Exhibit
10.08


 


 


AUDIT
COMMITTEE POLICY FOR


PRE-APPROVAL
OF AUDITOR SERVICES


 


 


ARTICLE I — PURPOSE


 


The Audit Committee of
California Coastal Communities, Inc. (the “Company”) is required to pre-approve
the audit and non-audit services performed by the Company’s independent auditor
in order to determine that the provision of such services does not adversely
affect the auditor’s independence. Other than services to be provided by the
independent auditor which have been generally pre-approved, specific pre-approval
by the Audit Committee will be required. If a proposed service exceeds
pre-approved cost levels, such services must receive specific pre-approval by
the Audit Committee.


 


The exhibits to this Policy
describe the “Audit”, “Audit-Related”, “Tax” and “Other” services that have
been pre-approved by the Audit Committee. Unless the Audit Committee
specifically provides for a different period, pre-approvals are for a twelve
(12) month period from the date of pre-approval. The Audit Committee may, at
any time, amend the list of pre-approved services.


 


 


ARTICLE II — AUDIT SERVICES


 


The annual Audit Services, terms
of engagement and fees will be subject to the specific pre-approval of the
Audit Committee. The Audit Committee will approve, as may be required, any
changes in such terms, conditions and fees resulting from changes in the scope
of the audit or other reasons.


 


The Audit Committee may grant
pre-approval for other Audit Services, that only the Company’s auditor can
reasonably provide. The Audit Services listed in Exhibit A have been
pre-approved, and any other Audit Services must be separately pre-approved by
the Audit Committee.


 


 


ARTICLE III — AUDIT-RELATED
SERVICES


 


Audit-Related Services are those
services that are reasonably related to the performance of the audit or review
of the Company’s financial statements and that are traditionally performed by
the auditor. The Audit Committee has pre-approved the Audit-Related Services
listed in Exhibit B and believes that the provision of such
Audit-Related Services does not impair the independence of the independent
auditor. Any other Audit-Related Services not listed in Exhibit B must
be separately pre-approved by the Audit Committee.


 


 


ARTICLE IV — TAX SERVICES


 


The Audit Committee believes
that, without impairing the auditor’s independence, the auditor can provide Tax
Services to the Company such as tax planning, tax compliance and tax 


 


 





















 


advice. However, the auditor is not permitted to
be retained in connection with a transaction initially recommended by the
auditor, where the tax treatment of such transaction may not be supported in
the Internal Revenue Code and the regulations thereunder, or where the purpose
of which may be tax avoidance. The Tax Services listed in Exhibit C have
been pre-approved, and all Tax Services involving large and complex
transactions not listed in Exhibit C must be separately pre-approved by
the Audit Committee.


 


 


ARTICLE V — OTHER SERVICES


 


The Audit Committee may grant
pre-approval to other permissible non-audit services that it believes are
routine and recurring services, and which services the Audit Committee believes
would not impair the independence of the auditor. The Audit Committee has
pre-approved the Other Services listed in Exhibit D. Any additional
permissible Other Services not listed in Exhibit D must be separately
pre-approved by the Audit Committee.


 


Schedule
1 to this Policy sets forth a list of the SEC’s currently prohibited
non-audit services.


 


 


ARTICLE VI — PRE-APPROVAL FEE
LEVELS


 


The Audit Committee will periodically
establish Pre-approval fee levels for all services to be provided by the
auditor. Specific pre-approval by the Audit Committee will be required for any
proposed services exceeding these fee levels.


 


 


ARTICLE VII — SUPPORTING
DOCUMENTATION


 


The auditor will provide the
Audit Committee with detailed back-up documentation regarding the specific
services to be provided with respect to each proposed pre-approved service.


 


ARTICLE VIII — DELEGATION


 


The Audit Committee shall not delegate to management of the Company, any of its
responsibilities to pre-approve services performed by the independent auditor.
However, pre-approval authority may be delegated to one or more of the Audit
Committee members; provided that such member(s) to whom such authority is
delegated shall report each pre-approval decision to the Audit Committee at its
next scheduled meeting.


 


 


ARTICLE IX — PROCEDURES FOR
SEPARATE APPROVALS


 


The auditor and the Company’s
Chief Financial Officer shall submit to the Audit Committee all requests or
applications to provide services by the auditor, where such services require
separate approval by the Audit Committee. Such requests or applications must
include a joint statement as to whether, in their view, the request or
application is consistent with the SEC’s rules on auditor independence.


 


 


 
















 


 


Exhibit  A


 


Pre-Approved
Audit Services for Year Ending December 31, 2005


 


Dated:   March
9, 2005


 


	
  Service:

  	
   

  	
  Range of Fees:

  
	
   

  	
   

  	
   

  
	
  Statutory audits or financial audits for subsidiaries or affiliates of
  the Company. 

  	
   

  	
  —
  

  
	
   

  	
   

  	
   

  
	
  Services associated with SEC registration statements, periodic reports
  and other documents filed with the SEC or other documents  issued in connection with securities offerings
  (e.g., comfort letters,  consents),
  and assistance in responding to SEC comment letters. 

  	
   

  	
  $5,000
  - $10,000

  
	
   

  	
   

  	
   

  
	
  Consultations by the Company’s management as to the accounting or
  disclosure treatment of transactions or events and/or the actual or  potential impact of final or proposed rules,
  standards or interpretations  by
  the SEC, FASB, or other regulatory or standard setting bodies. 

  	
   

  	
  $10,000
  - $20,000

  
	
   

  	
   

  	
   

  



 


 


A-1
















 


Exhibit B


 


Pre-Approved
Audit-Related Services for Year Ending December 31, 2005


 


Dated:    March 9, 2005


 


	
  Service:

  	
   

  	
  Range of Fees:

  
	
   

  	
   

  	
   

  
	
  Due diligence services pertaining to potential business acquisitions/ dispositions.
  

  	
   

  	
  —

  
	
   

  	
   

  	
   

  
	
  Financial statement audits of employee benefit plans.

  	
   

  	
  —

  
	
   

  	
   

  	
   

  
	
  Agreed-upon or expanded audit procedures related to accounting and/or billing
  records required to respond to or comply with financial, accounting  or regulatory reporting matters. 

  	
   

  	
  —

  
	
   

  	
   

  	
   

  
	
  Internal control reviews and assistance with internal control reporting requirements.
  

  	
   

  	
  $90,000
  - $115,000

  
	
   

  	
   

  	
   

  
	
  Consultations by the Company’s management as to the
  accounting or disclosure
  treatment of transactions or events and/or the actual or potential  impact of final or proposed rules, standards or
  interpretations by the  SEC, FASB,
  or other regulatory or standard-setting bodies. 

  	
   

  	
  $10,000 - $25,000

  
	
   

  	
   

  	
   

  
	
  Attest services not required by statute or regulation.

  	
   

  	
  —

  



 


 


B-1
















 


Exhibit C


 


Pre-Approved
Tax Services for Year Ending December 31, 2005


 


Dated: March 9, 2005


 


	
  Service:

  	
   

  	
  Range of Fees:

  
	
   

  	
   

  	
   

  
	
  U.S. federal, state and local tax planning and advice.

  	
   

  	
  $20,000
  - $40,000

  
	
   

  	
   

  	
   

  
	
  U.S. federal, state and local tax compliance.

  	
   

  	
  $15,000
  - $35,000

  
	
   

  	
   

  	
   

  
	
  Review of federal, state and local income, franchise, and other
  tax returns. 

  	
   

  	
  $10,000
  - $20,000

  
	
   

  	
   

  	
   

  
	
  Licensing or purchase of income tax preparation software from the auditor,
  provided the functionality is limited to preparation  of tax provisions or returns. 

  	
   

  	
  $5,000
  - $10,000

  
	
   

  	
   

  	
   

  



 


 


C-1
















 


Exhibit D


 


	
  Pre-Approved All Other Services for Year Ending December 31, 2005

  
	
   

  	
   

  	
   

  
	
  Dated:
  March 9, 2005

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Service:

  	
   

  	
  Range of Fees:

  
	
   

  	
   

  	
   

  
	
  To be determined

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


 


D-1
















 


Schedule 1


 


Prohibited
Non-Audit Services*


 


Bookkeeping or other services related to the
accounting records or financial statements of the audit client.


 


Financial information systems design and
implementation.


 


Appraisal or valuation services, fairness
opinions or contribution-in-kind reports.


 


Actuarial services.


 


Internal audit outsourcing services.


 


Management functions.


 


Human resources.


 


Broker-dealer, investment adviser or investment
banking services.


 


Legal services.


 


Expert services unrelated to the audit.


 










* Provision of these non-audit
services is permitted if it is reasonable to conclude that the results of these
services will not be subject to audit procedures.


 


Materiality is not an appropriate basis upon
which to overcome the rebuttable presumption that prohibited services will be
subject to audit procedures because determining materiality is itself a matter
of audit judgment.


 


 


 


S-1