Review of Audited Financial Statements as of
and for the Year Ended June 30, 2013
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As one should expect, the City received
an Unmodified Opinion on its financial
statements as of and for the year ended
June 30, 2013.
The City also received an Unmodified
Opinion on its Federal Compliance
Audit.
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There were 2 new pronouncements implemented
during the year ending June 30, 2013:
◦ GASB 63 – Financial Reporting of Deferred
Outflows of Resources, Deferred Inflows of
Resources, and Net Position
◦ GASB 65 – Items Previously Reported as Assets
and Liabilities
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These 2 new pronouncements resulted in the
following changes to the City’s financial
statements:
o Previously classified “assets” have been split into
“assets” and “deferred outflows of resources”
o Previously classified “liabilities” have been split
into “liabilities” and “deferred inflows of
resources”
o The previous terminology of “net assets” has
been changed to “net position”
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Financial Highlights ~
◦ Total assets and deferred outflows of resources
of the City amount to $82.7 million. The majority
consists of capital assets of $59.1 million and
another $15.7 million in cash and investments.
◦ Total liabilities and deferred inflows of resources
of the City amount to $57.6 million. The majority
pertains to outstanding bond obligations of
$34.7 million and unearned property tax revenue
of $9.2 million.
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Financial Highlights (continued) ~
◦ Net Position at June 30, 2013 for the City totaled
$25.1 million as follows:
 net investment in capital assets of $26.1 million
 restricted net position of $274 thousand
 the balance of ($1.2 million) represents a deficit
as the compensated absences and OPEB are
unfunded liabilities
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Total revenues and other financing sources
exceeded budgeted estimates by $21 thousand.
This favorable variance amounts to .06% of the
total estimated revenues of $35,652,923.
Great job in estimating the fiscal year revenue!
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Total expenditures and other financing uses of
$35.8 million were $438 thousand less than
final budgeted amounts.
This favorable variance amounts to 1.21% of
the total appropriations of $36,248,923.
Again, very good job in managing the City’s
finances within the approved budget.
The Budgetary Fund Balance is what is available to
manage the City’s tax rates. The change in budgetary
fund balance is as follows:
Budgetary Fund Balance – July 1, 2012
Net change in fund balance
Budgetary fund balance - June 30, 2013
$4,476,762
( 136,657)
$4,476,762*
The decrease in fund balance was anticipated since
$350,000 of the City’s fund balance from June 30, 2012
was used to reduce the tax rate
* detailed on the next page
The components of the budgetary fund balance are as
follows:
Nonspendable:
Prepaid expenses
Assigned:
Designated to offset subsequent
fiscal year tax rate
Unassigned:
General operations
$ 32,412
325,000
4,119,350**
** The City’s fund balance policy is to strive to maintain an
unassigned fund balance equal to 5-17% of the total
appropriations of the community.
ACTUAL PERCENTAGE
9.61%
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
2010
2011
2012
Nonspendable
Assigned
Unassigned
DRA recommended (at 17%)
2013
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The City of Somersworth has two significant
enterprise funds – the Water Fund and the Sewer
Fund
Several resolutions were previously passed
authorizing the increase in user fees for both water
and sewer users.
The following charts show the positive impact that
these increased user fees have had on each fund.
Water Fund
2,500,000
2,000,000
1,500,000
1,000,000
500,000
(500,000)
FY10
FY11
FY12
FY13
(1,000,000)
Cash & equivalents
Unrestricted Net position
Revenues
Expenses
Sewer Fund
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
(500,000)
FY10
FY11
FY12
FY13
(1,000,000)
(1,500,000)
(2,000,000)
Cash & equivalents
Unrestricted Net position
Revenues
Expenses
The last rate increase was effective July 1, 2011. The
rate increases and the change to monthly billings has
effectively achieved the following:
Advances from the General Fund have been
repaid
Cash and equivalents are now positive figures
Cash flows have improved due to the monthly
billings
The unrestricted net position has increased
The water fund and sewer fund have achieved the
status of “self-supporting” enterprise funds!
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The City expended approximately $1.8
million in federal awards, and a federal
compliance audit was also performed.
Of the federal awards, $1.59 million (or
89.3%) pertains to the school department.
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As part of the federal compliance audit, we tested
the City’s internal control over both financial
reporting and on compliance with the federal
awards.
We are pleased to report that there were no
deficiencies or weaknesses identified and no
findings or questioned costs to report.
Congratulations on your outstanding efforts!
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On behalf of myself and the members of our firm, we
thank you for allowing us to serve as your independent
auditors.
We also want to express our appreciation to the
management team, especially the finance office within
the City and the school department, for their assistance
during the audit.