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)

     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.


             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

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

       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

4.   Psovrsion   for   drpreexdtxon