Management Letter: DOE-OIG-25-13

February 20, 2025

The Department of Energy’s Fiscal Year 2024 Consolidated Financial Statements

Pursuant to requirements established by the Government Management Reform Act of 1994, the Office of Inspector General engaged the independent public accounting firm of KPMG LLP (KPMG) to perform the audit of The Department of Energy’s Fiscal Year 2024 Consolidated Financial Statements.  During the audit, KPMG considered the Department’s internal controls 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 consolidated financial statements.

During the audit, KPMG identified certain deficiencies in internal control that were considered to be a material weakness and communicated this material weakness in the audit report dated December 12, 2024.  Specifically, KPMG identified a material weakness over the environmental management liability estimate.  KPMG determined that Office of Environmental Management Headquarters had not ensured that the environmental liability estimate was adequately supported with valid cost estimates, schedules, and assumptions.  For instance, KPMG identified that three sites at the Portsmouth Paducah Project Office did not maintain documentation to support risks and cost estimates associated with $39.1 billion of its environmental liability.  KPMG also noted that the lack of management review at the Office of River Protection contributed to an overstatement of $1.8 billion.  Finally, the Savannah River Site did not ensure that supporting documentation was available for risks associated with two of its projects.  The findings that led to the material weakness are included in the attached management letter under Exhibit A.

Although not considered to be significant deficiencies or material weaknesses, KPMG noted other deficiencies in internal control that are also included in the attached management letter.  The attached letter contains 13 new findings, 1 repeat finding, and a total of 22 recommendations that were issued during the audit of The Department of Energy’s Fiscal Year 2024 Consolidated Financial Statements.  Except for one instance, management fully concurred with each of the recommendations included in the management letter and had taken or planned to take corrective actions.  Management’s responses are included with each finding.