Subject
title
FY 2025 Annual Comprehensive Financial Report (ACFR), Independent Auditor Reports, and FY 2025 Popular Annual Financial Report (PAFR)
end
Department
Finance
Recommendation
Staff recommends the Mayor and Council receive the Fiscal Year 2025 Annual Comprehensive Financial Report (ACFR), Internal Control Letter, Fiscal Year 2025 Report on Single Audit, and Fiscal Year 2025 Popular Annual Financial Report (PAFR).
Discussion
ACFR and Independent Auditor Reports
The city’s financial policies specify that, on an annual basis, a firm of independent Certified Public Accountants (CPA’s) audit the city’s financial statements, and that the auditor’s opinion be included in the financial statements as required by Generally Accepted Accounting Principles (GAAP). An independent audit is essential to demonstrate the accountability of government officials’ use of public resources and provides a basis for user acceptance of the audited financial statements.
The city’s audit was conducted in conformity with Generally Accepted Auditing Standards (GAAS). These are the standards that a CPA must follow when auditing financial statements. In an independent audit, the CPA expresses an opinion as to whether the financial statements present fairly the financial position and results of operations for the year ended. The fiscal year 2025 audit report contains this unmodified opinion starting on page 13 of the ACFR, at the beginning of the financial section.
Attachment A, The Internal Control Letter, is a report from the auditors on internal controls and compliance based on their audit. Attachment B, The Report on Single Audit, is a compliance audit for entities receiving federal funding. There were no significant financial issues of concern with the fiscal year 2025 financial statements. There were no identified material weaknesses in the city's internal controls.
The city ended the fiscal year in a strong financial position, with positive fund balances and policy compliance for all governmental funds and positive net positions for all enterprise funds, except for the Parking Fund due to the outstanding garage debt. All the enterprise funds had positive cash balances.
The complete ACFR is available at
<https://www.rockvillemd.gov/wp-content/uploads/2025/12/Fiscal-Year-2025-ACFR.pdf>.
PAFR
The PAFR is designed to enhance transparency by making the financial information presented in the ACFR easier to read and understand. The PAFR reports on financial matters (i.e., budget, and financial results) without the technical jargon required in the ACFR and shares other helpful information about the City. The PAFR is not a replacement for the ACFR, but a supplementary document that can further assist members of the public in their review of the City government's financial operations.
The complete PAFR is available at
<https://www.rockvillemd.gov/wp-content/uploads/2025/12/Fiscal-Year-2025-PAFR.pdf>.
Mayor and Council History
Annually the City is required to produce basic financial statements and to conduct an independent financial audit. The previous audit was presented to the Mayor and Council in December 2024. The FY 2025 ACFR and FY 2025 PAFR were posted to the city’s website in December 2025.
Boards and Commissions Review
The Financial Advisory Board reviews the city’s financial reports as part of their annual work plan. The Board plans to review these reports in the first few months of calendar year 2026.