Auditors issue clean opinion; Freeport’s general fund posts healthy reserve but water/sewer shows operating loss

Auditors from Brooks Watson & Company presented the City of Freeport’s audited financial statements for the year ended Sept. 30, 2025, and issued an unmodified (clean) opinion.

Mike Brooks, the audit partner, highlighted the audit process and several financial figures: total maintenance and operations (M&O) property taxes were reported just under $3.4 million (a decrease of about $40,000), interest and sinking (I&S) property taxes totaled just under $530,000, sales tax revenue totaled about $2.7 million, and industrial district revenues were approximately $10.5 million. The general fund showed a favorable budget variance and the unassigned portion of the general fund balance totaled about $12.1 million, equating to roughly eight months of operating expenditures — well above the city’s 25% (90‑day) policy.

Brooks told council the water and sewer enterprise fund recorded an operating loss of about $1.4 million; he noted that the city had not adjusted rates to keep pace with expenditures but said staff had updated rates for the coming year to address the shortfall. The audit team also confirmed the city’s compliance with the Texas Public Funds Investment Act.

Brooks summarized findings and recommendations in a separate letter to be reviewed by staff. “We were able to issue an unmodified clean audit opinion over the city's financials,” he said, adding the audit “went very smoothly.” Council placed the audit report on the record with a motion to receive and file.

The presentation gave councilors an opportunity to ask whether the audit firm also audited the EDC (it does, as a component unit presented alongside the city statements) and to confirm that required disclosures, new accounting standards (GASB 101), and audit adjusting entries were addressed in the audit documentation.