San Jose accepts annual financial report; auditors issue clean opinion after GASB restatement
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Summary
City Council accepted the annual comprehensive financial report and related audit. Auditors issued an unqualified opinion while noting the one-time $75 million restatement tied to new GASB guidance on compensated absences; staff said the city—nded the year with an adjusted $10 million net position increase.
San Jose—ity Council on Dec. 9 accepted the city nnual comprehensive financial report and the external auditors' report, with council voting unanimously to approve the two items.
Finance staff and the city's external auditors presented the results. Victor Lowe, deputy director of finance, said the city ocumented a $85,000,000 increase in net position for the year ending June 30, 2025, but after a $75,000,000 restatement required by the Governmental Accounting Standards Board (GASB) for compensated absences the adjusted increase is approximately $10,000,000. "The city's net position increased by $85,000,000 driven by several key factors," Lowe said, citing higher property and utility revenues and FEMA reimbursements.
Ben Lau, audit partner for MGO, told the council the auditors issued an unmodified (clean) opinion on the audited reports and included an emphasis of matter related to implementation of GASB Statement 101 on compensated absence. Lau said the firm "did not identify any uncorrected misstatements" and reported no internal control findings.
Why it matters: an unqualified audit opinion signals that external auditors found the city's audited financial statements materially consistent with accounting standards. Staff told the council the result reflects disciplined year-end processes, improved interdepartmental collaboration and ongoing systems modernization.
Council reaction and next steps: Councilmembers thanked the finance team for consistent performance; staff noted the single-audit (federal grants) work will start in January and is expected to be complete by March 31, 2026. The council accepted the reports and related governance communications and closed the item with a unanimous vote.
Authorities cited in the presentation included implementation of GASB Statement 101 and related federal single-audit timing; council accepted the recommendations to file the reports.