Federal Reports

This audit was performed by the independent public accounting firm of KPMG LLP (KPMG) on behalf of the Department of Energy’s Office of Inspector General. KPMG audited the balance sheet of the Department’s Western Area Power Administration (WAPA), as of September 30, 2025, and the related consolidated statement of net cost, changes in net position, combined statement of budgetary resources, and custodial activity for the year then ended.

The audit’s objective was to obtain reasonable assurance about whether the financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that included an opinion.

KPMG performed the audit in accordance with generally accepted government auditing standards.

KPMG concluded that the financial statements present fairly, in all material respects, the financial position of WAPA as of September 30, 2025, and its net cost, changes in net position, budgetary resources, and custodial activity for the year then ended in accordance with U.S. generally accepted accounting principles. KPMG also considered WAPA’s internal control over financial reporting as part of its review and did not identify any deficiency in internal control over financial reporting that was considered a material weakness. KPMG tested for compliance with certain provisions of laws, regulations, contracts, and grant agreements that could have a direct material effect on the financial statements. The results of the auditors’ review disclosed no instances of noncompliance or other matters required to be reported under Government Auditing Standards, applicable Office of Management and Budget guidance, or the Federal Financial Management Improvement Act of 1996.

The Office of Inspector General issued Notices of Findings and Recommendations to management throughout the audit. All findings and recommendations will be detailed in a separate management letter that will be provided to WAPA.

USGS distributed Earth MRI IIJA funds in accordance with the Act, but it was unable to demonstrate the cooperative agreements met program objectives.

Our Objective(s)

To assess MARAD's risk management and oversight of Port Infrastructure Development Project (PIDP) grants funded through the Investment in Infrastructure and Jobs Act (IIJA). Specifically, we assessed MARAD's policies and procedures in the areas of risk management, oversight, workforce planning, and training. 

Why This Audit

MARAD's PIDP Federal grant program supports the modernization and expansion of port infrastructure across the United States. IIJA greatly increased PIDP funding, adding $2.25 billion over 5 fiscal years beginning in fiscal year 2022. We initiated this audit based on the heightened risks with administering a Federal grant program that receives such a large increase in funding in a short period of time. 

What We Found

MARAD did not apply comprehensive risk management tools to help identify and manage PIDP risks. MARAD began developing a PIDP Process Level Risk Assessment but had not yet used it to test the design and effectiveness of internal controls for PIDP. Additionally, MARAD lacked clear criteria and definitions to assess post award project risks. Gaps in MARAD's policies and procedures diminish their utility for overseeing IIJA-funded PIDP grants. MARAD employees conducting site visits of grantees lacked formal procedures and supervisory review of their findings was not required. The Agency's policies and procedures for reviewing grantee requests for advance and reimbursement of funds were not sufficient and MARAD lacked instructions for review of Federal Financial Reports. MARAD has not updated its Strategic Human Capital plan to address workforce challenges. MARAD has lost a significant number of staff with institutional knowledge while its funding and oversight needs have expanded. MARAD's Strategic Human Capital Plan expired in 2022 and does not account for the Grants Management Team's current workload. MARAD did not provide timely training for its staff to oversee the PIDP. The Agency planned to provide eight eLearning courses to staff and grantees; however, MARAD has not fully implemented that plan. 

Recommendations

We made 8 recommendations to improve MARAD's oversight of PIPD grants.