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Home My WebLink AboutAEA Audit in Accordance with OMB Circular A-133 Year ended June 30, 2011ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Audit in Accordance with OMB Circular A-133 Year ended June 30, 2011 (With Independent Auditors’ Report Thereon) ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Table of Contents Independent Auditors’ Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program, Internal Control over Compliance, and Supplementary Schedule of Expenditures of Federal Awards in Accordance with OMB Circular A-133 Schedule of Expenditures of Federal Awards Notes to Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Page(s) aed KPMG LLP Suite 600 701 West Eighth Avenue Anchorage, AK 99501 Independent Auditors’ Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program, Internal Control over Compliance and Supplementary Schedule of Expenditures of Federal Awards in accordance with OMB Circular A-133 The Board of Directors Alaska Energy Authority: Compliance We have audited the compliance of the Alaska Energy Authority (the Authority) with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of the Authority’s major federal programs for the year ended June 30, 2011. The Authority’s major federal programs are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the Authority’s management. Our responsibility is to express an opinion on the Authority’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Authority’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Authority’s compliance with those requirements. In our opinion, the Authority complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2011. Internal Control over Compliance Management of the Authority is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Authority’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Authority’s internal control over compliance. KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative (“KPMG International”), a Swiss entity. mana A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. Schedule of Expenditures of Federal Awards We have audited the financial statements of the Alaska Energy Authority (a Component Unit of the State of Alaska) as of and for the year ended June 30, 2011, and have issued our report thereon dated October 26, 2011. Our audit was performed for the purpose of forming an opinion on the Authority’s basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. This report is intended solely for the information and use of the board of directors, management, federal awarding agencies, and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. KPMG LEP October 31, 2011, except as to the paragraph relating to the schedule of expenditures of federal awards which is as of October 26, 2011 ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Schedule of Expenditures of Federal Awards Year ended June 30, 2011 Catalog of federal domestic Federal grantor/pass-through grantor assistance Award Federal grantor program title number amount expenditures U.S. Department of Energy Direct — Alaska Wind Energy 81.087 $ 3,072,410 395,883 Passed through Washington State University - Renewable Energy Research 81.087 65,000 8,674 3,137,410 404,557 Passed through Alaska Housing Finance Corporation: ARRA - State Energy Program — Energy Conservation 81.041 3,732,000 702,863 State Energy Program — Energy Conservation 81.041 88,000 88,000 State Energy Program ~ Energy Solutions for Alaska 81.041 700,000 53,811 4,520,000 844,674 Direct - Geothermal Outreach 81.117 122,000 638 Passed through Alaska Housing Finance Corporation - ARRA - Energy Efficiency Conservation Block Grant 81.128 7,730,100 1,477,531 Denali Commission: Direct Bulk Fuel Consolidation Upgrades and Power Generators 90.100 42,064,866 201,224 Bulk Fuel Consolidation Upgrades 90.100 3,991,328 236 Bulk Fuel Consolidation and Power Generator Upgrades 90.100 21,215,255 2,475,640 Alternative Energy Proposal Review and Project Management 90.100 3,090,000 136,788 Kwethluk Power System Upgrade 90.100 3,000,000 164,194 Ouzinkie Power System Upgrade 90.100 200,000 281 FY08 Project Administration 90.100 996,179 422,500 Pelican Hydro Upgrade 90.100 2,274,000 860,604 Napakiak Power System Upgrade 90.100 850,000 74 Tuluksak Bulk Fuel Upgrade 90.100 120,000 11,081 Repair and Replacement 90.100 225,000 36,659 Yakutat Power System Upgrade 90.100 495,000 4,539 Chitina Power System Upgrade 90.100 940,000 100,732 Takotna Power System Upgrade 90.100 950,000 32,687 Ruby Power System Upgrade 90.100 2,791,825 1,109,290 Remote Monitoring and Metering 90.100 153,000 50,659 Village End Use Efficiency Measures 90.100 180,000 5,000 Unalakleet Power System Upgrade 90.100 3,500,000 2,337,041 Tazimina Hydroelectric 90.100 1,273,543 573,059 Kipnuk Power System Upgrade 90.100 400,000 187,776 Fort Yukon Power System Upgrade 90.100 340,000 100,844 Akiak Power System Upgrade 90.100 250,000 63,093 Atmautluak Power System Upgrade 90.100 150,000 841 Central Power System Upgrade 90.100 150,000 8,048 Hoonah Power System Upgrade 90.100, 3,330,000 387,991 Alakanuk Bulk Fuel Upgrade 90.100 165,000 145,488 Igiugig Power System Upgrade 90.100 1,350,000 832,043 Koliginek Bulk Fuel Construction 90.100 1,100,000 958,452 Yakutat Power System Upgrade Construction 90.100 3,205,514 102,076 Passed through the State of Alaska Department of Labor — Operator Training 90.100 57,791 53,740 98,808,301 11,362,680 U.S. Department of Agriculture: Direct: RUS Napakiak Power Project 10.859 2,915,228 840 RUS Elfin Cove Power System Upgrade 10.859 1,178,490 (461) RUS Levelock Power System Upgrade 10.859 2,637,831 44,526 6,731,549 44,905 U.S. Department of Labor: Passed through State of Alaska Department of Labor — ARRA - Energy Sector Training 17.275 150,000 106,267 U.S. Environmental Protection Agency: Direct - EPA AK Fish Oil Biodiesel 66.034 75,110 7,536 Passed Through State of Alaska Department of Environmental Conservation - Organic Rankine 66.040 79,972 46,733 Total Federal Awards See accompanying independent auditors’ report. $ ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Notes to Schedule of Expenditures of Federal Awards Year ended June 30, 2011 (1) General The accompanying schedule of expenditures of federal awards presents the activity of all federal awards of the Alaska Energy Authority (Authority). The Authority’s reporting entity is defined in note 1 to the Authority’s financial statements. Federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included on the schedule. (2) Basis of Accounting The accompanying schedule of expenditures of federal awards is presented using the accrual basis of accounting, which is described in note 2 to the Authority’s financial statements. 4 (Continued) (3) Notes to Schedule of Expenditures of Federal Awards Subrecipients ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Year ended June 30, 2011 The Authority provided the following to subrecipients during the year ended June 30, 2011: U.S. Department of Energy: Alaska Wind Energy Energy Efficiency Conservation Block Grant State Energy Program - Energy Conservation Denali Commission: Bulk Fuel Consolidation Bulk Fuel Consolidation Upgrade and Power Generator Upgrades Bulk Fuel Consolidation and Power Generator Upgrades Alternative Energy Proposal Review and Project Management Kwethluk Power System Upgrade Ouzinkie Power System Upgrade Pelican Hydro Upgrade Napakiak Power System Upgrade Chitina Power System Upgrade Takotna Power System Upgrade Unalakleet Power System Upgrade Tazimina Hydroelectric Kipnuk Power System Upgrade Ruby Power System Upgrade Hoonah Power System Upgrade Alakanuk Bulk Fuel Upgrade Igiugig Power System Upgrade Koliginek Bulk Fuel Construction Yakutat Power System Upgrade Construction U.S. Department of Agriculture: RUS Levelock Power System Upgrade Total to subrecipients $ 393,618 1,175,444 662,949 2,232,011 38,334 (8) 2,014,380 131,588 112,751 281 843,270 91 47,838 6,572 2,115,581 466,779 180,754 961,851 285,348 137,072 764,668 947,811 4,612 9,059,573 41,565 41,565 $ 11,333,149 ALASKA ENERGY AUTHORITY (A Component Unit of the State of Alaska) Schedule of Findings and Questioned Costs Year ended June 30, 2011 (1) Summary of Auditors’ Results Financial Statements: Type of auditors’ report issued Unqualified Internal control over financial reporting: Material weakness(es) identified? yes Xx no Significant deficiency(ies) identified that are not considered to be material weakness(es)? yes Xx none reported Noncompliance material to financial statements noted? yes Xx no Federal Awards: Internal control over major programs: Material weakness(es) identified? yes XxX no Significant deficiency(ies) identified that are not considered to be material weakness(es)? yes X none reported Type of auditors’ report issued on compliance for major programs Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of OMB Circular A—133? yes X no Identification of major programs: CFDA Numbers Name of Federal Program or Cluster 90.100 Denali Commission 81.128 Energy Efficiency Conservation Block Grant 81.041 State Energy Program 17.275 Energy Sector Training Dollar threshold used to distinguish between Type A and Type B programs: $ 428,866 Auditee qualified as low-risk auditee? X yes no (2) There were no findings relating to the financial statements reported in accordance with Government Auditing Standards. (3) There were no findings or questioned costs relating to federal awards. Baa KPMG LLP Suite 600 701 West Eighth Avenue Anchorage, AK 99501 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The Board of Directors Alaska Energy Authority: We have audited the financial statements of the Alaska Energy Authority (the Authority) as of and for the year ended June 30, 2011, and have issued our report thereon dated October 26, 2011. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control over Financial Reporting In planning and performing our audit, we considered the Authority’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Authority’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Authority’s internal control over financial reporting. A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Authority’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 7 KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative (“KPMG International”), a Swiss entity. PANARE, This report is intended solely for the information and use of the board of directors, management, federal awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. KPMG LEP October 26, 2011