Jersey City’s 2025 audit contains two conclusions that belong together. The auditors concluded that the City’s main fund statements fairly present its finances under the accounting rules New Jersey municipalities use. They also reported weaknesses in the processes that close the books, reconcile ledgers, track public assets, authorize spending, and retain supporting records.
An audit opinion is not a grade for every financial practice. It addresses the statements and the reporting framework specified in the opinion. The findings address control failures, legal compliance, and records encountered during the audit. Reading those parts separately—and then reconnecting them—gives the clearest view of the report.
The opinion is favorable on the principal funds, with one major exception
The independent auditor’s report gives unmodified opinions, on the State’s regulatory basis, for the Current Fund, Federal and State Grant Fund, Trust Funds, and General Capital Fund. In plain terms, the auditors concluded that those statements fairly present the reported financial position and activity under the State’s municipal reporting provisions.
General fixed assets are different. The auditors declined to express an opinion because the City did not provide an inventory they could audit. The report says the adjustment needed to reach a reliable balance could not be determined and was presumed material.
The report also contains an adverse opinion under U.S. generally accepted accounting principles. That language follows from the City reporting on New Jersey’s required regulatory basis rather than GAAP; it should not be mistaken for a third current-year control finding. The operational concerns appear in the numbered findings.
The two material weaknesses affect the books and the asset inventory
A material weakness means there is a reasonable possibility that a material misstatement would not be prevented, or detected and corrected, on time. It does not establish that every balance is wrong. It says the control is not strong enough to provide the level of assurance expected for financial reporting.
| Finding | What the auditor found | Why it matters |
|---|---|---|
| 2025-001 Financial closing | Material differences between subsidiary records and general-ledger control accounts; regular interim reconciliations were not performed. | Corrections accumulate after year-end, delaying the close and increasing the chance that errors survive longer. |
| 2025-002 Fixed assets | The City did not update the fixed-asset inventory for 2025. The reported $1.648 billion balance remained unchanged. | The auditors could not determine additions, disposals, or a reliable ending balance, so they gave no opinion on this statement. |
Both findings are identified as repeats. The first was narrower than in prior audits, but it remained material. The fixed-asset problem also followed a 2024 inventory adjustment of $854.9 million, while additions and disposals still could not be audited. Continuity is the central risk: a rebuild must be followed by routine tagging, disposal records, and ledger reconciliation or the inventory will become stale again.
The $94.1 million balance is a schedule, not one new bill
Note 14 reports a year-end deferred-charge balance of $94,124,946. These are amounts the regulatory statements carry for funding through later budgets. The total combines items created in different years and for different reasons.
| Component at Dec. 31, 2025 | Amount | Origin |
|---|---|---|
| Contractual severance authorizations | $33.200M | Multi-year special emergencies |
| Group health insurance and tax appeals | $22.500M | 2025 emergency appropriation |
| 2021 operating deficit | $22.963M | Balance of a five-year funding schedule |
| Prior budget overexpenditures | $11.578M | Unfunded 2024 balance |
| 2019 payroll-tax overpayment | $3.100M | Receivable now considered uncollectible |
| Appropriation-reserve overexpenditures | $0.487M | 2024 and 2025 activity |
| Grant-reserve overexpenditures | $0.297M | 2025 activity |
| Total | $94.125M | Four funds |
Small internal discrepancy: Finding 2025-003 lists grant-reserve overexpenditures of $296,788, while Note 14 lists $296,778. The $94,124,946 total above follows Note 14.
The same note shows $57.6 million as a 2026 budget appropriation and $36.5 million remaining for later budgets. Its footnote says the 2026 budget had not been adopted when the audit was issued, so the split was still subject to change.
The City also reported $78.7 million in notes backed by emergency or special-emergency authorizations: $33.2 million for severance, $22.5 million for health insurance and tax appeals, and $23.0 million for the remaining 2021 deficit. Those notes finance three components already included in the deferred-charge table. Adding the two totals would count the same obligations twice.
Health insurance shows both improvement and a budgeting problem
The adopted 2025 appropriation for employee group health insurance was $147.4 million. Late in the year, the City added a $22.5 million emergency appropriation covering health insurance and tax appeals. The audit says statutory overexpenditures fell from $11.9 million in 2024 to $542,866 in 2025, an important reduction.
The improvement relied in part on the emergency appropriation. The auditors noted that health costs recur and can be estimated, making them a poor fit for a mechanism intended for unexpected needs. They separately found $2.5 million of October and November health costs missing from year-end encumbrances. The report does not establish that this amount sits outside the $22.5 million authorization, so the two figures should not be automatically added together.
Two large budget inputs will not recur automatically
The 2025 revenue statements include $33.1 million from municipal property sales and $27.9 million of surplus used as anticipated revenue. Both were recognized as budgeted. The forward-looking issue is replacement: neither amount repeats without another property sale or another draw on available surplus.
| 2025 budget input | Realized | Question for the next budget |
|---|---|---|
| Sale of municipal properties | $33.137M | What recurring source or spending change replaces it? |
| Surplus used as revenue | $27.929M | How much usable fund balance remains after the draw? |
The other 15 findings show where routine controls broke down
Findings 2025-003 through 2025-017 range from budget execution to court documentation. The measured exceptions are useful signals, but audit samples are not prevalence estimates. One error in 25 tested payments, for example, does not prove that 4% of every payment was wrong.
| Control area | Findings | What testing identified |
|---|---|---|
| Budget and purchasing | 003, 005, 006 | $246,088 above appropriation reserves; $296,788 above grant reserves; $5.262 million in purchase-order encumbrances dating from 2014-2021; and $71,469 paid above a council-authorized vendor amount. |
| Payroll and employee liabilities | 007-010 | Leave-liability records could not be reconciled; one of 25 severance payments included a $32,240 overpayment; one pension salary record differed from payroll; one of 20 overtime samples had four unsupported hours and seven lacked work descriptions. |
| Tax eligibility records | 011-012 | Required statements were unavailable for 12 of 60 sampled exempt properties, and applications were unavailable for five of 40 sampled veterans deductions. |
| Grants and collections | 013-015 | $17.8 million of grant receivables and $12.2 million of grant reserves were more than five years old; the off-duty police program reported about $7.7 million receivable; departmental deposit trails were inconsistent. |
| Capital classification | 016 | State-law eligibility for financing certain microtransit service costs through capital authorizations had not been established. |
| Municipal Court | 004, 017 | Required surety coverage was missing or insufficient; approval evidence was absent for two of 40 voided matters and three of 85 dismissed matters tested. |
How to interpret the amounts: Aged receivables are exposures, not confirmed losses; missing support in a sample is not proof that every underlying transaction was improper; and the microtransit finding calls for a legal determination rather than stating that every prior charge was ineligible.
The corrective-action plan creates a calendar for follow-through
The City’s corrective-action plan assigns officials and target dates. It marks the review and closure of stale purchase orders as completed, with quarterly reviews to continue. A monitoring step within the financial-closing response is also marked complete. Most other remedies were still scheduled when the plan was published.
| Target | Plan commitment | Public evidence to look for |
|---|---|---|
| Sep. 30, 2026 | Bond-counsel opinion on microtransit capital eligibility | The opinion and any required reclassification |
| Oct. 15, 2026 | Reconcile off-duty police receivables | Aged balance, collections, adjustments, and escrow controls |
| Oct. 31, 2026 | Correct Municipal Court approval records | Updated procedures and the follow-up internal audit |
| Nov. 30-Dec. 31, 2026 | Most budget, payroll, revenue, procurement, tax, grant, and closing controls | Reconciliations, review sign-offs, policies, and corrected records |
| Sep. 30, 2027 | Complete the fixed-asset rebuild | Asset register, physical count, tags, disposals, and quarterly milestones |
Planned action is not the same as verified remediation. The audit labels management’s responses unaudited. The strongest evidence will be completed records, reconciliations, legal conclusions, and a later independent audit that does not repeat the same findings.
A practical public scorecard starts before the next audit
- Monthly close: Are control accounts reconciled to subsidiary ledgers, with dates and reviewer approval?
- Fixed assets: Has a qualified vendor been retained, and are quarterly inventory milestones public?
- Deferred charges: What did the adopted 2026 budget fund, and what balance moved to later years?
- Health costs: Do forecasts, invoices, and year-end encumbrances agree before the fiscal year closes?
- Receivables: Are aged grant and off-duty police balances collected, adjusted, returned, or formally written off?
- Capital charges: What did bond counsel conclude about microtransit, and how did the City account for prior years?
- Repeat rate: Which of the six recurring 2025 findings appear again in the 2026 audit?
Assessment
The 2025 audit does not support a one-line verdict. It validates the principal fund statements under New Jersey’s regulatory framework while documenting serious weaknesses in the machinery that produces and supports those statements. It also records measurable progress in reducing statutory overexpenditures.
The decisive information will come next: whether monthly controls operate, whether the asset inventory can be audited, whether old balances are resolved, and whether promised dates produce records that survive independent testing.
Explore every finding.
Search the 17 findings, compare the key financial measures, and follow each corrective-action target back to the official documents.
Open the audit explorerSources and method: JC Open Funds reviewed the City’s signed 2025 annual audit and 2026 corrective-action plan. All figures and finding descriptions above are traced to those official documents. Amounts are rounded for display; totals use the reported unrounded figures. Audit samples are described as samples and are not extrapolated to the full population. This analysis distinguishes audited findings from management’s unaudited remediation statements.