Financial Statement: DOE-OIG-18-28

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March 27, 2018

Management Letter on the Western Federal Power System’s Fiscal Year 2017 Financial Statement Audit

KPMG LLP, our contract auditors, planned and performed an audit of the combined financial statements of the Western Federal Power System as of and for the year ended September 30, 2017, 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 Western Area Power Administration, a component of the U.S. Department of Energy, and the hydroelectric power generating functions of the Bureau of Reclamation, U.S. Department of the Interior; Army Corps of Engineers, U.S. Department of Defense; and the International Boundary and Water Commission, U.S. Department of State.

As part of the audit of the combined financial statements, KPMG LLP considered the Western 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 Western Federal Power System’s internal control. Accordingly, KPMG LLP did not express an opinion on the effectiveness of the Western 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 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 six findings that were issued during the course of the Western Federal Power System’s Fiscal Year 2017 Financial Statement Audit. Management concurred with each of the findings and provided planned corrective actions for the recommendations included in the Management Letter.

Topic: Management & Adminstration