ITEM:

CONSENT CALENDAR

 

9.

REVIEW AND ACCEPT INDEPENDENT AUDIT REPORT FOR FISCAL YEAR 2006-07

 

Meeting Date:

February 28, 2008

Budgeted:

N/A

 

From:

David A. Berger,

Program/

N/A

 

General Manager

Line Item No.:

 

Prepared By:

Rick Dickhaut

Cost Estimate:

N/A

 

General Counsel Approval:N/A

Committee Recommendation: The Administrative Committee reviewed this item on February 20, 2008 and recommended ≠≠≠≠≠≠≠≠≠≠≠≠≠≠≠approval.

CEQA Compliance:N/A

 

SUMMARY:Drafts of the Financial Statements and Independent Auditorsí Report, and Board Disclosure Letter for the fiscal year ending June 30, 2007 have been received from the Districtís external auditors, Hayashi & Wayland.They have been distributed under separate cover to the Board and are available for public review at the District office.The report can also be accessed on the Districtís website.This was the first of a three year agreement with Hayashi & Wayland to audit the Districtís financial records.

The auditors have issued a clean opinion on the financial statements.The statements show that revenues for the year totaled $5,257,855 and expenditures were $5,267,900, resulting in a minor deficit (use of reserves) of $10,045.This actual use of reserves compared to the budgeted surplus of $38,700 which resulted in a net decrease of $48,745 to the budgeted carryover to fiscal year 2007-08.The updated reserve amounts will be reflected in the mid-year budget adjustment document.Despite this small deficit, the Districtís net assets increased by approximately $835,000 during the year, largely due to capitalized expenditures for the work completed on the Districtís second well for its Aquifer Storage & Recovery Project.

 

A Management Letter offers constructive suggestions for improvements on matters that came to the auditorsí attention in connection with the audit.In early 2006, the American Institute of CPAís Auditing Standards Board passed a sweeping set of new auditing standards which consist of eight statements related to the assessment of risk and performance procedures in an audit of financial statements.The standards have significantly increased the work required by auditors.At the heart of these statements are requirements for the auditor to obtain a broader and deeper understanding of the entity and its environment, including its internal control, to identify the risks of material misstatements in the financial statements.As noted in the Management Letter, Hayashi & Wayland identified two minor control deficiencies that they noted did not constitute significant deficiencies or material weaknesses.District staff concurs with the auditorís observations and recommendations and will work toward their implementation during the current fiscal year.

 

The Administrative Committee reviewed the draft report and the related letters on February 20, 2008 with the District's auditors, Hayashi and Wayland.Following approval by the Board, the report will be finalized and provided to Monterey County and various financial institutions that the District conducts business with.The statements will also be made available for public review.

 

RECOMMENDATION:District staff recommends that the Board review and accept the Financial Statements and Independent Auditorsí Report for the year ending June 30, 2007.

 

EXHIBITS

None

 

 

 

 

 

 

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