The Town of Derry has received a clean bill of accounting health from its auditing firm, Melanson Heath.
Scott McIntyre, a certified public accountant with the Nashua-based firm, reported on the audit at the Jan. 5 Town Council meeting.
McIntyre said he has met with the auditing committee and found the books for FY 2015, which ended this past June, in good working order.
“The audit revealed no significant deficiencies or material weaknesses,” McIntyre told the Council.
McIntyre discussed the new government accounting standard, GASB 68, which went into effect June 30, 2015. As of that time, McIntyre said, governing bodies are required to report their net pension liability according to the New Hampshire Retirement System.
“Derry’s applicable percentage of the unfunded liability is required to be present in the financial statement,” McIntyre explained.
The audit includes two balance sheets, a long-term balance sheet and a current balance sheet, McIntyre said, and the long-term sheet is the only one with the GASB 68 requirement.
The town’s net pension liability is $32.5 million, according to McIntyre. Its assets are $18.5 million, so the pension liability exceeds the assets, he said.
“If your liability goes up your net position goes down,” McIntyre said.
At the end of the 2014 fiscal year, the town’s net liability was positive by $14 million, he said.
But McIntyre added that financial institutions and credit rating agencies are already aware of the GASB 68 requirement. “It is no surprise to them,” he said.
McIntyre added that as the town makes contributions to the pension system on schedule, the pensions will be fully funded and the liability will decrease.
McIntyre said the unexpended fund balance (UFB) was $11.3 million as of June 30, 2015. He reminded the Council that the UFB is 13 percent of the operating budget, as driven by the town’s Fund Balance policy, a percentage at the “midpoint” of the range recommended by the New Hampshire Department of Revenue Administration. The committed fund balance is $11.6 million.
Revenues were $2.5 million more than anticipated for FY 2015 and expenses were $860,000 less than anticipated, bringing a positive balance of $3.4 million, he said. With the use of some of the UFB to reduce the FY 15 tax rate, it “softened” the positive balance a little, to $3.2 million.
