Financial Statement Audit: DOE-OIG-24-20

June 10, 2024

The Western Area Power Administration’s Fiscal Year 2023 Financial Statements Audit

The attached report presents the results of the independent certified public accountants’ audit of the Western Area Power Administration’s (WAPA) balance sheets as of September 30, 2023, and 2022, and the related consolidated statements of net costs, changes in net position, custodial activity, combined statements of budgetary resources for the years then ended, and the related notes to the consolidated financial statements.

To fulfill the Office of Inspector General’s audit responsibilities, we contracted with the independent public accounting firm of KPMG LLP (KPMG) to conduct the audit, subject to our review.  KPMG is responsible for expressing an opinion on WAPA’s financial statements and reporting on applicable internal controls and compliance with laws and regulations.  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.  The Office of Inspector General did not express an independent opinion on WAPA’s financial statements.

KPMG concluded that the financial statements present fairly, in all material respects, the financial position of WAPA as of September 30, 2023, and 2022, and its net costs, changes in net position, budgetary resources, and custodial activity for the years then ended in accordance with U.S. generally accepted accounting principles.

As part of this review, auditors also considered WAPA’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 financial statements.  The audit identified certain deficiencies in internal control that we consider to be a material weakness and significant deficiency:

• KPMG identified a material weakness with internal controls over the financial reporting process.  WAPA’s stand-alone statements are designed to conform to Federal Accounting Standards Advisory Board and Office of Management and Budget Circular A-136, Financial Reporting Requirements.  However, WAPA’s existing procedures and controls are not designed to accommodate the dramatic deviations from the Department of Energy reporting package.  
• KPMG identified a significant deficiency with internal controls over the manual journal entry process.  During walkthroughs and related audit procedures for WAPA’s fiscal year 2023 financial statement audit, KPMG identified that manual journal entries recorded by WAPA’s various budget offices did not require or enforce segregation of duties.

WAPA management agreed with the findings and recommendations and indicated that corrective actions had been taken or were planned.

The results of the auditors’ review disclosed no instances of noncompliance or other matters required to be reported under Government Auditing Standards or applicable Office of Management and Budget guidance.