Overview
SRA did not file its annual financial audit reports for 2015 and 2016 with the Office of the State Auditor (OSA) within 120 days of the end of each fiscal year as required. Its annual audit report for fiscal year 2015 was not filed until March 2016, and its fiscal year 2016 annual audit report was not filed until February 2017. Our prior audit (No. 2012-1452-3A) had also found that SRA did not file its annual audit report for fiscal year 2011 with OSA within the required timeframe. As a result of these late filings, key information about SRA’s financial state was not made available to stakeholders in a timely fashion.
Authoritative Guidance
Section 31 of Chapter 291 of the Acts of 2014 states,
The authority shall have an annual audit of its books and accounts relating to the NAS South Weymouth project to be made at least once annually by certified public accountants. The audit shall be filed with the state auditor annually not later than 120 days after the end of the authority’s fiscal year.
Reasons for Noncompliance with Reporting
According to SRA’s finance director/treasurer, SRA has found it difficult to meet the requirement to file its annual financial audit within 120 days after the fiscal year ends because of competing priorities and reductions in personnel. He added that although these reports were not prepared in a timely manner or sent to OSA, they were posted on SRA’s website when they became available.
Recommendation
SRA management should send the agency’s annual financial audits to OSA within 120 days of the close of the fiscal year. If SRA cannot meet the 120-day reporting requirement, it should work with the Legislature to amend the legislation to reflect a timeframe that is achievable.
Auditee’s Response
With respect to the Authority’s inability to submit its annual audited financial statements within 120 days of the close of the fiscal year, we want to remind you that the Parkway Financing [Memorandum of Agreement] between the Commonwealth and the Authority fixed a liability on the Authority. The liability is typically not annually certified by the Massachusetts Department of Revenue for 150–180 days following the close of the fiscal year. No creditable independent auditor would issue a report within 120 days of the close of the fiscal year until a deficiency, if any, was certified by the Massachusetts Department of Revenue, agreed to by the Board of Directors, and a method of payment accepted by the Board of Directors and the Massachusetts Department of Revenue. The practical effect of which is that the process to file independent audit reports will exceed the 120 days outlined in our enabling statute until such time as the Parkway Bond is paid off. We intend to seek an amendment to our enabling statute to reflect this reality so that we can avoid a recurring audit finding.
Auditor’s Reply
SRA is required by law to file with OSA an annual report prepared by certified public accountants no later than 120 days after the end of SRA’s fiscal year. As of the date of this audit report, OSA has not received SRA’s fiscal year 2017 audit report, which was due October 30, 2017.
We agree that SRA should seek legislative relief to enable it to comply with filing requirements.
| Date published: | March 29, 2018 |
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