ITEM:		CONSENT CALENDAR
5.	REVIEW AND ACCEPT INDEPENDENT AUDIT REPORT FOR FISCAL YEAR 2007-08
Meeting Date:			February 26, 2009	Budgeted:	N/A
From:			Darby Fuerst,	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 17, 2009 and recommended approval on a 3 to 0 vote.
CEQA Compliance: N/A

SUMMARY: Drafts of the Financial Statements and Independent Auditors’ Report (Report) and Board Disclosure Letter for the fiscal year ending June 30, 2008 have been received from the District’s external auditors, Hayashi & Wayland. The documents have been distributed under separate cover to the Board and are available for public review at the District office. The Report will also be posted on the District’s website after it has been approved by the Board. This was the second year of a three year agreement with Hayashi & Wayland to audit the District’s financial records.

The auditors have issued a clean opinion on the financial statements. The statements show that revenues for the year totaled $6,134,822 and expenditures were $6,013,692, resulting in a surplus (replenishment of reserves) of $121,130. This actual replenishment of reserves compared to the budgeted deficit of $749,700 resulted in an increase of $870,830 to the budgeted carryover to fiscal year 2008-09. The updated reserve amounts will be reflected in the mid-year budget adjustment document. The District’s net assets increased by approximately $859,000 during the year, largely due to capitalized expenditures for the work completed on the District’s second well for its Aquifer Storage and Recovery (ASR) Project. The Administrative Committee met with representatives from Hayashi and Wayland and reviewed the Auditors’ Report and the Board Disclosure Letter at its February 17, 2009 meeting.

During their presentation, the Auditors noted that the District’s Report must include the audited financial statements of the CAWD/PBCSD Reclamation Project (Project) because of the District’s involvement with the Project; and that issuance of the District’s Report has been delayed until February the last couple of years because the Reclamation Project’s Report has been completed later than usual. District staff reported that this is also a problem because the Project’s Report is supposed to be filed with the Trustee bank for the Project no later than December 30 of each year, and that the bank has noticed the District that “extraordinary fees” may be assessed if the deadline is not met in the future. After discussion, the Committee directed that General Manager Darby Fuerst contact the Carmel Area Wastewater District’s General Manager by telephone, and follow up by letter, to see what could be done to get the Project’s Report completed by October in future years, which would in turn allow the District’s report to be completed in November.

A Management Letter may be issued in conjunction with the Report to offer constructive suggestions for improvements on matters that came to the auditors’ attention in connection with the audit. A Management Letter was not deemed necessary by Hayashi & Wayland in connection with the audit for this fiscal year.

RECOMMENDATION: District staff recommends that the Board review and accept the Financial Statements and Independent Auditors’ Report for the year ending June 30, 2008. The Administrative Committee reviewed draft report February 17, 2009 and voted 3 to 0 to recommend approval of the staff recommendation.

EXHIBITS

None

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