Fiscal Year 1970 Financial Audit of Commercial Power Operations of Bonneville Power Administration

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

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

                                     REGIONAL               OFFICE
                      3066FEDERAL     OFFICE     BUILDING       909 FIRST    AVENUE

                               SEATTLE,        WASHINGTON            98104

                                                                                                MAR 4     1971

Mr. Henry R, kkhmond, Administrator
Bonnev%l%~ Power A.dm%n~tration
P. 0. Box 3621
Portland, Oregon 97208
Dear Bfr. Bichmond:
       We have exam%ned the Bonneville Power AW%otrat%on       (BPA) account-
ing records and practfces %n connection w%tb our annual f%nanc%al aud%t
of the Federal Columbia Paver Power System (FCEPS) for the fiscal. year
ended June 30, 1970. Our review9 completed in November 1970, was
directed toward determ%n%ng the reasonableness and propr%ety of BPA's
fzbumdal stateaente %ncluded %n the fiscal year 1970 consolidated
FCRPSfxnancial     statements.  Our review included an evaluation of adm%u%-
stardative procedures and controls and such tests of financial    transactions
as we considered necessary.
      We are pleased to report that we found adm%nfstrat%ve procedures
end .-%-4.-IIl-
-T"  rp"rrDb.Y*ots ho sdeq&ze.   We are aiso pieasesl to report that certain,
matters discussed in the following    paragraphs were mutually-resolved   as
a result of ddscussions with your staff,      except as noted.

F%nanefal Statement Adjustments
      Your staff adjusted the ffnancial                           statements          for the following
matters disclosed by our audit.
1.   The balance sheet line  items Trust Funds and Trust Fund Advances
     were overstated by $1,429,000 due to inclusion   of a sub-account
     twace . Adjustments were made to reduce the account balances.
2.   The balance sheet l%ne Item Other Assets and Deferred Charges in-
     cluded $750,000 of expired contract option costs charged to the
     Celflo-Mead DC l%ne, constructron  of which has been %ndef%n%.tely
     deferred.   After dfscusslng these costs we agreed to mite them
     off against Accumulated Wet Reventxes.
3.   Other Assets and Deferred Charges was also overstated by $109,000
     as a result of charging this account rather than the Transfers to
     Federal Agencies account with the cost of certain material and
     equ%pment transferred  to Southwestern Power Adm%n%strat%on.
     Appropriate adjustments were made.

                         50TH ANNIVERSARY 1921-1971
Mr. Henry R. Richmond               -2-

Other Items
1.   In our fiscal. year 1969 exchange of letters, we questioned a
     quality increase granted to a Bureau of Csmmgrcial Fisher&es'
     employee in January 1966. On December 18, 1970, we received
     a letter from the Darector of the Matioaal Marine Fishemies
     Service in Washington, D.C., which stated that he believed the
     payroll actbon was proper,   We have discussed this matter with
     our attorneys and plan to take a formal exception to thjs item.

2,   BPA officials    have advised us that the written agreements and
     proper accounting entries to record a June 1970 power exchange
     transaction   (whereby BPA delivered energy, surplus to Cominco
     Limzkted, to the Los Angeles Departmat of Water and Bower) will
     be completed zn February 1971. During our audit we noted that the
     accounting section was not provided with a formal agreement or
     other satisfactory     supporting information    to properly record this
     trmsactbosa,     Although a transactto     of this t9pe may somet$.mes
     be necessary be%ore any formal written agreemesas are prepared
     supporting it, we believe that appropriate memorandums &Q Lieu of
     formal agreements should be provided the accounting sectsons so
     that the transactions     may be properly recorded.
3.   As provided for in the Secretary of Zmterior's      Order No. 2929
     issued on January 29, 19709 and subsequent gu-bdelznes, BPA will
     apply a mw interest     rate beginxung far fiscal. yeaa: 1971. The
     inftial  rate is 4-7/8 percent.      According to the Secretarxal    Order
     and the guidelnnes the uew interest rate policy applies to any Corps
     or Bureau construction     initiated  after January 29, 1970. We under-
     stand that discussions are bedng held between Department of Interior
     and Corps officials    at Washington on the implementation     of this
     policy.                                                                T-.

4.   During our review we discussed tith BPA officials    the need for dis-
     closure in the notes to the finar~ciaf statements of BPA's commitments
     aesultfng from agreements signed as part of the Columbia Storage
     Power Exchange and Canadzan Treaty, and the hydro-thermal    power
     program planned for the Pacific Northwest.    As h result of these dis-
     cussio~s, BPA officials  agreed to include these rtems in the notes.

     A copy of this letter is being sent to the Director,       Office   of
Survey and Review, Department of the Interior.
Mr. Henry R. Ricbonti             -3-

      We wish to acknowledge the courtesy and cooperation given our
representatjtves durmg this review.    Your comments and advice as to
final action taken on these mattem will be apprec%ated.
                                               Sincerely   yours,

                                               William i, Contardy
                                               Regional Manager

cc:   Directm,  Office of Survey aud Review,
      Department of the Interior