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Carlsbad accepts unmodified FY2025 audit; city reports strong cash position
Summary
The City of Carlsbad accepted an unmodified independent auditors' report for fiscal year 2025, highlighting high cash balances and one large pension liability under GASB 68; council also heard March 2026 financials showing a $4.7 million cash increase and voted to approve the audit report.
The Carlsbad City Council on Monday accepted an unmodified independent auditors' report for the fiscal year ended June 30, 2025, and heard March 2026 financials showing increased cash reserves.
Jeff Mamaro, senior audit manager and partner at Southwest Accounting Solutions LLC, told the council the audit produced an unmodified opinion — the best possible — and noted the city has substantial cash and investment balances that exceed liabilities except for a large net pension liability of about $76 million required by GASB 68. "Your cash is higher than all your liabilities combined with the exception of one," Mamaro said, describing the pension amount as an actuarial, not immediate, cash obligation.
Mamaro highlighted that the city's joint utility produced operating income on a full‑accrual basis and that most federal awards also had no findings. He said one small business‑type fund — the municipal golf pro shop — showed a loss but improved in 2025 compared with 2024.
Finance staff (Miss Salcedo) summarized the March 2026 reports, reporting a beginning cash balance of $151.0 million and an ending cash balance of $155.7 million, a $4.7 million increase. Salcedo reported year‑to‑date revenues of $112.1 million were approximately $29.9 million unfavorable to the $142.0 million budget due to the timing of grants and water and sewer loans; she said, "If the unfavorable variances for the grants and loans were removed, the city would be favorable by $7.6 million in revenues."
Councilors asked routine audit questions about materiality and fund accounting; Mamaro explained auditors use a materiality threshold and perform random state‑compliance tests on selected items. After discussion, the council moved to accept the auditors' report by resolution; the motion passed on a roll‑call vote.
The council also voted to receive the March 2026 financial reports and to thank staff for the no‑finding audit. The acceptance completes the city's required submission of FY2025 financial statements to the state.
