The Western Federal Power System’s Fiscal Year 2022 Financial Statement Audit
September 22, 2023
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September 19, 2023
The Western Federal Power System’s Fiscal Year 2022 Financial Statement Audit
The Office of Inspector General engaged the independent public accounting firm, KPMG LLP, to perform the fiscal year (FY) 2022 financial statement audit of the Western Federal Power System (WFPS) to review the combined financial statements, evaluate internal accounting controls for adequacy, and determine whether Western Area Power Administration (WAPA) management complied with applicable laws and regulations. The attached report discusses the results of the internal controls over financial reporting test work conducted as part of the FY 2022 financial statement audit of the WFPS.
The Office of Inspector General issued four financial statement audit findings on the WFPS FY 2022 combined financial statements to WAPA, which related to the capitalization of maintenance costs; timeliness of property, plant, and equipment transfers from construction work in process; accuracy of cash allocations; and notes to the combined financial statements. The findings included six recommendations for improvement. In all instances, management concurred with the findings and recommendations, and had taken or planned to take corrective actions.
The identified weaknesses occurred for a variety of reasons. For instance, weaknesses related to the timely transfer of property, plant, and equipment from construction work in process occurred because manual journal entries were frequently utilized to reclassify completed project balances for financial reporting purposes. In addition, financial statement noted weaknesses had occurred because a report used to generate the related party’s footnote was not configured properly.
Without improvements to address the weaknesses identified in our report, WAPA could have an increased risk of a pervasive impact on the WFPS combined financial statements.
When fully implemented, the recommendations made during FY 2022 should help the WFPS enhance its financial reporting. WAPA should also ensure that corrective actions are completed in a timely manner.