For the first time since at least 2013, TAPS Public Transit returned no major findings, noncompliance issues or material weaknesses in its annual audit. The TAPS Board of directors received an update on the annual report earlier this week.
In its report for 2016, auditors found one material weakness related to missing documentation for $564,000 in expenses related to Medicaid. By comparison, the audit report for 2015 came back with no opinion due to weaknesses found throughout the audit and instead featured a disclaimer of the findings.
“Last year, when I was up here giving a report on the audit I stated that if you guys continued on the path you had been going on, improving your operations, then things would get better,”Michelle Treschwig, representing accounting firm Kushner LaGraize, said to the board. “I am very happy to say this year you received an unmodified opinion on your financial statements.”
Treschwig went on to commend the board and TAPS staff for its work in correcting the issues that have come to light in recent years regarding the organization’s accounting, and bookkeeping practices.
Despite the positive news about the results of the audit, Treschwig said there are some points of concern in the report. Notably, Treschwig said the audit showed a $1.9 million net deficit and $860,730 operational loss for the year 2017.
The audit attributed this loss in net position to a loss on the sale of assets and expenses exceeding revenues. However, Treschwig said in the future revenues from funding sources could increase, especially with the backing of a clean audit.
Grayson County Judge Bill Magers, who serves as the TAPS board vice chairman, noted that the operational loss for the year falls in line almost identically with $861,163 in depreciation to TAPS assets and vehicles. If this was removed as an expense, Magers said TAPS would be about even in expenses to revenue.
The audit found that TAPS has $2.6 million in total operating revenues — down from $4.05 million in 2016. Similarly, the agency saw a decrease in its operational expenses from $6.34 million in 2016 to just $3.46 million in 2017.
In addition to these concerns, the audit also noted that the transit agency currently has numerous litigation cases pending following TAPS’ financial difficulties and accumulated debt. These crises ultimately lead the agency to drastically scale down its services and coverage area, significantly reduce its staff and lead TAPS to temporarily suspend services in early 2016.
By the end of the 2016-2017 fiscal year, the estimated liabilities of pending cases was $2.13 million. This was up from $1.86 million for 2015-2016.
In a separate action, the board resolved some of these liabilities when it approved settlement agreements with Conway Company CPAs and First Transit, who previously provided management services to TAPS until early 2016. In a lawsuit filed in Collin County in 2016, First Transit sought $1.12 million in unpaid service fees for its work with the transit agency.
Magers declined to comment on the contents of the two settlement agreements citing ongoing litigation with other parties that could be jeopardized by the publication of the information. Calls to First Transit for comments were not immediately returned.
In addition to these concerns, Treschwig said TAPS should also increase its communications with Federal Transportation Administration, Texas Department of Transportation and the public.
Despite the fact some hardships still remain, Magers said this latest report is positive news for the agency.
“When you said we’d be around two years later I am sure you had some detractors,” Magers said to Fannin County Judge Spanky Carter, who also serves on the TAPS board, during Monday’s meeting.