c MK . James M. IngSeb -2- U.S. Bureau of Reclama~non ITe were advrsd that. the rehaaalxution and beeterme~lt work przaan~.ly involved rcplaeement of tnnlkn*d earth water slrpply and dnstribut~on works Trath prpe or ConcreeP lined facil~tl@r* In SoMe instances t1-e *c?w fac.i5rtles WeKe placecl in the same locafiron as p..?ror facnl1tnes, Whlle Xl ooher YXIstances they were relocated and old facll~tses abandoned, Jlowever, rnformatlon showing the specPf~c Bscat~ons unerc cu~st~ng and new locations were used had not been accumulated. b?~ewere advrsed by mern~e~s of your staff that considerable work would be required to obtann thzs data and the cost would not justlfg such an undertaking since the water users are oblqated to repay the costs regardless of whether they are classified as n%rlgatlon plant in service or deferred maintenance. We believe that the proper accountnng treatmene for lmprovemcnts and betterments lieper,ds upon whether it IS of a rm~or or minor naturq ana 1s not affected by the relmbursabllrty or non-reimbursability of the worL accompP%shed. ZlaJor expendrtutes shoulo be capitalazed and the cost of the Item replaced should be elmmlnated from the asset account We agree that a costly detalle d analysis of both rehab&litacPon and bettePrrent TW~I. forr the purpose of makang a Drecise reclasslflcatlon of costs may not be warranted. We also agree that Identlfrcatlon of costs which shotld be retired rray no longer be hractzcal at thns late date. Ie 1s OUP oplnlon ) however, that the cost of concrete pope 2nd canal lnnzngs (which both the internal audit repore and members of your staff state are betterments) should be capatalized as irrigation plant. We recommend that actron be taken to determine or estimate ehe cost of such betterments and that accountxng records be adJusted accordingly. ACCOUNTING FOR PLANT RETIREMENTS Our revxew disclosed a number of instances where all components of const~uctxon costsa were not used for reeordlng plant reearements as prescribed by Reclamation Instructrons 464 B.lOC. Costs excluded PI-OJ@CP: Item from retirement Mfssou~i River Basin Transformer-OgallaLa Substation $ 20,695 II II t1 Transformer-Love11 Substatlorn 42,976 I, il 1s Transfomer-Sfncfa%r Substatnon 20,510 II II I, Transformer-Love11 Substation 15,095 I* II It Boysen Camp 247,000?/ Rnverton Turbine runners-Prlot Butte Power Plant IL/ g/Approxnmate amount. _IL/Amount not determlned. New runners installed wrthout retuclng exnstang runners. jr. James M. Ingles -3- U.S. Bureau of Reclamation The above cases of zm?rope r accounting for plant retirements have resulted in the plant accounts beang overstated by the costs excluded from the retirement transactaons, and have also drstorted the annual prov~~ron for depreclatlon computations. During our exit conference the above errors were acknowledged and we were advlsed that correctrve action had been or would be taken and that all retirement transactlons would be reviewed for slmxlar errors. We were further advlsed that a new computer operated system was being developed which would preclude the occurrence of future errors of this nature COMPUTING AND ACCOUNTTNGFOR DEPRECIATION \ The followmg deflclenc-e L s In computing and accounting for deprecl- atlon were noted during our revzew. 1. Depreclatlon factors The depreclatlon factors establlshed for the Boysen and Ghendo units of the Missouri tiver Basin ProJect to Implement the compound Interest depreclatlon method were not properly developed All multzpurpose land and land right costs were included XI tne base used to establish the com- posnte lives and depreclatlon rate factors, whereas, only that portxon of these costs allocated to the power production purpose should have been Included. After we brought this matter to the attenelon of your staff, actmn was taken to correct the Boysen unit rate factor. In addltlon an adJustzng entry was processed to properly record an addltlonal depreclatlon accrual of $190,739 which was required as a result of the rate factor adJustment. We were advzsed that corrective actnon was not lnntlated for the Glendo unit because the aollar amount of the error was not szgnlflcant. Further- more, they polnted out that new studies to establish sernce loves and rate factors are required as of June 30, 1970, and that the Glendo unit would be adJusted at that time. We belleve that the accomplished and planned corrective actlon has adequately resolved thus matter. 2. Depreciation on movable equrpment Fiscal year 1968 and 1969 movable equipment depreclatlon accruals were not computed m accordance with Reclamation Instructions 489.1.5 -5- 4. Psovrsion for drpreexdtxon
Financial Activities of Missouri River Basin Integrated Projects for Fiscal Year 1969
Published by the Government Accountability Office on 1971-03-08.
Below is a raw (and likely hideous) rendition of the original report. (PDF)