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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, 2015
(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,
Audits of States, Local Governments, and Non-Profit Organizations
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, 2015. 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, 2015.
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.
2
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,
2015, and have issued our report thereon dated October 26, 2015, 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 26, 2015
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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, 2015
Catalog
of federaldomesticFederal grantor/pass-through grantor assistance Award Federal
grantor program title number amount expenditures
U.S. Department of Energy:
Direct – State Energy Program 81.041 $581,840 340,479
Direct – Alaska Wind Energy 81.087 1,585,652 69,856
Passed through Washington State University –
Renewable Energy Research 81.117 40,000 25,569
Total U.S. Department of Energy 2,207,492 435,904
Denali Commission:
Direct:
Nunam Iqua Bulk Fuel Facility 90.100 2,700,000 432,419
St. George Power System Upgrade 90.100 2,100,000 103,087
Fort Yukon Power System Upgrade 90.100 340,000 (60)
Emerging Energy Technology Fund (EETF) RivGen Power System
Commercial Project 90.100 651,990 263,519
Tatitlek Bulk Fuel System 90.100 1,472,000 260,673
Shishmaref Bulk Fuel 90.100 2,517,778 4,192
Ruby Power System Upgrade 90.100 2,671,825 241,048
Port Heiden Bulk Fuel Facility 90.100 780,000 14,679
EETF BRI Cyclo-Turbine Energy Production 90.100 335,169 107,816
Emerging Energy Technology (Round 1)90.100 911,079 198,930
Yakutat Power System Upgrade Construction 90.100 3,205,514 687
FY08 Project Administration 90.100 1,762,717 157,035
EETF Application of Composite Flywheels 90.100 309,350 179,234
Perryville Rural Power System Upgrade 90.100 2,560,000 195,675
EETF Arctic Field Testing of the EO-25/12 Wind Turbine 90.100 102,359 13,438
EETF Oceana In-stream Hydrokinetic Device Evaluation 90.100 566,235 188,344
Twin Hills Power System Upgrade 90.100 150,000 46,026
Alternative Energy Proposal Review and Project Management 90.100 2,226,373 529,245
Igiugig Power System Upgrade 90.100 1,350,000 224,140
EETF Ultra-Efficient Generator and Diesel-Electric Prop 90.100 103,487 37,122
EETF Small Community Self-Regulating Grid 90.100 142,532 13,245
EETF Arctic Thermal Shutter and Doors 90.100 62,560 8,665
EETF Enhanced Condensation for Organic Rankine Cycle 90.100 76,380 24,320
EETF Cold Climate Heat Pump Demonstration 90.100 50,385 2,019
Akiak Power System Upgrade 90.100 2,000,000 303,689
EETF Safe and Efficient Exhaust Thimble 90.100 40,429 3,621
Emerging Energy Technology (Round 2)90.100 345,000 49,067
Nunam Iqua Rural Power System Upgrade 90.100 760,000 405,189
EETF Biomass Reforest for Boreal 90.100 20,700 4,564
Bulk Fuel Inventory Assessment 90.100 275,000 201,067
Kake Bulk Fuel Storage Upgrade 90.100 585,000 10,921
31,173,862 4,223,616
U.S. Department of Agriculture:
Direct:
Rural Development, Forestry, and Communities – Wood Energy Development 10.672 277,756 74,059
Total federal awards $33,659,110 4,733,579
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, 2015
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, 2015.
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.
Negative amounts shown on the Schedule represent adjustments or credits made in the normal course of
business to amounts reported as expenditures in prior years.
ALASKA ENERGY AUTHORITY
(A Component Unit of the State of Alaska)
Notes to Schedule of Expenditures of Federal Awards
June 30, 2015
5
(3) Subrecipients
Of the federal expenditures on the Schedule, the Authority provided federal awards to subrecipients as
follows:
Denali Commission:
Nunam Iqua Bulk Fuel Facility 432,419
St. George Power System Upgrade 102,814
Emerging Energy Technology Fund (EETF) RivGen Power System
Commercial Project 263,519
Tatitlek Bulk Fuel System 244,844
Ruby Power System Upgrade 221,548
Port Heiden Bulk Fuel Facility 10,307
EETF BRI Cyclo-Turbine Energy Production 107,816
Yakutat Power System Upgrade Construction 687
EETF Application of Composite Flywheels 179,234
Perryville Rural Power System Upgrade 175,964
EETF Arctic Field Testing of the EO-25/12 Wind Turbine 13,438
EETF Oceana In-stream Hydrokinetic Device Evaluation 188,344
Twin Hills Power System Upgrade 45,002
Alternative Energy Proposal Review and Project Management 529,245
Igiugig Power System Upgrade 213,825
EETF Ultra-Efficient Generator and Diesel-Electric Prop 37,122
EETF Small Community Self-Regulating Grid 13,245
EETF Arctic Thermal Shutter and Doors 8,665
EETF Enhanced Condensation for Organic Rankine Cycle 24,320
EETF Cold Climate Heat Pump Demonstration 2,019
Akiak Power System Upgrade 297,031
EETF Safe and Efficient Exhaust Thimble 3,621
Nunam Iqua Rural Power System Upgrade 389,632
EETF Biomass Reforest for Boreal 4,564
Kake Bulk Fuel Storage Upgrade 10,135
Total Denali Commission 3,519,360
Total to subrecipients $3,519,360
ALASKA ENERGY AUTHORITY
(A Component Unit of the State of Alaska)
Schedule of Findings and Questioned Costs
June 30, 2015
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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, 2015, 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 26, 2015.
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 opinions 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.
8
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 26, 2015