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ADMINISTRATIVE
COMMITTEE |
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1. |
REVIEW AND ACCEPT
INDEPENDENT AUDIT REPORT FOR FISCAL YEAR 2006-07 |
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Meeting
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February 20, 2008 |
Budgeted: |
N/A |
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From: |
David A.
Berger, |
Program/ |
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General
Manager |
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Prepared
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Cost Estimate: |
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General Counsel Approval: N/A |
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Committee Recommendation: The Administrative Committee reviewed this item on February 20, 2008 and recommended __________. |
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CEQA Compliance: N/A |
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SUMMARY: Drafts of the Financial Statements and Independent Auditors’ Report (Exhibit 1-A), Board Disclosure Letter (Exhibit 1-B), and Management Letter (Exhibit 1-C) for the fiscal year ending June 30, 2007 have been received from the District’s external auditors, Hayashi & Wayland. This was the first 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 $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 District’s net assets increased by approximately $835,000 during the year, largely due to capitalized expenditures for the work completed on the District’s second well for its Aquifer Storage & Recovery Project.
A Management Letter offers constructive suggestions for improvements on matters that came to the auditors’ attention in connection with the audit. In early 2006, the American Institute of CPA’s 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 auditor’s 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
RECOMMENDATION: District staff recommends that the Board review and accept the Financial Statements and Independent Auditors’ Report for the year ending June 30, 2007. The Administrative Committee reviewed draft report February 20, 2008 and voted _ to _ to recommend approval of the staff recommendation.
1-A Financial Statements and Independent Auditors’ Report
1-B Board Disclosure Letter
1-C Management Letter
U:\staff\word\committees\Admin\2008\20080220\01\item1.doc