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Unusual Transactions, Controversial or Emerging Areas <br /> We noted no transactions entered into by the City during the year for which there is a lack of authoritative <br /> guidance or consensus.All significant transactions have been recognized in the financial statements in the <br /> proper period. <br /> Accounting Estimates <br /> Accounting estimates are an integral part of the financial statements prepared by management and are <br /> based on management's knowledge and experience about past and current events and assumptions about <br /> future events. Certain accounting estimates are particularly sensitive because of their significance to the <br /> financial statements and because of the possibility that future events affecting them may differ <br /> significantly from those expected. The most sensitive estimates affecting the City's financial statements <br /> were: <br /> Estimated Fair Value of Investments: As of June 30, 2016, the City held approximately $205 <br /> million of cash and investments as measured by fair value as disclosed in Note 2 to the financial <br /> statements. Fair value is essentially market pricing in effect as of June 30, 2016. These fair <br /> values are not required to be adjusted for changes in general market conditions occurring <br /> subsequent to June 30,2016. <br /> Estimate of Depreciation: Management's estimate of the depreciation is based on useful lives <br /> determined by management. These lives have been determined by management based on the <br /> expected useful life of assets as disclosed in Note 5 to the financial statements. We evaluated the <br /> key factors and assumptions used to develop the depreciation estimate and determined that it is <br /> reasonable in relation to the basic fmancial statements taken as a whole. <br /> Estimate of Compensated Absences: Accrued compensated absences which are comprised of <br /> accrued vacation, holiday, and certain other compensating time is estimated using accumulated <br /> unpaid leave hours and hourly pay rates in effect at the end of the fiscal year as disclosed in Note <br /> 1K to the financial statements. We evaluated the key factors and assumptions used to develop the <br /> accrued compensated absences and determined that it is reasonable in relation to the basic <br /> financial statements taken as a whole. <br /> Estimated Claims Liabilities: Management's estimate of the claims liabilities payable is <br /> disclosed in Note 7 to the financial statements and is based on actuarial studies determined by a <br /> consultant,which are based on the claims experience of the City. We evaluated the key factors <br /> and assumptions used to develop the estimate and determined that it is reasonable in relation to <br /> the basic financial statements taken as a whole. <br /> Estimated Net Pension Assets and Liabilities and Pension-Related Deferred Outflows and Inflows <br /> of Resources: Management's estimate of the net pension assets and liabilities and deferred <br /> outflows/inflows of resources are disclosed in Note 10 to the financial statements and are based <br /> on actuarial studies determined by a consultant, which are based on the experience of the City. <br /> We evaluated the key factors and assumptions used to develop the estimate and determined that it <br /> is reasonable in relation to the basic financial statements taken as a whole. <br /> Estimated Net OPEB Liability: Management's estimate of the net OPEB liability is disclosed in <br /> Note 11 to the financial statements and is based on actuarial study determined by a consultant, <br /> which is based on the experience of the City. We evaluated the key factors and assumptions used <br /> to develop the estimate and determined that it is reasonable in relation to the basic financial <br /> statements taken as a whole. <br /> 6 <br />