Financial Condition Assessment Procedures
Section 218.39(5), Florida Statutes, requires independent auditors to notify local governmental entities of deteriorating financial conditions that may cause a financial emergency to occur if actions are not taken to address such conditions. Section 10.556(8), Rules of the Auditor General, requires local governmental entity audits to include the use of financial condition assessment procedures to detect deteriorating financial conditions. The Auditor General provides financial data and other information to assist local governments and their auditors in the conduct of financial condition assessments. The financial data was compiled by Auditor General staff from audit reports submitted to the Auditor General and from other sources. We also provide example local governmental entity financial condition assessment indicators and related procedures that local governmental entity auditors may incorporate into the methodology they deem appropriate to carry out their responsibilities pursuant to Section 218.39(5), Florida Statutes.
Financial Data and Benchmarks
Financial data and benchmarks are provided in Microsoft Excel format. The financial data for each specified local governmental entity is provided in a template that can be used to prepare and calculate financial indicator results and graph the results. Many of our example and supporting documents are in PDF format. It is necessary to have Adobe Acrobat Reader version 7.0 or higher to navigate through these documents (if you do not have Acrobat Reader or need a more current version, visit Adobe to obtain a free copy). The Financial Condition Assessment Instructions contain indexes to the financial data and templates and provides links to benchmarks and instructions for use in Microsoft Excel. To access the information for use in spreadsheet software other than Microsoft Excel, please contact our Office at (850) 412-2881 or by e-mail at flaudgen_localgovt@aud.state.fl.us.
Example Indicators and Related Procedures
Example local governmental entity financial condition assessment indicators and related procedures were developed based on recommendations from a task force composed of representatives and staff from the Executive Office of the Governor, Department of Financial Services, Legislative Auditing Committee, the Office of the Auditor General, and various professional organizations associated with local governmental entities and auditors of such entities. Local governmental entity auditors may incorporate the following example indicators and related procedures into the methodology they deem appropriate to carry out their responsibilities pursuant to Section 218.39(5), Florida Statutes.
- Example Local Governmental Entity Financial Condition Assessment Indicators and Related Procedures
- Appendix A - Financial Indicators
- Appendix B - Data Elements
- Appendix C - Guide for Analysis of Financial Indicators
- Appendix D - Potential Factors that Could Cause Deteriorating Financial Condition
- Appendix E - Web Sites with Information Useful for Assessing Financial Condition
The procedures include the use of financial indicators, calculated based on financial and other data, for performing trend analyses and benchmark comparisons. If a preliminary financial condition assessment indicates a deteriorating financial condition, further analysis is required before a conclusive financial condition assessment can be made. See Example Local Governmental Entity Financial Condition Assessment Indicators and Related Procedures, steps 5 and 6.
Descriptions of Information Provided
Benchmarks - Benchmarks are used to compare financial indicator results for a given entity to other similar entities. Benchmarks were calculated using the average financial indicator results of the entities included within a given benchmark grouping. There are up to three benchmarks provided for each entity. The Financial Condition Assessment Instructions contain links to benchmark groupings. County and municipality benchmarks are grouped by (1) fund type and population, (2) fund type and taxable property values, or (3) fund type, population, and taxable property values. Special district benchmarks are grouped by fund type and expenditures for all special districts and, for some districts, by function; function and fund type; or function, fund type, and expenditures. The term “fund type” refers to fund categories used by the entities (i.e., governmental, proprietary, a combination of governmental and proprietary, or hospital enterprise). Unadjusted benchmark groupings are provided in Microsoft Excel format.
Financial Data - The data provided is for the 2018-19 through 2021-22 fiscal years and was extracted from audit reports and other sources for each entity for which an audit report was submitted to the Auditor General, as of October 31, 2023. The financial data is provided in a template so that current year data may be added to preliminarily assess the entity’s financial condition. For entities that submitted an audit report for the fiscal year ended September 30, 2021, but had not submitted an audit report for the fiscal year ended September 30, 2022, we have provided financial data for the 2017-18 through 2020-21 fiscal years.
Template - The financial data is provided in a template that can be used to prepare and calculate financial indicator results and graph the results. The price index used in the template was calculated based on the September 2023 Municipal Cost Index (MCI) published by American City and County Magazine, using 2019 as the base year (see Frequently Asked Questions for a description of the calculation). The MCI is a weighted average of the consumer price index, producer price index for industrial commodities, and construction cost index. If another price index is desired, these indices may be changed on the template. (Note: for financial indicators calculated using current dollars, the benchmarks provided were calculated using the MCI.)
Example Financial Condition Assessment Methodology – This document, linked on the Financial Condition Assessment Instructions page, and the related appendices provide an example methodology for evaluating preliminary financial indicator results.
The Auditor General anticipates releasing updated information annually. Auditors and local government officials using the information are responsible for reviewing the data for reasonableness; however, the Auditor General will assist auditors and local government officials in determining the reasons why data may appear questionable. Questions or comments regarding the information or its use are encouraged and may be communicated to the Auditor General via e-mail at flaudgen_localgovt@aud.state.fl.us, by telephone at (850) 412-2881, or by mail to Auditor General, Local Government Section 252, 111 West Madison Street, Claude Pepper Building, Room 401, Tallahassee, FL 32399-1450.