The City Council on Feb. 9, 2025 received and filed the annual audit report for Fiscal year 2024-25. The fiscal year ended June 30, 2025.
The vote was unanimous.
This was a Consent Calendar item. Consent items are voted on collectively, without discussion, unless a council member pulls one or more items for further discussion. This item was not pulled. Finance Director Barbara Arenado said the city received “unmodified opinion” that the city’s financial statements were represented fairly and in accordance with accounting standards.
There was a presentation to the council from a Sophia Kuo, engagement partner of The Pun Group Accountants & Advisors.
District Five Councilman Nathan Steele asked if Seal Beach was going bankrupt.
According to Kuo, as independent auditors The Pun Group was required to evaluate whether any events or conditions that would impact the city as a going concern. Kuo said they did not find any.
Background
“The audit firm, The Pun Group Accountants & Advisors (Pun Group), has completed the annual audit of the City for the Fiscal Year (FY) ending June 30, 2025,” according to the staff report by Finance Director/Treasurer Barbara Arenado.
“In our opinion, the accompanying financial statements referred to above present fairly, 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 of the City, as of June 30, 2025, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America,” according to the second paragraph of The Pun Group Independent Auditor’s Report.
“As discussed in the Note 15 to the basic financial statements, the City also recorded restatements due to error corrections in the governmental and business-type activities in the amounts of $2,622,626 and $2,652,594, respectively due to correction of capital assets. Our opinion is not modified with respect to this matter,” according to The Pun Group audit report.
“Management is responsible for the other information included in the annual report. The other information comprises the Introductory and Statistical Sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon,” according to The Pun Group audit report.
Net position and analysis
Attached to the audit report was a Seal Beach document called the Management’s Discussion and Analysis (Unaudited) For the Year Ended June 30, 2025. The following are highlights from that document.
“The City’s net position – the difference between its assets and deferred outflows of resources compared to its liabilities and deferred inflows of resources – was $150.6 million, an increase of $2.2 million or 1.5%. The net position of governmental activities increased by $1.8 million or 1.8%, while the net position of business-type activities increased by $0.4 million or 0.9%,” according to the Discussion and Analysis.
“The net position of $150.6 million consisted of $126.7 million of net investment in capital assets; $7.2 million of resources that are subject to external restrictions on how they may be used; $2.9 million that may be used to meet the City’s obligations for its governmental activities; and $13.8 million to meet obligations for its business-type activities,” according to the Discussion and Analysis.
“Total revenues were $65.8 million and total expenses were $63.6 million. Revenues increased by $2.0 million or 3.2%, and expenses increased by $3.6 million or 6.0%,” according to the Discussion and Analysis.
“As of the close of the fiscal year, the City’s governmental funds reported combined ending fund balances of $48.4 million, representing an increase of $1.8 million or 3.8%. Of this amount, $17.5 million (the sum of assigned and unassigned fund balances) is available for spending at the City’s discretion,” according to the Discussion and Analysis.
“The City’s Reserve Fund Policy aims to maintain a minimum balance in the Fiscal Policy Reserve equal to approximately three months’ worth of the City’s General Fund operating expenditures. As of June 30, 2025, the Committed-Fiscal Policy Reserve has a balance of $11.0 million, or 22.1% of General Fund expenditures (less transfers out related to capital projects) ,” according to the Discussion and Analysis.
