FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022 FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA TABLE OF CONTENTS Page INDEPENDENT AUDITOR’S REPORT 1-2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3-5 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position 6 Statement of Activities 7 Fund Financial Statements: Balance Sheet – Governmental Funds 8 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position 9 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 10 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 11 Notes to the Financial Statements 12-17 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund 18 Notes to Required Supplementary Information 19 OTHER INFORMATION Data Elements required by FL Statute 218.39 (3) (c) 20 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 21-22 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES, REQUIRED BY RULE 10.556(10) OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA 23 MANAGEMENT LETTER REQUIRED BY CHAPTER 10.550 OF THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA 24-26 INDEPENDENT AUDITOR’S REPORT To the Board of Supervisors Founder’s Ridge Community Development District Lake County, Florida Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities and the major fund of Founder’s Ridge Community Development District, Lake County, Florida (“District”) as of and for the fiscal year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and the major fund of the District as of September 30, 2022, and the respective changes in financial position thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the District and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements The District’s management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America; and for 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 District’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control–related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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 Information Included in the Financial Report Management is responsible for the other information included in the financial report. The other information comprises the information for compliance with FL Statute 218.39 (3) (c) but does not include the financial statements and our auditor's report thereon. Our opinions on the financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated April 7, 2023, 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, contracts, grant agreements and other matters. The purpose of that report is solely 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 effectiveness of the District’s 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 the District’s internal control over financial reporting and compliance. April 7, 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS Our discussion and analysis of Founder’s Ridge Community Development District, Lake County, Florida (“District”) provides a narrative overview of the District’s financial activities for the fiscal year ended September 30, 2022. Please read it in conjunction with the District’s Independent Auditor’s Report, basic financial statements, accompanying notes and supplementary information to the basic financial statements. FINANCIAL HIGHLIGHTS • The liabilities of the District exceeded its assets at the close of the most recent fiscal year resulting in a net position balance of ($23,241). • The change in the District’s total net position in comparison with the prior fiscal year was $197 an increase. The key components of the District’s net position and change in net position are reflected in the table in the government-wide financial analysis section. • At September 30, 2022, the District’s governmental funds reported combined ending fund balances of ($59,908), an increase of $36,863 in comparison with the prior fiscal year. A portion of fund balance is non-spendable for prepaid items and deposits, and the remainder is unassigned deficit fund balance. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis are intended to serve as the introduction to the District’s basic financial statements. The District’s basic financial statements are comprised of three components: 1) government- wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the District’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all the District’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the residual amount being reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. The government-wide financial statements include all governmental activities that are principally supported by Developer contributions. The District does not have any business-type activities. The governmental activities of the District include the general government (management) function. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The District, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The District has one fund category: governmental funds. OVERVIEW OF FINANCIAL STATEMENTS (Continued) Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a District’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the District’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The District maintains one governmental funds for external reporting. Information is presented separately in the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund. The District adopts an annual appropriated budget for its general and debt service funds. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with the budget. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position may serve over time as a useful indicator of an entity’s financial position. In the case of the District, liabilities exceeded assets at the close of the most recent fiscal year. Key components of the District’s net position are reflected in the following table: 20222021Assets, excluding capital assets56,765$ 88,914$ Total assets56,765 88,914 Liabilities, excluding long-term liabilities80,006 112,352 Total liabilities80,006 112,352 Net PositionUnrestricted(23,241) (23,438) Total net position(23,241)$ (23,438)$ NET POSITIONSEPTEMBER 30, GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued) The District’s net position increased during the most recent fiscal year. The majority of the increase represents the extent to which ongoing program revenues exceeded the cost of operations Key elements of the change in net position are reflected in the following table: 20222021Revenues: Program revenuesOperating grants and contributions33,904$ 153,529$ Total revenues33,904 153,529 Expenses: General government33,707 32,472 Total expenses33,707 32,472 Change in net position197 121,057 Net position - beginning(23,438) (144,495) Net position - ending(23,241)$ (23,438)$ FOR THE FISCAL YEAR ENDED SEPTEMBER 30, CHANGES IN NET POSITION As noted above and in the statement of activities, the cost of all governmental activities during the fiscal year ended September 30, 2022 was $33,707. The majority of the costs of the District’s activities were paid by program revenues. Program revenues are comprised of Developer contributions. GENERAL BUDGETING HIGHLIGHTS An operating budget was adopted and maintained by the governing board for the District pursuant to the requirements of Florida Statutes. The budget is adopted using the same basis of accounting that is used in preparation of the fund financial statements. The legal level of budgetary control, the level at which expenditures may not exceed budget, is in the aggregate. Any budget /amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2022. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS Subsequent to fiscal year end, the District the continued collection of amounts owed by the Developer related to the settlement agreement and reduction of the amounts owed by the District. CONTACTING THE DISTRICT’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, land owners, customers, investors and creditors with a general overview of the District’s finances and to demonstrate the District’s accountability for the financial resources it manages and the stewardship of the facilities it maintains. If you have questions about this report or need additional financial information, contact the Founder’s Ridge Community Development District’s Finance Department at 219 E. Livingston Street, Orlando, FL 32801. FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2022 ASSETSCash9,406$ Due from Developer41,715 Deposits and prepaids5,644 Total assets56,765 LIABILITIES Accounts payable 80,006 Total liabilities80,006 NET POSITIONUnrestricted(23,241) Total net position(23,241)$ Governmental Activities See notes to the financial statements FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022 OperatingGrants andGovernmentalFunctions/ProgramsExpensesContributionsActivitiesPrimary government: Governmental activities: General government33,707$ 33,904$ 197$ Total governmental activities33,707 33,904 197 Change in net position197 Net position - beginning(23,438) Net position - ending (23,241)$ Program RevenuesNet (Expense) Revenue and Changes in Net Position See notes to the financial statements FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2022 GeneralASSETSCash9,406$ 9,406$ Due from Developer41,715 41,715 Deposits and prepaids5,6445,644 Total assets56,765$ 56,765$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCESLiabilities: Accounts payable80,006$ 80,006$ Total liabilities80,006 80,006 Deferred inflow of resourcesUnavailable revenue36,667 36,667 Fund balances: Nonspendable: Prepaids and deposits5,644 5,644 Unassigned(65,552) (65,552) Total fund balances(59,908) (59,908) Total liabilities, deferred inflows of resources and fund balances56,765$ 56,765$ Total Governmental FundsMajor Funds See notes to the financial statements FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2022 Fund balance - governmental funds $ (59,908) Amounts reported for governmental activities in the statement of net position are different because: 36,667 Net position of governmental activities $ (23,241) Assetsrecordedinthegovernmentalfundfinancialstatementsthatarenotavailabletopayforcurrent-periodexpendituresareunavailable revenue in the governmental funds. See notes to the financial statements FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022 GeneralREVENUESDeveloper contributions70,570$ 70,570$ Total revenues70,570 70,570 EXPENDITURESCurrent: General government33,707 33,707 Total expenditures33,707 33,707 Excess (deficiency) of revenuesover (under) expenditures36,863 36,863 Fund balances - beginning(96,771) (96,771) Fund balances - ending(59,908)$ (59,908)$ Major FundsTotal Governmental Funds See notes to the financial statements FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022 Net change in fund balances - total governmental funds $ 36,863 Amounts reported for governmental activities in the statement of activities are different because: (36,666) Change in net position of governmental activities $ 197 Unavailablerevenuefromprioryearcollectedincurrentyearrecordedatthefundlevelonlyasamountwaspreviouslyrecordedonthe governmental wide statements. See notes to the financial statements FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA NOTES TO FINANCIAL STATEMENTS NOTE 1 – NATURE OF ORGANIZATION AND REPORTING ENTITY Founder’s Ridge Community Development District ("District") was created on April 30, 2007 by Ordinance No. 2007-06 of the City Council of the City of Minneola, Florida, pursuant to the Uniform Community Development District Act of 1980, and otherwise known as Chapter 190, Florida Statutes. The Act provides among other things, the power to manage basic services for community development, power to borrow money and issue Bonds, and to levy and assess non-ad valorem assessments for the financing and delivery of capital infrastructure. The District was established for the purposes of financing and managing the acquisition, construction, maintenance and operation of a portion of the infrastructure necessary for community development within the District. The District is governed by the Board of Supervisors ("Board"), which is composed of three members. The Supervisors are elected by the qualified electors of the District. The Board of Supervisors of the District exercise all powers granted to the District pursuant to Chapter 190, Florida Statutes. At September 30, 2022, all of the Board members are affiliated with Founders Ridge Development, LLC (“Developer”), and Founders Ridge Development II, LLC (“Developer”) The Board has the responsibility for: 1. Assessing and levying assessments. 2. Approving budgets. 3. Exercising control over facilities and properties. 4. Controlling the use of funds generated by the District. 5. Approving the hiring and firing of key personnel. 6. Financing improvements. The financial statements were prepared in accordance with Governmental Accounting Standards Board (“GASB”) Statements. Under the provisions of those standards, the financial reporting entity consists of the primary government, organizations for which the District is considered to be financially accountable and other organizations for which the nature and significance of their relationship with the District are such that, if excluded, the financial statements of the District would be considered incomplete or misleading. There are no entities considered to be component units of the District; therefore, the financial statements include only the operations of the District. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Government-Wide and Fund Financial Statements The basic financial statements include both government-wide and fund financial statements. The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment. (Operating-type special assessments for maintenance and debt service are treated as charges for services.); and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Other items not included among program revenues are reported instead as general revenues. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Assessments are recognized as revenues in the year for which they are levied. Grants and similar items are to be recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due. Assessments Assessments are non-ad valorem assessments on benefited property within the District. Operating and maintenance assessments are based upon the adopted budget and levied annually at a public hearing of the District. Debt service assessments are levied when Bonds are issued and assessed and collected on an annual basis. The District may collect assessments directly or utilize the “Uniform Method of Collection” under Florida Statutes. Direct collected assessments are due as set forth in the annual assessment resolution adopted by the Board of Supervisors. Assessments collected under the Uniform Method are noticed by the 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 considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. The portion of assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. The District reports the following major governmental funs: General Fund The general fund is the general operating fund of the District. It is used to account for all financial resources except those required to be accounted for in another fund. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first for qualifying expenditures, then unrestricted resources as they are needed. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position or Equity Restricted Assets These assets represent cash and investments set aside pursuant to Bond covenants or other contractual restrictions. Deposits and Investments The District’s cash and cash equivalents are considered to be cash on hand and demand deposits (interest and non-interest bearing). The District has elected to proceed under the Alternative Investment Guidelines as set forth in Section 218.415 (17) Florida Statutes. The District may invest any surplus public funds in the following: a) The Local Government Surplus Trust Funds, or any intergovernmental investment pool authorized pursuant to the Florida Inter-local Cooperation Act; b) Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency; c) Interest bearing time deposits or savings accounts in qualified public depositories; d) Direct obligations of the U.S. Treasury. Securities listed in paragraph c and d shall be invested to provide sufficient liquidity to pay obligations as they come due. In addition, surplus funds may be deposited into certificates of deposit which are insured and any unspent Bond proceeds are required to be held in investments as specified in the Bond Indenture. The District records all interest revenue related to investment activities in the respective funds. Investments are measured at amortized cost or reported at fair value as required by generally accepted accounting principles. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Capital Assets Capital assets which include property, plant and equipment, and infrastructure assets (e.g., roads, sidewalks and similar items) are reported in the government activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Unearned Revenue Governmental funds report unearned revenue in connection with resources that have been received, but not yet earned. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position or Equity (Continued) Long-Term Obligations In the government-wide financial statements long-term debt and other long-term obligations are reported as liabilities in the statement of net position. Bond premiums and discounts are deferred and amortized over the life of the Bonds. Bonds payable are reported net of applicable premiums or discounts. Bond issuance costs are expensed when incurred. In the fund financial statements, governmental fund types recognize premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Fund Equity/Net Position In the fund financial statements, governmental funds report non spendable and restricted fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Assignments of fund balance represent tentative management plans that are subject to change. The District can establish limitations on the use of fund balance as follows: Committed fund balance – Amounts that can be used only for the specific purposes determined by a formal action (resolution) of the Board of Supervisors. Commitments may be changed or lifted only by the Board of Supervisors taking the same formal action (resolution) that imposed the constraint originally. Resources accumulated pursuant to stabilization arrangements sometimes are reported in this category. Assigned fund balance – Includes spendable fund balance amounts established by the Board of Supervisors that are intended to be used for specific purposes that are neither considered restricted nor committed. The Board may also assign fund balance as it does when appropriating fund balance to cover differences in estimated revenue and appropriations in the subsequent year’s appropriated budget. Assignments are generally temporary and normally the same formal action need not be taken to remove the assignment. The District first uses committed fund balance, followed by assigned fund balance and then unassigned fund balance when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. Net position is the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources. Net position in the government-wide financial statements are categorized as net investment in capital assets, restricted or unrestricted. Net investment in capital assets represents net position related to infrastructure and property, plant and equipment. Restricted net position represents the assets restricted by the District’s Bond covenants or other contractual restrictions. Unrestricted net position consists of the net position not meeting the definition of either of the other two components. NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Other Disclosures Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. NOTE 3 – BUDGETARY INFORMATION The District is required to establish a budgetary system and an approved Annual Budget. Annual Budgets are adopted on a basis consistent with generally accepted accounting principles for the general fund. All annual appropriations lapse at fiscal year-end. The District follows these procedures in establishing the budgetary data reflected in the financial statements. a) Each year the District Manager submits to the District Board a proposed operating budget for the fiscal year commencing the upcoming October 1. b) A public hearing is conducted to obtain comments. c) Prior to October 1, the budget is legally adopted by the District Board. d) All budget changes must be approved by the District Board. e) The budgets are adopted on a basis consistent with generally accepted accounting principles. f) Unused appropriation for annually budgeted funds lapse at the end of the year. NOTE 4 – DEPOSITS The District’s cash balances were entirely covered by federal depository insurance or by a collateral pool pledged to the State Treasurer. Florida Statutes Chapter 280, "Florida Security for Public Deposits Act", requires all qualified depositories to deposit with the Treasurer or another banking institution eligible collateral equal to various percentages of the average daily balance for each month of all public deposits in excess of any applicable deposit insurance held. The percentage of eligible collateral (generally, U.S. Governmental and agency securities, state or local government debt, or corporate bonds) to public deposits is dependent upon the depository's financial history and its compliance with Chapter 280. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. NOTE 5 – DEVELOPER TRANSACTIONS The Developers have agreed to fund the general operations of the District. In connection with that agreement Developers contributions to the general fund were $33,903. The District entered into a settlement agreement with the Developers on June 8, 2021 to address outstanding accounts payable amounts. The settlement agreement requires the Developers to pay the delinquent accounts payable over a 3 year period. The first payment was received in the fiscal year ended September 30, 2021. The second payment was received in the current fiscal year. The final payment is due on 6/30/23. Upon satisfaction of the payments under the settlement agreement, the remaining outstanding accounts payable will be written off. NOTE 6 – CONCENTRATION The District’s activity is dependent upon the continued involvement of the Developer, the loss of which could have a material adverse effect on the District’s operations. NOTE 7 – MANAGEMENT COMPANY The District has contracted with a management company to perform management advisory services, which include financial and accounting services. Certain employees of the management company also serve as officers of the District. Under the agreement, the District compensates the management company for management, accounting, financial reporting, computer and other administrative costs. NOTE 8 – 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. The District has obtained commercial insurance from independent third parties to mitigate the costs of these risks; coverage may not extend to all situations. There were no settled claims during the past three years. NOTE 9 – DEFICIT FUND BALANCE The settlement agreement provides that if all amounts are paid by the Developer certain vendors have agreed to write off amounts owed in excess of the $110,000 settlement amount. Without the receipt of the remaining settlement amounts and reduction of the delinquent payables it is unclear how the liabilities will be paid off. FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2022 ActualOriginal & FinalAmountsREVENUESDeveloper contributions41,875$ 70,570$ 28,695$ Total revenues41,875 70,570 28,695 EXPENDITURESCurrent: General government41,87533,707 8,168Total expenditures41,875 33,707 8,168 Excess (deficiency) of revenuesover (under) expenditures-$ 36,863 36,863$ Fund balance - beginning(96,771) Fund balance - ending(59,908)$ Variance with Final Budget - Positive (Negative) Budgeted Amounts See notes to required supplementary information FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION The District is required to establish a budgetary system and an approved Annual Budget for the general fund. The District’s budgeting process is based on estimates of cash receipts and cash expenditures which are approved by the Board. The budget approximates a basis consistent with accounting principles generally accepted in the United States of America (generally accepted accounting principles). The legal level of budgetary control, the level at which expenditures may not exceed budget, is in the aggregate. Any budget amendments that increase the aggregate budgeted appropriations must be approved by the Board of Supervisors. Actual general fund expenditures did not exceed appropriations for the fiscal year ended September 30, 2022. FOUNDER’S RIDGE COMMUNITY DEVELOPMENT DISTRICT LAKE COUNTY, FLORIDA OTHER INFORMATION – DATA ELEMENTS REQUIRED BY FL STATUTE 218.39(3)(C) UNAUDITED ElementCommentsNumber of district employees compensated at 9/30/20220Number of independent contractors compensated in September 20223Employee compensation for FYE 9/30/2022 (paid/accrued) $ - Independent contractor compensation for FYE 9/30/2022 $ 33,707 Construction projects to begin on or after October 1; (>$65K)Not applicableBudget variance reportSee page 18 of annual financial reportNon ad valorem special assessments;Not applicable 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 Founder’s Ridge Community Development District Lake 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 the governmental activities and the major fund of Founder’s Ridge Community Development District, Lake County, Florida (“District”) as of and for the fiscal year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the District’s basic financial statements, and have issued our opinion thereon dated April 7, 2023. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the District’s internal control over financial reporting (internal control) 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 the District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s internal control. 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 a 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 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. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the District’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the District in a separate letter dated April 7, 2023. The District's responses to the finding identified in our audit is described in the accompanying Management Letter. We did not audit the District's responses and, accordingly, we express no opinion on it. 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. April 7, 2023 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH THE REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES, REQUIRED BY RULE 10.556(10) OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA To the Board of Supervisors Founder’s Ridge Community Development District Lake County, Florida We have examined Founder’s Ridge Community Development District, Lake County, Florida’s (“District”) compliance with the requirements of Section 218.415, Florida Statutes, in accordance with Rule 10.556(10) of the Auditor General of the State of Florida during the fiscal year ended September 30, 2022. Management is responsible for District’s compliance with those requirements. Our responsibility is to express an opinion on 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. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the District complied, in all material respects, with the specified requirements referenced in Section 218.415, Florida Statutes. An examination involves performing procedures to obtain evidence about whether the District complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the District’s compliance with specified requirements. In our opinion, the District complied, in all material respects, with the aforementioned requirements for the fiscal year ended September 30, 2022. This report 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, management, and the Board of Supervisors of Founder’s Ridge Community Development District, Lake County, Florida and is not intended to be and should not be used by anyone other than these specified parties. April 7, 2023 MANAGEMENT LETTER PURSUANT TO THE RULES OF THE AUDITOR GENERAL FOR THE STATE OF FLORIDA To the Board of Supervisors Founder’s Ridge Community Development District Lake County, Florida Report on the Financial Statements We have audited the accompanying basic financial statements of Founder’s Ridge Community Development District, Lake County, Florida ("District") as of and for the fiscal year ended September 30, 2022, and have issued our report thereon dated April 7, 2023. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; 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 the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Auditor’s Report on an examination conducted in accordance with AICPA Professional 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 April 7, 2023, should be considered in conjunction with this management letter. Purpose of this Letter The purpose of this letter is to comment on those matters required by Chapter 10.550 of the Rules of the Auditor General for the State of Florida. Accordingly, in connection with our audit of the financial statements of the District, as described in the first paragraph, we report the following: I. Current year findings and recommendations. II. Status of prior year findings and recommendations. III. Compliance with the Provisions of the Auditor General of the State of Florida. 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, as applicable, management, and the Board of Supervisors of Founder’s Ridge Community Development District, Lake County, Florida and is not intended to be and should not be used by anyone other than these specified parties. We wish to thank Founder’s Ridge Community Development District, Lake County, Florida and the personnel associated with it, for the opportunity to be of service to them in this endeavor as well as future engagements, and the courtesies extended to us. April 7, 2023 REPORT TO MANAGEMENT I. CURRENT YEAR FINDINGS AND RECOMMENDATIONS 2022-01 Financial Condition Assessment Observation: As a result of performing financial condition assessment procedures, it was determined that a deteriorating financial condition exists with respect to the District. The District has an accumulated deficit of ($59,908) in the general fund. The deficit is primarily the result of non payment of prior year expenses owed to vendors due to a lack of funds. Recommendation: The District should take the necessary steps to alleviate the deteriorating financial condition. Management Response: The District entered into a settlement agreement with the Developers on June 8, 2021 to address outstanding accounts payable amounts. The settlement agreement requires the Developers to pay the delinquent accounts payable over a 3 year period. The first payment was received in the fiscal year ended September 30, 2021. The second payment was received in the current fiscal year. The final payment is due on 6/30/23. Upon satisfaction of the payments under the settlement agreement, the remaining outstanding accounts payable will be written off. II. PRIOR YEAR FINDINGS AND RECOMMENDATIONS 2021-01 Financial Condition Assessment Current Status: See finding 2022-01 above. III. COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA Unless otherwise required to be reported in the auditor’s report on compliance and internal controls, the management letter shall include, but not be limited to the following: 1. A statement as to whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no significant findings and recommendations made in the preceding annual financial audit report for the fiscal year ended September 30, 2021, except as noted above. 2. Any recommendations to improve the local governmental entity's financial management. There were no such matters discovered by, or that came to the attention of, the auditor, to be reported for the fiscal year ended September 30, 2022, except as noted above. 3. 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 which warrants the attention of those charged with governance. There were no such matters discovered by, or that came to the attention of, the auditor, to be reported, for the fiscal year ended September 30, 2022, except as noted above. 4. The name or official title and legal authority of the District are disclosed in the notes to the financial statements. 5. In connection with our audit, we determined that the District has met one or more of the financial emergency conditions described in Section 218.503(1), Florida Statutes. The District failed to make vendor payments as a result of a lack of funds. We applied financial condition assessment procedures pursuant to Rule 10.556(7) and determined that a deteriorating financial condition was noted. See Findings section above for additional information. It is management’s responsibility to monitor financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. REPORT TO MANAGEMENT (Continued) III. COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA (Continued) 6. Management has provided the specific information required by Section 218.39(3)(c) in the Other Information section of the financial statements on page 20.