Virginia Beach FY25 audit: auditors give unmodified opinion as city reports $1.8 billion cash and $4.7 billion net position
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Summary
Auditors issued a clean (unmodified) opinion on Virginia Beach’s FY25 financial statements; the city reported roughly $1.8 billion in cash, $5.3 billion in capital assets and a $4.7 billion net position, and staff said the single (federal) audit is still in process.
Virginia Beach’s annual financial report for fiscal year 2025 received an unmodified ("clean") opinion from audit firm Cherry Becker, the auditors and city officials told the council during the December meeting.
Shelby Brown, audit manager with Cherry Becker, told the council the firm audited the city’s financial statements for the year ended June 30, 2025, and "we have issued an unmodified opinion on the financial statements." Brown also said the firm identified no instances of noncompliance required under the applicable standards and no material weaknesses in internal control. She noted the single audit under the Uniform Guidance remains in process and will be issued after completion of federal program testing; the audit report date is 12/04/2025, she said.
Kevin Kilbalson, the city controller, reviewed the audited results and highlighted the city’s key balances. He said total assets increased by about $117 million in FY25, capital assets were about $5.3 billion and total assets were roughly $7.0 billion. "We have a total cash of about $1,800,000,000," Kilbalson said, and reported a total net position of approximately $4.7 billion for FY25.
Kilbalson reviewed the general fund and budget-to-actual results: a general fund budget of a little over $1.4 billion, revenues roughly $40.4 million (about 2.7%) over budget, and expenditures coming in under budget so the city ended with an unassigned fund balance he reported as $178,400,000, or about 11.5% of FY26 revenue. He said the city’s unassigned fund balance sits within the council-adopted policy target range of 8–12%.
On questions about the large cash balance and strong interest income, Kilbalson said the $1.8 billion is spread across many funds: the general fund holds a little over $300 million, capital project funds contain cash set aside for reimbursements (PayGo), some cash is restricted for federal programs, and an OPEB trust holds roughly $80 million. He credited the treasurer’s office and conservative investment rules for higher-than-usual returns and offered to provide a detailed breakdown of where the cash is held.
Council members also asked about pension funding. Kilbalson said the city’s contributions to the Virginia Retirement System (VRS) keep the funded ratio near 80–82% and that VRS sets rates based on actuarial studies performed every two years.
The auditors and controller emphasized that, aside from the single-audit procedures still underway, they found no instances of fraud or illegal acts affecting the city during FY25 and no substantial doubt about the city’s ability to continue as a going concern.
Next steps: Cherry Becker will complete the single-audit reporting once federal program testing is complete and deliver the final federal compliance reports to the city.
