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Home My WebLink AboutBradley Lake Project Management Committee Sept 1, 1991 through June 30, 1992BRADLEY LAKE PROJECT MANAGEMENT COMMITTEE REPORT ON AGREED UPON PROCEDURES FOR THE PERIOD OF SEPTEMBER 1,1991 THROUGH JUNE 30,1992 Prusena,Somberg &Company A Professional Corporation Certified Public Accountants 3301 C Street,Suite 520 Anchorage,Alaska 99503 Tel.(907)563-4547 FAX (907)561-7683 April 13,1993 Bradley Lake Project Management Committee At your request,we have applied the procedures listed below with respect to theaccountingrecordsoftheAlaskaEnergyAuthority(AEA)for the annual projectcostsoftheBradleyLakeHydroelectricProject(Bradley)for the period from September 1,1991 (inception)to June 30,1992.It is understood that thisreportissolelytoassistyouinevaluatingthereasonablenessofcostsreported by AEA and is not to be used for any other purpose. Our procedures and findings are as follows: a.We agreed the deposits and disbursements in the Bradley Operating Fund bank account to the accounting records to determine that all revenues were deposited into the bank account and all disbursements were reported in the accounting records. b.We verified revenues by tracing the required monthly contributions to amounts deposited per the trust fund bank statements and recalculating each utility's contribution as a percentage of the total contribution in order to confirm compliance with allocations set forth in the Power Sales Agreement.We also confirmed these amounts with the Utilities.Interest income was verified by tracing all amounts to the bank statements. Cc.We tested the validity of expenses reported in the accounting records by making a selection of expenses and tracing the items selected to supporting documentation to determine: 1.That the expense was an appropriate charge to Bradley annual project costs for the ten months ended June 30,1992. 2.That the expense was budgeted for Bradley annual project costs by the PMC.We did not examine the construction expenditures for expenses that should have been charged to O &M. da.We reviewed the method employed by AEA to allocate shared expenses to Bradley annual project costs. e.We read the Power Sales Agreement,minutes of the PMC meetings and other Bradley O &M agreements to familiarize ourselves with the nature and terms of appropriate expenses. f.We agreed the debt service requirement to the audited financial statements of Alaska Energy Authority for the year ended June 30,1992 to determine that the power sales payments were properly calculated and the debt service payments were made.This audit was performed by other auditors, Deloitte &Touche;their report is dated October 2,1992. Page 2Bradley Lake Project Management Committee April 13,1993 Because the procedures noted above do not constitute an audit made in accordancewithgenerallyacceptedauditingstandards,we do not express an opinion on anyoftheaccountsoritemsreferredtoabove.In connection with the procedures referred to above we noted that: 1.AEA did not record Bradley 0 &M expense in accounts consistent with the budget.Therefore,we could determine if an expense was consistent innaturewiththebudgetbutwecouldnotcomparetotalexpenseincertaincategorieswiththebudgetforthoseitems.The following compares budgettoactualforthosecategoriesforwhichinformationwasavailable. Budget Actual Variance FERC Account Personnel Direct 541 $288,862 $229,920 $58,942 AEA Employees : Allocated 535 213,765 149,969 -63,796 Permit Specialist 928B 45,273 _22,726 22,547 547,900 402,615 145,285 Insurance 924 Property 240,000 144,048 95,952 Boiler &Machinery 65,000 31,250 33,750 General Liability 10,000 -0-10,000 Watercraft &Aviation 10,000 20,000 (10,000) Directors &Officers Liability 15,000 -0-15,000 340,000 195,298 144,702 Contracts Stream Gauging 928C 75,000 122,010 (47,010) Snow Measurement 928C 20,000 10,790 9,210 Water Quality 928C 1,400 4,000 (2,600) Seismic Monitoring 928C 35,000 -0-35,000 Climatologic 928C 30,000 -0-30,000 Legal 923 50,000 2,586 47,414 Project Audit 923 15,000 -0-15,000 Arbitrage Study -0-3,000 (3,000) Load Dispatching 561 131,000 113,800 17,200 Station Expense 562 2,000 -0-2,000 Line Maintenance 571 39,000 15,405 23,595 FERC Fees 928a 150,000 *#111,044 38,956 AEA Allocated-Personnel 902 144,208 (144,208) AEA Allocated-Non Personnel 59,365 (59,365) Other Travel,Supplies, Telephone &Office Expense 112,468 (112,468) Other Budget Items 770,700 770,700 Total Operation &Maintenance Budget Expense $2,207,000 $1,296,589 910,411 *Includes $10,000 funding of reserve. Page 3Bradley Lake Project Management Committee April 13,1993 AEA has established the FERC accounts necessary to track these expenses for the fiscal year ending June 30,1993. 2.Payroll costs are charged to Bradley Annual Project Costs in three ways: a.Direct charges for personnel who work 100%for Bradley at the site(overtime for these individuals was charged to Bradley Construction). b.Charges for AEA employees who work part-time for Bradley (normallyoff-site)and charge their time based on time cards or estimated annual percentages. Cc.Indirect charges for AEA personnel considered overhead.These chargesarebasedonapercentageappliedtothedirectpayrollcosts.Forthefiscalyearendthatpercentagewasapproximately36%. These costs are recapped as follows: Bradley Lake Hydroelectric Annual Project Costs Direct 100%Bradley FERC Account 541 Richard Turner $54,291 John Zidalis 65,589 Russ Hansen 55,612 John Sherlock 54,428 $_229,920 Allocated (Less than 100%Bradley)FERC Account 535 Larry Wolf $48,907 Bill Sobolesky 22,255 Eric Marchegiani 21,030 Stan Sieczkowski .18,158 Deanna Knight-Scott 10,056 Han Choe 9,299 Bret Wilbanks 6,509 Lisa Vaughn 5,166 Denise Burgis 3,957 Penny Haldane 3,729 Miscellaneous Others (6 at less than $500 each)903 $149,969Allocated(Less than 100%Bradley)FERC Account 928B Thomas Arminski $_22,726 Indirect Personnel Costs FERC Account 902 $144,208 Total Direct and Indirect Personnel Costs $546,823 3.We noted $612 of per diem payments charged to Bradley O &M that should have been charged to Bradley Construction. 4.A contract with AEA to provide consulting services for a State Emergency Exercise was allocated 67%to Bradley 0 &M.The Bradley Project was charged $2,700 for theses services in addition to indirect charges by AEA. Bradley PMC may wish to review the AEA allocation method for these costs. Page 4 Bradley Lake Project Management Committee April 13,1993 The O &M activity of the Bradley Lake Hydroelectric project for the period from September 1,1991 (inception)to June 30,1992 is as follows: Adjustments Based upon Total Procedures Budget Actual Performed Variance Revenues Interest income $776,265 $717,343 -0-(58,922) Utilities payments 12,746,383 12,747 B66/-0-1,483 Total revenue 13,522,648 13,465,209 -0-(57,439) Expenses -0 &M:o/Operating expense 2,207,000 1,286,58 (612)921,023 Reserve (5 yr.study)-0-10,000 -0-(10,000) Contingency (7.5%)165,525 -0--0-165,525 Total O &M expense 2,372,525 1,296,589 (612)1,076,548 Debt Service: Principal due 7/1/92 1,955,000 1,955,000”-0--0- Interest due 7/1/92 5,519,148 5,519,168",-0--0- Interest paid 3,675,975 3,675,975 -0--0- Total debt service 11,150,123 11,150,123 -0--0- Total expenses &debt service 13,522,648 12,446,712 (612)1,076,548 Revenues over expenses .* and debt service .-0-1,018,497 (612)1,019,109 (*)Variance is accounted for in the following funds: Revenue Fund :$891,726 Debt Service Fund 126,771 Receivable from AEA 612 $1,019,109 Had we performed additional procedures or had we made an audit of the financial statements in accordance with generally accepted auditing standards,mattersmighthavecometoourattentionthatwouldhavebeenreportedtoyou.Thisreportrelatesonlytotheaccountsanditemsspecifiedaboveanddoesnotextend to any financial statements of the Bradley Lake Hydroelectric Project,ProjectManagementCommittee,taken as a whole.reese LatraDug »Ompor /7Po-Parisena,Stromberg &Company,APCApril13,1993