An ongoing external review of MBTA Retirement Fund assets and liabilities is holding up the filing of the state’s annual financial statement, according to Comptroller Thomas Shack, who filed an interim report last week that explained the reasoning behind the delay.
Under state law, Shack is required to file the state’s Comprehensive Annual Financial Report (CAFR) no later than the second Wednesday in January.
But after consultation with his senior staff and external auditors, Shack decided it is “not in the best interest of the commonwealth” to file an incomplete report, and instead intends to wait until he can include a complete statement for the Massachusetts Department of Transportation (MassDOT).
After concerns were raised in June by an outside firm about accuracy of MBTA pension-related assets and liabilities, the retirement fund’s board in December hired FTI Consulting to review its financial statements between 2011 and 2013. That review has prevented the MBTA from finalizing its audited statements, which has had a trickle-up effect on MassDOT and the commonwealth, according to Shack.
“The commonwealth is unable to finalize its audited financial statements with respect to MassDOT without the risk of a ‘modified (or qualified) audit opinion’ being issued by the auditors for each of the public entities involved,” Shack wrote in Wednesday’s filing, which was linked in a message posted on the comptroller’s website. “A modified opinion is substantial negative treatment in the auditing vernacular. This risk exists solely because of the reporting relationships described above.”
Shack said the MBTA Retirement Fund’s status as a private legal entity gives him “limited insight” into the timeline for the outside probe. Retirement fund spokesman Steve Crawford said FTI Consulting began work in December and anticipates completing its review in February.
Shack said he intends to issue audited financial statements in mid-February and will update his timeline for completion of the fiscal year 2015 CAFR as soon as possible.
