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Fremont receives clean FY2025 audit; GASB 101 implementation alters reporting
Summary
Auditors issued an unmodified opinion on the city's FY2025 financial statements but included an emphasis of matter tied to a new GASB standard on compensated absences and noted a $938,876 classification issue in internal service funds.
The City of Fremont received the audited financial statements for the fiscal year ending Sept. 30, 2025, and the independent auditor delivered an unmodified opinion while calling attention to changes required under a new accounting standard for compensated absences.
"We did issue a clean or unmodified opinion on those financial statements," said Colby of Forbes Mazars as the firm presented the audit to the council. Colby told the council the audit report included an emphasis-of-matter paragraph because the city implemented GASB Statement No. 101 related to compensated absences, and the financial statements were adjusted accordingly.
Finance Director Jennifer Knapp told the council the statements and backup material will be posted to the city website. Knapp said the city is "moving in to the time where we're using the rest of our reserves," noting that the council has intentionally drawn on reserves to finance planned investments. She added the city is seeing rising costs and indicated additional rate and budget work is underway.
Auditors also reported a single-audit clean opinion for federal award compliance, noting that the city spent about $3,100,000 from the Coronavirus State and Local Fiscal Recovery Fund during the year. Colby said the $938,876 referred to by a council member was not a loss but a classification difference between city and utility reporting related to internal service fund allocations: "There is no there's no missing million dollars or $980,000. It's just a classification standpoint between those reporting units."
Council members pressed staff for clarity on the classification and on how fund balances and transfers affect liquidity. The council voted unanimously to receive the audited financial statements.
