5. Proper Accounting of Collected Funds

Testimony on whether Del Oro had properly accounted for funds collected through the main extension agreements was presented by James R. Wuehler, a certified public accountant and a utility financial examiner for the Commission. Wuehler examined bank records, general ledgers, and annual reports to the Commission for the funds collected. He reviewed canceled checks and invoices to verify expenditures of these funds. He conducted a field examination of the Lime Saddle District and its contracts and accounting for purchased water.

Wuehler testified that at the end of 1999, the Lime Saddle District had received $865,852 in main extension agreement contributions (not including interest), had paid $268,688 in income taxes on contributions, and had spent $678,412 on projects listed in the main extension agreements. He further found that the funds collected were properly recorded and reported in the district's Account 132 (Special Accounts) and that the funds were deposited in a separate account with the Chico office of Paine Webber Inc. and, later, in a Bank of America savings account. Wuehler also found that the main extension agreements each state the purposes for which the funds were collected. He stated that his examination of canceled checks and invoices showed that the funds were used exclusively for those purposes.

After receipt of the audit report, Breuer stated that it would take no position on whether Del Oro had properly accounted for main extension agreement funds. Allegations of impropriety in the collection, use, and accounting of these funds had been raised initially by Marshall S. Mayer, the attorney for three of the protestants. At hearing, however, Mayer withdrew his written testimony, participating only to the extent of conducting cross-examination. Mayer has not filed briefs in support of his clients' protests.

Based on the staff audit report, and in the absence of any challenge to the conclusions of that report, we find that Del Oro and its Lime Saddle District have properly accounted for funds collected through the main extension agreements.