A comprehensive audit of Monterey One Water has revealed significant findings regarding financial practices and compliance with established agreements. The audit, which commenced nearly a year ago, involved extensive interviews, document reviews, and a risk assessment to evaluate the organization's financial operations.

The audit's testing phase, which began in October, included four days of on-site examination of financial records. The auditors conducted a random test of over 300 transactions related to accounts payable, finding that the majority were well-documented and organized. However, the audit identified four key findings that raised concerns about financial practices.

The first major finding pertains to the indirect cost methodology used by Monterey One Water. The audit concluded that the organization did not adhere to the agreed-upon cost allocation plan, resulting in an estimated discrepancy of approximately $1.1 million. The auditors recommended that this amount be refunded and suggested that both parties amend their agreement to ensure compliance with federal standards moving forward.

The second finding highlighted inconsistencies in time records for projects, which are critical for determining direct costs. The auditors noted a lack of supporting documentation for billed hours, raising questions about the accuracy of the time reported for various projects.

The final report, which was discussed in the meeting, emphasized the importance of addressing these findings to prevent ongoing issues in financial management. The auditors underscored the need for improved documentation and compliance with established methodologies to ensure transparency and accountability in future operations.