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AGENDA ITEM NO. 24.
CITY OF HAWTHORNE City Council AGENDA BILL For the meeting of 04/14/2026 Originating Department: Finance |
City Manager:
Department Head:
SUBJECT:
Agreement between the City of Hawthorne and Rogers, Anderson, Malody, & Scott, LLP, CPA’s to perform independent audit services.
RECOMMENDED MOTION:
Staff recommends that the City Council approve the agreement between the City of Hawthorne and Rogers, Anderson, Malody, & Scott, LLP, CPA’s to perform independent audit services for four years plus two optional years beginning with Fiscal Year ending June 30, 2026.
DISCUSSION:
The City’s financial policies require the performance of an annual audit. The Government Finance Officers Association (GFOA) recommends that an annual audit of an agency’s financial statements should be conducted by an external auditor as a best practice. The purpose of an annual audit is to provide stakeholders with an auditor’s opinion on whether the financial statements of an entity are presented fairly in all material respects. As a result of the Office of Management and Budget Circular A-133 (also known as the Uniform Guidance), all non-federal government agencies spending more than $750,000 of federal awards in a fiscal year are required to obtain an annual audit from an independent certified public accountant.
These audits are to be conducted in conformance with Generally Accepted Government Auditing Standards (GAGAS) by a licensed independent public accounting firm. As such, auditors complete a risk assessment at the beginning of each audit during the planning stage and create a list of items to be tested while on-site during fieldwork. At a minimum, the City’s financial principles require the City to bid for audit services every five to six years.
The City’s current audit firm is Rogers, Anderson, Malody, & Scott, LLP, CPA’s. The original contract with Rogers, Anderson, Malody, & Scott, LLP, CPA’s has expired at the conclusion of the FY 2024-2025 audit. In accordance with the City’s financial policies, staff issued a Request for Proposal (RFP), on January 12, 2026, for financial audit services for a new four-year engagement, including two optional years, to commence with Fiscal Year Ending June 30, 2026. The City solicited and issued a request for proposals (RFP) directly to sixteen firms. The City received nine proposals on or before March 19, 2026. Proposals were opened, and reviewed by members of the Finance staff.
Professional services, such as auditing, are awarded primarily on criteria other than cost, which include proposal content, resources, and technical abilities.
The Finance Department is recommending that the City engage the services of Rogers, Anderson, Malody, & Scott, LLP, CPA’s based on the overall proposal, along with the following Criteria:
• Experience in auditing mid-sized government entities;
• Technical qualifications;
• Personalized service;
• Referrals received on their behalf;
• Practical and streamlined approach to fieldwork; and
• Seasoned audit team.
Rogers, Anderson, Malody, & Scott, LLP, CPA’s is a public accounting firm located in San Bernardino that has been providing audit services for more than 78 years, specializing in governmental agencies. As such, over sixteen thousand hours per year are devoted to governmental agencies. The firm is known for its partners and supervisory staff participating in the field with staff accountants, which lends greater expertise and ensures a smooth, efficient, and effective audit. Therefore, the Finance Department believes that the City of Hawthorne will get exceptional audit work for a reasonable cost and recommends the City Council award the contract for audit services to the firm of Rogers, Anderson, Malody & Scott, LLP for four fiscal years beginning with the June 30, 2026 year-end, with the option for two additional years.
Section 12410.6 of Assembly Bill (AB) 1345 prescribes that, effective fiscal 2013-2014, the lead partner in the audit engagement serves in that capacity for no more than 6 consecutive years. Thus, after fiscal year 2025-2026, the lead partner will change.
Staff recommends that the City Council approve a four-year contract with RAMS for financial audit services with an annual value of $78,715, and authorize the City Manager to extend the term of the agreement for an additional two-year period if deemed in the City’s best interest. The City may cancel the contract at any time without cause.
Interim audit work for FY 2025-2026 is expected to commence in June, with fieldwork concluding in November, and the audit results will be presented to the City Council in February 2027.
These audits are to be conducted in conformance with Generally Accepted Government Auditing Standards (GAGAS) by a licensed independent public accounting firm. As such, auditors complete a risk assessment at the beginning of each audit during the planning stage and create a list of items to be tested while on-site during fieldwork. At a minimum, the City’s financial principles require the City to bid for audit services every five to six years.
The City’s current audit firm is Rogers, Anderson, Malody, & Scott, LLP, CPA’s. The original contract with Rogers, Anderson, Malody, & Scott, LLP, CPA’s has expired at the conclusion of the FY 2024-2025 audit. In accordance with the City’s financial policies, staff issued a Request for Proposal (RFP), on January 12, 2026, for financial audit services for a new four-year engagement, including two optional years, to commence with Fiscal Year Ending June 30, 2026. The City solicited and issued a request for proposals (RFP) directly to sixteen firms. The City received nine proposals on or before March 19, 2026. Proposals were opened, and reviewed by members of the Finance staff.
Professional services, such as auditing, are awarded primarily on criteria other than cost, which include proposal content, resources, and technical abilities.
The Finance Department is recommending that the City engage the services of Rogers, Anderson, Malody, & Scott, LLP, CPA’s based on the overall proposal, along with the following Criteria:
• Experience in auditing mid-sized government entities;
• Technical qualifications;
• Personalized service;
• Referrals received on their behalf;
• Practical and streamlined approach to fieldwork; and
• Seasoned audit team.
Rogers, Anderson, Malody, & Scott, LLP, CPA’s is a public accounting firm located in San Bernardino that has been providing audit services for more than 78 years, specializing in governmental agencies. As such, over sixteen thousand hours per year are devoted to governmental agencies. The firm is known for its partners and supervisory staff participating in the field with staff accountants, which lends greater expertise and ensures a smooth, efficient, and effective audit. Therefore, the Finance Department believes that the City of Hawthorne will get exceptional audit work for a reasonable cost and recommends the City Council award the contract for audit services to the firm of Rogers, Anderson, Malody & Scott, LLP for four fiscal years beginning with the June 30, 2026 year-end, with the option for two additional years.
Section 12410.6 of Assembly Bill (AB) 1345 prescribes that, effective fiscal 2013-2014, the lead partner in the audit engagement serves in that capacity for no more than 6 consecutive years. Thus, after fiscal year 2025-2026, the lead partner will change.
Staff recommends that the City Council approve a four-year contract with RAMS for financial audit services with an annual value of $78,715, and authorize the City Manager to extend the term of the agreement for an additional two-year period if deemed in the City’s best interest. The City may cancel the contract at any time without cause.
Interim audit work for FY 2025-2026 is expected to commence in June, with fieldwork concluding in November, and the audit results will be presented to the City Council in February 2027.
ECONOMIC DEVELOPMENT STRATEGIC PLAN:
Establish partnerships with entities that can work toward City goals and objectives.
FISCAL IMPACT:
The amount of $78,715 for audit services to be performed has been appropriated in the FY 2026-27 annual budget in the General Fund, the Community Redevelopment Fund, and various Grant Funds. Sufficient funds will also be included in future budgets.
NOTICING PROCEDURE:
72 Hours posted notice pursuant to the Ralph M. Brown Act.