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ALASKA ENERGY AUTHORITY
(A Component Unit of the State of Alaska)
Audit in Accordance with OMB Circular A-133
June 30, 2014
(With Independent Auditors’ Reports Thereon)
ALASKA ENERGY AUTHORITY
(A Component Unit of the State of Alaska)
Table of Contents
Page(s)
Independent Auditors’ Report on Compliance for Each Major Program; Report on Internal
Control over Compliance; and Report on Schedule of Expenditures of Federal Awards
Required by OMB Circular A-133 1–2
Schedule of Expenditures of Federal Awards 3
Notes to Schedule of Expenditures of Federal Awards 4–5
Schedule of Findings and Questioned Costs 6
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 7–8
Independent Auditors’ Report on Compliance for Each Major Program; Report on
Internal Control over Compliance; and Report on Schedule of Expenditures of
Federal Awards Required by OMB Circular A-133
The Board of Directors
Alaska Energy Authority:
Report on Compliance for Each Major Federal Program
We have audited Alaska Energy Authority’s compliance with the types of compliance requirements
described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect
on Alaska Energy Authority’s major federal program for the year ended June 30, 2014. Alaska Energy
Authority’s major federal program is identified in the summary of auditor’s results section of the
accompanying schedule of findings and questioned costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants
applicable to its federal programs.
Auditors’ Responsibility
Our responsibility is to express an opinion on compliance for Alaska Energy Authority’s major federal
program based on our audit of the types of compliance requirements referred to above. 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 Alaska Energy 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 on compliance for the major federal
program. However, our audit does not provide a legal determination of Alaska Energy Authority’s
compliance.
Opinion on the Major Federal Program
In our opinion, Alaska Energy Authority complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on its major federal program for
the year ended June 30, 2014.
Report on Internal Control over Compliance
Management of Alaska Energy Authority is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above. In planning and
KPMG LLP
Suite 600
701 West Eighth Avenue
Anchorage, AK 99501
KPMG LLP is a Delaware limited liability partnership,
the U.S. member firm of KPMG International Cooperative
(“KPMG International”), a Swiss entity.
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performing our audit of compliance, we considered Alaska Energy Authority’s internal control over
compliance with the types of requirements that could have a direct and material effect on the major federal
program to determine the auditing procedures that are appropriate in the circumstances for the purpose of
expressing an opinion on compliance for the major federal program 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 Alaska Energy Authority’s internal control over compliance.
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. A significant deficiency in internal control
over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with
a type of compliance requirement of a federal program that is less severe than a material weakness in
internal control over compliance, yet important enough to merit attention by those charged with
governance.
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 material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing
of internal control over compliance and the results of that testing based on the requirements of OMB
Circular A-133. Accordingly, this report is not suitable for any other purpose.
Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133
We have audited the financial statements of Alaska Energy Authority as of and for the year ended June 30,
2014, and have issued our report thereon dated October 24, 2014, which contained an unmodified opinion
on those financial statements. Our audit was conducted for the purpose of forming an opinion on the
financial statements as a whole. 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
financial statements. Such information is the responsibility of management and was derived from and
relates directly to the underlying accounting and other records used to prepare the financial statements. The
information has been subjected to the auditing procedures applied in the audit of the financial statements
and certain additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the financial statements or to the financial
statements themselves, and other additional procedures in accordance with auditing standards generally
accepted in the United States of America. In our opinion, the schedule of expenditure of federal awards is
fairly stated in all material respects in relation to the financial statements as a whole.
October 24, 2014
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ALASKA ENERGY AUTHORITY
(A Component Unit of the State of Alaska)
Schedule of Expenditures of Federal Awards
Year ended June 30, 2014
Catalog
of federal
domestic
Federal grantor/pass-through grantor assistance Award Federal
grantor program title number amount expenditures
U.S. Department of Energy:
Direct – State Energy Program 81.041 $282,000 236,154
Passed through Alaska Housing Finance Corporation –
State Energy Program – Energy Conservation 81.041 700,000 61,474
982,000 297,628
Direct – Alaska Wind Energy 81.087 1,585,652 495,513
Passed through Washington State University –
Renewable Energy Research 81.117 40,000 14,431
Total U.S. Department of Energy 2,607,652 807,572
Denali Commission:
Direct:
Nunam Iqua Bulk Fuel Facility 90.100 2,700,000 1,867,866
St. George Power System Upgrade 90.100 2,100,000 1,143,397
Perryville Bulk Fuel 90.100 1,653,500 383,701
Emerging Energy Technology Fund (EETF) RivGen Power System
Commercial Project 90.100 651,990 381,253
EETF Wind-Diesel Battery Hybrid for Kwigillingok 90.100 471,845 361,518
Shishmaref Bulk Fuel 90.100 2,517,778 330,666
Ruby Power System Upgrade 90.100 2,671,825 241,037
EETF High Efficiency Diesel Electric Generator Set 90.100 311,654 236,759
EETF BRI Cyclo-Turbine Energy Production 90.100 335,169 227,353
Emerging Energy Technology (Round 2)90.100 911,079 215,607
Yakutat Power System Upgrade Construction 90.100 3,205,514 171,653
FY08 Project Administration 90.100 1,685,917 145,327
EETF Application of Composite Flywheels 90.100 309,350 130,116
EETF High Capacity Airborne Wind Turbine 90.100 340,453 91,235
EETF Arctic Field Testing of the EO-25/12 Wind Turbine 90.100 102,359 85,031
EETF Oceana In-stream Hydrokinetic Device Evaluation 90.100 566,235 78,319
Twin Hills Power System Upgrade 90.100 150,000 58,706
Alternative Energy Proposal Review and Project Management 90.100 2,226,373 55,708
Igiugig Power System Upgrade 90.100 1,350,000 51,387
EETF Ultra-Efficient Generator and Diesel-Electric Prop 90.100 103,487 46,673
Atmautluak Power System Upgrade 90.100 150,000 46,630
EETF Small Community Self-Regulating Grid 90.100 142,532 46,525
EETF Arctic Thermal Shutter and Doors 90.100 62,560 46,440
EETF Enhanced Condensation for Organic Rankine Cycle 90.100 76,380 36,177
EETF Cold Climate Heat Pump Demonstration 90.100 50,385 31,943
Akiak Power System Upgrade 90.100 2,000,000 17,653
EETF Safe and Efficient Exhaust Thimble 90.100 40,429 15,921
Emerging Energy Technology (Round 1)90.100 345,000 15,050
Nunam Iqua Rural Power System Upgrade 90.100 760,000 10,657
EETF Biomass Reforest for Boreal 90.100 20,700 10,043
Bulk Fuel Inventory Assessment 90.100 275,000 2,858
Kake Bulk Fuel Storage Upgrade 90.100 585,000 1,121
28,872,514 6,584,330
U.S. Department of Agriculture:
Direct:
Rural Development, Forestry and Communities – Wood Energy Development 10.672 526,147 123,318
Total federal awards $32,006,313 7,515,220
See accompanying independent auditors’ report.
ALASKA ENERGY AUTHORITY
(A Component Unit of the State of Alaska)
Notes to Schedule of Expenditures of Federal Awards
June 30, 2014
4 (Continued)
(1) Basis of Presentation
The Alaska Energy Authority’s (Authority’s) reporting entity is defined in note 1 to the Authority’s
financial statements. The accompanying schedule of expenditures of federal awards (Schedule) includes
the federal grant activity of the Authority under programs of the federal government for the year ended
June 30, 2014. The information in this Schedule is presented in accordance with the requirements of the
Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments and
Non-Profit Organizations. Because the Schedule presents only a selected portion of the operations of the
Authority, it is not intended to and does not present the financial position, changes in net assets or cash
flows of the Authority.
(2) Summary of Significant Accounting Policies
Expenditures reported on the Schedule are reported on the accrual basis of accounting, which is described
in note 2 to the Authority’s financial statements. Such expenditures are recognized following the cost
principles contained in OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal
Governments, wherein certain types of expenditures are not allowable or are limited as to reimbursement.
ALASKA ENERGY AUTHORITY
(A Component Unit of the State of Alaska)
Notes to Schedule of Expenditures of Federal Awards
June 30, 2014
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(3) Subrecipients
Of the federal expenditures on the Schedule, the Authority provided federal awards to subrecipients as
follows:
U.S. Department of Energy:
FY11 Alaska Housing Finance Corporation Biggest State Biggest Saver $64,204
Denali Commission:
Nunam Iqua Bulk Fuel Facility 1,867,866
St. George Power System Upgrade 1,112,834
Emerging Energy Technology Fund (EETF) RivGen Power System
Commercial Project 381,253
Perryville Bulk Fuel 366,430
EETF Wind-Diesel Battery Hybrid for Kwigillingok 361,518
Shishmaref Bulk Fuel Facility 260,573
EETF High Efficiency Diesel Electric Generator Set 236,759
EETF BRI Cyclo-Turbine Energy Production 227,353
Ruby Power System Upgrade 156,831
EETF Application of Composite Flywheels 130,116
Yakutat Power System Upgrade Construction 112,946
EETF High Capacity Airborne Wind Turbine 91,235
EETF Arctic Field Testing of the EO-25/12 Wind Turbine 85,031
EETF Oceana In-stream Hydrokinetic Device Evaluation 78,319
Alternative Energy Proposal Review and Project Management 55,708
EETF Ultra-Efficient Generator and Diesel-Electric Prop 46,673
EETF Small Community Self-Regulating Grid 46,525
EETF Arctic Thermal Shutter and Doors 46,440
EETF Enhanced Condensation for Organic Rankine Cycle 36,177
Igiugig Power System Upgrade 33,281
EETF Cold Climate Heat Pump Demonstration 31,943
EETF Safe and Efficient Exhaust Thimble 15,921
Akiak Power System Upgrade Construction 10,398
EETF Biomass Reforest for Boreal 10,043
Reclassification from Emerging Energy Technology (Round 2) to other
EETF grants (69,686)
Total Denali Commission 5,732,487
Total to subrecipients $5,796,691
ALASKA ENERGY AUTHORITY
(A Component Unit of the State of Alaska)
Schedule of Findings and Questioned Costs
June 30, 2014
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(1) Summary of Auditors’ Results
Financial Statements
Type of auditors’ report issued: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? yes X no
Significant deficiency(ies) identified that are
not considered to be material weakness(es)? yes X none reported
Noncompliance material to the financial
statements noted? yes X no
Federal Awards
Internal control over major programs:
Material weakness(es) identified? yes X no
Significant deficiency(ies) identified that are
not considered to be material weaknesses? yes X none reported
Type of auditors’ report issued on compliance
for major programs: Unmodified
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 #Name of federal program or cluster
90.100 Denali Commission
Dollar threshold used to distinguish between
type A and type B programs: $300,000
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.
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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, in accordance with the 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, the financial statements of Alaska Energy
Authority, which comprise the statement of net position as of June 30, 2014, and the related statements of
revenues, expenses, and changes in net position and cash flows for the year then ended, and the related
notes to the financial statements, and have issued our report thereon dated October 24, 2014.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered Alaska Energy Authority’s
internal control over financial reporting (internal control) to determine the audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but
not for the purpose of expressing an opinion on the effectiveness of Alaska Energy Authority’s internal
control. Accordingly, we do not express an opinion on the effectiveness of Alaska Energy Authority’s
internal control.
A deficiency in internal control 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, 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. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe
than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses
may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Alaska Energy Authority’s financial statements
are free from 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.
KPMG LLP
Suite 600
701 West Eighth Avenue
Anchorage, AK 99501
KPMG LLP is a Delaware limited liability partnership,
the U.S. member firm of KPMG International Cooperative
(“KPMG International”), a Swiss entity.
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Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the Alaska Energy
Authority’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the Alaska Energy Authority’s internal
control and compliance. Accordingly, this communication is not suitable for any other purpose.
October 24, 2014