HomeMy WebLinkAboutBradley Lake Project Management Committee July 1, 1992 through June 30, 1993BRADLEY LAKE PROJECT
MANAGEMENT COMMITTEE
REPORT ON AGREED UPON PROCEDURES
FOR THE PERIOD OF
JULY 1,1992 THROUGH JUNE 30,1993
'A Professional Corporation
Prusena,Somberg &Company
A Professional Corporation Certified Public Accountants
a 3301 C Street,Suite 520
Anchorage,Alaska 99503
Tel.(907)563-4547
FAX (907)561-7683
November 30,1993
Bradley Lake Project Management Committee
At your request,we have applied the procedures listed below with
respect to the accounting records of the Alaska Energy Authority
(AEA)for the annual project costs of the Bradley Lake
Hydroelectric Project (Bradley)for the fiscal year ended June 30,
1993.It is understood that this report is solelyto assist you in
evaluating the reasonableness of costs reported by AEA and is not
intended to be used for any other purpose.
Our procedures and the results thereof are as follows:
a.We traced the Utilities'contributions into the accounting
records and to the Revenue Fund trust account statements to
determine that all contributions were deposited into'the
appropriate fund.We also confirmed these amounts with the
Utilities.Individual utility contributions were recalculated as
a percentage of total contributions in order to confirm compliance
with the allocation schedule set forth in the Power Sales
Agreement.
b.We reviewed the transfers from the Revenue Fund to the
Bradley Operating Fund to determine that the required monthly
transfers of 1/12th of the approved annual budget were made.We
also agreed the transfers into the Debt Service Fund to the
transfers from the applicable fund to determine the propriety of
the source of the Debt Service funding.
c.In order to determine the completeness of the expenses
recorded in the financial records,we agreed the disbursements
detailed in the Bradley Operating Fund and the Debt Service Fund
trust account statements to the accounting records.We also
selected disbursements per the Bond Proceeds Construction Fund
statements and traced them to the supporting documentation in order
to determine the validity of their classification as construction
rather than operating and maintenance costs.
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Bradley Lake Project Management Committee
November 30,1993
d.We tested the validity of expenses reported in the accounting
records by selecting certain items and tracing them to the
supporting documentation in order to determine that:
1.It was an appropriate charge to the Bradley annual
project costs for the fiscal year ended June 30,1993;and
2.The expense was budgeted for Bradley annual project costs
by the Project Management Committee.
e.In order to familiarize ourselves with the nature and terms of
appropriate expenses,we reviewed the Power Sales Agreement and
other Bradley operation and maintenance agreements.To gain a
further understanding of issues and events affecting Bradley
throughout the period,we read the minutes of the PMC meetings.
f.We agreed the debt service requirements to the audited
financial statements of the Alaska Energy Authority for the year
ended June 30,1993 to determine that the interest and principal
payments funded by Bradley's fiscal year 1993 budget were properly
calculated and paid.
g.Due to the ongoing litigation regarding the overhead costs
charged Bradley by AEA,we were unable to perform any procedures
with respect to the allocation methodology employed by AEA.Nor
were we able to test the validity of overhead expenses charged by
tracing individual items to supporting documentation.
h.We reconciled the ending surplus balance to the cash account
balances at June 30,1993.
Because the procedures noted above do not constitute an audit made
in accordance with generally accepted auditing standards,we do not
express an opinion on any of the accounts or items referred to
above.
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Bradley Lake Project Management Committee
November 30,1993
Adjustments
During the course of performing the procedures previously
described,we noted the following items which are included as
adjustments to arrive at total Operating and Maintenance costs:
Salaries expense relating to the workers
injured in the commuter airline accident
includes amount which will be reimbursed
through Workers'Compensation Insurance.
Aircraft Accident Recovery expenses were
decreased by the amount due from Workers'
Compensation Insurance at June 30,1993 $22,900
The Metzler construction audit charges
included in the O&M expenses were removed
and charged to Construction as approved by
the PMC.This was reimbursed on November 15,
1993,per ABA.30,620
To correct a coding error on payroll costs,
amounts incorrectly charged to Construction
were charged to O&M.This will be adjusted,
per AEA.(355)
Questioned Costs
AEA charged overhead on direct aircraft accident expenses of
$66,242.These charges totalled $32,639.Since the direct costs
are partially reimbursed by workers'compensation insurance in
addition to being potentially recoverable through insurance and/or
litigation,it appears that overhead charges on these direct
expenses are not warranted.Also,as salaries expense increased
due to other employees assuming duties of the injured workers
during their convalescence,and since overhead was applied to the
increase in salaries expense,it would appear as if Bradley was in
effect paying overhead twice on the same direct labor base.
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Bradley Lake Project Management Committee
November 30,1993
Remodelling costs of $4,534 for the Operations Assistant's office
were charged directly to Bradley O &M as AFA administration costs.
It does not appear to have been provided for in the approved
budget.
In August,1992,AEA inadvertently billed Bradley $55,803 for
overhead charges relating to fiscal year 1992.These charges had
already been paid previously;consequently the August billing
-resulted in a double-payment of this amount.During fiscal year
1993,reimbursements to AEA for overhead and direct charges paid on
behalf of Bradley exceeded actual costs incurred by AEA.The
probable explanation offered for the excess reimbursements is that
one or more reports generated by the AKSAS system detailing the
charges to be reimbursed to AEA overlapped dates with other
reports.The overlapping probably allowed certain expenses to be
charged twice.The total amount due Bradley as of June 30,1993 is
as follows:
FY92 charges billed twice §55,803
FY93 overlapping charges 96,446
Total due Bradley for
excess reimbursements $152,249
AEA repaid the full amount on September 3,1993.
Monies held in the Operating Fund earn interest at a rate of
7.38%.Bradley may wish to consider charging interest at this
rate for the funds advanced to AEA.Because the details of the
fiscal year 1993 overcharges have not been investigated,interest
could be estimated as follows:
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Bradley Lake Project Management Committee
November 30,1993
Advance outstanding from
8/14/92 through 9/03/93 $55,803
Simple interest for 12.5
months -x_1.38%
$4,290
Advances on FY93 amounts ,
96,446
ma .
Assumed average advances
outstanding 48,223
Simple interest,annual X_7.38%
3,559
Estimate of interest on
AEA advance -$7,84
Had we performed additional procedures or had we made an audit of
the financial statements in accordance with generally accepted
auditing standards,matters might have come to our attention that
would have been reported to you.This report relates only to the
accounts and items specified above and does not extend to any
financial statements of the Bradley Lake Hydroelectric Project,
Project Management Committee,taken as a whole.
VRourena,Lfrorldng »2 porn,PPCParisena,Stromberg &Company,APC
November 30,1993
*Includes $15,000 funding of reserve for
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
Statement of Accrued Cash Receipts and Disbursements -0 &M
Year Ended June 30,1993
Budget
Hydraulic power generation expense:
Operation supervision and engineering $257,926
Hydraulic operation 123,860
Electric operation --82,000
Hydraulic power generation operation 20,000
Transportation 266,900
Structure maintenance 60,000
Electric plant maintenance 45,000
Miscellaneous hydraulic plant maintenance 45,000
Hydraulic plant maintenance 392,000
Fuel stock 40,000
System control and load dispatching 174,000
Transmission expense:
Bradley Junction substation 2,000
Overhead line maintenance 39,000
Administrative,general and regulatory expense:
Project Management Committee costs 81,000
Administration 421,011
Contractual services 25,000
Insurance 245,824
Regulatory commission ___401,807
Total operation and
maintenance expense $2,747,328
Actual
$263,914
69,534
26,660
12,777
159,280
16,344
Adjustments
Based Upon
Procedures
Performed
33TSB IWS lo
33,258
409,115
8,181
138,000
23,677
$20,937
201,545
203,174
--337,345*
$2,440,497
five-year inspection.
$(22,545)
(30,620)
$(53,165)
Adjusted
Total
$263,914
69,534
26,660
12,777
159,280
16,344
33,258
33,258
409,115
8,181
138,000
23,677
498,392
170,925
203,174
-337,345
2,387
Variance
$(5,988)
54,326
55,340
7,223
107,620
43,656
11,742
11,742
(17,115)
31,819
36,000
2,000
39,000
$7,323
(77,381)
(145,925)
42,650
-£4,462
359,996
BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE
Combined Statement of Accrued Cash Receipts
and Operating and Maintenance and Debt
Service Disbursements
Year Ended June 30,1993
Receipts:
Utilities contributions
Interest received
Total receipts
Disbursements:
Operations and maintenance
Interest paid
Principal due July,1993
Interest due July,1993
Total disbursements and
debt service payments
Excess of disbursements
over receipts in
current year
Surplus for the period
September 1,1991 to
June 30,1992
Interest earned prior
to September 1,1991
Surplus,July 1,1992
Surplus,June 30,1993
Budget
$13,882,980
-1.680,821.
12,563,801
2,747,328
5,458,932
2,470,000
2,458,932
16,135,192
S__(571,391)
Actual=Variance
$13,882,980
-1.872,117
-13.725,097
2,387,332
5,458,932
2,470,000
-2.458,932
15,775,196
1,019,109
359,996
0
0
-____9
332,996
$551,292