The town’s independent auditor told the Select Board Monday that Danvers received an unmodified (clean) opinion on its FY2024 financial statements and walked the board through key balances and disclosures in the annual comprehensive financial report (ACFR).

Scott McIntyre, partner at Markham (now part of CBIZ), described the audit opinion as "a clean audit opinion" and said the governance letter identified management override of controls as a standard significant risk the firm must assess in every audit. McIntyre said auditors found Danvers’s internal control system "well designed and effectively operating" for the period audited.

Why it matters: The ACFR and auditor’s governance letter provide the board and residents with independent assurance about the town’s fiscal condition. McIntyre highlighted several items that typically draw attention from rating agencies and residents: the town’s net pension liability ($94.9 million measured at calendar-year 2023), net OPEB liability (about $122 million as of 6/30/24), and the general fund unassigned balance (about $21.9 million, or roughly 18% of general fund expenditures).

Key points from the presentation:
- Opinion and standards: The auditors issued an unmodified opinion after testing under U.S. generally accepted auditing standards and generally accepted government auditing standards. McIntyre noted auditors also reported non-audit services (assistance preparing the ACFR) in accordance with professional standards.
- Pension and OPEB: The net pension liability decreased from the prior year (driven by favorable 2023 investment returns) while net OPEB rose slightly due to actuarial experience changes. Danvers used a 7% discount rate for pension measurement (down from 7.25% the prior year).
- Fund balance and budget results: Total general fund balance was about $40.8 million; unassigned fund balance was $21.9 million (approximately 18% of expenditures). The auditors explained that a budgetary surplus (about $12.5 million in combined favorable revenues and unspent appropriations) largely funded capital appropriations at town meeting, increasing committed fund balance rather than producing a dollar-for-dollar increase in unassigned balance.
- ARPA and other liabilities: The audit shows $1,153,000 of unearned revenue in nonmajor governmental funds at 6/30/24, reflecting unspent ARPA (American Rescue Plan Act) funds. McIntyre said that amount is recognized as revenue when spent. McIntyre also explained a capital-project deficit tied to a $4.5 million bond anticipation note for the landfill project; permanent financing will eliminate that timing-related deficit.
- Enterprise funds: McIntyre highlighted enterprise fund cash flows (water, sewer, and related funds) and said net cash provided by operations exceeded debt service in each enterprise, a metric noted by rating agencies.

Board discussion: Select Board members asked about the meaning of the management override risk, the treatment and status of ARPA funds and the composition of restricted net position (examples: water mitigation, childcare, student athletic fees). McIntyre said the management-override designation is a required audit risk and that auditors tested controls and transactions in response; he confirmed that the town’s ARPA balance had been largely spent by December (staff reported remaining accounting work to finalize). Town finance staff confirmed they will provide budget-season detail on restricted funds.

What’s next: The ACFR contains additional footnote disclosures and statistical schedules that the town will use for budgeting and capital planning. The Select Board and finance staff will review detailed fund activity during the FY2026 budget process.