Auditors from Clark Schafer Hackett told the Adrian City Commission on Dec. 1 that the city's 2025 financial statements received an unmodified opinion, commonly described as a "clean" audit, and that no material weaknesses or noncompliance issues were identified. "The opinion is unmodified, which is, mean clean audit," auditor Amar Lasqueri said during the presentation.

The audit team highlighted a $1.3 million increase in cash and investments and about $1.5 million of net reductions in capital assets driven by depreciation. The auditors also cautioned the commission that accounting recognition of pension liabilities has created an apparent unrestricted deficit on paper, even though the change is largely non-cash. "That liability always existed," Lasqueri said, explaining that a recent GASB accounting standard required broader recognition of compensated-absence and pension obligations.

Finance Director Nathan Owens and auditor Cody Mitchell described enterprise fund performance as roughly break-even after factoring in about $400,000 of new operating grants for water and wastewater. Mitchell said the general fund balance at year-end was about $8.9 million, which auditors characterized as a healthy reserve level.

Commissioners pressed the auditors about reserve guidance and pension funding. Auditors recommended using a percentage benchmark rather than a simple "two months" rule, arguing a 20% general-fund reserve is a conservative baseline, while noting Moody's and other credit agencies may seek higher liquidity. On pensions, the panel said the plan's funded ratio in the auditors' snapshot was below traditional targets and that the city's plan (MERS) funding varies with market returns. "If the stock market continues to be strong, you might recover in a few years," an auditor said, adding that the city is meeting its actuarially determined annual contribution.

The commission approved a resolution later in the meeting to adopt the audited financial statements and year-end designations. The presentation concluded with staff and auditors agreeing to monitor pension metrics and continue work on any corrective plans required by the state.