FINANCE AND ADMINISTRATION COMMITTEE
ITEM:		ACTION ITEM
7.	CONSIDER AUTHORIZATION TO CONTRACT WITH THE PUN GROUP LLP TO CONDUCT ANNUAL FINANCIAL AUDITS
Meeting Date:			April 14, 2025	Budgeted:	Yes
From:			David J. Stoldt,	Program/
			General Manager	Line Item No.:	Professional Fees
Prepared By:			Nishil Bali	Cost Estimate:	$78,000 (2025), $81,900 (2026), 85,995 (2027), 90,295 (2028), 94,809 (2029)
General Counsel Approval: N/A
Committee Recommendation: The Finance and Administration Committee reviewed this item on April 17, 2025 and recommended ______________
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

SUMMARY: Special districts are required to have annual, independent audits conducted by a certified public accountant or a county auditor as outlined in Government Code Section 26909. Since 1989, the Monterey Peninsula Water Management District (District) has used the accounting firm of CliftonLarsonAllen LLP (formerly Hayashi Wayland) to conduct the District’s annual financial audit. The current contract with CLA expires on June 30, 2025.

Staff conducted a formal procurement for Audit Services to ensure that the District continues receiving high-quality and cost-effective services. Staff prepared a Request for Proposals (RFP) for Auditing Services that was posted on the District website and the CSDA RFP Clearinghouse, and distributed to multiple qualified firms. The District received proposals from four firms – Chavan & Associates, Nigro & Nigro, Edie Bailey, and The Pun Group. The proposal evaluation was structured so that the key factors in selecting an independent auditor were the auditor’s ability to perform a quality audit as evidenced by firm qualifications, experience, audit approach, and a demonstrated commitment to the state and local government audit practice.

While all four firms are well-qualified to perform an audit, staff recommends entering into an agreement with the Pun Group. Besides having relevant experience and qualified staff, the Pun Group also performs the audit for the Carmel Area Wastewater Project/ Pebble Beach Community Services Reclamation Project (project), which is considered an enterprise fund of the District. Having the same auditor perform both audits provides synergies, besides making it easier to coordinate the two annual financial reports with the District’s audit and financial report dependent on the completion of the CAWD’s audit report. The Pun Group has also won the 2025 Best of Accounting award for the fourth year in a row for consistently delivering exceptional client service, and their proposal is competitive in terms of pricing and value. Their proposal includes fees for the compilation of the District’s Annual Comprehensive Financial Report (ACFR) as well as State Controllers Report. A copy of the proposal is attached as Exhibit 7-A.

The Government Finance Officers Association (GFOA) recommends that government entities enter into multiyear agreements of at least five years when obtaining the services of independent auditors. A multiyear agreement assists a new auditing firm to become sufficiently knowledgeable with the District’s financial records in time, allowing for continuity, greater efficiencies, and lower disruption from frequent changes with new auditing firms. 

RECOMMENDATION: The Finance and Administration Committee should recommend that the Board authorize the Chief Financial Officer to enter into a five-year agreement with two one-year options to renew with The Pun Group LLP to conduct the annual audit of the District’s financial records including the compilation of the ACFR and completion of the State Controllers Report.

BACKGROUND: Annually, the District is required to complete an independent audit of its financial operations in conformance with the requirements set by the Governmental Accounting Standards Board and the California State Controller. The District has used the accounting firm of CliftonLarsonAllen LLP (formerly Hayashi Wayland) to conduct the annual audit of the District’s financial records since 1989. This contract is set to expire this fiscal year. Staff conducted a formal competitive solicitation process and recommends entering into an agreement with the Pun Group for the District’s Audit Services.

EXHIBIT

7-A Audit Proposal - The Pun Group LLP

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