This excerpt taken from the PCYO DEF 14A filed Dec 12, 2005.
(Proposal No. 2)
Action is to be taken by the stockholders at the Meeting with respect to the ratification and approval of the selection by the Audit Committee of the Companys board of directors of Anton Collins Mitchell LLP (ACM) to be the independent auditors of the Company for the fiscal year ending August 31, 2006. In the event of a negative vote on such ratification, the Audit Committee of the board of directors will reconsider its selection. A representative of ACM is expected to be present at the Meeting, will have the opportunity to make a statement if he or she desires to do, and is expected to be available to respond to appropriate questions.
Change in Auditors On December 15, 2004, Pure Cycle replaced KPMG, LLP as its independent registered public accountant. The reports of KPMG, LLP for the years ended August 31, 2004 and 2003 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. The decision to replace KPMG, LLP was approved by the Audit Committee of the board of directors.
KPMGs reports on the financial statements of the Company for the fiscal years ended August 31, 2004 and 2003, did not contain an adverse opinion or a disclaimer of opinion, nor was either qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended August 31, 2004 and 2003, and the subsequent interim period through December 15, 2004 (the date of the change in auditors), there were (i) no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures which, if not resolved to KPMGs satisfaction, would have caused KPMG to make reference to the subject matter of such disagreement in connection with its reports on the financial statements of the Company, and (ii) no reportable events as listed in Item 304(a)(1)(v) of Regulation S-K.
On December 15, 2005, the Company engaged its new independent registered public accountant, ACM. Since its appointment, the Company has not consulted with ACM on matters of the type contemplated by Item 304(a)(2) of Regulation S-K.
ACM has no direct or indirect financial interest in the Company and does not have any connection with the Company in the capacity of promoter, underwriter, voting trustee, director, officer or employee. Neither the Company, nor any officer, director or associate of the Company has any interest in ACM.
Audit Fees For the fiscal year ended August 31, 2005, ACMs fees for annual audit services and the review of interim financial statements was $31,500. For the fiscal year ended August 31, 2004, KPMGs fees for annual audit services and the review of interim financial statements was $45,000. The Audit Committee approved 100% of these fees in accordance with the Audit Committee Charter.
Audit-Related Fees During the fiscal year ended August 31, 2004, KPMGs fees for audit-related services was $69,200. This related to the review of the Registration Statement used in the equity offering completed in June 2004. There were no audit-related fees incurred during fiscal 2005.
Tax and Other Fees The Company did not pay ACM or KPMG any fees related to tax consultations, tax return preparation or other professional services.
Pre-Approval Policy The Audit Committee has established a pre-approval policy in its Charter. In accordance with the policy, the Audit Committee pre-approves all audit, non-audit and internal control related services provided by the independent auditors prior to the engagement of the independent auditors with respect to such services.