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CC:SA:HA:PA - ACTION ITEM: (1) Receipt and Filing of the Fiscal Year 2023-2024 Annual Comprehensive Financial Report (ACFR); (2) Receipt and Filing of the Fiscal Year 2023-2024 Popular Annual Financial Report (PAFR); (3) Receipt and Filing of the Fiscal Year 2024-2025 ACFR; (4) Receipt and Filing of Metro City of Culver City Annual Financial Report for Fiscal Years ended June 30, 2025 and 2024; (5) Receipt and Filing of Communication Letter from the City’s Auditors, Lance, Soll and Lunghard LLP (LSL); (6) Receipt and Filing of LSL’s Independent Auditor’s Report on Internal Control Over Financial Reporting; (7) Receipt of Presentation from LSL; (8) Approval of a Professional Services Agreement with LSL Consulting & Advisory Department in an Amount Not-To-Exceed $50,000 to Assist with Establishing Best Practices; (9) Approval of an Amendment to the City’s Existing Professional Services Agreement with LSL Assurance Department for Additional Audit Services for the Fiscal Year 2025-2026 Audit and the Transportation Department in an Amount Not-To-Exceed $50,000; and (10) Adoption of Resolution Amending City Council Policy 5002, Financial Policies to Establish a Requirement to Provide City Council with a Report on the ACFR by March 31 Each Year.
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Meeting Date: April 13, 2026
Contact Person/Dept: Elizabeth Shavelson / Finance Department
Phone Number: (310) 253-5865
Fiscal Impact: Yes [] No [X] General Fund: Yes [X] No []
Attachments: Yes [X] No []
Public Notification: (E-Mail) Meetings and Agendas - City Council (04/09/2026)
Department Approval: Stephen Agostini, Chief Financial Officer (04/08/2026)
RECOMMENDATION
Staff recommends the City Council (1) receive and file the Fiscal Year 2023-2024 Year-End Report and Audit Summary; (2) receive and file the Fiscal Year 2023-2024 Popular Annual Financial Report (PAFR); (3) receive and file the Fiscal Year 2024-2025 Annual Comprehensive Financial Report (ACFR); (4) receive and file the Metro City of Culver City Annual Financial Report for Fiscal Years ended June 30, 2025 and 2024; (5) receive and file the Communication Letter from the City’s auditors, Lance, Soll and Lunghard LLP (LSL); (6) receive and file LSL’s Independent Auditor’s Report on Internal Control Over Financial Reporting; (7) receive a presentation from LSL; (8) approve a professional services agreement with LSL Consulting & Advisory Department in an amount not-to-exceed $50,000 to assist with establishing best practices for becoming current in month end close and daily cash processes; (9) approve an amendment to the City’s existing professional services agreement with LSL Assurance Department for additional audit services for the Fiscal Year 2025-2026 audit and the Transportation Department in an amount not-to-exceed $50,000; and (10) adopt a resolution amending City Council Policy 5002, Financial Policies, to establish a requirement to provide City Council with a report on the ACFR by March 31 each year.
BACKGROUND
The City prepares its financial statements in conformance with Generally Accepted Accounting Principles (GAAP). Responsibility for the accuracy and completeness of the financial statements rests with the City. However, the City retains the services of an external accounting firm to audit the financial statements on an annual basis. On March 21, 2024, the City released a Request for Proposals (RFP) for financial audit services. On June 27, 2024, the Audit, Financial Planning and Budget Subcommittee reviewed the proposals received and recommended that the City Council approve a three-year professional services agreement with Lance, Soll & Lunghard (LSL) Assurance Department for financial audit services in an amount not to exceed $339,480 and authorized the City Manager to exercise two one-year options for renewal. On July 8, 2024, the City Council approved a three-year professional services agreement with LSL and authorized the City Manager to exercise two one-year options for renewal for a total amount not-to-exceed $228,980. In January 2026, the City amended the existing agreement to increase the compensation by $27,094 for additional hours to complete the audit for Fiscal Year 2024-2025.
As part of this work, LSL provides an independent audit and report preparation for the City, Other Postemployment Benefit Plan, Municipal Bus Lines, Single Audit as required by the federal government, review of the Gann Appropriations Limit, and preparation of various State Controller and Housing Authority reports. In addition, they assist the City in implementing any new Governmental Accounting Standard Board (GASB) statements that take effect during the term of the agreement.
DISCUSSION
City Financial Statements and Audits
Staff worked with LSL to finalize the annual financial statements and prepare the Annual Comprehensive Financial Report (ACFR) for Fiscal Year 2023-2024 and Fiscal Year 2024-2025. The Fiscal Year 2023-2024 ACFR is provided as Attachment 1. The City received the Government Finance Officers Association (GFOA) Certificate of Achievement for Excellence in Financial Reporting for the Fiscal Year 2023-2024 ACFR. To increase public awareness of the City’s finances, the City also produced a Popular Annual Financial Report (PAFR). The PAFR for Fiscal Year 2023-2024 is provided as Attachment 2.
In addition to the ACFR, the City must submit a Single Audit Report, which focuses on the City’s federal funding, to the Federal Audit Clearinghouse each year. The City was delayed completing the ACFR for Fiscal Year 2023-2024 and as a result the Single Audit Report was filed after the March 31 deadline. This resulted in an audit finding for Timeliness in Financial Reporting, a significant deficiency/material noncompliance. The Single Audit Report which details the finding and the corrective action plan was posted on the City’s website.
Notwithstanding, the City’s staff failed to inform the City Council that the federal audit filing deadline was missed, of which was determined to be a significant act as transparency to the governing body is an important regulatory requirement.
For Fiscal Year 2024-2025, staff sought to address the issue of timeliness in financial reporting by pushing up the City’s internal deadlines for the City’s year-end financial close as well as the timing of the audit field work to allow more time for audit preparation and completion, creating specialized reports and implementing new procedures in the City’s Enterprise Resource Planning system, Tyler Munis, to help generate efficiencies in certain financial reporting processes. In addition, to help get more senior-level support in the Accounting Division, staff requested, and Council approved the reclassification of the Department’s vacant Senior Accountant position to an Accounting Supervisor position as part of the budget for fiscal year 2025-2026. The new Accounting Supervisor position was approved by the Civil Service Commission on December 3, 2025. The position was advertised in late December 2025, and recruitment is still ongoing. In the meantime, to help with the workload the City hired temporary accounting staff and secured the assistance of a retired annuitant to assist with some auxiliary audit reporting activities and other finance functions.
The City recently completed the ACFR for Fiscal Year 2024-2025. It is provided as Attachment 3 to this report. The City submitted the Single Audit Report within the March 31, 2026 federally-imposed deadline. LSL’s Communication Letter to the Mayor and Members of the City Council regarding the year ended June 30, 2025, is provided as Attachment 4. LSL’s Independent Auditor’s Report on Internal Control Over Financial Reporting and On Compliance and Other Matters Based on An Audit of Financial Statements Performed in Accordance with Government Auditing Standards is provided as Attachment 5. During the course of the audit, the auditors identified some misstatements due to processing delays and system peculiarities which were corrected by management before the completion of the ACFR.
Consultant Agreements
LSL recommends that the City secure additional consultant support to provide additional accounting services to assist with audit preparation for Fiscal Year 2025-2026 and strengthen internal control processes for timely financial reporting. The City Manager concurs with this recommendation. Pursuant to Culver City Municipal Code Section 3.07.065.A, professional services are exempt from formal competitive bidding procedures provided the agreement is based upon competitive quotations, whenever practical, as determined by the City Manager. Staff has reached out to two accounting firms to get proposals for assistance with accelerating the year-end financial close work, and other related accounting support including establishing a month-end close process and evaluating the daily cash process which caused delays in the year-end close process. Due to the timing of the Fiscal Year 2025-2026 audit and the need to begin audit preparation, it is not practical to solicit additional proposals at this time. Staff found the LSL Consulting & Advisory Department representative to be knowledgeable, with extensive experience in municipal accounting, and recommends Council approve a professional services agreement with LSL, LLP Consulting & Advisory Department for this work in an amount not-to-exceed $50,000. LSL, LLP’s Consulting & Advisory Department is managed out of LSL’s office in Texas and is a separate team from the LSL Assurance Department. The company has strict safeguards in place to ensure that the audit team remains independent. City Management will ultimately be responsible for all the work LSL LLP Consulting & Advisory Department performs. As Ryan Domino, CPA, Partner with LSL Assurance Department explains these safeguards serve to create a firewall between the departments.
Staff also concurs with the auditor’s recommendation that City Council approve an amendment to the City’s existing agreement with LSL to expand the scope for the Fiscal Year 2025-2026 audit to include additional testing. LSL estimates that the cost for the additional audit services will not exceed $30,000. Staff will work closely with LSL to determine that expanded scope significantly in advance of commencing the audit. The Chief Financial Officer (CFO) and staff will work to complete the recruitment and onboarding of the Accounting Supervisor position before the end of June 2026. Finally, the CFO will review protocols and policies for month-end closing to ensure that the City’s practices become timely and accurate in preparation for the audit. Ryan Domino will give a presentation on the Annual Financial Audit for the Fiscal Year Ended June 30, 2025, and be available to answer questions.
Metro Audit
Separate from the City’s annual ACFR and the Single Audit Report, the City is audited by the Los Angeles Metropolitan Transportation Authority (Metro) annually regarding the City’s use of its regional transportation funding including Proposition A Local Return, Proposition C Local Return, Measure R Local Return, Los Angeles County Measure M Local Return and Transportation Development Act Article 3. The Metro audit for the years ending June 30, 2024 and 2025 included two findings related to the City claiming expenditures under Measure R and Measure M without prior approval. The report is provided as Attachment 6. The expenditures were found to be eligible expenses and were retroactively approved by Metro. The City is required to enter its proposed projects and project budgets into Metro’s online SmartSheet system for approval prior to expending funds. Transportation and Public Works staff were unaware that unspent funds approved by Metro in a prior year did not automatically carry over and must be reentered into the system for approval and that City and Metro budget approval was required before the use of Measure R and M Local Return funds. This was a repeat finding from the prior year. Public Works and Transportation staff responsible for administrating Metro funding participated in additional training in 2025. However, there has been significant staff turnover in Transportation and, as a result these staffing changes, there were some planned Measure R and Measure M Local Return expenditures that were inadvertently excluded from the project and budget information the City submitted to SmartSheet for approval.
To address this issue and help Transportation during this period of transition, staff is recommending that Council approve an amendment to the City’s existing professional services agreement with LSL for additional audit services for the Transportation Department in an amount not-to-exceed $20,000.
Amendment to Council Policy 5002
In addition to the steps outlined above, as part of the City’s efforts to promote transparency and financial sustainability, the City Manager is recommending that the City Council adopt a resolution to amend Council Policy 5002 (Financial Policies) to establish a requirement to provide City Council with a report on the ACFR by March 31 each year. Section IV of the Policy has been revised as follows:
Accounting standards boards and regulatory agencies set the minimum standards and disclosure requirements for annual financial reports and continuing disclosure requirements associated with municipal securities. The City places a high value on transparency and full disclosure in all matters concerning the City’s financial position and results of operations. To this end, the City endeavors to make superior disclosure in the City’s Comprehensive Annual Comprehensive Financial Report (ACFR) and Continuing Disclosure filings by going above and beyond the minimum reporting requirements including certificate of achievement programs and voluntary event disclosure filings. As part of the auditing process, the City Manager shall submit the ACFR to the City Council at a public meeting by March 31st of each year.
The proposed resolution along with the amended Council Policy 5002 is provided as Attachment 7.
FISCAL ANALYSIS
The Adopted Budget for Fiscal Year 2025-2026 includes sufficient funding in the amount of $50,000 for the proposed agreement with LSL, LLP Consulting & Advisory Division in Account No. 10114200.619800 (General Accounting - Other Contractual Services) to assist with year-end financial close work and other related accounting support.
If the proposed amendment to the City’s existing professional services agreement with LSL, LLP Audit Division for additional audit services for the City’s Fiscal Year 2025-2026 audit and the Transportation Department in an amount not-to-exceed $50,000 is approved, staff will include $30,000 in Account No. 10114100.610100 (Finance Administration - Audit Services) and $20,000 in Account No. 20370100.619800 as part of the Proposed Budget for Fiscal Year 2026-2027.
ATTACHMENTS
1. 2026-4-13_ATT1_FY 2023-2024 ACFR
2. 2026-4-13_ATT2_FY 2023-2024 PAFR
3. 2026-4-13_ATT3_FY 2024-2025 ACFR
4. 2026-4-13_ATT4_LSL’s Communication Letter
5. 2026-4-13_ATT5_LSL’s Independent Auditor’s Report on Internal Control Over Financial Reporting
6. 2026-4-13_ATT6_ Metro - City of Culver City Annual Financial Report for Fiscal Years ended June 30, 2025 and 2024
7. 2026-4-13_ATT7_Resolution Amending City Council Policy Statement 5002
8. 2026-4-13_ATT8_ACFR_LSL’s Presentation
recommended action
MOTIONS
That the City Council:
1. Receive and file the attached (1) the Fiscal Year 2023-2024 ACFR (2) the Fiscal Year 2023-2024 PAFR; (3) the Fiscal Year 2024-2025 ACFR; (4) LSL Communication Letter; (5) LSL Independent Auditor’s Report on Internal Control Over Financial Reporting and (6) Metro - City of Culver City Annual Financial Report for Fiscal Years ended June 30, 2025 and 2024; and
2. Receive presentation from the City’s auditor with Lance, Soll & Lunghard LLP; and
3. Approve a professional services agreement with Lance, Soll & Lunghard, LLP Consulting & Advisory Department in an amount not-to-exceed $50,000 to assist with establishing best practices and other accounting services for Fisal Year 2025-2026; and
4. Approve an amendment to the City’s existing professional services agreement with Lance, Soll & Lunghard LLP Assurance Department for additional audit services for the Fiscal Year 2025-2026 and the Transportation Department in an amount not-to-exceed $50,000; and
5. Authorize the City Attorney to review/prepare the necessary documents; and
6. Authorize the City Manager to execute such documents on behalf of the City; and
7. Adopt a resolution amending City Council Policy 5002 (Financial Policies) to establish a requirement to provide City Council with a report on the ACFR by March 31 each year.