REPORT TO AUDIT COMMITTEE
SUBJECT
Title
Overview of Santa Clara Stadium Authority Fiscal Year 2023/24 Annual Financial Statements and Audit Results
Report
BACKGROUND
The Santa Clara Stadium Authority (Stadium Authority), the Stadium Funding Trust, and Goldman Sachs Bank USA entered into a Credit Agreement on June 19, 2013. Section 5.1(a) of the Credit Agreement requires that the Stadium Authority Annual Financial Statements be audited by independent certified public accountants within 180 days after the end of each fiscal year. On June 25, 2021, the Stadium Authority entered into a professional services agreement with KPMG, LLP (KPMG) to perform the annual financial audit of the Stadium Authority’s Fiscal Year 2023/24 Annual Financial Statements.
The Annual Financial Statements include: (1) the Independent Auditors’ Report which describes the auditors’ responsibility and their opinion of the Financial Statements, (2) Management’s Discussion and Analysis which provides an overall review of the Stadium Authority’s financial activities, (3) the Basic Financial Statements, and (4) the Notes to the Financial Statements which have additional information pertaining to the Stadium Authority’s operations and financial position.
The Financial Statements being discussed with this report cover the Stadium Authority’s 2023/24 fiscal year, which runs from April 1, 2023 to March 31, 2024.
DISCUSSION
The role of the audit committee is to provide oversight of the Stadium Authority’s financial reporting processes, internal controls and independent auditors. On September 3, 2024 Jaime Cavin, Managing Director, and Alexander Pfeiffer, Manager, from KPMG presented the Stadium Authority audit results to the audit committee providing a brief overview of the audit. This included their audit report, financial statement disclosures, internal control related matters and other items.
Stadium Authority staff also provided an overview of the Stadium Authority Fiscal Year 2023/24 Annual Financial Statements including year-over-year comparison of the Stadium Authority financial position. During the presentation the audit committee suggested that a reference to note 8 be added to the Statements of Revenues, Expenses, and Changes in Net Position and this suggestion was incorporated to the draft financial statements.
At the September 3, 2024 Audit Committee Meeting, there was discussion of a correction that was made to the prior year financial statements related to the implementation of Governmental Accounting Standards Board (GASB) Statement 87, Leases. Subsequent to the meeting, KPMG and staff revisited the GASB literature and received additional guidance from the technical topic team that an adjustment is needed to the original correction entry regarding the deferred rent liability. The correction entry is to remove the deferred rent liability through the prior year’s Net Position instead of reducing the Right to Use asset on the Statement of Net Position. The net impact of this adjustment resulted in a net increase of $6.2 million to Net Position and a net increase of $6.2 million to the Right to Use asset on the Statement of Net Position.
A link to the September 3, 2024 Audit Committee Meeting materials and video presentation can be found here: City of Santa Clara - Audit Committee (legistar.com) <https://gcc02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fsantaclara.legistar.com%2FDepartmentDetail.aspx%3FID%3D36951%26GUID%3D201B575A-D5E4-4BB4-A15C-AA25E44460A8&data=05%7C02%7CTCook%40santaclaraca.gov%7C2581f7cbf0994b72024f08dccc40f79a%7C28ea354810694e81aa0b6e4b3271a5cb%7C0%7C0%7C638609826594668284%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=cwOI1O6PZPdusNYfnhShuWbyrM9Blr9s4%2FgGgOynZxs%3D&reserved=0>.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environment Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(a)(4) in that it is a fiscal activity that does not involve any commitment to any specific project which may result in a potential significant impact on the environment.
FISCAL IMPACT
Costs associated with the preparation of this report are included in the Stadium Authority Operating Budget.
COORDINATION
This report has been coordinated with the Stadium Authority Counsel’s Office.
PUBLIC CONTACT
Public contact was made by posting the Audit Committee agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Accept the Santa Clara Stadium Authority Fiscal Year 2023/24 Annual Financial Statements and recommend that the Stadium Authority note and file the report at the September 24, 2024 Joint Council and Authorities Concurrent and Stadium Authority meeting.
Staff
Reviewed by: Kenn Lee, Treasurer
Approved by: Jovan D. Grogan, Executive Director
ATTACHMENTS
1. FY 2023/24 Santa Clara Stadium Authority Financial Statements Draft