ITEM:	CONSENT CALENDAR
2.	CONSIDER AUTHORIZATION OF CONTRACT WITH ACCOUNTING FIRM TO CONDUCT ANNUAL AUDITS FOR FISCAL YEARS 2003-04, 2004-05 & 2005-06
Meeting Date:		May 17, 2004	Budgeted: Yes
Staff Contact:		Rick Dickhaut	Program/Line Item No.: Services
			& Supplies – Professional Services
			Cost Estimate: $54,750 (Three
			Year Total)
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: The District is required by Monterey County to have an annual audit performed by an accounting firm approved by the County Auditor-Controller. The three-year agreement with the firm of Hayashi and Wayland to conduct the annual audit of the District’s financial records expired in Fiscal Year (FY) 2002-03. Hayashi & Wayland has submitted a three-year proposal for the amounts of $17,000 for FY 2003-04, $18,250 for FY 2004-05 and $19,500 for FY 2005-06. If the District were to choose a one-year engagement, the cost for FY 2003-04 would be $18,250.

RECOMMENDATION: District staff recommends that the Board authorize the General Manager to enter into a three-year agreement with Hayashi & Wayland, beginning with FY 2003-04, to conduct the annual audit of the District’s financial records for a total cost of $54,750. The Administrative Committee did not meet on May 11, 2004 due to the lack of a quorum.

BACKGROUND: The District’s financial operations are sufficiently complex that many accounting firms are not qualified to handle annual audits in conformance with the requirements set by the Governmental Accounting Standards Board (GASB), the Single Audit Act, the Office of the California State Controller and Monterey County. Additionally, for FY 2003-2004 the District audit will have to initiate compliance with GASB 34, which changes the way financial statements are presented. Furthermore, as the issuer of $34 million of public debt for the CAWD/PBCSD Wastewater Reclamation Project, the complexity of the District’s financial operations relating to the project is high and, in many instances, unique. The District has used the accounting firm of Hayashi & Wayland to conduct the annual audit of the District’s financial records since 1989. The firm has done an excellent job and is very familiar with the operations of the District. The cost of last year’s audit (FY 2002-2003) was $19,000.

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