Financial Statement Audit Report: DOE-OIG-18-18

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February 9, 2018

Management Letter on the Southwestern Federal Power System’s Fiscal Year 2016 Financial Statement Audit

KPMG LLP, our contract auditors, planned and performed an audit of the combined financial statements of the Southwestern Federal Power System as of and for the year ended September
30, 2016, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States.  As part of the audit of the combined financial statements, KPMG LLP considered the Southwestern Federal Power System’s internal control over financial reporting (internal control) as a basis for designing auditing procedures for the purpose of expressing an opinion on the combined financial statements but not for the purpose of expressing an opinion on the effectiveness of the Southwestern Federal Power System’s internal control.  This review disclosed no instances where KPMG LLP did not comply, in all material respects, with generally accepted Government auditing standards.

During the audit, KPMG LLP noted certain matters involving internal control and other operational matters that are presented in the attached management letter prepared by KPMG LLP. The letter contains four findings that were issued during the course of the Southwestern Federal Power System’s Fiscal Year 2016 Financial Statement Audit. Management concurred with each of the findings and provided planned corrective actions for the recommendations listed in the Management Letter.

Topic: Management & Administration