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CONSENT CALENDAR
City of San Bernardino
Request for Council Action
Date: February 4, 2026
To: Honorable Mayor and City Council Members
From: C. Jeannie Fortune, Interim Director of Finance & Management Services
Department: Finance & Management Services
Subject: Receive and File the City’s Annual Comprehensive Financial Report for the Year Ended June 30, 2025 (All
Wards)
Recommendation:
It is recommended that the Mayor and City Council of the City of San Bernardino, California, receive and file the City’s Annual Comprehensive Financial Report (ACFR) for the Year Ended June 30, 2025.
City Manager's Comments
This is the City Annual ACFR for FY ending on June 30, 2025. The City Manager recommends that the City Council receive and file.
Executive Summary
Pursuant to California law, each year, the City engages the services of an independent auditor to audit its financial statements and related internal control procedures. The audit for the fiscal year ended June 30, 2025, has been completed and the Annual Comprehensive Financial Report issued by the City’s auditors, Rogers, Anderson, Malody and Scott, LLP (RAMS), includes their independent auditor’s report, indicating that in their opinion, “the accompanying financial statements present fairly, in all material aspects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2025.”
Background
The purpose of an independent auditor's report for government agencies is to provide stakeholders (citizens, lawmakers) with objective assurance and transparency on financial accountability, program effectiveness, and compliance with laws, improving trust and decision-making by verifying fair presentation, strong internal controls, and proper use of public funds.
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These audit reports also confirm adherence to Generally Accepted Accounting Principles (GAAP) and Generally Accepted Government Auditing Standards (GAGAS).
GAAP is the standards framework of rules, standards, and procedures for financial reporting, while GAGAS is a set of guidelines that independent auditors use for audits of government entities and organizations receiving government funds; and is often referred to as the “Yellow Book.”
The key purposes of the ACFR are:
Financial Reliability: Expresses an opinion on whether financial statements fairly present the agency's financial position, operations, and cash flows. Internal Control Assessment: Reports on the effectiveness of internal controls over financial reporting, highlighting potential risks like fraud or errors. Compliance Assurance: Verifies adherence to laws, regulations, grants, and contracts.
Transparency & Accountability: Serves as a public record to help citizens and leaders assess government performance and responsible spending. Informing Decisions: Provides managers and policymakers with insights to improve operations, strengthen programs, and make sound operational changes.
Detecting Issues: Identifies material misstatements or weaknesses that could lead to incorrect conclusions about an agency's financial health.
The ACFR Report is a critical tool for good governance, ensuring that public resources are managed responsibly and effectively.
Discussion
One of the key aspects of any financial audit is the Independent Auditor’s Report, which is provided on page 1 of the Annual Comprehensive Financial Report (ACFR) (Attachment 1). The Independent Auditor’s Report provides its opinion on whether or not the financial statements fairly present, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information as of the end of the fiscal year, and the respective changes in financial position and cash flows, where applicable, in conformance with Generally Accepted Accounting Principles (GAAP).
The resulting “opinion letter” is either unqualified or qualified. The “opinion letter” received by the City for its financial statements for the period ended June 30, 2025 is unqualified, indicating that the financial statements fairly represent the City’s financial position in accordance with GAAP.
Government-Wide Financial Results
Total net position (assets plus deferred outflows less liabilities and deferred inflows) was $611.4 million at June 30, 2025. Of this amount, $640.7 represents net investment in capital assets (land, infrastructure, buildings and 3 1
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improvements, etc.), $148.2 million is restricted for specific purposes, and ($177.6) million represents the unrestricted deficit. GASB 68, implemented in 2015 changed pension plan reporting, which was required to report/include long-term liabilities. (p.9 ACFR)
Total net position increased by $57.1 million compared to the prior year, with approximately 12% of the increase attributable to governmental activities and 8% to business-type activities. (p.10 ACFR)
Changes is Net Position – Governmental Activities
Operating grants and contributions increased by $67.5 million due to increased grants receipts for public works and uses of the City’s American Rescue Plan Act (ARPA) funding during the year.
General government expenditures increased by $12.2 million, primarily due to an increase in the City’s general liability claims, which include settlement of outstanding claims and new claims filed during the year. Expenditures related to public works increased by $18.2 million due to public works projects in the construction phase.
Expenditures related to community development increased by $35.8 million, primarily due expenditures related to Homekey 3.0 grant funding for the development of the San Bernardino Community Wellness Center. (p.11 ACFR) General Fund Financial Highlights
As of June 30, 2025, committed fund balance of the General Fund was $133 million, while total fund balance was $178.5 million. The fund balance of the General Fund decreased by $24.4 million primarily due to the flat performance of tax revenues, volatility of the economy, as well as an overall increase in operational expenditures. (p.17 ACFR)
DESCRIPTION FY2023-24 FY2024-25
Revenues $230,676,669 $227,709,057
Less: Expenditures $204,066,164 $250,143,724
NET $26,610,505 ($22,434,667)
Other finance sources(uses) $2,852,502 ($1,975,121)
Fund Balance:
Beginning of year $173,462,555 $202,925,562
End of year $202,925,562 $178,515,774
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FUND BALANCE (detail) FY2023-24 FY2024-25
Nonspendable (property held for resale) $40,806,497 $39,593,408 Restricted for Parks $2,099,574 $2,164,740
Committed
General Plan Update $551,312 $471,515
Measure S $86,734,706 $68,201,640
Emergency Reserve (15% of 2025-26 Budget) $35,618,054 $38,628,262 Economic Contingency (10% of 2025-26 Budget) $23,745,369 $25,752,175
Assigned $13,370,050 $3,704,034
Total Fund Balance $202,925,562 $178,515,774
Less: Nonspendable (property held for resale) ($40,806,497) ($39,593,408) NET FUND BALANCE $162,119,065 $138,922,366
In addition to the Annual Comprehensive Financial Report (ACFR), the independent auditor issues other related documents, which are summarized below:
Audit Overview Letter (Attachment 2)
Discusses the auditor’s responsibilities under Government Auditing Standards and any significant issues encountered during the audit that warrant disclosure.
None of the misstatements detected as a result of the audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Internal Control & Compliance Report (Attachment 3)
The Internal Control & Compliance Report identifies any material internal control deficiencies that impact the financial statements.
Internal Control. The results of the tests performed by the City auditors did not identify any deficiencies in internal control that are required to be reported under Government Auditing Standards.
Compliance Reporting. The results of the Auditor’s tests disclosed a deficiency/noncompliance in relation to credit card processing and approval as follows:
During testing over credit card compliance, the auditors were unable to obtain credit card purchase approvals for two (2) employees.
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The City will implement the following corrective actions to ensure that proper approval is obtained when processing credit card purchases:
1. Enhanced Oversight: Departments will conduct periodic reviews of reconciler and approver assignments to ensure accuracy and compliance.
2. Clear Accountability: Departments will promptly notify the City’s Purchasing Card Administrator when their assigned reconcilers or approvers change.
3. Improved Documentation: Efforts will be made to standardize approval processes to ensure all transactions are documented in a retrievable format.
4. Training and Guidance: Staff will receive additional training on policy requirements to reinforce proper reconciliation and approval procedures.
5. Corrective Action: The City has identified the deficiency and has implemented procedures in FY2025-26 to ensure every employee has a designated reviewer.
2021-2025 Strategic Targets and Goals
Receiving and filing the City’s Annual Comprehensive Financial Report for the Year Ended June 30, 2025, aligns with Key Target No. 1: Improved Financial & Operational Capacity.
Fiscal Impact
There is no fiscal impact associated with receiving and filing the City’s Annual Comprehensive Financial Report for the year ended June 30, 2025.
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino, California receive and file the City’s Annual Comprehensive Financial Report (ACFR) for the Year Ended June 30, 2025.
Attachments
Attachment 1 City of San Bernardino ACFR for the Year Ended June 30, 2025 Attachment 2 Audit Overview Letter (SAS 114)
Attachment 3 Internal Control and Compliance Report Ward:
All Wards
Synopsis of Previous Council Actions:
Each year, the Mayor and City Council of the City of San Bernardino, CA receive and file the Annual Comprehensive Financial Reports of the previous audited year.
CC: Eric Levitt, City Manager