PUC posts 10th consecutive clean audit; auditors call out GASB 75 adoption

The commission heard that the San Francisco Public Utilities Commission received a clean (unmodified) audit opinion on its fiscal year 2017‑18 financial statements, the tenth consecutive year of clean statements. Nancy Hamm, Deputy Chief Financial Officer, presented the statements and introduced Nancy Rose, audit partner at KPMG LLP, who delivered the audit results.

Rose said KPMG issued unmodified opinions on the PUC reporting entities including Hetch Hetchy Water, power and Clean Power SF, and found no material misstatements or internal control deficiencies. The auditors included an emphasis‑of‑matter paragraph to note that the PUC and Hetch Hetchy departments are city departments and do not represent the full city financials. They also flagged the significant adoption of GASB 75, the accounting standard for other post‑employment benefits (OPEB), as an item meriting disclosure in the audit opinion.

Rose discussed audit focus areas — workers’ compensation, claims liability, wholesale revenue balancing accounts, and the pension — and said auditors tested management assumptions and significant estimates. She noted the city’s current discount rate assumption of 7.5 percent and cautioned that a substantial downward change in the discount rate (for example to 3–4 percent) would materially affect the reported liabilities, although no audit adjustments were required for FY17‑18.

Rose also said auditors considered the risk of management override of controls as part of the fraud consideration and found no issues. Commissioners thanked the audit team and asked follow‑up questions about GASB 75 reporting detail and potential impacts.