Financial Statement Audit Report: DOE-OIG-20-01

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October 10, 2019

Management Letter on the Southwestern Federal Power System’s Fiscal Year 2018 Financial Statement Audit

KPMG LLP (KPMG), 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, 2018, 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.  The combined financial statements include the Southwestern Power Administration, a component of the U.S. Department of Energy; and the hydroelectric generation and power operations of the U.S. Army Corps of Engineers, a component of the U.S. Department of Defense.

As part of the audit of the combined financial statements, KPMG 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.  Accordingly, KPMG did not express an opinion on the effectiveness of the Southwestern Federal Power System’s internal control.  The Office of Inspector General monitored audit progress and reviewed the audit report and related documentation.  This review disclosed no instances where KPMG did not comply, in all material respects, with generally accepted government auditing standards. 

During the audit, KPMG noted certain matters involving internal control and other operational matters that are presented in the attached management letter prepared by KPMG.  The letter contains three findings that were issued during the course of the Southwestern Federal Power System’s Fiscal Year 2018 Financial Statement Audit.  Management concurred with the findings and provided planned corrective actions for the recommendations listed in the Management Letter.

Topic: Management and Administration