Santa Clara Stadium
Authority (the Authority)
Discussion with those
charged with governance
Audit results and strategy for the year ending March 31, 2024 September 3, 2024
2© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Required
communications to
those charged with
governance
Prepared on: 8/30/2024
Presented on: 9/3/2024
3© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Matters to communicate Response
Related parties Page 12
Going concern X
Other information X
Subsequent events Page 13
Noncompliance with laws and regulations X
Significant difficulties encountered during
the audit X
Significant findings or issues discussed, or
the subject of correspondence with
management
X
Management’s consultation with other
accountants
X
Disagreements with management X
Other significant matters X
Audit results required communications and other matters Matters to communicate Response
Significant unusual transactions X
Uncorrected audit misstatements X
Corrected audit misstatements Pages 6 - 8
Financial statement presentation and disclosure
omissions
X
Non-GAAP policies and practices X
Significant deficiencies in internal control Page 9
Auditors’ report Draft report
provided
Changes to our risk assessment and planned
audit strategy
X
Significant accounting policies and practices Page 10 Significant accounting estimates X
Significant financial statement disclosures Page 11
= Matters to report X = No matters to report
4© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Audit results required communications and other matters Consultations
We consulted with KPMG’s Department of Professional Practice regarding the correction of a prior period error in the comparative financial statement and the related evaluation of internal controls. See further consideration of this matter on page 9.
Illegal acts or fraud No actual or suspected fraud involving management, employees with significant roles in system of internal control, or where fraud results in a material misstatement in the financial statements were identified during the audit.
Written communications Engagement letter, management representation letter(s), including summary of uncorrected misstatements, internal control deficiency letter, and minutes representation letter to be distributed under separate covers.
Independence We hereby affirm that the engagement team and others in the firm as appropriate, the firm and its affiliated firms, have complied with relevant ethical requirements regarding independence.
Inquiries See page 14
Matters to communicate
5© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Pending Items
A summarized list of items still in progress or not yet received • Internal Controls over Financial Reporting Evaluation and Conclusion • Final Management Representation letter
• Final partner and manager sign offs
• Final sign off of KPMG DPP Consultation related to correction of prior year errors 6© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Corrected audit misstatements
Description of misstatement
Debit Credit
1) GASB 87 Prior year correction adjustment:
Eliminate deferred rent of ground lease as adjustment to ROU asset
FY23 Deferred Rent $7,644,723
FY24 Right-to-use leased assets $6,571,635
FY23 Beginning Net Position $554,044
FY23 Lease Expense $519,044
2) GASB 87 Prior year correction adjustment:
ROU amortization expense reduction in line with reduction in Gross ROU Asset reduction (item 1)
FY23 Right of use assets, net $335,224
FY24 Depreciation Expense $40,809
FY24 Accumulated Depreciation $40,809
FY23 Beginning Net Position $177,612
FY23 Depreciation Expense $177,612
3) GASB 87 Prior year correction adjustment:
Lessee Interest Expense – correction of presentation on Statements of Revenues, Expenses, and Changes in Net
Position
(no impact on net position)
FY23 Interest Expense $647,999
FY23 Interest Revenue $647,999
4) GASB 87 Prior year correction adjustment:
Lease Payment Expense Presentation - correction of
presentation on Statements of Revenues, Expenses, and
Changes in Net Position
(no impact on net position)
FY23 Rents and Licensing Revenue $460,000
FY23 Lease Expense $460,000
7© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Corrected audit misstatements, cont.
Description of misstatement
Debit Credit
5) GASB 87 Prior year correction adjustment:
Lessee Interest Expense – correction of 12-month expense calculation (1 month omitted in initial year)
FY23 Beginning Net Position $53,948
FY23 Interest Expense $342
FY24 Interest Expense $284
FY23 Interest Payable $54,290
FY24 Interest Payable $284
6) GASB 87 Prior year correction adjustment:
Lessor Interest Revenue – correction of 12-month calculation (1 month omitted in initial year)
FY23 Accounts Receivable $1,121,438
FY23 Interest Revenue $20,744
FY24 Interest Revenue $21,199
FY23 Accounts Receivable $20,744
FY24 Accounts Receivable $21,199
FY23 Beginning Net Position $1,121,438
7) Naming Rights Revenue:
Correction due to term extension in the agreement
amendment effective in the current year
FY24 Rents and Licensing (revenue) $1,645,460
FY24 Long Term Accounts Receivable $1,645,460
8© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Corrected audit misstatements, summary
Description of misstatement
Debit Credit Ending Net Position
Before Correction
Ending Net Position
As corrected
Change in Net Position
%
Summary of P&L
Impacts
2023 Beginning Net Position $1,799,146
2023 Change in Net Position $675,570
Total Net Increase of 2023
Ending Net Position $ 2,474,716 $109,570,809 $ 112,045,525 2.21% 2024 Change in Net Position $1,707,752 $121,908,155 $ 123,615,907 1.38% Total Net Increase of 2024
Ending Net Position $766,964
9© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Significant deficiencies in internal control
All other deficiencies in ICFR noted during the audit that are of a lesser magnitude than a material weakness or significant deficiency will be communicated to management in writing.
Significant deficiency
Description Potential effects Status
The adoption of the new
accounting pronouncement
(GASB 87) was not properly
implemented.
Resulted in the correction of prior period 2023
financial statements and corrected misstatements
in the 2024 financial statements
Management determined this matter to be an immaterial
correction of a prior year error. The prior year 2023
financial statements have been adjusted and a footnote
disclosure 2(L) summarizes the adjustments and effects
on the 2023 fiscal year.
Due to the nature of the error and the impact on the prior year issued financial statements, this is a significant deficiency in internal controls of which we recommend
that management develop a process to ensure all new
accounting pronouncements are properly assessed and
accurately accounted and presented in the year of
implementation.
10© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Significant accounting policies and practices
Description of significant accounting policies and practices Audit results • Cash and cash equivalent and restricted cash
• Accounts Receivable
• Unearned revenue and revenue recognition
• Leases
Qualitative aspects
• Refer to Note 2 of the financial statements for the detailed description of the significant accounting policies. Management has appropriately applied such policies to the Authority’s books and records as of and for the year ended March 31, 2024.
• Adoption of GASB 87 in the prior period.
11© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Significant financial statement disclosures
Description of significant financial statement disclosures Audit results • Prior Period Correction of Error Qualitative aspects
• We have evaluated the root cause, underlying detail, and presentation of the comparative financial statements & disclosure and consider the disclosure appropriate.
12© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Related parties
Identification of related parties Significant accounts or disclosures The City of Santa Clara Ground Lease
Shared staff and wage expenses
13© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Subsequent Events
Subsequent Event Procedures performed Results
Settlement Agreement • Inspection of executed settlement agreement • Review of City presentation explaining the
agreement & amendments to relevant lease and
management agreements
• Vouching of expense and liability recorded to
supporting documentation
• Inquiry with external and in-house counsel
Procedures performed without exception.
14© 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331 -1E Inquiries
Are those charged with governance aware of:
• Matters relevant to the audit, including, but not limited to, violations or possible violations of laws or regulations? • Any significant communications with regulators?
• Any developments in financial reporting, laws, accounting standards, corporate governance, and other related matters, and theeffect of such developments on, for example, the overall presentation, structure, and content of the financial statements, including the following:
- The relevance, reliability, comparability, and understandability of the information presented in the financial statements - Whether all required information has been included in the financial statements, and whether such information has been appropriately classified, aggregated or disaggregated, and presented?
Do those charged with governance have knowledge of:
• Fraud, alleged fraud, or suspected fraud affecting the Company? - If so, have the instances been appropriately addressed and how have they been addressed? Additional inquiries:
• What are those charged with governance’s views about fraud risks in the Company? • Who is the appropriate person in the governance structure for communication of audit matters during the audit? • How are responsibilities allocated between management and those charged with governance? • What are the Company’s objectives and strategies and related business risks that may result in material misstatements? • Are there any areas that warrant particular attention during the audit and additional procedures to be undertaken? • What are those charged with governance’s attitudes, awareness, and actions concerning (a) the Company’s internal controls and their importance in the entity, including oversight of effectiveness of internal controls, and (b) detection of or possibility of fraud? • Have there been any actions taken based on previous communications with the auditor? • Has the Company entered into any significant unusual transactions? • Whether the entity is in compliance with other laws and regulations that have a material effect on the financial statements? • What are the other document(s) that comprise the annual report, and what is the planned manner and timing of issuance of suchdocuments? • Have any subsequent events occurred that might affect the financial statements? Learn about us: kpmg.com
For additional information and audit committee resources, including National Audit Committee Peer Exchange series, a Quarterly webcast, and suggested publications, visit the KPMG Audit Committee Institute (ACI) at
www.kpmg.com/ACIQuestions?
This presentation to those charged with governance is intended solely for the information and use of those charged with governance and management and is not intended to be and should not be used by anyone other than these specified parties. This presentation is not intended for general use, circulation or publication and should not be published, circulated, reproduced or used for any purpose without our prior written permission in each specific instance.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. © 2024 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. USCS012331-1E The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization.