Exhibit A.1 - CAFR'16.pdf

For the Fiscal Year

Ended June 30, 2016

COLORADO

Comprehensive Annual Financial Report

For the Fiscal Year

Ended June 30, 2016

COLORADO

Comprehensive Annual Financial Report

REPORT LAYOUT

The Comprehensive Annual Financial Report is presented in three sections: Introductory, Financial, and Statistical. The Introductory Section includes the controller’s transmittal letter and the state’s organization chart.

The Financial Section includes the auditor’s opinion, management’s discussion and anal-ysis, the basic financial statements, and the combining statements and schedules. The Statistical Section includes fiscal, economic, and demographic information about the state.

INTERNET ACCESS

The Comprehensive Annual Financial Report and other financial reports are available on the State Controller’s home page at:

http://www.colorado.gov/osc/cafr

STATE OF COLORADO

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE FISCAL YEAR ENDED JUNE 30, 2016

CONTENTS

INTRODUCTORY SECTION

Page

Letter of Transmittal Certificate of Achievement Organization Chart

FINANCIAL SECTION

INDEPENDENT AUDITORS REPORT

MANAGEMENT’S DISCUSSION AND ANALYSIS

BASIC FINANCIAL STATEMENTS:

Government-Wide Financial Statements:

Statement of Net Position Statement of Activities Fund Financial Statements:

Balance Sheet – Governmental Funds Reconciliation of the Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities Statement of Net Position – Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds Statement of Cash Flows – Proprietary Funds Statement of Fiduciary Net Position – Fiduciary Funds Statement of Changes in Fiduciary Net Position – Fiduciary Funds Statement of Net Position – Component Units Statement of Revenues, Expenses, and Changes in Fund Net Position – Component Units Statement of Revenues, Expenses, and Changes in Net Position – Component Units Recast to the Statement of Activities Format

Notes to the Financial Statements

Notes 1 Through 7 – Summary of Significant Accounting Policies Note 1 – Government-Wide Financial Statements Note 2 – Reporting Entity Note 3 – Basis of Presentation – Government-Wide Financial Statements Note 4 – Basis of Presentation – Fund Financial Statements Note 5 – Basis of Accounting Note 6 – Accounting Policies Affecting Specific Assets, Liabilities, and Net Position Note 7 – Accounting Policies Affecting Revenues, Expenditures/Expenses

Note 8 – Stewardship, Accountability, and Legal Compliance

Notes 9 Through 17 – Details of Asset Items Note 9 – Cash and Pooled Cash Note 10 – Noncash Transactions in the Proprietary Fund Types Note 11 – Receivables Note 12 – Inventories Note 13 – Prepaids and Advances Note 14 – Investments Note 15 – Treasurer’s Investment Pool Note 16 – Other Long-Term Assets

Note 17 – Capital Assets

Notes 18 Through 27 – Details of Liability Items Note 18 – Pension System and Obligations Note 19 – Other Postemployment Benefits and Life Insurance Note 20 – Other Employee Benefits Note 21 – Risk Management Note 22 – Lease Commitments Note 23 – Short-Term Debt Note 24 – Notes, Bonds, and Certificates of Participation Payable Note 25 – Changes in Long-Term Liabilities Note 26 – Defeased Debt Note 27 – Pollution Remediation Obligations

Note 28 – Deferred Inflows and Outflows of Resources

Notes 29 Through 32 – Details of Net Position and Fund Balance Note 29A – Prior Period Adjustments Note 29B – Accounting Changes Note 30 – Fund Balance Note 31 – Stabilization Arrangements Note 32 – Minimum Fund Balance Policies

Note 33 – Interfund Receivables and Payables Note 34 – Transfers Between Funds Note 35 – Donor Restricted Endowments Note 36 – Pledged Revenue Note 37 – Segment Information Note 38 – Component Units Note 39 – Related Parties and Organizations Note 40 – Service Concession Arrangements Note 41 – Encumbrances Note 42 – Financial Guarantees Note 43 – Contingencies Note 44 – Subsequent Events

REQUIRED SUPPLEMENTARY INFORMATION:

Budget and Actual Schedules – Budgetary Basis:

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Appropriated General Funded Schedule of Revenues, Expenditures/Expenses, and Changes in Fund Balances/Net Position – Appropriated Cash Funded

Changes in Fund Balances/Net Position – Appropriated Federally Funded Reconciling Schedule All Budget Fund Types to All GAAP Fund Types General Fund Schedule of Revenues, Expenditures, and Changes in General Fund Surplus – Budget and Actual – Budgetary Basis Notes to Required Supplementary Information:

Note RSI-1 Budgetary Information Note RSI-2 The State’s Defined Benefit Pension Plan Note RSI-3 Other Postemployment Benefit Information

SUPPLEMENTARY INFORMATION:

Governmental Funds:

Combining Balance Sheet – General Fund Components Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – General Fund Components Combining Balance Sheet – Capital Projects Fund Components Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Capital Projects Fund Components Combining Balance Sheet – Other Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Other Governmental Funds Combining Balance Sheet – Special Revenue Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Funds Combining Balance Sheet – Permanent Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Permanent Funds Proprietary Funds:

Combining Statement of Net Position – Other Enterprise Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Other Enterprise Funds Combining Statement of Cash Flows – Other Enterprise Funds Combining Statement of Net Position – Internal Service Funds Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Internal Service Funds Combining Statement of Cash Flows – Internal Service Funds Fiduciary Funds:

Combining Statement of Fiduciary Net Position – Private Purpose Trust Funds Combining Statement of Changes in Fiduciary Net Position – Private Purpose Trust Funds Combining Statement of Changes in Fiduciary Assets and Liabilities – Agency Funds Component Units:

Combining Statement of Net Position – Other Component Units Combining Statement of Revenues, Expenses, and Changes in Net Position – Other Component Units Other Schedules:

Schedule of Capital Assets Used in Governmental Activities Schedule of Other Funds Detail

Budget and Actual Schedules – Budgetary Basis Non-Appropriated:

Schedule of Revenues, Expenditures, and Changes in Fund Balances – Non-Appropriated General Funded Schedule of Revenues, Expenditures/Expenses, and Changes in Fund Balances/Net Position – Non-Appropriated Cash Funded

Changes in Fund Balances/Net Position – Non-Appropriated Federally Funded

STATISTICAL SECTION

FINANCIAL TRENDS

Government-Wide Schedule of Net Position – Last Ten Fiscal Years Government-Wide Schedule of Changes in Net Position – Last Ten Fiscal Years Schedule of Revenues, Expenditures, and Changes in Fund Balance All Governmental Fund Types – Last Ten Fiscal Years General Purpose Revenues (After TABOR Refunds) – General Fund – Last Ten Fiscal Years Expenditures by Department and Transfers – Funded by General Purpose Revenues Last Ten Fiscal Years Fund Balance – General Fund and All Other Governmental Fund Types Last Ten Fiscal Years

REVENUE CAPACITY

TABOR Revenues, Expenditures, Fiscal Year Spending Limitations, and Refunds – Last Ten Fiscal Years Individual Income Tax Returns by Adjusted Gross Income Class Sales Tax Returns by Industry Class Colorado Tax Rates – Last Ten Years

DEBT CAPACITY

Debt Service Expenditures – All Governmental Fund Types – Last Ten Fiscal Years Total Outstanding Debt – Primary Government – Last Ten Fiscal Years Revenue Bond Coverage – Last Ten Fiscal Years

DEMOGRAPHIC AND ECONOMIC INFORMATION

Colorado Demographic Data – Last Ten Years Colorado Employment by Industry – Last Ten Years Value of Total Construction in Colorado by Type – Last Ten Years Colorado Sales and Gross Farming Revenue – Last Ten Years

OPERATING INFORMATION

Demand Drivers of the Primary Government – Last Ten Years Average Count of State Employees by Function, and Average Monthly Salary – Last Ten Fiscal Years Colorado State Highway System – Centerline and Lane Miles – Last Ten Years Colorado State-Owned Bridges by Functional Classification – Last Ten Years Building Square Footage Owned by the Primary Government – Last Nine Years Building Square Footage Leased by the Primary Government – Last Nine Years

OTHER INFORMATION

Other Colorado Facts

Introductory Section

Comprehensive Annual Financial Report

For the Fiscal Year Ended June 30, 2016

February 27, 2017

To the Citizens, Governor, and Legislators of the State of Colorado:

I am pleased to submit the State of Colorado’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2016. Except for certain institutions of higher education, the State Controller is responsible for managing the finances and financial affairs of the State and is committed to sound financial management and governmental accountability.

We believe the financial statements are fairly presented in all material aspects. They are presented in a manner designed to set forth the financial position, results of operations, and changes in net position or fund balances of the major funds and nonmajor funds in the aggregate. All required disclosures have been presented to assist readers in understanding the State’s financial affairs.

Except as noted below, the basic financial statements contained in the CAFR are prepared in conformity with generally accepted accounting principles (GAAP) applicable to governments as prescribed by the Governmental Accounting Standards Board (GASB) and, except for the discretely presented component units, they are audited by the State Auditor of Colorado. The basic financial statements comprise the Management Discussion and Analysis (MD&A), financial statements, notes to the financial statements, and Required Supplementary Information. The MD&A, which begins on page 23, contains additional financial analysis and supplementary information that is required by GASB and should be read in conjunction with this transmittal letter.

The schedules comparing budgeted to actual activity, included in the sections titled Required Supplementary Information and Supplementary Information, are not presented in accordance with GAAP; rather, they reflect the budgetary basis of accounting which defers certain payroll, Medicaid, and other statutorily defined expenditures to the following fiscal year. (See additional information on “Cash Basis Accounting” on page 40 of the MD&A.) In addition to the basic financial statements, the CAFR includes: combining financial statements that present information by fund category, certain narrative information that describes the individual fund categories, supporting schedules, and statistical tables that present financial, economic, and demographic data about the State.

The funds and entities included in the CAFR are those for which the State is financially accountable based on criteria for defining the financial reporting entity as prescribed by GASB. The primary government is the legal entity that comprises the major and nonmajor funds of the State, its departments, agencies, and State institutions of higher education. It also includes certain university activities that are legally separate but have been blended with the accounts of the institution that is financially accountable for the activity.

The State’s elected officials are financially accountable for other legally separate entities that qualify as discretely presented component units. The following entities qualify as discretely presented component units of the State:

Colorado Water Resources and Power Development Authority University of Colorado Foundation Colorado State University Foundation Colorado School of Mines Foundation University of Northern Colorado Foundation Other Component Units (nonmajor):

Denver Metropolitan Major League Baseball Stadium District Colorado Venture Capital Authority HLC @ Metro, Inc.

University of Colorado Real Estate Foundation

Additional information about these component units and other related entities is presented in Note 2 of the financial statements (see page 71). Audited financial reports are available from each of these entities.

1525 Sherman St., Denver, CO 80203 P 303.866.6200 www.colorado.gov/osc John W. Hickenlooper, Governor | June Taylor, Executive Director

Office of the State Controller 1525 Sherman St.

Denver, CO 80203

PROFILE OF THE STATE OF COLORADO

Colorado became the thirty-eighth state of the United States of America when it was admitted to the union in 1876. Its borders encompass 103,718 square miles of the high plains and the Rocky Mountains with elevations ranging from 3,315 to 14,433 feet above sea level. The State’s major economic sectors include agriculture, manufacturing, technology, tourism, energy production, and mining. Considerable economic activity is generated in support of these sectors by government, wholesale and retail trade, transportation, communications, public utilities, finance, insurance, real estate, and other services.

Given the State’s semi-arid climate, water resource development, allocation, and conservation are ongoing challenges for State management.

The State maintains a separation of powers utilizing three branches of government – executive, legislative, and judicial. The executive branch comprises four major elected officials – Governor, State Treasurer, Attorney General, and Secretary of State. Most departments of the State report directly to the Governor; however, the Departments of Treasury, Law, and State report to their respective elected officials, the Department of Education reports to the elected State Board of Education. The elected officials serve four-year terms with a limit on the number of terms allowed.

The Legislature is bicameral and comprises thirty-five senators and sixty-five representatives who are also term limited. It is a citizen legislature whose general session lasts 120 days beginning in January of each year. Special sessions may be called by the Governor at his discretion and are limited to the topics identified by the Governor. The Legislature’s otherwise plenary power is checked by the requirement for the Governor to sign its legislation and by specific limitations placed in the State Constitution by voters. The most significant fiscal limitation is the restriction related to issuing debt, raising taxes, and changing existing spending limits. From a fiscal perspective, the Joint Budget Committee of the Legislature, because of its preparation of the annual budget and supplemental appropriations bills, holds the most important power vested in the Legislature. The Committee is bipartisan with members drawn from each of the houses of the Legislature. The Governor’s Office of State Planning and Budgeting develops and submits an executive branch budget proposal, but there is no requirement for the Joint Budget Committee or the General Assembly to adopt that proposal.

The Judicial Branch is responsible for resolving disputes within the State, including those between the executive and legislative branches of government, and for supervising offenders on probation. The Branch includes the Supreme Court, Court of Appeals, and district and county courts, served by more than 300 justices and judges in 22 judicial districts across the State. Municipal courts are not part of the State system. There are also seven water courts, one in each of the State’s major river basins. The Judicial Branch budget is appropriated by the Legislature, and it is funded primarily from general-purpose revenues of the General Fund.

ECONOMIC CONDITION AND OUTLOOK

The State’s General Fund general-purpose revenues reflect the overall condition of the State economy, which showed slower growth in Fiscal Year 2015-16; General Fund revenues increased by $288.0 million (3.0 percent) from the prior year.

In absolute dollars, the Office of State Planning and Budgeting (OSPB) reports personal income in the State increased by approximately 4.2 percent for 2015 and is forecast to increase by 4.0 percent for 2016. State nonagricultural employment levels rose by 75,300 in 2015, and are forecast to increase by another 56,700 in 2016.

The Bureau of Economic Analysis reports that inflation adjusted national gross domestic product (GDP) grew at an annualized rate of 2.0 percent in the third quarter of calendar year 2015 and 2.9 percent in the third quarter of 2016. Inflation adjusted GDP increased 1.5 percent from the third quarter of 2015 to the third quarter of 2016 (all percentage changes in the balance of this paragraph are measured on the third quarter to third quarter basis). National personal consumption expend-itures account for over two-thirds of GDP and increased 2.6 percent. The increase in personal consumption was led by an increase of 5.6 percent in durable goods, the most significant in recreational goods and vehicles. Gross private domestic investment decreased 2.7 percent, primarily in transportation equipment and other equipment offset by an increase in investments in intellectual property products. Government spending increased by 0.3 percent related to increases in federal, and decreases in state and local government spending. Quarter-over-quarter exports increased by 2.0 percent and imports grew by 0.7 percent; net exports increased the GDP compared to the third quarter of 2015.

The national economy is continuing through a prolonged, anemic recovery resulting from the credit and housing boom and bust of the past two decades. This has been compounded by uncertainties in global markets and debates in the U.S. Congress over increases to federal debt ceiling, automatic tax increases and spending cuts. The June, 2016 Economic and Revenue Forecast of the Colorado Legislative Council observed that:

“Economic expansion is expected to progress at a relatively modest pace in both Colorado and the U.S. in 2016 and 2017.

Low unemployment rates and slowing job growth are signaling full employment, which will contribute to upward wage pressure as labor becomes more difficult to find. The tourism, services, real estate, and construction sector – industries that depend on the health of the labor market – continue to grow at healthy rates across the nation and Colorado. More current indicators, including financial markets, consumer spending, and consumer debt, demonstrate economic expansion but at a slowing pace.”

As reported by the OSPB, Colorado’s economy remains in expansion. Despite notable headwinds in recent years, the State’s economy has demonstrated resilience not seen in prior periods. Demand for workers among Colorado businesses remains strong. The urban areas along the Front Range have among the lowest unemployment in the country, with the Denver metro area having the lowest unemployment rate among large U.S. metro areas. The oil and gas industry’s deep contraction that contributed to slowing in the overall economy appears to have reached a bottom, though industry activity is expected to remain at subdued levels. Even so, the absence of the large decline in spending in the economy going forward will help overall economic conditions. Further, data shows renewed growth in new business formation in Colorado, a key ingredient for economic and job growth. Sustained growth in housing construction and home sales, albeit still at comparatively low levels, will also add to employment and spending in the economy. However, the State’s economic growth will remain at a more moderate pace than earlier in the expansion.

Historically, Colorado economic activity and in-migration have been interdependent. Net migration has averaged approximately 49,400 from 2011 to 2015. International immigration increased from approximately 8,800 (2011) to 13,300 (2015). Similarly, domestic migration from other states increased from 24,900 (2011) to 54,500 (2015). The information in the adjacent chart is based on current Colorado Sate Demographer estimates. The Demographer forecasts net population growth of 99,200 for 2016 and 99,700 for 2017, and the OSPB forecasts net migration of 61,400 and 61,200 for those years, respectively, which indicates persistent immigration.

According to the OSPB, economic growth for the nation overall continues to be modest. Persistent weakness in business investment and industrial production, along with subdued gains in business formation and productivity continue to result in lackluster growth. On the positive side, consumer spending and the labor market have been solid. In addition, the labor market recovery is broadening, with middle-wage industries adding jobs at a faster pace and lower wage workers seeing more wage growth. Further, although the industrial sector is not expected to generate a boost to economic growth going forward, an end to its downturn will at least present a smaller drag on economic activity.

OSPB has made the following calendar year forecasts for Colorado’s major economic variables:

Unemployment will average 3.4 percent for 2016 compared with 3.9 and 5.0 percent in 2015 and 2014, respectively, and it is expected to slightly increase in 2017 to 3.6 percent.

Wages and salary income will increase by 4.2 percent in 2016, by 5.5 percent in 2017, and by 5.4 percent in 2018.

Total personal income will increase by 4.0 percent in 2016, and reach 5.4 percent by 2017.

Net migration is expected to be 61,400 in 2016 and 61,200 in 2017, with total population growth of 1.7 percent in the same two years.

Retail trade sales will increase by 4.3 percent in 2016 followed by an increase of 5.2 percent in 2017.

Colorado inflation will be 2.7 percent in 2016 and 2017.

MAJOR GOVERNMENT FISCAL INITIATIVES

The General Assembly enacted, and the Governor signed, many bills during the 2016 Legislative Session. There were several areas of focus including education, healthcare, social programs and services, water conservation, and restructuring of cash funds. The following measures have a significant financial impact for Fiscal Year 2016-17:

In accordance with the Public School Finance Act of 1994, the General Assembly appropriated an additional

$135.5 million of state funds to the Department of Education. This appropriation includes an increase of $292.4 million from the General Fund and decreases totaling $156.9 million in cash funds.

The Colorado Water Conservation Board (CWCB) was appropriated $7.9 million from the CWCB Construction Fund to support 11 projects and studies. Additionally, a one-time transfer of $5.2 million and a recurring annual transfer of $5.0 million were made from the Tax Perpetual Base Fund to the CWCB to fund studies, programs, and projects related to the Colorado Water Plan.

The General Assembly transferred $20 million from the Children’s Basic Health Plan Trust to the newly created Primary Care Provider Sustainability Fund. This fund was created for the purpose of increasing access to primary care through rate enhancements for primary care office visits and services. $20 million was also appropriated to the Department of Health Care Policy and Financing from the Primary Care Provider Sustainability Fund to pay for medical services premiums.

The General Assembly appropriated $6.0 million from the Marijuana Tax Cash Fund to the Department of Human Services for the purpose of increasing access to effective substance use disorder services. This measure requires regional managed service organizations (MSOs) to submit action plans to the Department of Human Services and the Department of Health Care Policy and Financing to increase access to effective substance use disorder services in their geographic regions. $5.8 million of the appropriation is to be disbursed to MSOs and $.2 million of the appropriation is to be used by the Department of Human Services for operating costs and effectiveness evaluation.

The Department of Public Health and Environment received an appropriation of $1.2 million from the Water Quality Improvement Fund to implement changes related to the Water Pollution Control Program. The program collects fees from permits from various sectors. This measure repeals the fee structure of the program and directs the Department to conduct a stakeholder process to determine the necessity and appropriateness of fees and submit a proposal to the Joint Budget Committee regarding the results. This measure also repeals the Water Quality Control Fund and creates separate, sector-specific cash funds to which fees from each sector are to be deposited.

The General Assembly increased fees related to driver’s licenses which will result in an increase in revenue to the Licensing Services Cash Fund (LCSF) in the amounts of $1.5 million, $2.1 million, and $2.6 million for fiscal years ending 2017, 2018, and 2019, respectively. This measure also reduced the General Fund appropriation to the Department of Revenue by $3.2 million while increasing the appropriation to the Department from the LCSF and Highway Users Tax Fund by $1.2 million and $2 million, respectively.

The Governor’s Office of Information Technology received an increase of $22.4 million reappropriated funds to support the operating costs of the Colorado Benefits Management System. These funds are first appropriated to the Department of Health Care Policy and Financing and the Department of Human Services, then is transferred to the Governor’s Office of Information Technology for service provision.

The General Assembly appropriated $18.9 million to the Department of Humans Services from cash funds to the Old Age Pension Fund (OAPF). The expenditures from the OAPF are driven by the size of the benefit and the number of qualified individuals. This appropriation aligns appropriations from the OAPF with actual expenditures.

BUDGETARY AND OTHER CONTROL SYSTEMS

The General Assembly appropriates the annual State budget for ongoing programs at a line item level segregated by department, except for custodial funds, certain statutory cash funds, and most federal funds. New programs are funded for the first time through enabling legislation and are continued through the Long Appropriations Act in future periods. For the most part, operating appropriations lapse at the end of the fiscal year unless the State Controller approves, at a line item level, an appropriation rollforward based on express legislative direction or extenuating circumstances. The State Controller, with the approval of the Governor, may also allow expenditures in excess of the appropriated budget. This approval occurs at a budget line item level.

Capital construction appropriations are normally effective for three years and do not require State Controller rollforward approval.

The State records the appropriated budget in its accounting system, the Colorado Operations Resource Engine (CORE), along with nonappropriated budgets for most federal awards, statutory cash funds, and custodial funds of the various departments.

Revenues and expenditures are tracked by funding source – general, general exempt, cash, reappropriated and federal funds – and are designated appropriated or non-appropriated. Appropriated budgets include amounts that require a legislative appropriation authorizing spending, whereas non-appropriated budgets represent amounts that do not require an act of the legislature and are often referred to as informational only appropriations. The accounting system flags monies to be disbursed without sufficient spending authority. Revenues and expenses/expenditures are accounted for on the basis used for the fund in which the budget is recorded except for certain budgetary basis exceptions (see Note RSI-1A).

Encumbrances are recorded throughout the year and result in a reduction of the available spending authority. Encumbrances represent the estimated amount of expenditures that will be incurred when outstanding purchase orders, contracts, or other commitments are fulfilled. At fiscal year end, encumbrances lapse except those that represent appropriations that are approved for rollforward into the subsequent fiscal year, and legal or contractual obligations in the Capital Projects Fund and the Department of Transportation’s portion of the Highway Users Tax Fund (see Note 41).

In developing the State’s accounting system, consideration has been given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding the safeguarding of assets against loss from unauthorized use or disposition. Those controls also assure the reliability of financial records for preparing financial statements and maintaining the accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived from that control. The evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within this framework. We believe that the State’s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions.

INDEPENDENT AUDIT

The State Auditor performs an audit of the Basic Financial Statements. The opinion of the State Auditor is on page 18 of this report. Besides annually auditing the statewide financial statements, the State Auditor has the authority to audit the financial statements and operations of the departments and institutions within State government.

In 1996, the United States Congress amended the Single Audit Act of 1984. The amended act clarifies the State’s and the auditor’s responsibility for ensuring that federal moneys are used and accounted for properly. Under the requirements of this act, transactions of major federal programs are tested. The State prepares a Schedule of Expenditures of Federal Awards for inclusion in the State Auditor’s Statewide Single Audit Report. The State Auditor issues reports on the schedule, the financial statements, internal controls, and compliance with the requirements of federal assistance programs.

CERTIFICATE OF ACHIEVEMENT

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the State of Colorado for its comprehensive annual financial report for the fiscal year ended June 30, 2015. This was the nineteenth consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.

ACKNOWLEDGMENTS

In conclusion, I thank my staff and the controllers, accountants, auditors, and program managers in the State departments and branches whose time and dedication have made this report possible. I reaffirm our commitment to maintaining the highest standards of accountability in financial reporting.

Sincerely, Robert Jaros, CPA, MBA, JD Colorado State Controller