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Chino receives clean audit; council adopts midyear budget adjustments with $1.8M projected surplus
Summary
External auditors issued an unmodified opinion on Chino’s FY 2024‑25 financial statements; the council received the audit, heard about a significant deficiency related to prior restatements, and unanimously approved midyear budget adjustments that leave a projected $1.8 million surplus at June 30, 2026.
The City of Chino presented its annual comprehensive financial report for the fiscal year ended June 30, 2025, receiving an unmodified (clean) opinion from independent auditors and council approval to adopt midyear budget adjustments for FY25‑26.
Ahmed Badawi, the audit partner from Badawi & Associates, told the council the firm issued a clean opinion, stating, "we have issued an unmodified opinion," and summarized audit scope, risks and results. The audit identified standard areas of higher risk — management override, revenue recognition and accounting estimates — and disclosed a significant deficiency tied to a restatement of previously issued financial statements. Badawi also highlighted the city's largest estimated liability: pension obligations of about $59.3 million, noting those liabilities are sensitive to discount‑rate assumptions.
Director of Finance Kim Sow and Budget Manager Sherry Beckett presented the midyear budget review. Staff proposed revenue adjustments (including updated property tax and Measure V receipts) and expenditure changes across funds — notably water‑system repairs (Well 18), an additional $69,000 true‑up for ARC services, and an unbudgeted PERS unfunded liability payment of roughly $3.6 million covered by an employee services fund balance. Staff said Measure V project spending for FY25‑26 increased to about $9.0 million with active design and construction shown on the project list.
After discussion, the council unanimously adopted the midyear adjustments (Resolution 26‑23), which staff said would leave an estimated $1.8 million surplus and an estimated June 30, 2026 fund balance of about $42.0 million. Councilmembers praised department efforts to address deferred maintenance and to use Measure V funds to improve parks, streets and other capital assets.
Council and staff also discussed audit timing: auditors and staff noted that vacancies and new GASB implementation delayed the audit beyond the ideal December issuance but that the city is making progress to improve timelines.
Next steps include publishing the audited financial statements and staff continuing recruitment to fill vacancies in the finance department to help meet future audit timelines.
