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Honorable Mayor and Members of the City Council <br />City of Orono <br />Page 2 <br /> Management’s estimate of the depreciation expense on capital assets is based on <br />management’s estimated useful lives of those assets. We evaluated the key factors and <br />assumptions used to develop the depreciation expense estimate in determining that it is <br />reasonable in relation to the financial statements taken as a whole. <br /> Management’s estimate of the value of investments is based on published market values as of <br />December 31, 2015. We evaluated the key factors and assumptions used to value investments <br />in determining that it is a reasonable estimate in relation to the financial statements taken as a <br />whole. <br /> Management’s estimate of the liability for other post-employment benefits is based on various <br />actuarial assumptions. We evaluated the actuarial assumptions used to develop the liability in <br />determining that it is reasonable in relation to the financial statements taken as a whole. <br /> Management’s estimate of the liability for compensated absences is based on employee wage <br />information and the City’s policies of earning vacation and sick pay. We evaluated the actuarial <br />assumptions used to develop the liability in determining that it is reasonable in relation to the <br />financial statements taken as a whole. <br /> Management’s estimate of the City’s proportionate share of PERA’s GERF and PEPFF net <br />pension liabilities as well as the related deferred inflows and outflows is based on guidance from <br />GASB Statement No. 68, GASB Statement No. 71, and the plans’ allocation tables. The plans’ <br />allocation tables allocate a portion of the plans’ net pension liabilities based on the City’s <br />contributions during the plans’ fiscal years as a percentage of total contributions received for the <br />related fiscal year by the plans. <br /> <br />Financial statement disclosures <br />Certain financial statement disclosures are particularly sensitive because of their significance to <br />financial statement users. There were no particularly sensitive financial statement disclosures. <br /> <br />The financial statement disclosures are neutral, consistent, and clear. <br /> <br />Difficulties encountered in performing the audit <br />We encountered no significant difficulties in dealing with management in performing and completing our <br />audit. <br /> <br />Uncorrected misstatements <br />Professional standards require us to accumulate all misstatements identified during the audit, other <br />than those that are clearly trivial, and communicate them to the appropriate level of management. <br />Management has corrected all such misstatements. <br /> <br />Corrected misstatements <br />None of the misstatements detected as a result of audit procedures and corrected by management <br />were material, either individually or in the aggregate, to the financial statements taken as a whole. <br /> <br />Disagreements with management <br />For purposes of this letter, a disagreement with management is a financial accounting, reporting, or <br />auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial <br />statements or the auditors’ report. No such disagreements arose during our audit.