Seal Beach receives unmodified audit; finance director and auditor cite healthier reserves

Seal Beach officials told the City Council Feb. 9 that the city’s independent audit for the year ended June 30, 2025, resulted in an unmodified (clean) opinion and shows modest improvements in the city’s net position and reserves.

Director of Finance Arnaud reported the city completed its annual independent audit and received an unmodified opinion. Auditor Sofia Kuo of the Peng Group, the engagement partner for the audit, summarized required communications and audit procedures, noting that staff implemented two GASB pronouncements during the fiscal year and that the auditors encountered no disagreements with management.

Kuo said the government‑wide net position increased by about $2.2 million from the prior year. Arnaud gave general fund figures showing revenues of about $51.6 million and expenditures of about $46.9 million, resulting in a positive change in the general fund balance and an increase in reserves. On pension and OPEB metrics, combined net pension liability decreased from roughly $52.4 million to $51.6 million and funding ratios improved; the OPEB liability also declined.

When a councilmember asked bluntly, "Are we going bankrupt here in Seal Beach?" the auditor responded that auditors evaluate going‑concern indicators and did not identify events that raise substantial doubt about the city's ability to continue as a going concern; staff noted an approximate eight‑month reserve ratio compared with GFOA guidance of two to three months.

The presentation acknowledged ongoing financial planning work — including pension paydown contributions and a $5 million revitalization fund — and staff said they will continue five‑year forecasting to guide fiscal decisions.