PFPB Financial Statements for Years Ended 9/30/06 and 20051
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1
VILLAGE OF NORTH PALM BEACH
POLICE AND FIRE PENSION FUND
A Pension Trust Fund of the
Village of North Palm Beach, Florida
' Financial Statements and Accompanying Information
For Years Ended
September 30, 2006 and 2005
1
1
VILLAGE OF NORTH PALM BEACH
POLICE AND FIRE PENSION FUND
Table of Contents
Page
Report of Independent Auditors ........................................................................................ 2 - 3
Management's Discussion and Analysis ........................................................................... 4 - 8
BASIC FINANCIAL STATEMENTS
Statements of Plan Net Assets ......................................................................................... 9
Statements of Changes in Plan Net Assets ....................................................................... 10
Notes to Financial Statements .......................................................................................... 11-14
REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED)
Schedule of Contributions from the Employer and Other Contributing Entities .................. 15
Note to Schedule of Contributions from the Employer and Other Contributing Entities...... 16
OTHER SUPPLEMENTARY INFORMATION
Schedule of Administrative and Investment Expenses ...................................................... 17
OTHER REPORTS
Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an
Audit of the Financial Statements Performed In
Accordance with Government Auditing Standards ............................................................ 18-19
Report of Independent Auditors
I Board of Trustees
I Village of North Palm Beach Police and Fire Pension Fund
North Palm Beach, Florida
I We have audited the accompanying statements of plan net assets of the Village of North Palm
Beach Police and Fire Pension Fund (Fund) as of September 30, 2006 and 2005 and the
related statements of changes in plan net assets for the years then ended. These financial
I statements are the responsibility of the Fund's board of trustees and officers. Our responsibility
is to express an opinion on these financial statements based on our audits.
' We conducted our audits in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in
Government Auditing Standards issued by the Comptroller General of the United States. Those
I standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
I statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
I As discussed in Note 1, the financial statements present only the Fund and do not purport to,
and do not, present fairly the financial position of the Village of North Palm Beach, Florida as of
September 30, 2006 and 2005 and the changes in its financial position for the years then ended
I in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements referred to above present fairly, in all material respects,
I information regarding the Village of North Palm Beach Police and Fire Pension Fund's plan net
assets as of September 30, 2006 and 2005 and the changes therein for the years then ended in
conformity with accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated May
15, 2007 on our consideration of the Fund's internal control over financial reporting and our
tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements
and other matters. The purpose of that report is to describe the scope of our testing of internal
control over financial reporting and compliance and the results of that testing and not to provide
an opinion on the internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.
Management's discussion and analysis and the required supplementary information listed on
the table of contents are not a required part of the basic financial statements but are
supplementary information required by the Governmental Accounting Standards Board. 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 an opinion on the basic financial statements
taken as a whole. The other supplementary information listed on the accompanying table of
contents is presented for purposes of additional analysis and is not a required part of the basic
' financial statements. The other supplementary information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, and in our opinion, is fairly
stated in relation to the basic financial statements taken as a whole.
' West Palm Beach, Florida
May 15, 2007
MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's Discussion and ,Analysis
' As management of the Village of North Palm Beach Police and Fire Pension Fund (Fund), we
offer readers of the Fund's financial statements this narrative overview of the financial activities
' of the Fund for the years ended September 30, 2006 and 2005. This narrative is intended to
supplement the Fund's financial statements, and we encourage readers to consider the
information presented here in conjunction with these statements, which begin on page 9.
Overview of the financial statements
The following discussion and analysis are intended to serve as an introduction to the Fund's
financial statements. The financial statements are:
• Statements of Plan Net Assets
Statements of Changes in Plan Net Assets
Notes to the Financial Statements
This report also contains the following "Required Supplementary Information" to the financial
statements:
• Schedule of Contributions from the Employer and Other Contributing Entities
• Notes to the Required Supplementary Information
The financial statements contained in the report are described below:
• The Statements of Plan Net Assets is a point-in-time snapshot of account
balances at fiscal year-end. It reports the assets available for future payments to
retirees and any current liabilities that are owed as of the statement date. The
resulting Net Assets value (Assets -Liabilities =Net Assets) represents the
value of assets held in trust for pension benefits.
The Statements of Changes in Net Assets displays the effect of pension fund
transactions that occurred during the fiscal year, where Additions -Deductions =
Net Increase (Decrease) in Net Assets. This Net Increase (Decrease) in Net
Assets reflects the change in the net asset value of the Statement of Plan Net
Assets from the prior year to the current year. Both statements are in
compliance with Governmental Accounting Standards Board (GASB)
Pronouncements.
The Notes to the Financial Statements are an integral part of the financial
statements and provide additional information that is essential to the
comprehensive understanding of the data provided in the financial statements.
These notes describe the accounting and administrative policies under which the
Fund operates and provide additional levels of detail for select financial
statement items (See Notes to Financial Statements on pages 11 to 14 of this
report.)
Because of the long-term nature of a defined benefit pension plan, financial statements alone
cannot provide sufficient information to properly reflect the ongoing plan perspective. Therefore,
in addition to the financial statements explained above, this financial report includes an
additional "Required Supplementary Information" schedule with historical trend information.
i
• The Schedule of Contributions from the Employer and Other Contributing Entities
' (page 15) presents historical trend information regarding the value of total annual
contributions required to be paid by the employer and the State and the actual
performance of the employer and the State in meeting this requirement.
The Notes to Required Supplementary Information provide background
information and explanatory detail to aid in understanding the required
supplementary schedule.
The Fund uses the aggregate actuarial cost method to determine required contributions. This
method does not identify or separately amortize unfunded actuarial liabilities. Accordingly, a
schedule of funding progress is not presented.
Financial highlights
• The net assets of the Fund exceeded its liabilities at the close of the fiscal years
ended September 30, 2006 and 2005 with $9,450,468 and $8,485,462 in net
assets held in trust for pension benefits.
Net assets increased by $965,006 or by 11% percent during 2006, mostly due to
employer, State and Plan's member contributions.
• The Fund's funding objective is to meet long-term benefit obligations. As of
October 1, 2005, the date of last actuarial valuation, the funded ratio of the Fund
was 87.4 percent. In general, this means that for every dollar of pension benefits
due, the Fund has $0.87 of net assets available for payment.
• Additions to plan net assets for the year ended September 30, 2006 were
$1,421,552 which includes member, employer and state contributions of
$868,072 and net gains from investment activities totaling $553,480.
• Additions to plan net assets for the year ended September 30, 2005 were
$1,301,488 which includes member, employer and state contributions of
$730,101 and net gains from investment activities totaling $571,387.
• Deductions from plan net assets
$85,101 in 2005. Most of the
participants in 2006 of $393,092.
totaled $456,546 during 2006 compared with
increase relates to lump sum distributions to
Analysis of financial activities
The Fund's funding objective is to meet long-term benefit obligations through investment income
and contributions. Accordingly, the collection of employer and member contributions, and the
income from investments provide the reserves needed to finance future retirement benefits.
Contributions from the Village of North Palm Beach are made at levels determined by the
Fund's actuary. Because of lower than expected investment returns and experienced losses
incurred in previous years, the Village's contribution requirement has increased. The Fund's
investment portfolio produced positive returns in 2006 and 2005. Net assets held in trust for
pension benefits rose to $9,450,468 in 2006 compared with $8,485,462 in 2005. Since these net
assets are used to meet ongoing benefit obligations to plan participants and their beneficiaries,
2006's positive returns have improved the Fund's funding status.
Net Assets (Table 1)
As of Se tember 30 2006, 2005 and 2004
Increase Decrease
2006 to 2005 2005 to 2004
2006 2005 2004 $ % $
Current and other assets
Investments, at fair value $357,268
9,348,514 $488,290
7,997,172 $ 366,818
6,906,304 $(131,022)
1,351,342 (26.8)%
16.9 121,472
1,090,668 33.1
15.8
Total assets
Current liabilities 9,705,782
255,314 8,485,462
- 7,273,122
4,047 1,220,320
255,314 14.4
100.0 1,212,340
4,047 16.7
100.0
Net assets $9,450,468 $8,485,462 $7,269,075 $965,006 11.4 $1,216,387 16.7%
As the years roll forward and the total assets and liabilities grow, the Fund's investment income
will play a more significant roll in funding future retirement benefits. Therefore, investment return
over the long term is critical to the funding status of the retirement Fund.
During 2006, the Fund's investment portfolio returned gains of approximately 9.7 percent,
helping improve the Fund's financial position. It is important to remember that a retirement
Fund's funding is based on a long time horizon, where temporary ups and downs in the market
are expected. The more critical factor is that the Fund be able to meet an expected earnings
yield of 8.0 percent annual return on investments.
Based on the last actuarial valuation for the years ended September 30, 2006 and 2005, the
Fund's actuarial value of liabilities exceeds its actuarial value of assets by $1,092,613,
producing a funded ratio of 87.4 percent. The funded ratio is a key indication of financial
strength of a retirement Fund and analyzing this percentage over time indicates whether the
Fund is becoming stronger or weaker. Investment and experienced losses incurred in the
previous years have caused a downward trend in the funded ratio for recent years.
Financial analysis -summary
As previously noted, net assets viewed over time may serve as a useful indication of the Fund's
financial position (See Table 1 above.) At the close of fiscal year 2006, the assets of the Fund
exceeded its current liabilities by $9,450,468 shown as net assets held in trust for pension
benefits. The net assets are available to meet the Fund's ongoing obligation to plan participants
and their beneficiaries.
Net assets
The Fund's net assets are established from employer and member contributions, and the
accumulation of investment income, net of investment and administrative expenses and benefit
payments.
Additions to plan net assets
As noted above, the net assets needed to finance retirement benefits are accumulated through
the collection of employer and member contributions and through investment earnings (net of
investment expenses.) The additions totaled $1,421,552 for the year ended September 30,
2006. This was $120,0649 more than the prior year, primarily due to increases in contributions.
6
Additions to Net Assets (Table 2)
For the Years Ended Se tember 30, 2006, 2005 and 2004
Increase Decrease
2006 to 2005 2005 to 2004
2006 2005 2004 $ % $
Employer contributions $551,986 $471,864 $250,000 $80,122 17.0% 221,864 88.8
Member contributions 82,446 49,015 54,500 33,431 68.2 (5,485) (10.1)
State of Florida contributions 233,640 209,222 203,317 24,418 11.7 (5,905) (2.9)
Net investments income 553,480 571,387 529,123 17,907 3.0 42,264 8.0
Total additions $1,421,552 $1,301,488 $1,036,940 $120,064 9.2 $264,548 25.5%
Deductions from plan net assets
The Fund was created to provide retirement, survivor and disability benefits to qualified
members and their beneficiaries. The cost of such programs includes recurring benefit
payments, refunds of contributions to employees who terminate employment, and the cost of
administering the Fund.
Deductions from Net Assets (Table 3)
For the Years Ended Se tember 30, 2006, 2005 and 2004
Increase Decrease
2006 to 2005 2005 to 2004
2006 2005 2004 $ % $ %
Benefit payments
Refund of contributions
Administrative expenses $411,255
4,634
40,657 $ 18,163
13,564
53,374 $ 445,293
5,866
47,754 $ 393,092
(8,930)
12,717 2164.0%
66.0
24.0 $(427,130)
7,696
5,620 (95.9)
131.2
11.8
Total deductions $456,546 $85,101 $498,913 $371,445 436.5 $ 413,812 82.9
I Benefit payments for the plan year 2006 above include a lump sum distribution of $393,092.
Administrative expenses for the year ended September 30, 2006 totaled $40,657, a decrease of
24% percent from 2005. Further analysis of benefit payments is provided in Table 4 below.
Benefit Payments (Table 4)
For the Year Ended Se tember 30, 2006, 2005 and 2004
Increase Decrease
2006 to 2005 2005 to 2004
2006 2005 2004 $ % $ %
Normal retirement payments
Disability pension payments $411,255
- $ 18,163
- $445,293 $393,092
- 2164.2%
- (427,130) (95.9)
-
Total benefit a ments $411,255 $ 18,163 $445,293 $393,092 2164.2% 427,130 95.9
7
During 2006, the net of deductions of plan net assets of $456,546 and additions to plan net
assets of $1,421,552 resulted in an overall increase of $965,006 in net assets held in trust for
pension benefits. Administrative expenses were materially consistent to 2005.
Fiduciary responsibilities
The Board of Trustees is the fiduciary of the pension trust fund. Fiduciaries are charged with
the responsibility of assuring that the assets of the Fund are used exclusively for the benefit of
plan participants and their beneficiaries and defraying reasonable expenses administering the
Fund.
Requests for information
This financial report is designed to provide the Board of Trustees, our membership, taxpayers
and investment managers with an overview of the Fund's finances and accountability for the
money received. Questions concerning any of the information provided in this report or
requests for additional financial information should be addressed to:
Village of North Palm Beach Police and Fire Pension Fund
c/o Pension Resource Center
4360 Northlake Boulevard
Palm Beach Gardens, FL 33410
8
BASIC FINANCIAL STATEMENTS
Village of North Palm Beach Police and Fire Fund
Statements of Plan Net Assets
Assets
Cash and cash equivalents
Receivables
Accrued interest and dividends
Contribution receivable -State of Florida
Contribution receivable -City
Total receivables
Prepaids
Prepaid benefit payments
Investments, at fair value
I U. S. Government obligations
Mortgage backed securities
Corporate obligations
I Equity securities
Money market funds
Total investments
Total assets
September 30,
2006 2005
$ 19,741 $ 420,995
46,426
233,640
56,390
336,456
18,033
49,262
67,295
1,071
1,390,902
980,896
822,377
5,546,799
607,540
9,348,514
1,060,477
541,180
4,451,272
1,944,243
7,997,172
9,705,782 8,485,462
Liabilities
Accounts payable and accrued expenses (including pending trades) 255,314
Total liabilities 255,314
Net assets held in trust for pension benefits
(A schedule of funding progress is not presented
because the Fund uses the aggregate cost method
to determine required contributions)
$ 9,450,468 $ 8,485,462
See notes to financial statements. g
Village of North Palm Beach Police and Fire Fund
Statements of Changes in Plan Net Assets
I Additions
Contributions
Village of North Palm Beach
I Members
State of Florida
Total contributions
Investment income
Net appreciation in fair value of investments
Interest and dividends
Less investment expenses
Net investment income
Total additions
I Deductions
Participant benefit payments
Termination refunds
I Administrative expenses
Total deductions
Net increase
Net assets held intrust for pension benefits
I Beginning of year
End of year
Year Ended September 30
2006 2005
$ 551,986 $ 471,864
82,446 49,015
233,640 209,222
868,072 730,101
435,882 398,908
175,840 210,244
611,722 609,152
(58,242) (37,765)
553,480 571,387
1,421,552 1,301,488
411,255 18,163
4,634 13,564
40,657 53,374
456,546 85,101
965,006 1,216,387
8,485,462 7,269,075
$ 9,450,468 $ 8,485,462
See notes to financial statements. 10
' Village of North Palm Beach Police and Fire Pension Fund
' Notes to Financial Statements
Years Ended September 30, 2006 and 2005
Note 1 -Summary of significant accounting policies
Reporting entity -The Village of North Palm Beach Police and Fire Pension Fund (Fund) was
' established by Ordinance of the Village of North Palm Beach, Florida (Village) to account for the
financial activity of the Village of North Palm Beach Police and Fire Pension Plan (Plan). The
Fund is governed by alive-member Board of Trustees: two elected by police officers, two
' elected by firefighters and one appointed by the Village Council. The Fund is reported in the
fiduciary funds (pension trust) in the Village's basic financial statements.
' Basis of accounting -The Fund's financial statements are prepared using the accrual basis of
accounting. Contributions from the Plan's members are recognized as revenue in the period in
which the contributions are due. Contributions from the Village, as calculated by the Fund's
actuary, are recognized as revenue when due and when the Village has made a formal
' commitment to provide the contributions. Expenses are recognized in the accounting period
incurred, if measurable. Benefits and refunds are recognized when due and payable in
accordance with the terms of the Plan.
' Method used to value investments -Investments are reported at fair value. Money market
mutual funds are reported at cost, which approximates fair value. Securities traded on national
I or international exchanges are valued at the last reported sales price or exchange rate. Net
appreciation (depreciation) in fair value of investments includes the difference between cost and
fair value of investments held as well as the net realized gains or losses from securities sold.
' Interest and dividend income is recognized on the accrual basis when earned. Purchases and
sales of investments are recorded on a trade date basis.
Use of estimates -The preparation of financial statements in conformity with accounting
I principles generally accepted in the United States requires the Fund administrator to make
estimates and assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results may differ from those estimates.
Note 2 -Plan description and contribution information
' Plan description
The following brief description of the Plan is provided for general information purposes only.
' Participants should refer to Village Ordinances for more complete information.
The Fund was established by Ordinance enacted by the Village Council to provide for the
' creation and operation of the Village of North Palm Beach Police and Fire Pension Plan. All full-
time certified police department employees are covered under this single employer defined
benefit pension plan.
I The pension plan provides retirement, death and disability benefits for its members. Benefit
provisions are established and may be amended by the Village Council. In general, normal
retirement benefits are 2.5% of the member's average final compensation multiplied by the
I member's years of credited service. Generally, a member may retire with normal benefits after
reaching age 55.
11
Village of North Palm Beach Police and Fire Pension Fund
Notes to Financial Statements
Years Ended September 30, 2006 and 2005
Note 2 -Plan description and contribution information (continued)
Plan description (continued)
Participants are eligible for delayed retirement any time after achieving their normal retirement
date. Benefits are calculated in the same manner as the normal retirement benefit using the
average monthly earnings and credited service as of the normal retirement date and increased
actuarially to the actual retirement date.
Membership consisted of the following at October 1, 2005, the date of the latest actuarial
valuation:
Retirees and beneficiaries receiving benefits 3
Terminated employees entitled to but not yet receiving benefits 13
Active members 40
Contributions
Contribution requirements are established and may be amended by the Village Council upon
recommendation by the Board of Trustees. The contribution requirements are determined
based on the benefit structure established by the Village. Members are required to contribute
2% of their annual earnings. Pursuant to the Florida Statutes, a premium tax on certain property
insurance (Chapter 175) and casualty insurance (Chapter 185) contracts written on the Village
of North Palm Beach properties is collected by the state and remitted to the fund. The Village is
required to contribute the remaining amounts necessary to finance the benefits through periodic
contributions of actuarially determined amounts. Administrative costs are financed through
investment earnings.
Note 3 -Deposits and Investments
Deposits
Custodial credit risk -Florida Statutes require the Fund to maintain its deposits with financial
institutions in a qualified public depository, as determined by the Treasurer of the State of
Florida. The Fund's accounts maintained in qualified public depositories are covered by federal
depository insurance for an amount equal to the aggregate of each participant's ascertainable,
non-contingent interest in the Plan (up to $100,000 per participant). Amounts in excess of
federal depository insurance are secured by the Public Depository Trust Fund (Trust Fund)
maintained by the Treasurer. The Trust Fund is a multiple financial institution pool with the
ability to assess its member financial institutions for collateral shortfalls if a member fails.
12
Village of North Palm Beach Police and Fire Pension Fund
Notes to Financial Statements
Years Ended September 30, 2006 and 2005
Note 3 -Deposits and Investments (continued)
' Investments
At September 30, 2006, the Fund had the following investments:
Credit rating by Weighted average
Investment tvoe Standard & Poor's Fair value maturity (years)
U.S. Government AAA $1,390,902 4.14
obligations
Mortgage backed NR 980,896 12.94
securities
Corporate obligations A+ - BBB+ 822,377 10.17
Equity securities N/A 5,546,799 N/A
Money market funds AAA 607.540 .04
Total investments ~
Interest rate risk - As a means of limiting its exposure to fair value losses resulting from rising
interest rates, the Fund's investment policy establishes benchmarks based on credit quality and
duration. The benchmarks are monitored and changed when warranted by investment market
environment. Debt portfolios are structured and managed to produce returns based on risks
inherent in the selected benchmarks.
Credit risk -Florida Statutes, Village Ordinances and the Fund's investment policy limit
investments to:
• Bonds, notes or other evidences of indebtedness issued or guaranteed by the United
States of America or its subdivisions.
• Bonds, stocks or other evidences of indebtedness issued or guaranteed by a corporation
organized under the laws of the United States, and state or organized territory of the
United States, or the District of Columbia, provided the corporation is listed on any one
(1) or more of the recognized national stock exchanges, and, in the case of bonds only,
holds a rating in one (1) of the three (3) highest classifications by a major rating service.
• Time or savings accounts of a national bank, a state bank insured by the Bank
Insurance Fund or a savings and loan association insured by the Savings Association
Insurance Fund which is administered by the Federal Deposit Insurance Corporation or
a state or federal bank.
Concentration of credit risk -The Fund's investment policy specifies the following investment
limitations:
• Common stock or capital stock of any one issuing company is limited to 5% of the
Fund's assets,
• The aggregate investment in any one issuing company is limited to 5% of the
outstanding capital stock of the company
• The value of bonds issued by any single corporation is limited to 10% of the Fund's
assets
13
I Village of North Palm Beach Police and Fire Pension Fund
I Notes to Financial Statements
Years Ended September 30, 2006 and 2005
I Note 3 -Deposits and investments (continued)
• Corporate common stock and convertible bonds are limited to 60% of the Fund's assets
' at cost (60% at market value), and
• Foreign securities are limited to 10% of the Fund's assets at cost.
As of September 30, 2006, the Fund held no investments that represented a concentration of 5
percent or more of net plan assets in investments (other than those issued or guaranteed by the
U.S. government).
' Note 4 -Income taxes
The Fund's tax counsel believes that the Fund is designed and is currently being operated in
compliance with applicable requirements of the Internal Revenue Code.
Note 5 -Pending litigation, claims and assessments
The Fund is party to various lawsuits and claims which it is vigorously defending or pursuing.
These matters arise out of the normal course of its operations. While the results of litigation
cannot be predicted with certainty, management believes the final outcome of such litigation will
not have a material effect on the Fund's financial position.
14
REQUIRED SUPPLEMENTARY INFORMATION
(UNAUDITED)
Village of North Palm Beach Police and Fire Pension Fund
Schedule of Contributions from the
Employer and Other Contributing Entities
(Unaudited)
Year Ended
September 30 Annual
Required
Contribution Percentage
Contributed
2001 $ 85,866 119.8%
2002 130,305 112.3
2003 369,089 107.1
2004 383,891 118.1
2005 509,800 133.6
2006 690,186 113.8
"Annual required contributions include amounts required to be contributed by the Village of
I North Palm Beach and the State of Florida.
15
Village of North Palm Beach Police and Fire Pension Fund
Note to the Schedule of Contributions from the
Employer and Other Contributing Entities
The Fund uses the aggregate actuarial cost method to determine required contributions. This
method does not identify or separately amortize unfunded actuarial liabilities. Accordingly, a
schedule of funding progress is not presented. The information presented in the required
supplementary schedule was determined as part of the actuarial valuations at the dates
indicated. Additional information as of the latest actuarial valuation follows:
Valuation date
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return
Projected salary increases'
'Includes inflation at
Cost of living adjustments
Significant factors affecting trends in actuarial information:
October 1, 2005
Aggregate
N/A
N/A
5 year smoothed market value
8.00%
6.00%
4.00%
3.0% per year
2006 Changes in plan provisions and actuarial methods since prior valuation:
• None
2005 Changes in plan provisions and actuarial methods since prior valuation:
• None.
2004 Changes in plan provisions and actuarial methods since prior valuation:
• None.
' 2003 Changes in plan provisions and actuarial methods since prior valuation:
• Normal form of benefit change from single life annuity to a ten year certain and life
annuity.
I Early retirement penalty changed from 5% to 3%.
• Immediate eligibility for service-connected disability benefits instead of ten years of
service requirement.
' Minimum disability benefits of 42% of average monthly eamings for service connected
disability and 25% of average monthly eamings for non-service connected disability.
2002 None
' 2001 None
16
OTHER SUPPLEMENTARY INFORMATION
I Village of North Palm Beach Police and Fire Fund
I Schedule of Administrative and Investment Expenses
I Year Ended Se ptember 30
2006 2005
Administrative Expenses
Accounting services $ 9,600 $ -
I
Professional fees actuarial services 4,493 14,736
Professional fees legal services 9,419 11,704
Professional fees administrative services 12,937 9,700
I
Professional fees -consulting services 14,028
Professional fees custodial services 1,335 -
Fiduciary liability insurance 2,806 2,806
Annual membership fees 400
Miscellaneous expenses g7 _
' $ 40,657 $ 53,374
Investment Expenses
I ICC management fees $ 40,849 $ 28,389
Performance monitor fees 17,393 9,376
' $ 58,242 $ 37,765
17
OTHER REPORTS
Report on Internal Control Over Financial Reporting and on Compliance
And Other Matters Based on an Audit of the Financial Statements
Performed in Accordance with Government Auditing Standards
Board of Trustees
Village of North Palm Beach Police and Fire Pension Fund
North Palm Beach, Florida
We have audited the financial statements of Village of North Palm Beach Police and Fire
Pension Fund (Fund) as of and for the years ended September 30, 2006, and 2005 and have
issued our report thereon, dated May 15, 2007. We conducted our audit in accordance with
auditing standards generally accepted in the United States and the standards applicable to the
financial audit contained in Government Auditing Standards, issued by the Comptroller General
of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Fund's internal control over financial
reporting in order to determine our auditing procedures for the purposes of expressing our
opinion on the financial statements and not to provide assurance on the internal control over
financial reporting. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the intemal control over financial reporting that might be
material weaknesses. A material weakness is a reportable condition in which the design or
operation of one or more of the internal control components does not reduce to a relatively low
level the risk that misstatements caused by error or fraud in amounts that would be material in
relation to the financial statements being audited may occur and not be detected within a timely
period by employees in the normal course of performing their assigned functions. We noted no
matters involving the internal control over financial reporting and its operation that we consider
to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Fund'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.
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This report is intended solely for the information and use of the Board of Trustees and
I management and is not intended to be and should not be used by anyone other that those
specified parties.
' West Palm Beach; Florida
May 15, 2007
I
19