Sneed spoke in the July meeting of “friction” between Cooper and CDPA auditors Christopher and Barnes. Sneed recommended rotating auditors every three years.

Sneed and Cooper also disagreed with the figures that Armstrong and Barnes had returned in the spring on bond tests and called in a second independent CPA, Dale Fowler, who arrived at different figures that he said showed a smaller deficit.

Armstrong and Barnes stood by their calculations.

Sneed sent requests for proposals to five firms, including CDPA. Sneed recommended going with Dyer & Smith LLC of Huntsville at a cost of $5,000. The board voted to remain with CDPA, although the firm priced the audit at $30,000.

Professional services are not subject to the state’s competitive bid law and public entities could hire whomever they were most comfortable with.

December 2007 water board minutes stated that Armstrong had praised Cooper and his staff. The minutes read: “Mr. Armstrong mentioned there were zero adjustments made, which was the first time in his auditing career that any entity had such a clean audit.”

In December the board also unanimously voted to extend Sneed’s contract.

Yarbrough could not be reached Wednesday for comment on the business relationship between him and Pepper. A woman who answered the phone at Yarbrough’s residence said he was at work. A message on the All Power Construction number said it was “not in service for incoming calls.”

A receptionist at the Water and Sewer Authority said that Yarbrough’s number would have to be released by acting authority General Manager Tammy Smith. Repeated calls to Smith’s extension went unanswered.

The American Institute of Certified Public Accountants Code of Professional Conduct Rule 102 states: “Independence shall be considered to be impaired if (a) during a period of professional engagement a covered member (3) had a joint closely held investment that was material to the covered member.”

The Alabama State Board of Public Accountancy Administrative Code Rules of Professional Conduct state: “Independence shall be considered impaired if, for example, (a) During the period of professional engagement or at the time of expressing his opinion, he or his firm (3) had any joint closely held business investment with the enterprise or any officer, director, or principal stockholder thereof which was material in relation to his or his firm’s net worth”

However, Hugh Evans, legal counsel for the state Ethics Commission, speaking hypothetically and not specifically about this partnership, said of such business relationships, “In and of itself, there is nothing wrong. It would depend on quid pro quo — giving something to get a good audit. It is not a clear-cut yes or no. It would depend on attendant circumstances.”

When asked if he was concerned about the appearance of impropriety because of being in business with Yarbrough, Pepper said, “You’re implying that I’ve done something wrong. I am an accountant and I try to go by the rules.”

He later came to The News Courier office to say because his involvement in the LLC was limited — he said he was not involved in day-to-day operations — the partnership “does not impair independence” and follows the AICPA code of ethics.

The water board is scheduled to meet today at 3 p.m.