oversight

Fiscal Year 1970 Financial Audit of Commercial Power Operations in Region I, Bureau of Reclamation

Published by the Government Accountability Office on 1971-03-04.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                UNITED STATES GENERAL A~COIJNTING OFFICE
                                    REGIONAL            OFFJCE
                     SO96 FEDERAL   OFFICE   BUILDING      909 FIRST   &VENUE

   -=                        SEATTLE, WASHINGTON 98104




Mr. Earold    T. Nelson, R&final Director                         Y
Region 1,    u,s. Bureau of Reel  ti0Xl
Department     of the InteriolP
P, 0. Box    8008
Boise,   Idaho      83707
Dear Mr. Nelson:
      We have completed our review of the accounts and accounting pro-
cedrsree of the power generating and related multipurpose projects fn
Region 1, Burezm of Reclamation, that participated        in the Federal Columbia
R&vex Power System (FCPSS) during the f9scal year ended June 30, 1970.
The review was dfrected toward determining the reasonableness and propriety
sf the projects*     flmncIa1  statements submitted to Bonneville Powes: Admini-
stratbon (WA) for casmolidatfm        and inclusfon iaa the fiscal year 1970
FCRPS financial    statements.    Our review included an evaluation of current
administrative    procedures and controls and included such tests QE financial
transactions    as we deemed necessary*
      We are pleased to report that generally we found the administrative
pa*ocedwes and c~no~sols to be adequate. MQSGemors noted were Bnsigtificant
and were informally  dascussed and resolved with your staff during the audit.
In addition,  our audit dasclosed the following matters.
       Your staff revised two of the statements for the Columbia Basin
Project,   (1) Amount and Allocation  of Plant Investment Schedule A, and
(2) Statement of Project Cost and Repayment, The revisions were made
because of allocation    errors %n the computation of irrigation  assistance
required from power revenues for the Columbia Basin and Teton projects.
      Toward the end of our audft we noted that there has sometimes been
delays in recording completed plant additions in the plant-in-service
general ledger accounts.   Ue noted this for the Columbia Basin project.
C~nstructisn work under certain Cost Authorities    for this project was
completed in fiscal yeas 1969 or earlier,   but was not transferred   to
completed plant-In-service   untal fiscal year 1970. Delays iu recording
completed plant additxons results i.n understatement of Interest    on the
Federal investment in addition to understatement of the plant-m-service
account and overstatement of the constructzon work-in-process     account,
You may want to look into thfs and consider procedures to provide for
more tamely communication between the indivxdual   Project Engineers' Offices
and the Regional Finance Office upon completion of a Cost Authority.




                        50 TH ANNIVERSARY                    1921-     1971
Mr. Harold    T. Nelson                     -2-


        Certain matters dfsclosed          by prior years' audits remain to be
resolved      for improved reportzng        on the financial      statements.      These
matters include         (I) the capltalizatrox        of interest    during construction
for Bureau power projects           constructed      prnor to 1956, (2) the determina-
tion of the proper base to be used to compute interest                     expense, (3) the
recording       of interest    expense OR the Columbza Baslx ProJect investment
suballocated       to downstream river       regulation     prior   to 1963, and (4) the
reporting       of accrued unused annual leave as a lrability.

       During calendar year 1970 we recommended in two separate letter
reports    directed      to the Secretary     of the Interior     and the Commisszoner
of Reclamation        that the Bureau of Reclamation          (1) capltalire       interest
costs durmg construction          as part of the Federal investment              for all
power proJects constructed         prior    to 1956 and compute accumulated annual
interest    expense on the basis of such noncapitalized               costs, (2) compute
fraterest   expense on net additions          to the Federal investment          during the
year and make a retroactive          adfustment     for such interest        expense not re-
corded III past years, and (3) schedule such noncapitalized                    interest     costs
and znterest      expense for repayment to the Treasury from power revenues.
We understand       the Bureau is currently        considering    these recommendations.

       Durfrig OLt fiscal      year 1969 audit Ge discussed with Bureau officials
the need to include the imputed cost for space provided               by the General
Services Administration         which was then considerably      higher than earlier
years due to the Bureau's move to the recently            completed Federal Office
Building.      Bureau officials      informed us during the current      audit that the
imputed rental      cost will be included      in the formal accounts and financial
statements for the Bureau projects           beginnang in fiscal     yean 1971.



     A copy of this letter  is being sent to the Director,                    Office     of Survey
and Review, Department of the Interior.

      We tish to express        our appreciation   to you snd your staff               for the
courtesy and cooperation         given our representatives   during this               review.

                                                       -    Sincerely    yours,



                                                            William NJ Conrardy          V
                                                            Regional Manager

cc:   Director, Office of Survey and
      Review, Department of the Interior