AUDITED FINANCIAL STATEMENTS
FOR FISCALYEAR 2024-2025
Item 3.3 Annual Comprehensive Financial Report
Item 9.1 SARA Audited Financial Statements
Item 3.4 Report to Those Charged with Governance
Prepared by the Finance Department
COUNCIL AGENDA: 12/09/2025
Presenters:
Maria Öberg, Director of Finance
Victor Lo, CPA, Deputy Director – Accounting
Ben Lau, CPA, Partner: Macias, Gini & O’Connell LLP
PRESENTATION OVERVIEW
Item 3.3 Annual Comprehensive Financial Report
Audited Financial Statements Overview
Item 9.1 Successor Agency to the Redevelopment Agency (SARA) Audited Financial Statements Overview
Item 3.4 Report to those Charged with Governance
Independent Auditor’s Report
Accounting Standards Implemented
Audit Results
Management Response
2 AUDITS AND ENGAGEMENTS
City of San José Annual Comprehensive Financial Report (ACFR) GANN Appropriation Limitation – Agreed-Upon Procedures San José Mineta International Airport ACFR and Compliance Reports Wastewater Treatment System Financials
San José Clean Energy Financials
Successor Agency to the Redevelopment Agency (SARA) Financials San José Convention Center and Cultural Facilities
Bond Funds Financial Statements and Compliance Reports Measure O (2000) – Branch Library Projects
Measure P (2000) – Parks Projects
Measure T (2018) – Public Safety and Infrastructure Projects 3 In Progress
Complete and available on the City Auditor website under External Financial Audits. https://www.sanjoseca.gov/your-government/appointees/city-auditor/external-financial-audits
AUDITS AND ENGAGEMENTS
Library Parcel Tax Measure S (2004)
San José Semi-Annual Investment Program Compliance – Agreed-Upon Procedures South Bay Water Recycling Program
Deferred Compensation Plan
Executive Management and Professional Employees Tier 3 Defined Contribution 401(a) Plan City of San José Voluntary Employee Beneficiary Association (“VEBA”) Plans San José Clean Energy Agreed-Upon Procedures
Bicycle/Pedestrian Facilities Grant
Single Audit
4 In Progress
Complete and available on the City Auditor website under External Financial Audits. https://www.sanjoseca.gov/your-government/appointees/city-auditor/external-financial-audits ITEM 3.3
ANNUAL CO MPREHEN SIVE FIN AN CIAL REPO RT
FOR FISCAL YEAR 2024 -2025
5 MAJO R SECTIO N S OF THE ACFR
Introductory Section
Financial Section
Required Supplemental
Information (Unaudited)
Supplemental Information
Statistical Section (Unaudited)
67 STATEMENT OF NET POSITION
7 STATEMENT OF ACTIVITIES (IN MILLIONS)
8 FY 2024 FY 2025 FY 2024 FY 2025 FY 2024 FY 2025
Total Revenues 2,290$ 2,294$ 1,206$ 1,237$ 3,496$ 3,531$ Total Expenses and Transfers 2,331 2,373 969 1,073 3,300 3,446 Change in Net Position (41) (79) 237 164 196 85 Net Position at beginning of year 2,359 2,318 1,856 2,091 4,215 4,409 Adjustment due to change of accounting principles - (67) (2) (8) (2) (75) Net Position at end of year 2,318$ 2,172$ 2,091$ 2,247$ 4,409$ 4,419$ Governmental Business-type
Activities Activities Totals
ITEM 9.1
SARA A UDITED FIN AN CIAL STATEMEN TS
FOR FISCAL YEAR 2024 -2025
9 STATEMENT OF FIDUCIARY NET POSITION
• The ending net position is negative $0.856 billion. The net position will continue to improve as outstanding bonds are repaid and is expected to reach $0 when the bonds are fully paid off on August 1, 2035.
10 FY 2024 FY 2025
Assets 139$ 142$ 2.2%
Deferred outflows of resources 21 18 -14.3% Liabilities (1,127) (1,016) -9.8%
Net position held in trust (967)$ (856)$ 11.5%
(In millions) %
Change
STATEMENT OF CHANGES IN FIDUCIARY NET
POSITION
11 FY 2024 FY 2025
Additions 203$ 204$ 0.5%
Deductions (95) (93) -2.1%
Change in net position 108 111 2.8% Net position, beginning of year (1,075) (967) 10.0% Net position, end of year (967)$ (856)$ 11.5% (In millions) %
Change
ITEM 3.4
EXTERN AL AUDITO R’S REPO RT TO THOSE
CHARGED W ITH GOV E RNANCE
FOR FISCAL YEAR 2024 -2025
12 AUDIT RESULTS
Auditor’s Report Unmodified for all opinion units
Basis of Opinions Generally Accepted Auditing Standards Government Auditing Standards
Emphasis of Matters Adoption of Government Accounting Statement Board (GASB) Statement No. 101, Compensated Absences
REQUIRED COMMUNICATIONS
Auditor’s responsibilities with regard to the financial statement audits
Disagreements with management
Overview of the planned scope and timing of the
financial statement audits
Other Information included in annual reports
Preferability of accounting policies and practices Consultations with other accountants Adoption of, or change in, accounting policies Significant issues discussed with management Preferability of accounting policies and practices Significant difficulties encountered in performing the audit Significant accounting policies Significant matters that required consultations Significant unusual transactions Shared responsibilities for independence – City and MGO Management's judgments and accounting estimates Representations requested from management Audit adjustments and uncorrected misstatements Internal control and compliance matters
ACCOUNTING UPDATES
E ffective for fiscal year 2026
Statement No. 103, F inancial R eporting M odel I mprov ements Statement No. 104, Disclosure of Certa in Ca pita l A ssets
MANAGEMENT RESPONSE
This marks the fourth consecutive year the City has received an unqualified audit opinion and a “Report to Those Charged with Governance” with no new findings.
Key contributing factors include:
• Disciplined year-end processes ensuring accurate and timely financial reporting. • Enhanced inter-departmental collaboration between Finance and operating departments to improve data integrity and reconciliation. • Ongoing system modernization and automation streamlining financial workflows and strengthening internal controls.
• Targeted staff development programs fostering consistency, technical expertise, and accountability across the organization.
16 RECOMMENDATIONS
Acceptance of FY 2024-2025 reports:
Item 3.3 – Annual Comprehensive Financial Report
Item 3.4 – Report to Those Charged with Governance
Item 9.1 – SARA Audited Financial Statements
17 Maria Öberg, Director of Finance
Victor Lo, CPA, Deputy Director – Accounting
Ben Lau, CPA, Partner: Macias, Gini & O’Connell LLP
QUESTIONS