Annual 3^eport Ott\)t Celebmte/j.^ AO Citp of iSasiljua, 150'" iilunicipal (gotjernment I^eport Municipal Government Report isa' MUNICIPAL GOVERNMENTREPORT FISCAL YEAR JULY I 2002 -JUNE 30, 2003 Office of the City Clerk Paul R. Bergeron, City Clerk Patricia E. Lucier, Deputy City Clerk Printed by: Ralph B. Jackson Cover: Three Nashua High School students, josh Hardwick, Lacey Ritter, and Jenn Turcotte, designed the logo for Nashua's Sesquicentennial. The students, who worked under the guidance ot Nashua High School teacher Mark Christensen, also developed the design that was chosen for the City's 150th anniversar>' license plates, which were sold to residents and displayed on the front of their vehicles throughout 2003. City of Nashua " City of Nashua "We are getting to be a large place, and already begin to feel the necessity of a more efficient government than the old town organizations can give. We shall have to have a city government before long, that is perfectly apparent and if we do not adopt it now, we shall be forced into it by and by as other places of our magnitude, importance, and circumstances have been... The fact of having a city government exerts a powerful influence upon the growth of a place. ..People seek for larger places, they seek for cities, not only because of the fact that they are cities presupposes importance, but because there is something pleasing and respectable in the idea of a city. Albin Beard, Editor The Nashua Telegraph July 25, 1853 (Mayor: 1858 and 1859) The 2002 - 2003 Municipal Government Report for the City of Nashua has been compiled through the efforts of your local city officials, to serve as a permanent record of the past year. Many hours of work went into its preparation, and for this we thank our very dedicated city employees who contributed to this report. Throughout the 2003 calendar year, the City of Nashua celebrated the 150'^ anniversary of its incorporation as New Hampshire's third city. Nashua had been preceded in its transformation to city government by Manchester in 1846 and by Concord earlier in 1853. The 150'^ Municipal Government Report includes a number of photographs of Nashua buildings taken near the beginning of the 20'*^ Century, which were obtained from the Library of Congress Prints and Photographs Division. These, and other photographs, may be searched online at http://www.loc.qov/rr/print/cataloq.html . We hope that you will find this report interesting and informative. We welcome your questions and comments regarding any of the information contained in this report. Feel free to call us at 589-3010 or e-mail us at citvclerkdept(a)ci.nashua.nh.us /cuu/ uQsua.?^6*^ Paul R. Bergeron City Clerk 111 City of Nashua Municipal Government Report CITY OF NASHUA, NEW HAMPSHIRE Management Letter For ttie Year Ended June 30. 2003 City of Nashua TABLE OF CONTENTS PAGE INTRODUCTORY LETTER PRIOR YEAR RECOMMENDATIONS: 1. Implement Prior Recommendations in Fiscal 2005 2. FinaiizeConflictof Interest Policy for Public Works Retirement 4 CURRENT YEAR RECOMMENDATION: 3. Consider an Alternative Valuation Methodology - Public Works Retirement 5 Municipal Government Report WHKa Melansdn HtAiH Ck C Company, PC i I Kl II II l> I't 111 It A. « 111 XI VN !•* M\V\«.illlSI \ll\ litiK^ 1 1 Tni/irfiji/ \fii.m • '»i(n»' loi l.-l (tv> ;)ss.. 1 1 1 1 . ^„^ )iv>;lsn_--i>j5i> iik-r'iv«U»i-:uh.oifn To the Honorable Mayor and Board of Aldermen Nashua, New Hampshire We have audited the financial statements of the City of Nashua, New Hampshire. as of and for the year ended June 30, 2003 and have issued our report thereon dated January 15, 2004. As part of our audit, we made a study and evaluation of the City's system of intemal accounting control to the extent we considered necessary to evaluate the system as required by auditing standards generally accepted in the United States of America. Under these standards, the purpose of such evaluations are to establish a basis for reliance on the system of intemal accounting control in determining the nature, timing, and extent of other auditing procedures that are necessary for expressing an opinion on the financial state- ments. The management of the City of Nashua, New Hampshire is responsible for estab- lishing and maintaining a system of internal accounting control, in fulfilling this responsibility, estimates and judgments by them are required to assess the expected benefits and related costs of control procedures. The objectives of such a system are to provide reasonable, but not absolute assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with required authorization and recorded property to permit the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America. Because of inherent limitations in any system of intemal accounting control, errors or irregularities may still occur without being detected. Also, projection of any evalu- ation of the system to future periods is subject to the risks that procedures may become inadequate because of changes in conditions or that the degree of com- pliance with the procedures may deteriorate. City of Nashua Our study and evaluation was not designed for the purpose of expressing an opinion on the internal accounting control and would not necessarily disclose all weaknesses in the system. However, as a result of our study and evaluation, and in an effort to be of assistance to the City, we are submitting for your consideration comments and recommendations intended to improve operations and intemal accounting control. After you have had an opportunity to consider our comments and recommendations, we would be pleased to discuss them with you. let^ - /'c 'll^^^,,...^.^:^ ^:^-r Nashua, New Hampshire January 15, 2004 , Municipal Government Report The City has begun the process of implementing many of the recommendations made in our previous management letter. Certain prior recommendations, however, require programming changes that necessitate implementing at the start of a fiscal year. Accordingly, comment one summarizes our prior year recommendations that have not been fully implemented and that the City expects to address in fiscal year 2005. Comment two, is also repeated from our prior letter. 1- Implement Prior Recommendations in Fiscal 2005 Prior year issues : Trust Fund Accounting : in the prior year, we recommended that the City segregate the responsibilities of Trust Fund accounting and cash reconcilia- tion, and establish a complete general ledger to maintain the accounting records of the various trusts. This will improve the City's internal controls by providing an adequate segregation of duties, and improved documentation. Segregate Budget Information : In the prior year, we recommended that the City discontinue the practice of combining the annual budget with actual activity. This will result in a general ledger that reconciles with subsidiary ledgers, and reports actual year-to-date activity in conformity with generally accepted accounting principles. Revise Internal Service Funds : In the prior year, we recommended that the City revise the accounting procedures for the Intemai Service Fund by trans- fening the entire appropriation for the self-insured activities to the Internal Service Fund, and establishing separate funds for each major self-insurance program. Cun-ent Year Status : We understand the City expects to implement these recommendations in fiscal year 2005. Further Action Reguired : The City should ensure that all reorganizations and programming changes are in place during Spring 2004 to ensure a smooth transition effective July 1 2004. City of Nashua City Response : The Trust Fund Accounting and Revision of Internal Service Funds are nearing completion and will be transitioned effective July 1, 2004. The changes in Trust Fund Accounting vi/ill greatly enhance internal controls and segregation of duties. The revision of the Self-Insured Fund will provide more meaningful analysis of this activity for administration, management and the Board of Aldermen. With reference to Segregation of Budget Information, the City will be con- tinuing to produce current reports as well as developing new reports to meet Generally Accepted Accounting Principles (GAAP) reporting standards. We understand this will satisfy the audit requirements. 2. Finalize Conflict of Interest Policy for Public Works Retirement Prior Year Issue : In the prior year, we recommended that the Board of Public Works Retire- ment System establish a Conflict of Interest Policy for the System, its employees, Board members, service providers and professional advisors. Current Year Status : The City has drafted a formal conflict of interest policy, however, the Board has not yet adopted the policy. Further Action Required : The City should continue to review the draft policy and implement as soon as practical. Citv Response : The policy issue is nearing completion at this date. Adoption of the policy is expected prior to June 30, 2004. Municipal Government Report CURRENT YEAR RECOMMENDATION : 3. Consider an Alternative Valuation Methodology - Public Works Retirement The actuarial valuation of the Board of Public Works Retirement System does not separately Identify the unfunded actuarial liability, if any. While the actuarial cost method currently used by the City's actuary is permitted under generally accepted accounting principles, an altemative method would pro- vide the City with additional