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Sanitary district audit shows ‘clean’ opinion; board accepts FY24–25 financial statements
Summary
The East Palo Alto Sanitary District—now a subsidiary of the city—received a clean audit for FY24–25 showing a $3.4M increase in net position, approximately $26M in unrestricted equity and no reportable internal control deficiencies; the board voted to accept the audit.
The East Palo Alto Sanitary District audit for fiscal year 2024–25 received a clean opinion and was accepted by the board at the council’s meeting Tuesday.
Tomo Oku, finance director and district treasurer, summarized the district’s first audit since it became a blended component unit of the city. The audit showed the district’s net position increased by roughly $3.4 million, from $37.4M to about $40.9M, and reported approximately $26M in unrestricted equity. Operating revenue rose by about $400,000, attributed in part to a 10% sewer service charge increase implemented in the prior fiscal year.
External auditor Ahmad Gharaybe said his team issued a clean opinion and reported no adjustments to the financial statements and no significant internal-control deficiencies. The audit identified standard required procedures related to management override of controls and revenue recognition; auditors said additional procedures were performed and no issues requiring disclosure were found.
Board members pressed auditors on prior-year fraud findings and on how OPEB and pension liabilities were calculated. The auditors explained actuarial valuation methods, the use of a Section 115 trust (about $2.2M set aside reported as restricted cash) and the distinction between OPEB assets and liabilities; the district reported roughly $300,000 net OPEB assets as of June 30, 2025.
After discussion, the board adopted the resolution accepting the audit.
