CITY OF HAWAIIAN GARDENS
CITY COUNCIL
STAFF REPORT
Agenda Item #B7
DATE: May 13, 2026
TO: Honorable Mayor and Members of the City Council
FROM: Ernesto Marquez, City Manager
BY: Linda Hollinsworth, Finance Director
RECOMMENDATION:
RECOMMENDATION TO APPROVE A PROFESSIONAL SERVICES AGREEMENT
WITH BADAWI & ASSOCIATES TO PROVIDE INDEPENDENT AUDITING SERVICES FROM FY 2025-2026 THROUGH FY 2027-2028 WITH THE OPTION TO EXTEND FOR
TWO ADDITIONAL ONE-YEAR PERIODS AND AUTHORIZE THE CITY MANAGER TO
EXECUTE THE AGREEMENT
SUMMARY
For the last eight years, Gruber & Lopez, Inc. have provided auditing services for the City with different lead audit partners. Although this firm has provided excellent service, the City determined that it would be prudent policy to solicit new auditing firms to meet the City’s auditing needs through a competitive process to ensure the quality, objectivity, and favorable pricing of audits.
Federal and state laws require the City of Hawaiian Gardens (“City”) to perform annual audits of its financial statements. Municipalities are authorized to procure auditing services to prepare these audits. The Government Finance Officers Association recommends entering into a multiyear contract with an auditing firm for such services.
Working with a single firm over several years provides continuity and reduces “startup” costs. State law prohibits local agencies from providing the same audit partner with primary responsibilities over their audits after six consecutive years (Government Code section 12410.6). Thus, after a local agency has worked with the same audit partner for six years, the local agency must either work with a different audit partner at that firm or seek another firm to contract for audit services with.
The City’s existing contract with Gruber & Lopez, Inc. expired in June 2025 following the completion of the audit for FY 2024-2025. In February 2026, the City issued an RFP to provide auditing services to the City for three years for the fiscal years ending June 30, 2026 through June 30, 2028, with an option to extend an additional two years. The RFP Agenda Item #B7
May 13, 2026
was posted on the City’s website, posted on the website for the California Society of Municipal Finance Officers, and emailed to thirteen firms. The City received four proposals in response to the RFP.
The City considered the proposers’ qualifications, previous experience with audit requirements for our City and cost of services. All four of the proposing firms were qualified and experienced with the types of audits that the City will have performed, including Single Audits and Section 8 Public Housing Agency Audits (pursuant to Section 200.503 of Title 2 of the Code of Federal Regulations), and Successor Agency audits (pursuant to Section 34177 of the Health and Safety Code). Gruber & Lopez, Inc. was among the firms that were considered.
All proposals were reviewed and evaluated based on the criteria outlined in the RFP. After careful consideration, staff determined that it would be in the best interest of the City to select Badawi & Associates to provide auditing services to the City. Badawi & Associates has offices located in Emeryville, CA. The Engagement Partner assigned to the City is Mr. Ahmed Badawi. Mr. Badawi has more than 25 years of experience in municipal auditing and accounting with a focus on cities. The other four (4) assigned members of the engagement team have a total of 40 years of combined experience.
Staff recommends that the City Council approve the Professional Services Agreement with Badawi & Associates to provide independent auditing services for the City for three years beginning with FY 2025-2026 through FY 2027-2028, with an option to extend for two additional years and to authorize the City Manager to execute the final agreement.
FISCAL IMPACT
The not-to-exceed fees for audit services proposed by Badawi & Associates are shown in the Summary of Proposed Costs for Auditing Services (Attachment C). Funds for annual audits are included in each applicable fiscal year budgets for City Council approval.
SUGGESTED ACTION
Approve Recommendation.
ATTACHMENTS
A. Professional Services Agreement
B. Badawi & Associates Technical Proposal
C. Summary of Proposed Costs for Auditing Services