Los Altos commissioners receive draft 2025 audit, form ad hoc committee on financial communications

Los Altos City commissioners heard a draft 2025 audit from the city's external auditor and voted to create an ad hoc committee to develop recommendations for how the city presents its finances to the public.

Ahmed, the independent auditor presenting the draft report, said the audit work is largely complete and that the firm "expects to issue an unmodified opinion," meaning the auditor believes the financial statements are fairly stated in all material respects. He summarized the city's financial position as healthy, saying the general fund's unrestricted balance could cover roughly 11 months of expenditures based on current figures. Ahmed also warned that some amounts in the statements are estimates and sensitive to assumptions — particularly pension and OPEB liabilities — and described primary audit risks including revenue recognition, accounting estimates and the risk of management override of controls.

On revenues, staff explained that a one-time set of development fees tied to the 5150 El Camino Real project produced a large influx of fees this fiscal year, which included more than $10 million in park-in-lieu fees. A staff member said the development fees raised general‑fund–usable revenue of roughly $2.2 million and that the larger park-in-lieu receipts are restricted for park projects. "We saw a large influx of revenue" from that project, staff said, and cautioned the receipts are not expected to recur.

Ahmed reported some internal-control deficiencies discovered during the audit. He said the audit identified (1) compensated‑absence balances exceeding the city's policy limits, (2) areas where account reconciliations and audit preparedness could improve, and (3) instances where finance staff had the ability to both prepare and post accounting entries without sufficient independent review. On that last point he said such a capability increases the risk that errors or unauthorized changes could go undetected. Commissioners and staff noted the city moved to a new financial system, Tyler, which went live July 1, and staff said the new system restricts the ability for a single user to both enter and post general ledger entries.

Commissioners also discussed how to present the city's financial strengths — such as reserves and capital investments — to residents. The commission voted to disband an earlier ad hoc committee on key performance indicators and to form a new ad hoc committee focused on "financial communications." The motion passed with Commissioners Chang and Pollard and the commission chair voting in the affirmative; the meeting transcript records those three yes votes. The commission then approved two committee members named in the meeting, Scott and Jonathan (full names not specified in the transcript).

Other actions taken included approving a change to the commission meeting schedule and moving several follow-up items — including a final audit presentation and a joint meeting with the city council — to future agendas. Ahmed said the auditor expects to finalize and issue the audit report before the end of the calendar year, subject to completion of the city's remaining draft materials and management responses.

The commission adjourned after completing the agenda.