STAFF REPORT FOR CALENDAR ITEM NO.: 10 FOR THE MEETING OF: December - PDF document

STAFF REPORT FOR CALENDAR ITEM NO.: 10 FOR THE MEETING OF: December 8, 2016 TRANSBAY JOINT POWERS AUTHORITY BRIEF DESCRIPTION: Presentation of the audited Annual Financial Report of the Transbay Joint Powers Authority (TJPA) for the fiscal year ended June 30, 2016 and the Report to the Board of Directors. SUMMARY: State law, as well as various agreements in place with TJPA funders, requires that TJPA publish complete audited financial statements within six months of the close of each fiscal year. Responsibility for the preparation of the statements, the accuracy of the data, and the completeness and fairness of the presentation rests with TJPA management. The fiscal year 2015-16 financial statements are the thirteenth set of financial statements since the inception of the TJPA and fairly represent the financial position of the TJPA for the period of July 1, 2015 to June 30, 2016. The objective of the independent audit is to provide reasonable assurance that the financial statements are free of material misstatement. In addition, as a recipient of federal funds, TJPA is required to undergo a Single Audit of Federal Programs. Vavrinek, Trine, Day & Co (VTD) conducted an audit, including the Single Audit, of the TJPA’s financial statements for fiscal year ended June 30, 2016 according to Government Auditing Standards, and has issued an unmodified opinion. The Annual Financial Report includes the following required sections: 1) Independent Auditor’s Report—this report was prepared by the independent auditors, who rendered an unmodified opinion (formerly unqualified opinion), which is the most favorable opinion an agency can receive in an audit, and means that the financial statements are presented fairly and in accordance with accounting principles generally accepted in the United States of America. 2) Management’s Discussion and Analysis (MD&A)—this section provides management’s objective narrative overview of TJPA’s financial activities. It includes comparisons of the current year to the prior year, and analysis of the agency’s overall financial position. 3) Basic Financial Statements—the basic financial statements include a statement of net position; statement of revenues, expenses and changes in fund net position; statement of cash flows; and notes to the statements, which are essential to a full understanding of the data provided. 4) Required Supplementary Information (RSI)—the Governmental Accounting Standards Board (GASB) considers certain information to be an essential part of financial reporting and has established authoritative guidelines for the presentation of this information. Auditors are required to apply certain limited procedures in reviewing RSI. MD&A is RSI, although it is presented before the basic financial statements. TJPA’s other RSI is related to pension and other post-employment benefits. 5) Supplementary and Other Information—this includes the Schedule of Expenditures of Federal Awards, and the required auditor reports on internal control and compliance. A representative of VTD will address the Board at the December 8 meeting and be available to answer any questions. RECOMMENDATION: Information only.

TRANSBAY JOINT POWERS AUTHORITY Annual Financial Report For the Year Ended June 30, 2016

TRANSBAY JOINT POWERS AUTHORITY For the Year Ended June 30, 2016 Table of Contents Page(s) Independent Auditor's Report ................................................................................................................ 1-2 Management’s Discussion and Analysis (Required Supplementary Information - Unaudited) ..... 5-10 Basic Financial Statements: Statement of Net Position ................................................................................................................. 12-13 Statement of Revenues, Expenses and Changes in Fund Net Position .................................................. 14 Statement of Cash Flows .................................................................................................................. 15-16 Notes to the Basic Financial Statements ........................................................................................... 17-42 Required Supplementary Information: Schedule of TJPA’s Share of the Net Pension Liability ........................................................................... 44 Schedule of TJPA Pension Contributions ................................................................................................ 44 Schedule of Funding Progress for Other Post-Employment Benefits ...................................................... 45 Supplementary Information: Schedule of Expenditures of Federal Awards ........................................................................................ 48 Notes to Schedule of Expenditures of Federal Awards ......................................................................... 49 Other Reports: Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ........................................................................ 53-54 Independent Auditor’s Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance ....................................... 55-56 Schedule of Findings and Questioned Costs ......................................................................................... 57

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INDEPENDENT AUDITOR’S REPORT Board of Directors Transbay Joint Powers Authority San Francisco, California Report on the Financial Statements We have audited the accompanying basic financial statements of the Transbay Joint Powers Authority (TJPA), as of and for the fiscal year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards , issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the TJPA as of June 30, 2016 and the changes in financial position, and cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. 1