Finance Committee - 4/4/2018 Page 2
your financial statements went. From our perspective, it went very well. To put that it even the most basic
terms that | can think of, is to tell you that we found the books and records to be in good working order. Key
balance sheet accounts like your cash balances and your bank accounts, tax receivables, long-term debt
accounts payable; we found all of these accounts to be reconciled on a regular and timely basis. As a result of
that test work that we did on your account reconciliations, we did not need to propose any significant audit
entries as a result of the procedures we performed here in Nashua.
That is summarized in what we call the Governance Letter as a required communication. When | talk about
the key components of that Governance Letter it’s informing you of how the audit went and if there were
significant audit entries that were needed. There is some disclosure in there on one of the pages that indicate
that no significant audit entries were needed. There is also a disclosure in there that indicates that there were
no disagreements between the City and our firm and how to apply generally accepted accounting principles
that are really established by the Government Accounting Standards Board.
The last really required communication; again it is documented in that Governance Letter is to speak with the
committee about estimates. There certainly are estimates in your Comprehensive Annual Financial Report. In
our opinion the two most significant deals with a couple of actuarially determined liabilities, the City’s Net
Pension Liability and your Net OPEB Obligation, OPED being an acronym for the “Other Post Employment
Benefit” so it is benefits other than pension. Both of those liabilities, and we will look at those and talk quickly
about them, | certainly can answer many questions, if there are questions on them. But those liabilities are
estimates but they are based on actuarially science and standards that are followed by your actuaries in
determining what those liabilities are in your financial statements.
With that quick overview, if | could get into your comprehensive annual financial report. The first pages of
numbers that I’m going to look at really begins on Page 32 but | did want to point out and | am going to touch
base on Page 16, 17 and 18, only because that is our opinion on your financial statements. Everything else in
this document belongs to Nashua but Pages 16, 17, and 18 is our opinion. It goes on for essentially 3 pages
because it tells you that audit standards that we followed and the types of procedures that we did in our test
work here in Nashua and the results of that are highlighted under the Opinion Paragraph on Page 17. In our
opinion your financial statements are totally in accordance with GAAP or Generally Accepted Accounting
Principles for local governments here in the United States. It’s a clean opinion; technically it would be called
an Unmodified Opinion. It is not anything new but it really is, in our opinion, one of the highlights of this
communication is to be able to report to you that your financial statements are totally in accordance with
Generally Accepted Accounting Principles here in the United States.
Now following that is Management’s Discussion and Analysis or MDA and it goes from Pages 19 all the way
over to Page 31. This is what | was referring to earlier as a great resource to go back to at a later point in time
to perhaps recall why certain key account balances may have changed. | can certainly take any questions that
the committee may have on that. That takes us to Page 32. Before | start talking about this page | would want
to take the opportunity to remind the committee that there are essentially two perspectives in here. You have a
long-term perspective financial statement and a more short-term perspective. The pages that we are looking
at here are Page 32 in the Operating Statement on the long-term perspective is 33 and 34. These are the
long-term perspectives financial statements. We are going to get to the General Fund in a minute. When | talk
about this page the primary focus that I’d like to remind the committee about is a couple of the liabilities that |
said were estimates, the Net Pension Liability and the Net OPEB Liability. They are present on this long-term
basis balance sheet. They are really not going to be present on the General Fund Balance Sheet which we will
get to in a minute.
So again, on Page 32, the focus on this page is in the first column of numbers and probably about two-thirds of
the way down the page in the Non-Current Liability Section you see a net pension liability with the State of New
Hampshire. That is the New Hampshire Retirement System. You see a $267 million dollar liability on
Nashua’s financial statements, because that is your proportional share of the unfunded liability at the New
Hampshire Retirement System. | wanted to point this out, it’s obviously a significant account balance and it
goes back a couple of fiscal years to 2015 when the accounting standards changed and brought this liability
