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STATE OF CONNECTICUT |
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| AUDITORS OF PUBLIC ACCOUNTS | ||
| STATE CAPITOL | ||
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CAPITOL AVENUE HARTFORD, CONNECTICUT 06106-1559 |
Governor Dannel P. Malloy
Members of the General Assembly
Report on the Financial Statements
We have audited the accompanying financial statements of the State of
Connecticut as of and for the year ended June 30, 2016, 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 the financial reporting provisions of
Sections 3-115, 3-115b and Sections 3-114b through 3-114r of the Connecticut
General Statutes, as described in the note on the inside cover of the Annual
Report of the State Comptroller, in order to meet the financial and budgetary
reporting requirements of the State of Connecticut. Management is also
responsible for 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.
Auditor?s 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 10 percent and 12 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 90 percent and 86 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 84 percent and 13 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. 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 adverse and unqualified audit opinions.
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
To meet the financial and budgetary reporting requirements of the State of
Connecticut, the financial statements presented in the Annual Report of the
State Comptroller are prepared by the State Comptroller using accounting
practices described in the note presented on the inside cover of the Annual
Report of the State Comptroller. These practices follow the financial reporting
provisions of Sections 3-115, 3-115b and Sections 3-114b through 3-114r of the
Connecticut General Statutes, which is a basis of accounting other than
accounting principles generally accepted in the United States of America. The
effects on the financial statements of the variances between the statutory basis
of accounting described in the note on the inside cover of the Annual Report of
the State Comptroller and accounting principles generally accepted in the United
States of America, although not reasonably determinable, are presumed to be
material. In addition, 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 has also not provided the required notes to
the financial statements, a management discussion and analysis, and information
on depreciation expense and 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.
Adverse Opinion on U.S. Generally Accepted Accounting Principles
In our opinion, because of the significance of the matters discussed in the
Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles
paragraph, the financial statements referred to above do not present fairly, in
accordance with accounting principles generally accepted in the United States of
America, the financial position of the State of Connecticut, as of June 30,
2016, or the revenues, expenses, and changes in net position and, when
applicable, cash flows thereof for the year then ended.
Opinion on Statutory Basis of Accounting
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 statutory-basis financial position of all funds accounted for by the Office
of the State Comptroller of the State of Connecticut as of June 30, 2016, and
the statutory-basis cash transactions of such funds for the year then ended in
accordance with the statutory basis of accounting described in the note on the
inside cover of the Annual Report of the State Comptroller.
Emphasis of Matter
As discussed in the note on the inside cover of the Annual Report of the State
Comptroller, commencing with the fiscal year ended June 30, 2014, the State of
Connecticut changed from a modified cash basis of accounting to a statutory
basis of accounting for the General Fund, the Special Transportation Fund and
the Budgeted Special Revenue funds. This change, which was provided for in
Section 3-115b of the Connecticut General Statutes, as amended by Public Act
11-48, requires the State Comptroller to recognize in the financial statements
certain expenditure accruals for those funds that receive budgeted
appropriations from the Connecticut General Assembly.
Other Matters
The sundry section of the Annual Report of the State Comptroller has not been
subjected to the auditing procedures applied in the audit of the combined civil
list financial statements, and accordingly, we do not express an opinion or
provide any assurance on it.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we will also issue our report
dated November 30, 2016, 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
Auditor of Public Accounts
November 30, 2016
State Capitol
Hartford, Connecticut
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STATE OF CONNECTICUT |
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| AUDITORS OF PUBLIC ACCOUNTS | ||
| STATE CAPITOL | ||
| 210
CAPITOL AVENUE HARTFORD, CONNECTICUT 06106-1559 |
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 financial statements of the State of Connecticut as presented in the Annual Report of the State Comptroller, as of and for the year ended June 30, 2016 and have issued our report thereon dated November 30, 2016. Our report includes an adverse 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 financial statements presented in the Annual Report of the State Comptroller. 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 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 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, 2016 - State of Connecticut Comprehensive Annual Financial Report, and in separately issued departmental audit reports covering the fiscal year ended June 30, 2016. 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 financial statements as presented in the Annual Report of the
State Comptroller 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, 2016. 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
Auditor of Public Accounts
November 30, 2016
State Capitol
Hartford, Connecticut