‘Spirit of transparency and full disclosure’ achieved in comprehensive annual financial report

For the second straight year, the City of Somerville has earned the highest form of recognition in governmental accounting and financial reporting in North America for its comprehensive annual financial report (CAFR) for fiscal 2013.

The Certificate of Achievement for Excellence in Financial Reporting recognizes the City for going beyond the minimum requirements of generally accepted accounting principles in preparing a CAFR that achieves a “spirit of transparency and full disclosure,” according to awarding nonprofit Government Finance Officers Association of the United States and Canada (GFOA). The city earned the same award last year for its fiscal 2012 CAFR and, in April, the GFOA’s Distinguished Budget Presentation Award for its fiscal 2014 budget.

The program’s high standards mandate, among other requirements, that the CAFR includes an independent auditor’s report on the city’s financial statements, and that it describes the relationship between the city’s financial statements and the data reported for governmental activities, with analysis focusing on the reasons for changes in the City’s financial statements rather than only the amount of change. The city must also clearly distinguish expenses by function instead of lumping all expenses together in a single line item, making it clear to readers what exactly is being spent and where, among the other 220-plus requirements included on GFOA’s checklist.

The city’s CAFR, available at www.somervillema.gov/departments/finance, complements the annual city budget by presenting a complete accounting of all government funds, investments and operating activities, more detailed demographic and statistical information, and annual budget comparisons to help the reader better understand the financial condition of the city. The CAFR also has the potential to improve the city’s bond rating and earn lower interest rates for the city. The city currently has the highest bond ratings in its history—AA+ from Standard & Poor’s and Aa2 from Moody’s Investors Service.

“When I became mayor, our budget was simply a 138-page list of department line items, goals and objectives. Today, our budget is almost 300 pages of information including revenue accounts, explanations of cost drivers and more. Our CAFR goes even further in making city finances transparent and accessible to everyone, from taxpayers to financial institutions,” said Mayor Joseph A. Curtatone. “Taxpayers deserve to know how the city is managing their money so they can hold us accountable, and we need to hold ourselves accountable, meet our financial obligations and manage the city is a smart, efficient way. The CAFR helps us achieve that and our commitment to transparency, accountability and open government.”

Reports submitted for consideration are reviewed by GFOA professional staff and the GFOA Special Review Committee (SRC), which includes individuals with expertise in public-sector financial reporting such as financial statement preparers, independent auditors, academics and other finance professionals. The GOFA is a nonprofit professional association serving over 17,800 government finance professionals throughout North America and established the Certificate of Achievement for Excellence in Financial Reporting in 1945.

— City of Somerville