City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: March 16, 2026
Report #:2601-5817
TITLE
Accept the Single Audit Report audited by Macias Gini & O’Connell for the year ended June 30, 2025, Fiscal Year 2025; CEQA Status – Not a Project.
RECOMMENDATION
Office of the City Auditor and Staff recommend that the City Council accept the following audit reports for the fiscal year ended June 30, 2025, prepared by Macias Gini & O’Connell (“MGO”).
These reports are collectively referred to as the Single Audit.
1. Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements in Accordance with Government Auditing Standards.
2. Independent Auditor’s Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Federal Awards Required by the Uniform Guidance.
BACKGROUND
At its December 2, 2025, meeting1 the Finance Committee reviewed and recommended that the Council accept the City of Palo Alto's audited financial statement for the fiscal year ended June 30, 2025, and accompanying reports provided by Macias Gini & O'Connell LLP.
At that time, guidance necessary for the completion of the Single Audit had not yet been released by Federal Office of Management and Budget. The Single Audit report has since been 1 Finance Committee, December 2, 2025; Agenda Item #1; CMR #2510-5389, https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=84150&dbid=0&repo=PaloAlto&searchid=cbb6b9b 3-da43-4ce1-8bcf-0720eae7f541&cr=1
completed, thus the recommended action within this report. MGO reports the following within the Single Audit Report:
Unmodified (“clean”) opinions as it pertains to both the Financial Statements and to Federal Awards
No material weaknesses or significant deficiencies in internal controls over financial reporting or over major programs
No findings or costs questioned
At the December 15, 2025, City Council Meeting3, the City Council approved the following audit reports prepared by MGO:
1. Auditor’s Report to the City Council (the “Management Letter”)
2. Cable TV Franchise, Independent Auditor’s Report and Statements of Franchise Revenues and Expenses for the years ended December 31, 2023, and 2024,
3. Palo Alto Public Improvement Corporation (a component unit of the City of Palo Alto) Annual Financial Report for the year ended June 30, 2025,
4. Regional Water Quality Control Plant, Independent Auditor’s Report and Financial Statements for the year ended June 30, 2025,
5. Independent Accountant’s Report on Applying Agreed-Upon Procedures related to Article XIII-B Appropriations (GANN) Limit for the year ended June 30, 2025, and
6. Pedestrian/Bicycles Facilities Grant Metropolitan Transportation Commission Transportation Development Act Funds, Article III, Independent Auditor’s Report and Financial Statements, and Supplementary Information for the year ended June 30, 2025
ANALYSIS
The City’s Single Audit for the fiscal year ended June 30, 2025, resulted in unmodified (“clean”) audit opinions on both the financial statements and the City’s major federal programs, with no material weaknesses, significant deficiencies, or findings reported.
The City expended approximately $5.6 million in federal awards, qualified as a low-risk auditee, and demonstrated full compliance with Uniform Guidance requirements
FISCAL/RESOURCE IMPACT
There is no resource impact associated with this report. 3 City Council Meeting, December 15, 2025; Agenda Item #13; CMR #2511-5452 https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=84129&dbid=0&repo=PaloAlto
STAKEHOLDER ENGAGEMENT
This report has been prepared by the Administrative Services Department in coordination with Office of the City Auditor. The Single Audit was completed in coordination with departments that received and expended grant funding in Fiscal Year 2025.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined as CEQA because acceptance of the Single Audit Report is an administrative activity that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5).
ATTACHMENTS
Attachment A: City of Palo Alto - Single Audit Report FY2025 APPROVED BY:
Lauren Lai, Administrative Services Director