Poinciana Community Development District

ANNUAL FINANCIAL REPORT

September 30, 2018
Poinciana Community Development District ANNUAL FINANCIAL REPORT
September 30, 2018 TABLE OF CONTENTS

Page Number
REPORT OF INDEPENDENT AUDITORS	1-2
MANAGEMENT’S DISCUSSION AND ANALYSIS	3-8

BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements
Statement of Net Position	9
Statement of Activities	10
Fund Financial Statements:
Balance Sheet – Governmental Funds	11
Reconciliation of Total Governmental Fund Balances to Net
Position of Governmental Activities	12
Statement of Revenues, Expenditures and Changes in Fund
Balances – Governmental Funds	13
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the
Statement of Activities	14
Statement of Revenues, Expenditures and Changes in Fund
Balances – Budget and Actual – General Fund	15

Notes to Financial Statements	16-29
INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS	30-31
MANAGEMENT LETTER	32-33
INDEPENDENT ACCOUNTANT’S REPORT/COMPLIANCE WITH
SECTION 218.415, FLORIDA STATUTES	34

REPORT OF INDEPENDENT AUDITORS

To the Board of Supervisors
Poinciana Community Development District Polk County, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of Poinciana Community Development District as of and for the year ended September 30, 2018, and the related notes to financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit.  We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in the Government Accounting Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the  financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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To the Board of Supervisors
Poinciana Community Development District
Opinion
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, and each major fund of Poinciana Community Development District as of September 30, 2018, and the respective changes in financial position and the budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued a report dated June 19, 2019 on our consideration of the District’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations and contracts.
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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Poinciana Community Development District’s internal control over financial reporting and compliance.

Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL
Fort Pierce, Florida June 19, 2019

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Management’s discussion and analysis of Poinciana Community Development District (the “District”) financial performance provides an objective and easily readable analysis of the District’s financial activities. The analysis provides summary financial information for the District and should be read in conjunction with the District’s financial statements.

OVERVIEW OF THE FINANCIAL STATEMENTS

The District’s basic financial statements comprise three components; 1) Government-wide financial statements, 2) Fund financial statements, and 3) Notes to financial statements. The Government-wide financial statements present an overall picture of the District’s financial position and results of operations. The Fund financial statements present financial information for the District’s major funds. The Notes to financial statements provide additional information concerning the District’s finances.

The Government-wide financial statements are the statement of net position and the statement of activities. These statements use accounting methods similar to those used by private-sector companies. Emphasis is placed on the net position of governmental activities  and the change in net position. Governmental activities are primarily supported by special assessments.

The statement of net position presents information on all position and liabilities of the District, with the difference between position and liabilities reported as net position. Net position are reported in three categories; 1) net investment in capital assets, 2) restricted, and 3) unrestricted. Assets, liabilities, and net position are reported for all Governmental activities.

The statement of activities presents information on all revenues and expenses of the District and the change in net position. Expenses are reported by major function and program revenues relating to those functions are reported, providing the net cost of all functions provided by the District. To assist in understanding the District’s operations, expenses have been reported as governmental activities. Governmental activities financed by the District include general government, physical environment and interest on long term debt.

Fund financial statements present financial information for governmental funds. These statements provide financial information for the major funds of the District. Governmental fund financial statements provide information on the current assets and liabilities of the funds, changes in current financial resources (revenues and expenditures), and current available resources.

OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)

Fund financial statements include a balance sheet and a statement of revenues, expenditures and changes in fund balances for all governmental funds. A statement of revenues, expenditures, and changes in fund balances – budget and actual is provided for the District’s General Fund. Fund financial statements provide more detailed information about the District’s activities. Individual funds are established by the District to track revenues that are restricted to certain uses or to comply with legal requirements.

The government-wide financial statements and the fund financial statements provide different pictures of the District. The government-wide financial statements provide an overall picture of the District’s financial standing. These statements are comparable to private-sector companies and give a good understanding of the District’s overall financial health and how the District paid for the various activities, or functions, provided by the District. All assets of  the District, including land, infrastructure and improvements are reported in the statement of net position. All liabilities, including principal outstanding on bonds are included. The statement of  activities includes depreciation on all long-lived assets of the District, but transactions between the different functions of the District have been eliminated in order to avoid “doubling up” the revenues and expenses. The fund financial statements provide a picture of the major funds of the District. In the case of governmental activities, outlays for long lived assets are reported as expenditures and long-term liabilities, such as general obligation bonds, are not included in the fund financial statements. To provide a link from the fund financial statements to the government-wide financial statements, a reconciliation is provided from the fund financial statements to the government-wide financial statements.

Notes to financial statements provide additional detail concerning the financial activities and financial balances of the District. Additional information about the accounting practices of the District, investments of the District, capital assets and long-term debt are some of the items included in the notes to financial statements.

Financial Highlights

The following are the highlights of financial activity for the year ended September 30, 2018.

The District’s total assets exceeded total liabilities by $2,459,735 (net position). Unrestricted net position for Governmental Activities were $439,554. Net investment in capital assets was $1,707,803. Restricted net position was $312,378.

Governmental activities revenues totaled $2,342,628 while governmental activities expenses totaled $1,795,455.

OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)

Financial Analysis of the District

The following schedule provides a summary of the assets, liabilities and net position of the District and is presented by category for comparison purposes.

Net Position			
	 	Government
 	2018		al Activities	
 	2017	

$	783,441	
Current assets	$	620,024		
Restricted assets	1,479,301	1,395,861	
Capital assets, net	    15,977,356 	    16,295,627 	
Total Assets	   18,076,681 	    18,474,929 	
Current liabilities	1,379,027	1,436,215	
Non-current liabilities	   14,237,919 	    15,126,152 	
Total Liabilities	   15,616,946 	    16,562,367 	
Net investment in capital assets	1,707,803	1,177,841	
Net position - restricted	312,378	217,225	
Net position - unrestricted

Total Net Position	 	439,554 

  $ 2,459,735 	 	517,496 

  $ 1,912,562 	

The decrease in current assets is mainly the result of timing as less funds were due from developer at the end of the year.

The decrease in capital assets is mainly related to depreciation in the current year.

The decrease in current liabilities is related to timing as accounts payable were less in the current year.

The decrease in non-current liabilities and increase in net investment in capital assets is mainly related to principal payments in the current year.

OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)

Financial Analysis of the District (Continued)

The following schedule provides a summary of the changes in net position of the District and is presented by category for comparison purposes.

Change in Net Position

 	Governmental Activities	
 	2018		 	2017	
Program Revenues
Charges for services	$ 2,335,764	$ 2,389,232 General Revenues
Investment earnings	6,864	5,668	
Miscellaneous	 	- 	 	1,643 	
Total Revenues	 	2,342,628 	 	2,396,543 	

Expenses			
General government	239,455	218,775	
Physical environment	758,615	762,115	
Interest on long-term debt	 	797,385 	 	865,729 	
Total Expenses	 	1,795,455 	 	1,846,619 	

Change in Net Position	
547,173	
549,924	
Net Position - Beginning of Year	 	1,912,562 	 	1,362,638 	
Net Position - End of Year	  $ 2,459,735 	  $ 1,912,562 	

The increase in general government is mostly the result of an increase in legal fees.

The decrease in interest on long-term debt is related to principal payments reducing the outstanding bond balance.

OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)

Capital Assets Activity

The following schedule provides a summary of the District’s capital assets activity as of September 30, 2018 and 2017:

 	Description	 Capital assets not being depreciated:		Governmental Activities 2018	2017			
Land improvements	  $		10,404,277 		$ 10,404,277	

Capital assets being depreciated:					
Infrastructure		10,396,500		10,396,500	
Improvements other than buildings		28,857		-	
Accumulated depreciation Total Capital Assets, depreciated

Total Capital Assets	

$	 	(4,852,278)
 	5,573,079 

15,977,356		(4,505,150)

5,891,350

$ 16,295,627	

During the year, capital asset additions were $28,857 and depreciation was $347,128.

General Fund Budgetary Highlights

The budget exceeded governmental expenditures primarily because of lower legal advertising and aquatic maintenance expenditures than were expected.

The budget was amended mainly for increased legal and engineering fees and capital outlay expenditures.

Debt Management

Governmental Activities debt includes the following:

In April 2012, the District issued $13,285,000 Series 2012A-1 Senior  Special Assessment Refunding Bonds and $8,000,000 Series 2012A-2 Subordinate Special Assessment Refunding Bonds. These bonds were issued to refund and redeem the Series 2000A Special Assessment Bonds. The balance outstanding at September 30, 2018 of the Series 2012A-1 and Series 2012A-2 Bonds were $15,400,000.

OVERVIEW OF THE FINANCIAL STATEMENTS (CONTINUED)

Economic Factors and Next Year’s Budget

Poinciana Community Development District does not expect any economic factors to have any significant effect on the financial position or results of operations of the District in fiscal year 2019.

Request for Information

The financial report is designed to provide a general overview of Poinciana Community Development District’s finances for all those with an interest. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Poinciana Community Development District, Governmental Management Services, 135 W Central Blvd, Suite 320, Orlando, FL 32801.

	Governmental
Activities	
ASSETS		
Current Assets:		
Cash and cash equivalents	$	337,533	
Investments	108,814	
Assessments receivable	3,378	
Due from developer	 	170,299 	
Total Current Assets	 	620,024 	
Non-current Assets:
Restricted assets:
Investments	1,479,301
Capital assets not being depreciated:
Land improvements	10,404,277
Capital assets being depreciated:
Infrastructure	10,396,500	
Improvements other than buildings	28,857	
Less: accumulated depreciation	 	(4,852,278)	
Total Non-current Assets	 	17,456,657 	
Total Assets	 	18,076,681 	

LIABILITIES
Current Liabilities:
Accounts payable	180,470	
Accrued interest payable	308,557	
Bonds payable	 	890,000 	
Total Current Liabilities	 	1,379,027 	
Non-current liabilities: Bonds payable
Total Liabilities

 	14,237,919 
 	15,616,946 

NET POSITION		
Net investment in capital assets	1,707,803	
Restricted for debt service	312,378	
Unrestricted	 	439,554 	
Total Net Position	  $	2,459,735 	
STATEMENT OF ACTIVITIES
For the Year Ended September 30, 2018

			Net (Expense)	
			Revenues and	
	Program		Changes in	
	Revenues		Net Position

Governmental	
	Charges for			
Functions/Programs
Governmental Activities	 	Expenses		 	Services			Activities	
General government	$	(239,455)	$	225,838		$	(13,617)	
Physical environment	(758,615)	388,087		(370,528)	
Interest on long-term debt Total Governmental Activities	 	(797,385)	 	1,721,839 
  $	(1,795,455)	 $	2,335,764 		 	924,454 
540,309	
	General revenues:			
	Investment earnings

Change in Net Position		 	6,864 

547,173	
	Net Position - October 1, 2017
Net Position - September 30, 2018		 	1,912,562 
  $	2,459,735 	
BALANCE SHEET GOVERNMENTAL FUNDS
September 30, 2018

							Total	
					Debt		Governmental	
	General			Service		Funds		
ASSETS								
Cash and cash equivalents	$	337,533		$	-		$	337,533	
Investments		108,814			-		108,814	
Assessments receivable		3,378			-		3,378	
Due from developer		170,299			-		170,299	
Due from other funds		15,175			-		15,175	
Restricted assets - investments at fair value		-			1,479,301		1,479,301

  $	2,114,500 	
Total Assets	  $		635,199 		  $		1,479,301 			

LIABILITIES AND FUND BALANCES								
LIABILITIES								
Accounts payable	$	180,470		$	-		$	180,470	
Due to other funds		-			15,175		15,175

195,645	
Total Liabilities		180,470			15,175			

FUND BALANCES								
Restricted:								
Debt service		-			1,464,126		1,464,126	
Assigned:								
Operating reserves		155,224			-		155,224	
Unreserved and undesignated Total Fund Balances

Total Liabilities and Fund Balances	

  $		299,505
454,729

635,199 		

  $		- 1,464,126

1,479,301 		299,505

1,918,855

  $	2,114,500 	
RECONCILIATION OF TOTAL GOVERNMENTAL FUND BALANCES TO NET POSITION OF GOVERNMENTAL ACTIVITIES
September 30, 2018

Total Governmental Fund Balances	$	1,918,855	
Amounts reported for governmental activities in the Statement of Net Position are different because:			
Capital assets not being depreciated (land and improvements) used in governmental activities are not financial resources and are not reported at the fund statement level.		

10,404,277	
Capital assets being depreciated (infrastructure ($10,396,500) and improvements other than buildings ($28,857) net of accumulated depreciation ($(4,852,278)) used in governmental activities are not current financial resources and therefore, are not reported at the fund level.		

5,573,079	
Long-term liabilities, including bonds payable ($(15,400,000)), less net bond discount ($272,081) are not due and payable in the current period and therefore, are not reported at the fund statement level.	

(	

15,127,919)	
Accrued interest expense for long-term debt is not a current financial use and therefore, is not reported at the fund statement level.		
(308,557)	

Net Position of Governmental Activities	
  $		
2,459,735 	
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GOVERNMENTAL FUNDS
For the Year Ended September 30, 2018

						Total	
				Debt		Governmental	
	General			Service		Funds	
Revenues							
Special assessments	$	613,925		$	1,721,839		$ 2,335,764	
Investment earnings	3,113			3,751		6,864	
Total Revenues	 	617,038 	 	1,725,590 		 	2,342,628 			
Expenditures							
Current							
General government	239,455			-		239,455	
Physical environment	411,487			-		411,487	
Capital outlay	28,857			-		28,857	
Debt service							
Principal	-			870,000		870,000	
Interest	-			774,663		774,663	
Other debt service costs	-			15,174		15,174	
Total Expenditures	 	679,799 	 	1,659,837 		 	2,339,636 			
Net change in fund balances	(62,761)			65,753		2,992	
Fund Balances - October 1, 2017	517,490			1,398,373		1,915,863	

Fund Balances - September 30, 2018	
$	454,729		
$	
1,464,126		
$ 1,918,855	
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, 2018

Net Change in Fund Balances - Total Governmental Funds	$	2,992	
Amounts reported for governmental activities in the Statement of Activities are different because:			
Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives as depreciation. This is the amount of depreciation ($(347,128)) in excess of capital outlay ($28,857) in the current period.		

(318,271)	
Repayment of long-term liabilities are reported as expenditures in the governmental fund statement, but such repayments reduce liabilities in the
Statement of Net Position.		

870,000	
Amortization expense of a bond premium/discount does not require the use of current resources and therefore is not reported in the governmental funds. This is the amount of amortization in the current period.		

(21,767)	
In the Statement of Activities, interest is accrued on outstanding bonds; whereas in governmental funds, interest expenditures are reported when due. This is the change in accrued interest from the prior year to the current year.		

14,219	

Change in Net Position of Governmental Activities	
$	
547,173	
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND
For the Year Ended September 30, 2018

							Variance with	
	
Original Budget		
Final Budget		
Actual		Final Budget Positive (Negative)	
Revenues								
Special assessments	$ 618,161		$608,533		$ 613,925		$	5,392	
Investment earnings	3,500		3,500		3,113		(387)	
Total Revenues

Expenditures	621,661		612,033		617,038		5,005	
Current								
General government	185,568		240,275		239,455		820	
Physical environment	436,094		416,884		411,487		5,397	
Capital outlay	-		26,500		28,857		(2,357)	
Total Expenditures

Net change in fund balances	621,662

(1)		683,659

(71,626)		679,799

(62,761)		3,860

8,865	
Fund Balances - October 1, 2017

Fund Balances - September 30, 2018	501,945

$ 501,944		71,626

$	-		517,490

$454,729		445,864

$	454,729	

See accompanying notes.

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the District have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The District's more significant accounting policies are described below.

Reporting Entity

The District was established on November 1, 1999, pursuant to the Uniform Community Development District Act of 1980, Chapter 190, Florida Statutes. Chapter 190 provides that a Community Development District with a size of 1,000 acres or more may be established by rule adopted under Chapter 120 by the Florida Land and Water Adjudicatory Commission (“FLWAC”). The District was established by Rule 42AA-1, Florida Administrative Code as amended, adopted by FLWAC. The District consists of approximately 3,240 acres after a 2008 boundary amendment. The District was established for the purposes of financing and managing the acquisition, construction, maintenance and operation of the infrastructure necessary for community development within its jurisdiction. The District is authorized to issue bonds for the purpose, among others, of financing, funding, planning, establishing, acquiring, constructing or re-constructing, enlarging or extending, equipping, operating and maintaining water management, bridges or culverts, district roads, landscaping, street lights and other basic infrastructure projects within or without the boundaries of the Poinciana Community Development District. The District is governed by a five-member Board of Supervisors who are elected on an at-large basis in a general election by qualified electors within the District. The District operates within the criteria established by Chapter 190.

The reporting entity for the District includes all functions of government in which the District’s Board exercises oversight responsibility. Oversight responsibility includes, but is not limited to, financial interdependency, designation of management, significant ability to influence operations and accountability for fiscal matters. As required by GAAP, these financial statements present the Poinciana Community Development District (the primary government) as a stand-alone government.

Based upon the application of the above-mentioned criteria as set forth by the Governmental Accounting Standards Board, the District has identified no component units.

Measurement Focus and Basis of Accounting

The basic financial statements of the District are composed of the following:

Government-wide financial statements

Fund financial statements

Notes to financial statements

Government-wide Financial Statements

Government-wide financial statements report all non-fiduciary information about the reporting government as a whole. These statements include all the governmental activities of the primary government. The effect of interfund activity has been removed from these statements.

Governmental activities are supported by special assessments. Program revenues include charges for services and payments made by parties outside of the reporting government’s citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the Statement of Activities to present the net cost of each program.

Amounts paid to acquire capital assets are capitalized as assets, rather than reported as an expenditure. Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as an other financing source.

Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure.

Fund Financial Statements

The underlying accounting system of the District is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

Fund financial statements for the primary government’s governmental funds are presented after the government-wide financial statements. These statements display information about major funds individually.

b. Fund Financial Statements (Continued) Governmental Funds
When both restricted and unrestricted resources are combined in a fund, qualified expenses are considered to be paid first from restricted resources, and then from unrestricted resources. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are considered to be available when they are collected within the current period or soon thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.
Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Interest associated with the current fiscal period is considered to be an accrual item and so has been recognized as revenue of the current fiscal period.

Under the current financial resources measurement focus, only current assets and current liabilities are generally included on the balance sheet. The reported fund  balance is considered to be a measure of “available spendable resources”. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of “available spendable resources” during a period.

Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by non-current liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.

Amounts expended to acquire capital assets are recorded as expenditures in the year that resources are expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing source rather than as a fund liability.

Debt service expenditures are recorded only when payment is due.
Poinciana Community Development District NOTES TO FINANCIAL STATEMENTS
September 30, 2018

NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of Presentation
Governmental Major Funds
General Fund – The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.
Debt Service Funds – Accounts for the accumulation of resources for the annual payment of principal and interest on long-term general obligation debt.
Non-current Governmental Assets/Liabilities
GASB Statement 34 requires that non-current governmental assets, such as land and buildings, and non-current governmental liabilities, such as general obligation bonds, be reported in the governmental activities column in the government-wide Statement of Net Position.
Assets, Liabilities, and Net Position or Equity
Cash and Investments
Florida Statutes require state and local governmental units to deposit monies with financial institutions classified as "Qualified Public Depositories," a multiple financial institution pool whereby groups of securities pledged by the various financial institutions provide common collateral from their deposits of public funds. This pool is provided as additional insurance to the federal depository insurance and allows for additional assessments against the member institutions, providing full insurance for public deposits.
The District is authorized to invest in those financial instruments as established by Section 218.415, Florida Statutes. The authorized investments consist of:
Direct obligations of the United States Treasury;
The Local Government Surplus Funds Trust or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperative Act of 1969;
Interest-bearing time deposits or savings accounts in authorized qualified public depositories;
Securities and Exchange Commission, registered money market funds with the highest credit quality rating from a nationally recognized rating agency.
Cash equivalents include time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less.

Restricted Net Position

Certain net position of the District will be classified as restricted on the statement of net position because their use is limited either by law through constitutional provisions or enabling legislation; or by restrictions imposed externally by creditors. In a fund with  both restricted and unrestricted net position, qualified expenses are considered to be paid first from restricted net position and then from unrestricted net position.

Capital Assets

Capital assets, which include infrastructure, are reported in governmental activities.

The District defines capital assets as assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of two years. The valuation basis for all assets is historical cost.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend its useful life are not capitalized.

Depreciation of capital assets is computed and recorded by utilizing the straight-line method. Estimated useful lives of the various classes of depreciable capital assets are as follows:

Infrastructure	30 years
Improvements other than buildings	10 years

Bond Discounts

Bond discounts associated with the issuance of bonds are amortized over the life of the bonds using the straight line method of accounting.

Budgets

Budgets are prepared and adopted after public hearings for the governmental funds, pursuant to Chapter 190 and Section 200.065, Florida Statutes. The District utilizes the same basis of accounting for budgets as it does for revenues and expenditures in its various funds. Formal budgets are adopted for the general fund. The legal level of budgetary control is at the fund level. As a result, deficits in the budget columns of the accompanying financial statements may occur. All budgeted appropriations lapse at  year end.

Net Position

Net position represents the difference between assets and liabilities and are reported in three categories. Net investment in capital assets represents capital assets, net of accumulated depreciation and any outstanding debt related to those assets.  Net position is reported as restricted when there are legal limitations imposed on their use by legislation, or external restrictions imposed by other governments, creditors, or grantors. Unrestricted net position are assets that do not meet definitions of the classifications previously described.

NOTE	B	–		RECONCILIATION	OF	GOVERNMENT-WIDE	AND	FUND	FINANCIAL STATEMENTS

1. Explanation of Differences Between the Governmental Fund Balance Sheet and the Government-wide Statement of Net Position

“Total fund balances” of the District’s governmental funds ($1,918,855) differs from “net position” of governmental activities ($2,459,735) reported in the Statement of Net Position. This difference primarily results from the long-term economic focus of the Statement of Net Position versus the current financial resources focus of the Governmental Fund Balance Sheet. The effect of the differences is illustrated below.

Capital related items

When capital assets (improvements and equipment that are to be used in governmental activities) are purchased or constructed, the cost of those assets is reported as expenditures in governmental funds. However, the Statement of Net Position includes those capital  assets among the assets of the District as a whole.

Land improvements	$	10,404,277	
Infrastructure	10,396,500	
Improvements other than buildings	28,857	
Accumulated depreciation	 	(4,852,278)	
Total	$	15,977,356 	

NOTE	B	–		RECONCILIATION	OF	GOVERNMENT-WIDE	AND	FUND	FINANCIAL STATEMENTS (CONTINUED)

Explanation of Differences Between the Governmental Fund Balance Sheet and the Government-wide Statement of Net Position (Continued)

Long-term debt transactions
Long-term liabilities applicable to the District’s governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities.  All liabilities (both current and long-term) are reported in the Statement of Net Position. Balances at September 30, 2018 were:
Bonds payable	$ (15,400,000)
Bond discount, net	 	272,081
Total	$ (15,127,919)

Accrued interest
Accrued liabilities in the Statement of Net Position differ from the amount reported in governmental funds due to the accrued interest on bonds.
Accrued interest	$	(308,557)
Explanation of Differences Between the Governmental Fund Operating Statements and the Statement of Activities
The “net change in fund balances” for government funds ($2,992) differs from the “change in net position” for governmental activities ($547,173) reported in the Statement of Activities. The differences arise primarily from the long-term economic focus of the Statement of Activities versus the current financial resources focus of the governmental funds. The effect of the differences is illustrated below.

NOTE	B	–		RECONCILIATION	OF	GOVERNMENT-WIDE	AND	FUND	FINANCIAL STATEMENTS (CONTINUED)
2. Explanation of Differences Between the Governmental Fund Operating Statements  and the Statement of Activities (Continued)
Capital related items
When capital assets that are to be used in governmental activities are purchased or constructed, the resources expended for those assets are reported as expenditures in governmental funds. However, in the Statement of Activities, the costs of those assets is allocated over their estimated useful lives and reported as depreciation. As a result, fund balances decrease by the amount of financial resources expended, whereas net position decrease by the amount of depreciation charged for the year.
Depreciation	$	(347,128)
Capital outlay	 	28,857
Total	$	(318,271)

Long-term debt transactions
Some expenses reported in the Statement of Activities do not require the use of current financial resources, therefore, are not reported as expenditures in governmental funds.
Net decrease in accrued interest payable	$	14,219
The repayment of long-term liabilities is reported as an expenditure at the fund level, but such repayments reduce long-term liabilities at the government-wide level.

Debt principal payments	$	870,000

Amortization expense of the bond premium/discount does not require the use of current resources and therefore is not reported in the governmental funds.
Amortization of bond premium/discount	$	(21,767)
NOTE C – CASH AND DEPOSITS
All deposits are held in qualified public depositories and are included on the accompanying balance sheet as cash and investments.

Custodial Credit Risk – Deposits
Custodial credit risk is the risk that in the event of a bank failure, the District's deposits may not be returned to it. The District follows the provisions of Chapter 280, Florida Statutes regarding deposits and investments to manage custodial credit risk. The District maintains all deposits in  a qualified public depository, so that all deposits are fully insured by Federal Depositors Insurance or collateralized under Chapter 280, Florida Statutes. As of September 30, 2018, the District's bank balance was $352,400 and the carrying value was $337,533.

Custodial Credit Risk – Deposits (Continued)

As of September 30, 2018, the District had the following investments and maturities:

 	Investment		    Fair Value		
Commercial Paper	$ 1,479,301	
Certificate of Deposit	 	108,814 	
Total	  $ 1,588,115 	

The District categorizes its fair value measurements within the fair value hierarchy recently established by generally accepted accounting principles. The fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. The District uses a market approach in measuring fair value that uses prices and other relevant information generated by market transactions involving identical or similar assets, liabilities, or groups of assets and liabilities.

Assets or liabilities are classified into one of three levels. Level 1 is the most reliable and is based on quoted price for identical assets, or liabilities, in an active market. Level 2 uses significant other observable inputs when obtaining quoted prices for identical or similar assets, or liabilities, in markets that are not active. Level 3 is the least reliable and uses significant unobservable inputs that uses the best information available under the circumstances, which includes the District’s own data in measuring unobservable inputs.

Based on the criteria in the preceding paragraph, the investment in Commercial Paper is a Level 1 asset.

Investments

The District’s investment policy allows management to invest funds in investments permitted under Section 218.415, Florida Statutes.

Interest Rate Risk

The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates.

Credit Risk

The District's investments are limited by state statutory requirements and bond compliance.  The District has no investment policy that would further limit its investment choices. As of September 30, 2018, the District’s investments in Commercial Paper were rated A-1+ by Standard & Poor’s.

Concentration of Credit Risk

The District places no limit on the amount it may invest. The investment in Commercial Paper represents 93% of the District’s total investments. The investment in Certificates of Deposit represents 7% of the District’s total investments.

The types of deposits and investments and their level of risk exposure as of September 30, 2018 were typical of these items during the fiscal year then ended. The District considers any decline in fair value for certain investments to be temporary.

NOTE D – SPECIAL ASSESSMENT REVENUES

Assessments are non-ad valorem assessments on benefitted property within the District. Operating and Maintenance Assessments are based upon adopted budget and levied annually. Debt Service Assessments are levied when bonds are issued and collected annually for the term of the bond. The District may collect assessments directly or utilize the uniform method of collection (Chapter 197.3632, Florida Statutes). Directly collected assessments are due as determined by annual assessment resolution adopted by the Board of Supervisors. Assessments collected under the uniform method are mailed by County Tax Collector on November 1 and due on or before March 31 of each year. Property owners may prepay a portion or all of the Debt Service Assessments on their property subject to various provisions in the bond documents.

Assessments and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government.

NOTE E – CAPITAL ASSETS

Capital Asset activity for the year ended September 30, 2018 was as follows:

	Balance								Balance	
	10/1/17	Additions		Deletions			09/30/18			
Governmental Activities:										
Capital assets, not depreciated:										
Land and improvements	$ 10,404,277		$	-		$	-		$ 10,404,277	
Capital assets, being depreciated:										
Infrastructure	10,396,500			-			-		10,396,500	
Improvements other than buildings	-			28,857			-		28,857	
Total Capital Assets Depreciated	10,396,500			28,857			-		10,425,357	
Less accumulated depreciation for:										
Infrastructure	(4,505,150)			(346,550)			-		(4,851,700)	
Improvements other than buildings	-			(578)			-		(578)	
Total accumulated depreciation	(4,505,150)			(347,128)			-		(4,852,278)	
Total Capital Assets Depreciated, Net	5,891,350			(318,271)			-		5,573,079	
Governmental Activities Capital Assets	  $ 16,295,627 		  $ 	(318,271)		  $		- 		  $ 15,977,356 	

Depreciation of $347,128 was allocated to physical environment.

NOTE F – LONG-TERM DEBT
Governmental Activities

The following is a summary of activity for long-term debt of the Governmental Activities for the year ended September 30, 2018:

Long-term debt at October 1, 2017	$	16,270,000 Principal payments	 		(870,000)
Long-term debt at September 30, 2018	$	15,400,000 Less: bond discount, net	 		(272,081)
Total long-term debt, September 30, 2018	$	15,127,919 

Long-term debt for Governmental Activities is comprised of the following: Special Assessment Refunding Bonds
$13,285,000 Series 2012A-1 Senior Special Assessment Refunding Bonds due in annual principal installments maturing May 2031. Interest is due semi-annually on May 1 and November 1, at various rates between 1.6% and 4.5%. Current
portion is $600,000.	$	10,015,000

$8,000,000 Series 2012A-2 Subordinate Special Assessment Refunding Bonds due in annual principal installments maturing May 2031. Interest is due semi-annually on May 1 and November 1 at various rates between 5.75% and 6.00%.
Current portion is $290,000.	 5,385,000

Bond payable	15,400,000

Bond discount, net	 	(272,081)

Bonds Payable, Net	$	15,127,919 

The annual requirements to amortize the principal and interest of bonded debt outstanding as of September 30, 2018 are as follows:

Year Ending					
   September 30, 

2019	 	Principal	

$	890,000	

$	 	Interest	

740,441	 	Total	

$ 1,630,441	
2020	920,000		704,456	1,624,456	
2021	965,000		665,506	1,630,506	
2022	995,000		622,919	1,617,919	
2023	1,050,000		577,350	1,627,350	
2024-2028	6,110,000		2,070,688	8,180,688	
2029-2031	 	4,470,000 	 	459,224 	 	4,929,224 
  $ 21,240,584 		
Totals	  $ 15,400,000 	  $ 	5,840,584 		

Summary of Significant Bond Resolution Terms and Covenants

Special Assessment Refunding Bonds

Significant Bond Provisions

The Series 2012 Senior and Subordinate Bonds are subject to redemption at the option of the District prior to their maturity, in whole or in part, at any time after May 1, 2022 at a redemption price equal to the principal amount of the Series 2012 Senior and Subordinate Bonds to be redeemed, together with accrued interest to the date of redemption. The Series 2012 Senior and Subordinate Bonds are subject to extraordinary mandatory redemption prior to maturity in the manner determined by the Bond Registrar if certain events occurred as outlined in the Trust Indenture.

The Trust Indenture established certain amounts be maintained in a reserve account. In addition, the Trust Indenture has certain restrictions and requirements relating principally to the use of proceeds to pay for the infrastructure improvements and the procedures to be followed by the District on assessments to property owners. The District agrees to levy special assessments in annual amounts adequate to provide payment of debt service and to meet the reserve requirements.

Depository Funds

The bond resolution establishes certain funds and determines the order in which revenues are to be deposited into these funds. A description of the significant funds, including their purposes, is as follows:

Reserve Fund - The Series 2012A-1 and Series 2012A-2 Reserve Accounts were funded from the proceeds of the Series 2012A-1 and Series 2012A-2 Bonds in amounts equal to 50 percent of the maximum annual debt outstanding Series 2012A-1 and Series 2012A-2 Bonds at issuance. Monies held in the reserve accounts will be used only for the purposes established in the Trust Indenture.

The following is a schedule of required reserve deposits as of September 30, 2018:

Reserve
 	Balance		Reserve
  Requirement 	
Senior Special Assessment Refunding Bonds, Series 2012A-1 Subordinate Special Assessment Refunding Bonds, Series 2012A-2	$	535,748	$	535,748
$	322,618	$	322,618	

NOTE G – RISK MANAGEMENT
The District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance.

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Supervisors
Poinciana Community Development District Polk County, Florida

We have audited, in accordance with the 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, the financial statements of Poinciana Community Development District, as of and for the year ended September 30, 2018, and the related notes to the financial statements, and have issued our report thereon dated June 19, 2019.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered Poinciana Community Development District's internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Poinciana Community Development District’s internal control. Accordingly, we do not express an opinion on the effectiveness of Poinciana Community Development District's internal control over financial reporting.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Board of Supervisors
Poinciana Community Development District

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Poinciana Community Development District'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.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants
Fort Pierce, Florida June 19, 2019

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MANAGEMENT LETTER

To the Board of Supervisors
Poinciana Community Development District Polk County, Florida

Report on the Financial Statements

We have audited the financial statements of the Poinciana Community Development District as of and for the year ended September 30, 2018, and have issued our report thereon dated June 19, 2019.

Auditor’s Responsibility

We conducted our audit in accordance with auditing standards generally accepted in the United States; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Florida Auditor General.

Other Reporting Requirements

We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards and our Independent Auditor’s Report on an examination conducted in accordance with AICPA Professionals Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated June 19, 2019, should be considered in conjunction with this management letter.

Prior Audit Findings

Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding financial audit report. There were no findings or recommendations in the preceding audit.

Financial Condition and Management

Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require us to apply appropriate procedures and communicate the results of our determination as to whether or not Poinciana Community Development District has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify the specific conditions met. In connection with our audit, we determined that Poinciana Community Development District did not meet any of the conditions described in Section 218.503(1) Florida Statutes.

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To the Board of Supervisors
Poinciana Community Development District

Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for Poinciana Community Development District. It is management’s responsibility to monitor the Poinciana Community Development District’s financial condition; our financial condition assessment was based in part on the representations made by management and the review of the financial information provided by the same as of September 30, 2018.

Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

Additional Matters

Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but warrants the attention of those charged with governance. In connection with our audit, we did not note any such findings.

Purpose of this Letter

Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the Board of Supervisors, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.

Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL
Fort Pierce, Florida June 19, 2019

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INDEPENDENT ACCOUNTANT’S REPORT/COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES

To the Board of Supervisors
Poinciana Community Development District Polk County, Florida

We have examined Poinciana Community Development District's compliance with Section 218.415, Florida Statutes during the year ended September 30, 2018. Management is responsible for Poinciana Community Development District’s compliance with those requirements. Our responsibility is to express an opinion on Poinciana Community Development District’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about Poinciana Community Development District’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on Poinciana Community Development District’s compliance with the specified requirements.

In our opinion, Poinciana Community Development District complied, in all material respects, with the aforementioned requirements during the year ended September 30, 2018.

Berger, Toombs, Elam, Gaines & Frank Certified Public Accountants PL
Fort Pierce, Florida June 19, 2019

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