.




                                                 -22-
                                                                           City of Marianna
                                                              Notes to Financial Statements


NOTE 4 - DEPOSITS AND INVESTMENTS (CONTINUED)

The City invested funds in the Florida State Board of Administration Local Governments Surplus
Funds Investment Pool. At September 30, 2009, the market value and the carrying value of these
funds was $238,855. The funds are carried as a cash equivalent on the balance sheet at
September 30, 2009 (See Note 1, Section D for definition of cash equivalents) and are included in
carrying value and bank balance in the first paragraph of this note.

The City’s investments in the Local Government Surplus Funds Trust Fund (Florida PRIME),
which the State Board of Administration indicates is a Securities and Exchange Commission
Rule 2a7-like external investment pool, as of September 30, 2009, are similar to money market
funds in which shares are owned in the fund rather than the underlying investments. These
investments are reported at fair value, which is amortized cost.

The State Board of Administration’s interpretation in regards to the City’s investments in Fund B
is that it does not meet the requirement of a SEC 2a-7-like fund; therefore, State Board of
Administration is providing a Fair Value factor (i.e. total net asset value of Fund B divided by
total participant balances of Fund B) for September 30, 2009. The Fair Value factor for Fund B
for September 30, 2009, is .54915069.

As of September 30, 2009, the City had $204,308 and $36,709 invested in Florida PRIME and
Fund B, respectively. Additional information and investment policies regarding the Local
Government Surplus Funds Trust Fund may be obtained from the State Board of Administration
at www.sbafla.com/prime.

Credit Risk
The credit risk of certain investments, such as investment pools managed by other
governments, cannot be categorized as to credit risk because the City investments are not
evidenced by specific, identifiable investment securities.

As of September 30, 2009, the City’s investment in the Florida PRIME is rated by Standard and
Poors and the current rating is AAAm. The Fund B Surplus Funds Trust Fund is not rated by
any nationally recognized statistical rating agency.

Interest Rate Risk
The weighted average days to maturity (WAM) of the Florida PRIME at September 30, 2009, is 33
days. Next interest rate reset for floating rate securities are used in the calculation of the WAM.
The weighted average life (based on expected future cash flows) of Fund B at September 30,
2009, is estimated at 6.69 years. However, because Fund B consists of restructured or defaulted
securities, there is considerable uncertainty regarding the weighted average life.




                                               -23-
                                                                                       City of Marianna
                                                                        Notes to Financial Statements


NOTE 4 - DEPOSITS AND INVESTMENTS (CONTINUED)

The City also offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. This plan allows the employees to designate where the plan funds are
invested. At September 30, 2009, plan funds totaling $316,954 were invested in mutual funds. These
funds are carried as an investment in the agency fund.


NOTE 5 - ACCOUNTS RECEIVABLE

                                            GENERAL            UTILITY       AIRPORT                 MHR

Accounts receivable                     $     68,938      $      659,561     $            - $ 1,275,451
Other receivables                            231,471              10,300             41,429           -
Interest receivable                           35,851                   -                  -      24,877
Less allowance for doubtful
 accounts                                    (33,660)             (29,757)                 -         (97,955)

          Receivables, net              $    302,600      $      640,104     $       41,429 $ 1,202,373

Receivables arise primarily from utility services (sewer, gas and water) provided by the City of
Marianna, Florida and nursing home services provided by the Marianna Health and Rehabilitation
Center. The City grants credit to customers, substantially all of whom are local residents.


NOTE 6 - INTERFUND BALANCES

Interfund balances are generally used to meet cash demands necessary to pay operating expenses.
Amounts are generally repaid during the next fiscal year. Balances due to/from other funds at
September 30, 2009 are as follows:

           Receivable fund                      Payable fund
              General                         Proprietary funds                                $ 1,227,362

For Governmental Funds, the interfund balance is comprised of $1,876,134 in due from other
funds and $648,772 in payable to other funds. For Proprietary Funds, the interfund balance is
comprised of $604,566 in due from other funds and $1,831,928 in payable to other funds.

                                                    TRANSFERS IN

TRANSFERS                                      DEBT
   OUT           GENERAL       CRA            SERVICE         UTILITY    AIRPORT           MHR         TOTAL



General          $         - $ 44,406        $ 112,675    $         -    $       -     $         -   $ 157,081
CRA                   11,000        -                -              -            -               -      11,000
Utility              731,185        -          129,490              -            -               -     860,675
Airport               43,080        -                -              -            -               -      43,080
MHR                  423,756        -                -              -            -               -     423,756

                 $ 1,209,021 $ 44,406        $ 242,165    $         -    $       -     $         -   $1,495,592
                                                   -24-
                                                                                        City of Marianna
                                                                        Notes to Financial Statements


NOTE 7 - CAPITAL ASSETS

Capital asset activity for the year ended September 30, 2009 was as follows:

                               BEGINNING                                                           ENDING
                                BALANCE                  INCREASES             DECREASES          BALANCE
Governmental activities:
  Capital assets, not being
   depreciated:
    Land                       $    1,202,036        $            -        $             -    $    1,202,036
    Construction in progress        3,068,205             1,093,050             (3,820,675)          340,580

   Total capital assets, not
    being depreciated               4,270,241             1,093,050             (3,820,675)        1,542,616

   Capital assets, being
    depreciated:
     Infrastructure                 1,581,321              3,820,674                     -         5,401,995
     Buildings                      1,011,079                 11,853                     -         1,022,932
     Improvements other
      than buildings                1,388,634                 2,400                     -          1,391,034
     Equipment                      2,514,271               155,262               (27,115)         2,642,418

   Total capital assets,
    being depreciated               6,495,305             3,990,189               (27,115)        10,458,379

   Less: accumulated
    depreciation for:
     Infrastructure                  337,472                 35,979                      -          373,451
     Buildings                       641,014                 24,624                      -          665,638
     Improvements other
      than buildings                  399,284                60,112                     -            459,396
     Equipment                      1,786,507               173,503               (27,115)         1,932,895

   Total accumulated
   depreciation                     3,164,277               294,218               (27,115)         3,431,380

   Total capital assets,
    being depreciated, net          3,331,028             3,695,971                      -         7,026,999

Governmental activities
    capital assets, net        $    7,601,269        $    4,789,021        $    (3,820,675)   $    8,569,615




                                                   -25-
                                                                                   City of Marianna
                                                                    Notes to Financial Statements


NOTE 7 - CAPITAL ASSETS (CONTINUED)

                                   BEGINNING                                                  ENDING
                                    BALANCE            INCREASES         DECREASES           BALANCE
Business-type activities:
 Utility
 Capital assets, not being
  depreciated:
   Land                        $    1,073,892      $           -     $             -     $    1,073,892
   Construction in progress        27,391,627            617,382         (28,007,040)             1,969

 Total capital assets, not
  being depreciated                28,465,519            617,382         (28,007,040)         1,075,861

 Capital assets, being
  depreciated:
   Buildings                        1,423,911                   -                  -          1,423,911
   Improvements other
    than buildings                 23,705,440          29,154,706                  -         52,860,146
   Equipment                        1,750,485              42,667            (53,545)         1,739,607

 Total capital assets,
  being depreciated                26,879,836          29,197,373            (53,545)        56,023,664

 Less: accumulated
  depreciation for:
   Buildings                         814,047              10,391                   -           824,438
   Improvements other
    than buildings                 12,176,023           1,017,945                  -         13,193,968
   Equipment                        1,398,850              97,470            (53,545)         1,442,775

 Total accumulated
 depreciation                      14,388,920           1,125,806            (53,545)        15,461,181

 Total capital assets,
  being depreciated, net           12,490,916          28,071,567                  -         40,562,483

 Utility capital assets, net   $   40,956,435      $ 28,688,949      $ (28,007,040)      $   41,638,344




                                                -26-
                                                                               City of Marianna
                                                               Notes to Financial Statements


NOTE 7 - CAPITAL ASSETS (CONTINUED)

                                 BEGINNING                                              ENDING
                                  BALANCE         INCREASES     DECREASES              BALANCE
Airport
Capital Assets, not being
 depreciated:
  Land                       $      75,509    $            -   $          -        $      75,509
  Construction in progress         246,731           555,160       (571,571)             230,320

Total capital assets, not
 being depreciated                 322,240           555,160       (571,571)             305,829

Capital assets, being
 depreciated:
  Buildings                       2,396,843           10,683              -             2,407,526
  Improvements other
   than buildings                 2,096,217          571,571              -             2,667,788
  Equipment                         824,729            1,312              -               826,041

Total capital assets,
 being depreciated                5,317,789          583,566              -             5,901,355

Less: accumulated
 depreciation for:
  Buildings                        804,038            57,691              -              861,729
  Improvements other
   than buildings                  828,044            60,104              -              888,148
  Equipment                        399,239            80,062              -              479,301

Total accumulated
depreciation                      2,031,321          197,857              -             2,229,178

Total capital assets,
 being depreciated, net           3,286,468          385,709              -             3,672,177

Airport capital
  assets, net                $    3,608,708   $      940,869   $   (571,571)       $    3,978,006




                                              -27-
                                                                                City of Marianna
                                                                     Notes to Financial Statements


NOTE 7 - CAPITAL ASSETS (CONTINUED)

                                  BEGINNING                                                ENDING
                                   BALANCE            INCREASES          DECREASES        BALANCE
 MHR
 Capital assets, not being
  depreciated:
   Land                       $      50,000       $             -    $          -     $      50,000
   Construction in progress               -                     -               -                 -

 Total capital assets, not
  being depreciated                  50,000                     -               -            50,000

 Capital assets, being
  depreciated:
   Buildings                       4,775,023              22,384                -          4,797,407
   Equipment                       1,855,177             103,951                -          1,959,128

 Total capital assets,
  being depreciated                6,630,200             126,335                -          6,756,535
 Less: accumulated
  depreciation for:
   Buildings                       2,933,161             164,194                -          3,097,355
   Equipment                       1,327,108             105,871                -          1,432,979

 Total accumulated
 depreciation                      4,260,269             270,065                -          4,530,334

 Total capital assets,
  being depreciated, net           2,369,931             (143,730)              -          2,226,201

 MHR capital assets, net      $    2,419,931     $       (143,730)   $          -     $    2,276,201

Depreciation expense was charged to functions as follows:

 Governmental activities
  General government                                                                  $     97,350
  Public safety                                                                             96,391
  Highways and streets                                                                      81,663
  Culture and recreation                                                                    18,814

     Total depreciation expense-governmental activities                               $    294,218

 Business-type activities
 Gas                                                                                  $     66,610
 Water                                                                                     235,652
 Sewer                                                                                     823,544
 MHR                                                                                       270,066
 Airport                                                                                   197,857

    Total depreciation expense-business-type activities                               $ 1,593,729

                                                  -28-
                                                                                        City of Marianna
                                                                           Notes to Financial Statements


NOTE 8 - LONG-TERM DEBT

Long-term debt activity for the year ended September 30, 2009, was as follows:

                                                                                                   DUE
                    BEGINNING                                                    ENDING           WITHIN
                     BALANCE         ADDITIONS            REDUCTIONS            BALANCE          ONE YEAR

 Governmental
  activities:
 Compensated
  absences         $     348,918     $         -          $      3,721         $     345,197     $          -
 Notes payable           835,648               -               220,918               614,730          214,730

                        1,184,566              -               224,639               959,927          214,730

 Business-type
  activities:
 General
 revenue bonds          5,416,000              -               426,000              4,990,000         437,000
 Less deferred
 charges and
 bond premium
 - net                   (357,969)             -                (39,774)             (318,195)               -
 Compensated
 absences                 674,489              -                 40,629               633,860               -
 Notes payable         16,444,420        553,183              1,023,179            15,974,424         742,311

                       22,176,940        553,183              1,450,034            21,280,089        1,179,311

  Total            $ 23,361,506      $   553,183          $ 1,674,673          $ 22,240,016      $ 1,394,041




                                                   -29-
                                                                                 City of Marianna
                                                                     Notes to Financial Statements


NOTE 8 - LONG-TERM DEBT (CONTINUED)

Debt service requirements on long-term debt at September 30, 2009 are as follows:

                                                                       GOVERNMENTAL ACTIVITIES
 FISCAL YEAR ENDING                                                        NOTES PAYABLE
    SEPTEMBER 30,                                                      PRINCIPAL     INTEREST

         2010                                                          $     214,730   $    10,725
         2011                                                                200,000         4,713
         2012                                                                200,000           673
         2013                                                                      -             -
         2014                                                                      -             -
       2015-2019                                                                   -             -

          Total                                                        $     614,730   $    16,111

                                               BUSINESS-TYPE ACTIVITIES
 FISCAL YEAR ENDING                  REVENUE BONDS                  NOTES PAYABLE
    SEPTEMBER 30,               PRINCIPAL       INTEREST      PRINCIPAL       INTEREST

         2010                   $     437,000          $   197,415     $     742,311   $   130,949
         2011                         454,000              179,877           748,440       124,821
         2012                         471,000              163,470           751,717       118,642
         2013                         488,000              147,297           755,350       112,411
         2014                         245,000              134,301           761,633       106,129
       2015-2019                    1,129,000              525,726         3,904,245       434,563
       2020-2024                      326,000              389,976         4,069,331       269,477
       2025-2029                      411,000              304,762         4,241,397        97,411
       2030-2034                      520,000              197,222                 -              -
       2035-2039                      509,000               61,656                 -              -
       2040-2044                            -                    -                 -              -
       2045-2047                            -                    -                 -              -

          Total                 $ 4,990,000            $ 2,301,702     $ 15,974,424    $ 1,394,403

Governmental activities

 Notes payable

 Ford Motor Credit Company - payable in annual installments of $15,702, including
 interest at 6.6%, collateralized by vehicles, due February 2010                       $   14,730

 SunTrust Bank - payable in annual installments of $200,000 plus interest at 2.02%
 at September 30, 2009, on the unpaid balance, secured by non-advalorem
 revenues, due December 2014.                                                              600,000

   Total notes payable                                                                     614,730

        Total governmental activities                                                  $ 614,730




                                                -30-
                                                                           City of Marianna
                                                              Notes to Financial Statements


NOTE 8 - LONG-TERM DEBT (CONTINUED)

 Business - type activities

 Revenue Bonds

$4,255,000 Utility System Refunding Revenue Bonds – Series 2004, due in
annual installments of $365,000 to $445,000 from October 1, 2005 through
October 1, 2017, interest at 1.65% to 4.00%, net of $16,666 bond premium
and $334,861 deferred amount on refunding.                                          $ 2,441,805

$2,500,000 Wastewater System Revenue Bond – Series 1998 due in annual
installments of $25,000 to $134,000 from September 1, 2001 to September
1, 2038, interest at 4.75%.                                                            2,230,000

  Total - net of discounts, premiums and deferred amount on refunding                  4,671,805

Notes payable

Marlin Business Bank – payable in monthly installments of $458,
collateralized by equipment, due March 2012                                               13,595

State of Florida - State Revolving Fund, payable in semiannual installments
of $447,027, including interest at .835%, due January 2029.                           15,960,829

  Total notes payable                                                                 15,974,424

  Total business - type activities                                                  $ 20,646,229


NOTE 9 - MAJOR SUPPLIER

All natural gas sold by the City is purchased from a single supplier, Florida Gas Utility Company.
Purchases totaled $1,005,059 for the year ended September 30, 2009. The City has placed a
deposit totaling $147,000 with Florida Gas Utility Company to secure the credit needed with the
company.




                                               -31-
                                                                               City of Marianna
                                                                 Notes to Financial Statements


NOTE 10 - DEFERRED COMPENSATION PLAN

The City offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457. The plan, available to all City employees, permits them to defer a
portion of their salary until future years. Participation in the plan is optional. The deferred
compensation is not available to employees until termination, retirement, death or unforeseeable
emergency. All amounts of compensation deferred under the plan, all property and rights
purchased with those amounts, and all income attributable to those amounts, property or rights are
(until paid or made available to the employee or other beneficiary) solely the property and rights of
the government subject only to the claims of the government’s general creditors. Participants’ rights
under the plan are equal to those of general creditors of the government in an amount equal to the
fair market value of the deferred account for each participant.

Investments are managed by the plan’s trustee under one of four investment options, or a
combination thereof. The choice of the investment option(s) is made by the participants.


NOTE 11 - EMPLOYEE BENEFITS

During November 2008, the City elected to participate in the Florida Retirement System (FRS) a
cost-sharing, multiple employer defined benefit public retirement system administered by the State
of Florida Department of Administration, Division of Retirement, to provide retirement and survivor
benefits to participating public employees. Chapter 121, Florida Statutes, establishes the authority
for participant eligibility, contribution requirements, vesting eligibility and benefit provisions. FRS
issues a publicly available financial report that includes financial statements and required
supplementary information. The report may be obtained by writing to the State of Florida Division
of Retirement, Tallahassee, FL 32399-1560, or by accessing their internet site at
www.dos.state.fl.us/fgils/retirement.

The System provides vesting of benefits after six years of creditable service. Members are
eligible for normal retirement after six years of service and attaining age 62, or 30 years of service
regardless of age. Early retirement may be taken any time after completing six years of service;
however, there is a 5% benefit reduction for each year prior to normal retirement. FRS also
provides death and disability benefits and cost-of-living adjustments. Generally, membership is
compulsory for all full-time and part-time employees. Retirement coverage is employee
noncontributory. The employer pays all contributions.

The funding methods and the determination of benefits payable are provided in various acts of the
Florida Legislature. These acts provide that employers pay all contributions at rates determined
each year by the legislature. The rates, as a percentage of gross earnings, are as follows:

                                                                                 10/01/08-09/30/09
Regular class                                                                           9.85%
Senior management                                                                      13.12%
Special risk class                                                                     20.92%
DROP program participants                                                              10.91%




                                                 -32-
                                                                              City of Marianna
                                                                Notes to Financial Statements


NOTE 11 - EMPLOYEE BENEFITS (CONTINUED)

Contribution rates equal actuarial determined rates. During the years ended September 30, 2009,
total payroll for all employees was $6,158,473. The retirement contributions for all employees
covered by FRS for the years ended September 30, 2009 were $618,802. The contributions for
the years ending September 30, 2009 represented 10.01% of total payroll.


NOTE 12 - PENSION PLAN

Employees that elected not to enter the Florida Retirement System when the City elected to in
November 2009, participate in the Florida League of Cities' Municipal Pension Trust Fund. The
employees contribute 3.5% of their gross pay, and the City contributes 6.5% of their gross pay.
Total contributions made by the City were $19,462 for the year ended September 30, 2009. The
Met Life Municipal Trust Fund was unable to provide the market value of the City’s portion of the
pension fund at year end.

The following are accounted for in the Pension Trust Fund:

The Municipal Firemen's Pension Trust Fund was created by the State of Florida for all
municipalities having an organized fire department and approved equipment in excess of $10,000
where the municipality did not already have a similar fund. The plan is funded through employee
contributions, contributions from the State of Florida and contributions by the City. The employee
contribution is equal to 5% of gross salaries (3% of the employees are participating under the Old
Age Survivors Insurance and Social Security Law as elected by these employees). The state
contribution is derived from an assessment against insurance companies which sell property
insurance on property located within the city limits. The City is to provide a sum equal to the normal
cost and the amount required to fund over a period of 40 years or on a 40 year basis, any actuarial
deficiency shown by an actuarial valuation performed every three years. The actuarial determined
liability is $2,659,566 as of October 1, 2006. The excess of this liability over current assets is
$946,685 at September 30, 2009. The plan covers all firemen of the City unless rejected by the
individual.

The Municipal Police Officers' Retirement Trust Fund was created by the State of Florida for all
municipalities having an organized police department and approved equipment in excess of $500
where the municipality did not already have a similar fund. The plan is funded in a like manner to
the Municipal Firemen's Pension Trust Fund. The actuarial determined liability is $2,752,814 as of
October 1, 2006. The excess of the current assets over this liability is $368,115 at September 30,
2009. The plan covers all policemen of the City unless rejected by the individual.

Information regarding the Municipal Firemen’s Pension Trust Fund and the Municipal Police
Officers’ Retirement Trust Fund can be obtained from the Florida Division of Retirement, Post
Office Box 3010, Tallahassee, Florida 32315.




                                                 -33-
                                                                           City of Marianna
                                                              Notes to Financial Statements


NOTE 13 - CONTINGENCIES AND COMMITMENTS

Various claims and lawsuits are pending against the City. In the opinion of legal counsel, the
potential unrecorded liability on all claims and lawsuits will not be significant to the City's
financial position.

The City has various leases for airport buildings and hangers, for office equipment, etc. Most of
these leases are for one year and coincide with the City’s fiscal year.

The City is operating under a consent order from DEP related to its WWTP operations. It is
currently in compliance with all provisions but will remain under this consent order until the new
WWTP facility is completed and in operation.

The City was awarded funding by Florida Department of Environmental Protection to rehabilitate
the City’s water distribution system. This project is $3 million in funding with 85% being grant
funded and 15% in the form of a loan. The City entered into a contract with I-C Contractors, Inc.
in the amount of $3,854,950 and also committed City reserve funds for additional paving in
relation to this project.


NOTE 14 - SUBSEQUENT EVENTS

The City approved an increase in the Fire Department plan review fee rates from $.03 per
square foot to $.10 per square foot.

The City approved the purchase of two police vehicles at a total cost of $48,650 with financing
from a local bank at a rate of 5%.

The Commission agreed to accept a $100,000 grant and a $216,000 loan from USDA – Rural
Development for the purchase of two emergency fire vehicles.

The City revised the natural gas incentive program to provide increased incentives for
customers to convert to natural gas.

The City approved various capital expenditures including a vehicle lift in the amount of $11,299,
backhoe loader in the amount of $75,451, a wood chipper in the amount of $27,275, a mower in
the amount of $8,875, and resident furniture in the amount of $29,366.

The City entered into an agreement for engineering services with David H. Melvin, Inc. for the
CDBG – Downtown Revitalization Project for a contract price of $38,000.

The City approved a change order in the amount of $15,285 for the airport runway lighting
project 18/36.




                                               -34-
                                                                           City of Marianna
                                                              Notes to Financial Statements


NOTE 15 - RECLASSIFICATION

Certain 2008 amounts have been reclassified to conform with 2009 classifications. Such
reclassifications had no effect on reported net income.


NOTE 16 - CHANGE IN ACCOUNTING ESTIMATES

Effective September 30, 2009, the City changed its estimate of the liability related to an ongoing
lawsuit involving the Marianna Health and Rehabilitation Center. The effect of this change in
estimate was to decrease other accrued losses and increase other income by $100,000 for
2009.


NOTE 17 - RISK MANAGEMENT

The City is exposed to various risks of loss related to torts, theft of, damage to and destruction
of assets, errors or omissions; injuries to employees and/or the public; or damage to property of
others; and natural disasters for which the City carries commercial insurance. Insurance
against losses is provided for the following types of risk:

   •   Workers’ compensation and employer’s liability
   •   General and automobile liability
   •   Real and personal property damage
   •   Public officials’ liability
   •   Accidental death and dismemberment


NOTE 18 - GRANTS

The City participates in several state and federal grant programs. These programs are subject
to program compliance audits by grantors or their representatives. The audits of these programs
for, or including, the year ended September 30, 2009, have not yet been accepted/approved by
the grantors. Accordingly, the final determination of the City’s compliance with applicable grant
requirements will be established at a future date. The amount, if any, of expenditures which may
be disallowed by granting agencies cannot be determined, although the City expects such
amounts, if any, to be immaterial.




                                               -35-
                                                                      City of Marianna
                                                          Notes to Financial Statements


NOTE 19 - FUND EQUITY

Reserved Fund Equity

Reservations of equity show amounts that are not appropriated for expenditure or are legally
restricted for specific uses. The purpose for each is indicated as follows:

       Funds                   Purpose                                           Amount
General fund                   Capital projects                              $      37,646
General fund                   Other purposes                                      516,037
CRA                            Community redevelopment projects                    455,113
Utility fund                   Capital projects                                    233,684
Utility fund                   Debt service                                        668,559
Utility fund                   Other purposes                                        1,763
Airport fund                   Capital projects                                     33,026

Total restricted fund equity                                                 $   1,945,828




                                            -36-
Supplementary Information
Honorable Mayor and Members
of the City Council
City of Marianna, Florida
Page Two

The Rules of the Auditor General [Section 10.554(1) (i) 4.] also require that we address violations
of provisions of contracts and grant agreements or abuse 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 note any matters that were required to be disclosed by Rules of the Auditor General
[Section 10.554(1) (i) 4.].

The Rules of the Auditor General (Section 10.554(1)(i)5.) requires, based on professional
judgment, the reporting of the following matters that are inconsequential to the financial
statements, considering both quantitative and qualitative factors: (1) violations of laws, rules,
regulations, and contractual provisions that have occurred, or are likely to have occurred and
would have an immaterial effect on the financial statements; (2) improper expenditures or illegal
acts that would have an immaterial effect on the financial statements; and (3) control
deficiencies that are not significant deficiencies, including, but not limited to: (a) improper or
inadequate accounting procedures (e.g., the omission of required disclosures from the financial
statements); (b) failures to properly record financial transactions; and (c) other inaccuracies,
shortages, defalcations, and instances of fraud discovered by, or that come to the attention of,
the auditor. In connection with our audit, we did not note any matters that were required to be
disclosed by Rules of the Auditor General (Section 10.554(1)(i)5.).

The Rules of the Auditor General (Section 10.554(1) (i) 6.) also requires that the name or official
title and legal authority for the primary government and each component unit of the reporting entity
be disclosed. The City was established by Chapter 59-1983, Laws of Florida.

The Rules of the Auditor General (Section 10.544(1)(i)7a), 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(s) 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.

As required by the Rules of the Auditor General (Section 10.554(1) (i)7 .b.), we determined that the
annual financial report for the City of Marianna for the year ended September 30, 2009, 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, 2009.
In connection with our audit, we determined that these two reports were in agreement.




                                                -38-
Honorable Mayor and Members
of the City Council
City of Marianna, Florida
Page Three

As required by the Rules of the Auditor General (Sections 10.554(i) 7.c. and 10.556(7)), we applied
financial condition assessment procedures. It is management’s responsibility to monitor the entity’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.

This management letter is intended solely for the information of the City of Marianna and
management, and the State of Florida Office of the Auditor General, and is not intended to be and
should not be used by anyone other than these specified parties.




February 16, 2010




                                                -39-
Honorable Mayor and Members
of the City Council
City of Marianna, Florida
Page Two

A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that a material misstatement of the financial statements
will not be prevented or detected by City of Marianna’s internal control.

Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in internal control that might be significant deficiencies and, accordingly, would not necessarily
disclose all significant deficiencies that are also considered to be material weaknesses.
However, we believe that none of the significant deficiencies described above are also a
material weakness.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the City of Marianna, Florida’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 other matters that we reported to the management of the City of Marianna in a
separate letter dated February 16, 2010.

City of Marianna’s response to the findings identified in our audit is described in the
accompanying schedule of findings and questioned costs. We did not audit the City of
Marianna’s response and, accordingly, we express no opinion on it.

This report is intended for the information and use of management, others within the entity, City
Council, and 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.




February 16, 2010




                                                -41-
Honorable Mayor and Members
of the City Council
City of Marianna, Florida
Page Two

Internal Control Over Compliance

The management of the City of Marianna is responsible for establishing and maintaining
effective internal control over compliance with requirements of laws, regulations, contracts and
grants applicable to federal programs and state projects. 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 or state project in order to determine our
auditing procedures for the purpose of expressing our opinion on compliance 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 of Marianna’s internal
control over compliance.

A control deficiency in an entity’s internal control over compliance 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 noncompliance with a type of
compliance requirement of a federal program or state project on a timely basis.

A significant deficiency is a control deficiency, or combination of control deficiencies, that
adversely affects the entity’s ability to administer a federal program or state project such that
there is more than a remote likelihood that noncompliance with a type of compliance
requirement of a federal program or state project that is more inconsequential will not be
prevented or detected by the entity’s internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that
results in more than a remote likelihood that material noncompliance with a type of compliance
requirement of a federal program or state project will not be prevented or detected by the
entity’s internal control.

Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and would not necessarily identify all deficiencies in the
internal control that might be significant deficiencies or material weaknesses. We did not identify
any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above.

This report is intended solely for the information and use of management, others within the
entity, City Council, federal and state awarding agencies and pass-through entities, and specific
legislative or regulatory bodies and is not intended to be and should not be used by anyone
other than these specified parties.




February 16, 2010




                                               -43-
                                                                                                                  City of Marianna
                                             Schedule of Expenditures of Federal Awards and State Financial Assistance

For year ended September 30, 2009

Federal Agency                                                                 CFDA/              Contract /
Pass through entity                                                            CFSA                Grant
Federal Program                                                                 No.                 No.                   Expenditures

U.S. Department of Justice
  Bullet Proof Vest Grant Program                                              16.607             2008 Fund           $           1,764

U.S. Department of Justice
Passed through the Florida Department of Law Enforcement
  Edward Byrne Memorial Justice Assistance Grant Program                       16.738     2009-JAGD-JACK-3-T8-045                 1,151

Department of Homeland Security
  Assistance to Firefighters Grant Program                                     97.044        EMW-2005-FF-00376                   57,799

Department of Homeland Security
Passed through the Florida Department of Community Affairs
  Disaster Grants - Public Assistance                                          97.036         FEMA01831-DR-FL                     3,472

Department of Transportation, Federal Highway Administration
  Highway Planning and Construction Program Safe Routes to School              20.205        FPN 422935-1-38-01                 238,016

Federal Aviation Agency
Passed through Florida Department of Transportation
  Airport Improvement Program Apron Reseal                                     20.106        3-12-0045-011-2009                  46,602
  Airport Improvement Program Lighting Design                                  20.106        3-12-0045-009-2009                  34,486
  Airport Improvement Program Lighting Construction                            20.106        3-12-0045-010-2009                 149,232

U.S. Department of Environmental Protection Agency
Passed through Florida Department of Environmental Protection
  State Revolving Loan Fund Program                                            66.458           CS12045114P                  18,395,733

Total Federal Awards                                                                                                         18,928,255

State Agency
State Program

Florida Department of Transportation
   Airport Improvement Grant                                                   55.004           42382019401                     129,435
   Airport Improvement Grant                                                   55.004           41449619401                      10,608
   Airport Improvement Grant                                                   55.004           42382049401                       5,142
   Airport Improvement Grant                                                   55.004           42072219401                     179,636

Office of Tourism, Trade, and Economic Development
  Project Springs                                                              31.002             OT-09-021                     246,789
  Rural Infrastructure Grant Program                                           31.030             OT-08-081                      74,915

Florida Department of Environmental Protection
   Florida Recreation Development Assistance Program-Performing Arts Park      37.017               A9066                        36,291
   Capitalization Grants for Clean Water                                       37.039                N/A                      1,235,171

Florida Department of Community Affairs
   Emergency Management Programs - Disaster Grant                              52.xxx                N/A                           579

Total State Financial Assistance                                                                                              1,918,566

Total Federal Awards and State Financial Assistance                                                                   $      20,846,821




              See accompanying notes to Schedule of Expenditures of Federal Awards and State Financial Assistance.
                                                             -44-
                                                               City of Marianna, Florida
                                 Notes to Schedule of Expenditures of Federal Awards
                                                       and State Financial Assistance
                                              For the year ended September 30, 2009


NOTE 1 - BASIS OF PRESENTATION

The accompanying Schedule of Expenditures of Federal Awards and State Financial Assistance
include the federal and state activities of the City of Marianna and are presented on the accrual
basis of accounting. The information in these schedules is presented in accordance with the
requirement of OMB Circular A-133, “Audits of States, Local Governments, and Non-Profit
Organizations” and Chapter 10.550, Rules of the Auditor General. Therefore, some amounts
presented in the Schedule may differ from amounts presented in, or used in the preparation of,
the basic financial statements.




                                              -45-
                                                                           City of Marianna
                                               Schedule of Findings and Questioned Costs
                                                  For the year ended September 30, 2009


A. SUMMARY OF AUDIT RESULTS

  1.   The Independent Auditors’ Report expresses an unqualified opinion on the financial
       statements of the City of Marianna.

  2.   Significant deficiencies disclosed during the audit of the financial statements are reported
       in the 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.

  3.   No instances of noncompliance material to the financial statements of the City of
       Marianna were disclosed during the audit.

  4.   No significant deficiencies relating to the audit of the major federal award program and
       state projects are reported in the Independent Auditors’ Report on Compliance and
       Internal Control Over Compliance Applicable to Each Major Program and State Project.

  5.   The Independent Auditors’ Report on Compliance and Internal Control over Compliance
       Applicable to Each Major Federal Program and State Project of the City of Marianna
       expresses an unqualified opinion.

  6.   No audit findings relative to the major federal award programs and state projects for the
       City of Marianna are reported in this schedule.

  7.   The programs/projects tested as major programs and projects includes:

       Federal Program                                                       Federal CFDA No.

       State Revolving Loan Fund                                                       66.458

       State Project                                                           State CFSA No.

       Capitalization Grants for Clean Water                                           37.039

  8.   The threshold for distinguishing Type A and B programs was $300,000 for major federal
       programs and major state projects.

  9.   The City of Marianna was not determined to be a low-risk auditee.




                                               -46-
                                                                 City of Marianna, Florida
                                              Schedule of Findings and Questioned Costs
                                                          Year ended September 30, 2009


B. FINDINGS - FINANCIAL STATEMENTS AUDIT

BOOKKEEPING 09-01

COMMENT: During the current year, a material adjustment to the allowance for doubtful
accounts was needed for Marianna Health and Rehabilitation Center.

RECOMMENDATION: We recommend that the allowance for doubtful accounts be monitored
and adjusted on a regular basis.


C. FINDINGS - MAJOR FEDERAL PROGRAMS

There were no current year audit findings.

See summary schedule of prior year audit findings for findings not resolved in the current year.


D. FINDINGS - MAJOR STATE PROJECTS

There were no current year audit findings.

See summary schedule of prior year audit findings for findings not resolved in the current year.




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                                                                 City of Marianna, Florida
                                               Summary Schedule of Prior Audit Findings
                                                        Year ended September 30, 2009


PRIOR-YEAR AUDIT FINDINGS AND QUESTIONED COSTS


MAJOR FEDERAL PROGRAMS AND STATE PROJECTS

SEGREGATION OF DUTIES 03-01 – NOT RESOLVED

This applies to all major federal programs and state projects listed in Part A, Number 7 of Schedule
of Findings and Questioned Costs.

COMMENT: We noted that there is a lack of segregation of duties between employees who have
recordkeeping responsibilities and employees in custody of City assets.

RECOMMENDATION: We realize that due to the size of the City’s administrative staff it is difficult
to achieve ideal separation of duties. However, the City should be aware of this internal control
weakness and attempt to separate recordkeeping duties from custody of assets as much as
possible.

STATUS: There is still a lack of segregation of duties between employees who have recordkeeping
responsibilities and employees with custody of City assets.


FINANCIAL STATEMENTS

SEGREGATION OF DUTIES 03-01 – NOT RESOLVED

COMMENT: We noted that there is a lack of segregation of duties between employees who have
recordkeeping responsibilities and employees in custody of City assets.

RECOMMENDATION: We realize that due to the size of the City’s administrative staff it is difficult
to achieve ideal separation of duties. However, the City should be aware of this internal control
weakness and attempt to separate recordkeeping duties from custody of assets as much as
possible.

STATUS: There is still a lack of segregation of duties between employees who have recordkeeping
responsibilities and employees with custody of City assets.




                                                -48-
                                                           City of Marianna, Florida
                                           Summary Schedule of Prior Audit Findings
                                                    Year ended September 30, 2009


PRIOR-YEAR AUDIT FINDINGS AND QUESTIONED COSTS (CONTINUED)


PRIOR PERIOD ADJUSTMENT 08-03 - RESOLVED

COMMENT: During the current year, a material prior period adjustment had to be made for an
insurance deposit that had not been properly recorded in previous years for Marianna Health
and Rehabilitation Center.

RECOMMENDED: We recommend that all assets owned and maintained by the City be
properly recorded on the City’s general ledger.

STATUS: Insurance deposit was properly recorded.




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