Common use of Record Keeping and Audit Clause in Contracts

Record Keeping and Audit. 6.1 SMWD shall establish and maintain accounting records of all costs incurred for the construction, operation and maintenance, and replacement parts of the Project as described in Exhibits B and C. Accounting for the Project shall utilize generally accepted accounting practices and be consistent with the terms of this Agreement. SMWD’s Project accounting records must clearly distinguish all costs for the Project from SMWD’s other water production, treatment, and distribution costs. SMWD’s records shall also be adequate to determine Allowable Yield and Recovered Water to accomplish all cost calculations contemplated in this Agreement. 6.2 SMWD shall establish and maintain accounting records of all contributions including grants that offset eligible Project capital costs, operation and maintenance costs, and/or replacement costs, as outlined in Section 5.4. 6.3 SMWD shall collect Recovered Water and Allowable Yield data for each Fiscal Year of Project operation and retain records of that data based on the metering requirements in Section 3.4. In addition, SMWD shall collect and retain records of the total annual amount of water conveyed outside of SMWD’s service area using Project facilities. 6.4 Metropolitan shall have the right to audit Project costs and other data relevant to the terms of this Agreement both during the Agreement term and for a period of three years following the termination of this Agreement. Metropolitan may elect to have such audits conducted by its staff or by others, including independent accountants, designated by Metropolitan. SMWD shall make available for inspection to Metropolitan or its designee, upon 30 days advance notice, all records, books and other documents, including all xxxxxxxx and costs incurred by contractors, relating to the construction, operation and maintenance of the Project; any grants and contributions, as described in Exhibits B and C, and capital cost financing. Upon 30 days advance notice and at Metropolitan’s request, SMWD shall also allow Metropolitan’s staff or its designee to accompany SMWD staff in inspecting SMWD’s contractors’ records and books for the purpose of conducting audits of Project costs. 6.5 In lieu of conducting its own audit(s), Metropolitan shall have the right to direct SMWD to have an independent audit conducted of all Project costs incurred in any Fiscal Year(s) pursuant to this Agreement. SMWD shall then have an audit performed for said Fiscal Year(s) by an independent certified public accounting firm and provide Metropolitan copies of the audit report within six months after the date of the audit request. The cost of any independent audit performed under this Agreement shall be paid by SMWD and is an allowable Project operation and maintenance cost pursuant to Exhibit C. 6.6 SMWD shall retain an independent auditor satisfactory to Metropolitan to conduct an initial audit of the Project costs and accounting record keeping practices and submit the results to Metropolitan with the first reconciliation data as outlined in Section 5. 6.7 SMWD shall keep all Project records for at least ten consecutive years prior to each cost audit per Section 6. SMWD shall maintain audited records for three years after the audit. SMWD shall keep unaudited Project records for at least three years following the termination of this Agreement. 6.8 If an audit of SMWD’s reported Project costs cannot be provided, then those costs are not eligible under this Agreement. Based on the results of any project cost audit, an adjustment for over- or under-payment of Allowable Yield for each applicable Fiscal Year shall be completed by Metropolitan and included in Metropolitan’s next invoice issued to SMWD.