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RESOLUTION 2020-05

A RESOLUTION BY THE BOARD OF SUPERVISORS OF THE MOODY RIVER ESTATES COMMUNITY DEVELOPMENT DISTRICT ADOPTING AN INTERNAL CONTROLS POLICY CONSISTENT WITH SECTION 218.33, FLORIDA STATUTES; PROVIDING AN EFFECTIVE DATE.

WHEREAS, the Moody River Estates Community Development District (the “District”) is a local unit of special-purpose government created and existing pursuant to Chapter 190, Florida Statutes, being situated entirely within Lee County, Florida; and

WHEREAS, consistent with Section 218.33, Florida Statutes, the District is statutorily required to establish and maintain internal controls designed to prevent and detect fraud, waste, and abuse as defined in Section 11.45(1), Florida Statutes; promote and encourage compliance with applicable laws, rules, contracts, grant agreements, and best practices; support economical and efficient operations; ensure reliability of financial records and reports; and safeguard assets; and

WHEREAS, to demonstrate compliance with Section 218.33, Florida Statutes, the District desires to adopt by resolution the Internal Controls Policy attached hereto as Exhibit A.

NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF SUPERVISORS OF THE MOODY RIVER ESTATES COMMUNITY DEVELOPMENT DISTRICT:

SECTION 1. The attached Internal Controls Policy attached hereto as Exhibit A is hereby adopted pursuant to this Resolution.

SECTION 2. If any provision of this Resolution is held to be illegal or invalid, the other provisions shall remain in full force and effect.

SECTION 3. This Resolution shall become effective upon its passage and shall remain in effect unless rescinded or repealed.

PASSED AND ADOPTED THIS 21st DAY OF MAY, 2020.

ATTEST: Chuck Adams, Secretary

MOODY RIVER ESTATES COMMUNITY DEVELOPMENT DISTRICT: Chris Jenner, Chair, Board of Supervisors

EXHIBIT “A”
MOODY RIVER ESTATES COMMUNITY DEVELOPMENT DISTRICT INTERNAL CONTROLS POLICY

1. Purpose.

• 1.1. The purpose of this internal controls policy is to establish and maintain internal controls for the Moody River Estates Community Development District.
• 1.2. Consistent with Section 218.33(3), Florida Statutes, the internal controls adopted herein are designed to:
  • 1.2.1. Prevent and detect Fraud, Waste, and Abuse (as hereinafter defined).
  • 1.2.2. Promote and encourage compliance with applicable laws, rules, contracts, grant agreements, and best practices.
  • 1.2.3. Support economical and efficient operations.
  • 1.2.4. Ensure reliability of financial records and reports.
  • 1.2.5. Safeguard Assets (as hereinafter defined).

2. Definitions.

• 2.1. “Abuse” means behavior that is deficient or improper when compared with behavior that a prudent person would consider a reasonable and necessary operational practice given the facts and circumstances. The term includes the misuse of authority or position for personal gain.
• 2.2. “Assets” means District assets such as cash or other financial resources, supplies, inventories, equipment and other fixed assets, real property, intellectual property, or data.
• 2.3. “Auditor” means the independent auditor (and its employees) retained by the District to perform the annual audit required by state law.
• 2.4. “Board” means the Board of Supervisors for the District.
• 2.5. “District Management” means (i) the independent contractor (and its employees) retained by the District to provide professional district management services to the District and (ii) any other independent contractor (and its employees) separately retained by the District to provide amenity management services, provided said services include a responsibility to safeguard and protect Assets.
• 2.6. “Fraud” means obtaining something of value through willful misrepresentation, including, but not limited to, intentional misstatements or intentional omissions of amounts or disclosures in financial statements to deceive users of financial statements, theft of an entity’s assets, bribery, or the use of one’s position for personal enrichment through the deliberate misuse or misapplication of an organization’s resources.
• 2.7. “Internal Controls” means systems and procedures designed to prevent and detect fraud, waste, and abuse; promote and encourage compliance with applicable laws, rules, contracts, grant agreements, and best practices; support economical and efficient operations; ensure reliability of financial records and reports; and safeguard assets.
• 2.8. “Risk” means anything that could negatively impact the District’s ability to meet its goals and objectives. The term includes strategic, financial, regulatory, reputational, and operational risks.
• 2.9. “Waste” means the act of using or expending resources unreasonably, carelessly, extravagantly, or for no useful purpose.

3.Control Environment.

• 3.1. Ethical and Honest Behavior.
  • 3.1.1. District Management is responsible for maintaining a work environment that promotes ethical and honest behavior on the part of all employees, contractors, vendors and others.
  • 3.1.2. Managers at all levels must behave ethically and communicate to employees and others that they are expected to behave ethically.
  • 3.1.3. Managers must demonstrate through words and actions that unethical behavior will not be tolerated.

4. Risk Assessment.

• 4.1. Risk Assessment. District Management is responsible for assessing Risk to the District District Management’s Risk assessments shall include, but not be limited to:
  • 4.1.1. Identifying potential hazards.
  • 4.1.2. Evaluating the likelihood and extent of harm.
  • 4.1.3. Identifying cost-justified precautions and implementing those precautions.

5. Control Activities.

• 5.1. Minimum Internal Controls. The District hereby establishes the following minimum Internal Controls to prevent and detect Fraud, Waste, and Abuse:
  • 5.1.1. Preventive controls designed to forestall errors or irregularities and thereby avoid the cost of corrections. Preventive control activities shall include, but not be limited to, the following:
    • 5.1.1.1. Identifying and segregating incompatible duties and/or implementing mitigating controls.
    • 5.1.1.2. Performing accounting functions in accordance with Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB) standards.
    • 5.1.1.3. Requiring proper authorizations to access and/or modify accounting software.
    • 5.1.1.4. Implementing computerized accounting techniques (e.g. to help identify coding errors, avoid duplicate invoices, etc.).
    • 5.1.1.5. Maintaining a schedule of the District’s material fixed Assets.
    • 5.1.1.6. Maintaining physical control over the District’s material and vulnerable Assets (e.g. lock and key, computer passwords, network firewalls, etc.).
    • 5.1.1.7. Retaining and restricting access to sensitive documents.
    • 5.1.1.8. Performing regular electronic data backups.
  • 5.1.2. Detective controls designed to measure the effectiveness of preventive controls and to detect errors or irregularities when they occur. Detective control activities shall include, but not be limited to, the following:
    • 5.1.2.1. Preparing financial reports in accordance with Generally Accepted Accounting Principles (GAAP) and Governmental Accounting Standards Board (GASB) standards.
    • 5.1.2.2. Reviewing financial statements and investigating any material variances between budgeted expenses and actual expenses.
    • 5.1.2.3. Establishing and implementing periodic reconciliations of bank, trust, and petty cash accounts.
    • 5.1.2.4. Establishing an internal protocol for reporting and investigating known or suspected acts of Fraud, Waste, or Abuse.
    • 5.1.2.5. Engaging in periodic physical inventory counts and comparisons with inventory records.
    • 5.1.2.6. Monitoring all ACH (electronic) transactions and the sequencing of checks.
• 5.2. Implementation. District Management shall implement the minimum Internal Controls described herein. District Management may also implement additional Internal Controls that it deems advisable or appropriate for the District. The specific ways District Management implements these minimum Internal Controls shall be consistent with Generally Accepted Accounting Principles (GAAP) and otherwise conform to Governmental Accounting Standards Board (GASB) and American Institute of Certified Public Accountants (AICPA) standards and norms.

6. Information and Communication.

• 6.1. Information and Communication. District Management shall communicate to its employees (needing to know) information relevant to the Internal Controls, including but not limited to any changes to the Internal Controls and/or changes to laws, rules, contracts, grant agreements, and best practices.
• 6.2. Training. District Management shall regularly train its employees (needing the training) in connection with the Internal Controls described herein and promote and encourage compliance with applicable laws, rules, contracts, grant agreements, and best practices.

7. Monitoring Activities.

• 7.1. Internal Reviews. District Management shall internally review the District’s Internal Controls at least once per year. In connection with this internal review, District Management shall:
  • 7.1.1.1. Review its operational processes.
  • 7.1.1.2. Consider the potential risk of Fraud, Waste, or Abuse inherent in each process.
  • 7.1.1.3. Identify the controls included in the process, or controls that could be included, that would result in a reduction in the inherent risk.
  • 7.1.1.4. Assess whether there are Internal Controls that need to be improved or added to the process under consideration.
  • 7.1.1.5. Implement new controls or improve existing controls that are determined to be the most efficient and effective for decreasing the risk of Fraud, Waste or Abuse.
  • 7.1.1.6. Train its employees on implemented new controls or improvements to existing controls.
• 7.2. External Audits and Other Reviews. Audits and other reviews may be performed on various components of the District’s Internal Controls by the Auditor consistent with Government Auditing Standards (GAS). Audits may identify material deficiencies in the Internal Controls and make recommendations to improve them. District Management shall communicate and cooperate with the Board and the Auditor regarding the potential implementation of Auditor recommendations.