MEETING MINUTES. Commissioners in attendance:

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1 MEETING MINUTES Commissioners in attendance: Commissioner Fuller, City of Chesapeake Commissioner Parnell, Chair, City of Norfolk Commissioner Moffett, City of Hampton Commissioner Hunter, City of Portsmouth Commissioner Wood, City of Virginia Beach Commissioner Ross-Hammond, City of Virginia Beach Commissioner Kanoyton, City of Hampton Alternate Commissioners in attendance: Commissioner Raliski, City of Norfolk Commissioner Sorey, City of Chesapeake Commissioner DeProfio, City of Hampton Commissioner Cipriano, City of Newport News Commissioner Solis, City of Virginia Beach Commissioner Pittard, DRPT Hampton Roads Transit Staff in attendance: Gene Cavasos, Director of Marketing and Communications Brenda Green, Accounting Coordinator (recorder) Angela Glass, Director of Budget and Financial Analysis William Harrell, President and Chief Executive Officer Sylvia Shanahan, Interim Chief Financial Officer Brain Smith, Assistant to the President for Organizational Advancement Margaret Denoncourt, Internal Auditor Ray Amoruso, Chief Planning & Development Officer Robert Travers, Attorney Alesia Cain, Chief Information Officer/Chief Technology Officer Dyanne Sampson, Director of Procurement

2 Sonya Luther, Assistance Director of Procurement Joe Dillard, Government Relations Liaison Sibyl Pappas, Chief Engineering and Facilities Officer Luis Ramos, Executive Assistant to the President and CEO Derrick Snowden, Chief Safety and Security Officer Leah Sebrell, Staff Accountant Ashley Fauntleroy, Staff Accountant Jim Price, Chief Transit Operations Officer Kim Ackerman, Chief Human Resources Offices Others in attendances: Susan Wilson, City of Portsmouth Miguel Wilborne, Cherry Bekaert, CPA & Advisors Krista Edoff, Cherry Bekaert, CPA & Advisors Call to Order: Commissioner Parnell called the meeting of the Audit & Budget Review Committee to order at 12:21 pm. The December 2017 Audit & Budget Review Committee (ABRC) meeting package was distributed electronically to the ABRC members and Commissioners in advance of the meeting. The meeting package consisted of: Meeting Agenda Minutes of the October 2017 ABRC 1 st Quarter FY 18 & 1 st Quarter FY17 Comparison Hampton Roads Transit Annual Financial Statements-Draft Hampton Roads Transit Internal Control Letter-Draft Approval of October 26, 2017 ABRC Meeting Minutes: A motion to approve the October 26, 2017 Audit & Budget Review Committee (ABRC) meeting minutes was made and properly seconded. A vote resulted the following: The October 2017 minutes were approved by a unanimous vote.

3 Summary of the Fiscal Year 2017 Draft Annual Financial Statements Ms. Sylvia Shanahan, Interim Chief Financial Officer, welcomed the Commissioners and attendees to the December 14, 2017 ABRC meeting. Ms. Shanahan stated that Article VII, Section 2 of the Bylaws of Transportation District Commission of Hampton Roads states: At least once each year, the Commission will cause an audit to be made by an independent certified public accountant of the general funds of the Commission and any special project funds not audited by the federal or state government or by other independent accountants. Ms. Shanahan stated that due to an error in the summing for footnote 3 in the Draft Annual Financial Statements Report, a request to accept the audit will be postponed until the January Commission meeting. Ms. Shanahan, introduced Krista Edoff and Miguel Wilborne of Cherry Bekaert, CPAs & Advisors. Ms. Edoff presented the results of the financial audit, year ended June 30, 2017, and the required communications, to the Audit and Budget Review Committee of the Transportation District Commission of Hampton Roads Engagement Services HRT engaged Cherry Bekaert, CPAs & Advisors to provide the following: An audit of Commission s June 30, 2017 financial statements. An examination of the census data provided to the Virginia Retirement Systems (VRS) for the fiscal year June 30, 2017 An agreed-upon procedures engagement for the annual reporting to National Transit Data (NTD) for the fiscal year June 30, 2017 Service Deliverables & Audit Results Audit Deliverables for the year ended June 30, 2017: Opinion on the financial statement of the Commission

4 Report on internal control over financial reporting and on compliance and other matters required by Government Auditing Standards (including compliance with Audit of Public Accounts (APA) Specifications Report on compliance for the major program and on internal control over compliance required by the Uniform Guidance Audit Results Financial statements unmodified Report on internal control over financial reporting and compliance unmodified Report on compliance for the major program and internal control over compliance unmodified Internal control deficiencies over financial reporting and compliance - no material weaknesses, no significant deficiencies reported Financial Highlights Net position decreased $25M to $288M Total operating expenses increased $0.5M from FY16 but were $0.5M under budget. Fringe benefits and depreciation expense are the primary drivers of this increase. Total operating revenues decreased $0.6M or 3% over FY16. Passenger fares are the primary driver of the decrease, down $0.8M or 4.8%. There was some discussion concerning FY17 depreciation and FY17 year-end accounts payables aging. There was some discussion concerning true-up contributions and how they are displayed in the financial report. Ms. Cipriano requested, for historical purposes, that the true-up presented in footnote 7 of the FY17 Annual Financial Statements be reported in (3) three columns; original FY16 True-up, Additional FY16 True-Up, and FY17 True-up. Ms. Shanahan stated the purpose of footnote 7 is to report the liability at year end. Cherry Bekaert staff confirmed it is being displayed properly. As the audit is a report by an

5 independent auditor, not HRT staff, the final decision would be made by Cherry Bekaert on how to display footnote 7. Mr. Harrell stated that a letter could be sent to the Board members providing the outlined detail of the true-up. Ms. Shanahan stated that after the audit is accepted, detailed information of financials, by mode would be sent out to each city. Mr. Parnell reminded Commissioners the audit would be put forth for acceptance at the January Commission meeting. Ms. Shanahan introduced and thanked Ms. Leah Sebrell, Staff Accountant and Ms. Ashley Fauntleroy, Staff Accountant for their outstanding work and assistance throughout the year as well as during the process of the year end audit. Other Matters There were no other matters to be discuss. Adjournment: With no further business to discuss, the December 2017 Audit & Budget Review Committee meeting was adjourned at 12:58 pm by Commissioner Parnell.