Audit Report: DOE-OIG-19-51

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September 26, 2019

Southwestern Federal Power System’s Fiscal Year 2018 Financial Statement Audit

The attached report presents the results of the independent certified public accountants’ audit of the Southwestern Federal Power System’s combined balance sheets, as of September 30, 2018, and 2017, and the related combined statements of changes in capitalization, revenues and expenses, and cash flows for the years then ended.

To fulfill the Office of Inspector General’s audit responsibilities, we contracted with the independent public accounting firm of KPMG LLP to conduct the audit, subject to our review.  KPMG LLP concluded that the combined financial statements present fairly, in all material respects, the respective financial position of Southwestern Federal Power System as of September 30, 2018, and 2017, and the results of its operations and its cash flow for the years then ended, in conformity with United States generally accepted accounting principles.

As part of the review, KPMG LLP also considered Southwestern Federal Power System’s internal control over financial reporting and tested for compliance with certain provisions of laws, regulations, contracts, and grant agreements that could have a direct and material effect on the determination of financial statement amounts.  The audit identified one significant deficiency in internal control over accrued expenses where goods and services were not properly accrued.  KMPG LLP made one recommendation to enhance existing procedures and related controls to ensure all material procurement of goods and services received prior to period-end are timely and accurately accrued.

Southwestern Power Administration management agreed with the finding and recommendation and indicated that corrective actions would be taken.  The audit disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Topic: Management and Adminstration