State of Connecticut

STATE OF CONNECTICUT

State of Connecticut seal
AUDITORS OF PUBLIC ACCOUNTS
JOHN C. GERAGOSIAN 210 CAPITOL AVENUE
HARTFORD, CONNECTICUT 06106-1559
ROBERT M.WARD

INDEPENDENT AUDITORS' REPORT

Governor Dannel P. Malloy
Members of the General Assembly

Report on the Financial Statements
We have audited the accompanying combined civil list financial statements of the State of Connecticut as of and for the year ended June 30, 2013, as listed in the Table of Contents of the Annual Report of the State Comptroller.

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 opinions on these financial statements based on our audit. We did not audit the financial statements of the Special Transportation Fund which represent 13 percent and 16 percent, respectively, of the assets and receipts of the Special Revenue Funds; we did not audit the financial statements of the Transportation Special Tax Obligations Fund, which represent 89 percent and 76 percent, respectively, of the assets and receipts of the Debt Service Funds; and we did not audit the financial statements of the Clean Water Fund-Federal Account, and the Drinking Water Fund-Federal Account, which represent 92 percent and 16 percent, respectively, of the assets and receipts of the Enterprise Funds. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the aforementioned funds and accounts, is based solely on the reports of other auditors.

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. In addition, all of the aforementioned audits were conducted in accordance with 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. In making those risk assessments, the auditor considers internal control relevant to the organization's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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 opinions.

As discussed in the note presented on the inside cover of the Annual Report of the State Comptroller, the State of Connecticut has prepared these financial statements using accounting practices prescribed by the State Comptroller, which practices differ from accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between these regulatory accounting practices and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

The financial statements referred to above present only the civil list funds of the State of Connecticut on a budgetary basis and are not intended to present fairly the financial position and results of operations of the State of Connecticut in conformity with accounting principles generally accepted in the United States of America. Management has not presented government-wide financial statements to display the financial position and changes in financial position of its governmental activities, business-type activities, and discretely prepared component units. Management also has not provided notes to the financial statements, a management discussion and analysis, and information on depreciation expense, disclosure of all types of debt and infrastructure assets on the financial statements. All of which has been determined as necessary by accounting principles generally accepted in the United States of America.

Opinions
In our opinion, because of the effects of the matters discussed in the preceding paragraphs, the financial statements referred to above do not present fairly the financial position of the State of Connecticut, as of June 30, 2013, or the changes in financial position, or where applicable its cash transactions for the year then ended, in conformity with accounting principles generally accepted in the United States of America,

In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the combined civil list funds as of June 30, 2013, and the cash transactions of such funds for the year then ended, in conformity with the basis of accounting described in the note presented on the inside cover of the Annual Report of the State Comptroller.

Our audit was performed for the purpose of forming an opinion on the combined civil list financial statements of the State of Connecticut taken as a whole. The combining and individual fund and account group financial statements and schedules, included in the Annual Report of the State Comptroller, are presented for purposes of additional analysis and are not a required part of the combined civil list financial statements. Such information has been subjected to the auditing procedures applied in the audit of the combined civil list financial statements and, in our opinion, is fairly presented, in all material respects, in relation to the combined civil list financial statements taken as a whole.

We did not audit the data included in the sundry section of the Annual Report of the State Comptroller and, accordingly, express no opinion thereon.

Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we will also issue our report dated December 31, 2013, on our consideration of the State of Connecticut's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit.

John C. Geragosian Robert M. Ward
Auditor of Public Accounts Auditor of Public Accounts

December 31, 2013
State Capitol
Hartford, Connecticut

INDEPENDENT AUDITORS' 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


Governor Dannel P. Malloy
Members of the General Assembly

We have audited 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, the combined civil list financial statements of the State of Connecticut, as of and for the year ended June 30, 2013 and have issued our report thereon dated December 30, 2013. Our report includes a qualified opinion. Our report includes a reference to other auditors. Other auditors audited the financial statements of the Special Transportation Fund, the Transportation Special Tax Obligations Fund, the Clean Water Fund-Federal Account, and the Drinking Water Fund-Federal Account, as described in our report on the State of Connecticut's civil list financial statements. This report does not include the results of the other auditors' testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors.

Internal Control Over Financial Reporting:

Management of the State of Connecticut is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the State of Connecticut's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the combined civil list financial statements, but not for the purpose of expressing an opinion on the effectiveness of the State of Connecticut's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the State of Connecticut's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, detect or correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the failure of the State Comptroller to produce its combined civil list financial statements in compliance with generally accepted accounting principles to be a material weakness in internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material weaknesses have been identified.

We have noted other matters involving the internal control over financial reporting that we have reported, or will report, to the State's management in our Auditors' Report on Internal Control over Financial Reporting and on Compliance and Other Matters, for the Fiscal Year Ended June 30, 2013 - State of Connecticut Comprehensive Annual Financial Report, and in separately issued departmental audit reports covering the fiscal year ended June 30, 2013. The State's management responses to the findings identified in our audits are not audited by us and, accordingly, we express no opinion on them.

Compliance and Other Matters:
As part of obtaining reasonable assurance about whether the State of Connecticut's combined civil list financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

We have noted certain immaterial instances of noncompliance or other matters that we have reported, or will report, to the State's management in separately issued departmental audit reports covering the fiscal year ended June 30, 2013. The State's management responses to the findings identified in our audits are not audited by us and, accordingly, we express no opinion on them.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the State of Connecticut's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the State of Connecticut's internal control and compliance. This report is intended solely for the information and use of the Governor, the State Comptroller, the Appropriations Committee of the General Assembly, and the Legislative Committee on Program Review and Investigations and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited.

John C. Geragosian Robert M. Ward
Auditor of Public Accounts Auditor of Public Accounts

December 31, 2013
State Capitol
Hartford, Connecticut