The TAPS Public Transit board of directors received the results of its first annual-audit since its financial crisis in late 2015. The audit found a $2.29 million operating loss for the year, but only one material weakness in the agency’s reporting, financial and internal control practices.
“I am glad to say you received an unmodified opinion, that is a clean opinion, on the two grants,” Michelle Treshwig, representing accounting firm Kushner LaGraize, said referencing grants from the Federal Transit Administration and Texas Department of Transportation.
Auditors were scheduled to present the findings of this report during a meeting last month, but were unable to attend. Since then, the audit has been updated as additional supporting documentation has been provided. By comparison, the audit report for 2015 came with no opinion due to weaknesses found in the audit and instead featured a disclaimer of the findings.
This audit of TAPS finances covered TAPS operations from October 2015 through September 2016, including much of the agency’s first year under the management of Transdev, which took over operations last March. Officials with TAPS noted that the material weakness discovered was related to documentation before Transdev’s time with the organization.
The one material weakness discovered in the audit related to $564,000 of expenses related to Medicaid that was missing supporting documentation. A second expense related to TxDOT funds was also missing its documentation during the first draft of the audit. However, TxDOT was able to provide the documentation and eliminate the concerns in the final version, Treshwig said.
“Because we were unable to obtain sufficient appropriate audit evidence, we were unable to satisfy ourselves as to the value of the Medicaid expense account and we cannot determine the possible effects on the financial statements of undetected misstatements, if any, that could be material but not pervasive,” the report says.
The audit found that TAPS received just $4.05 million in revenues during the 2016 fiscal year; down from $19.56 million in 2015. For the past year, the audit found that TAPS had $6.34 million in operating expenses, leaving an operating loss of $2.29 million. Among the expenses in the audit was $2.66 million related to subcontractor expenses, $581,092 in salaries and benefits and $317,961 in vehicle expenses.
Finance Director Shellie White attributed $1.48 million of these expenses to depreciation that did not represent physical expense to the agency. White also noted that during this time frame the FTA had cut off its funding for the agency. The board announced Monday that this funding source has since been restored and the agency is expected to receive about $920,000 for the current fiscal year.
Other items were related to the agency’s accrued liabilities of $4.18 million. When combined with its current liabilities of $892,194, this brings the agency’s current liabilities to $5.13 million.
When asked for comment, Vice Chairman Bill Magers said he had just seen the modified audit earlier that morning and was unable to comment until he had an opportunity to fully read the findings. Magers, however did say that the current liabilities, owed to Transdev, showed up on the audit simply due to the timing of the report.
Despite the operating expenses for the past year, officials with the agency took the nearly-clean audit as a success and a sign of it moving in the right direction. Treshwig said if trends continue she expects TAPS to have a clean audit next year.
“By any measure, it is getting better,” Magers said. “We aren’t out of the water, … but in the next few months we are on the way to righting the ship.”