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 combined balance sheets of the Department’s Southwestern Federal Power Systems (SWFPS) as of September 30, 2024, and 2023, and the related combined statements of changes in capitalization, revenues and expenses, and cash flows for the years then ended, and the related notes to the combined financial statements.

The audit’s objective was to obtain reasonable assurance about whether the financial statements, as a whole, were free from material misstatement 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 presented fairly, in all material respects, the financial position of SWFPS as of September 30, 2024, and 2023, and the results of its operations and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles. KPMG also considered SWFPS’ internal control over financial reporting as part of its review and identified certain deficiencies in internal control that they considered to be a material weakness concerning post-retirement benefit expenses and workers’ compensation liability. In addition to the material weakness, KPMG also identified a significant deficiency over entity-level controls. 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 Southwestern Power Administration. There are no formal recommendations that need to be tracked in the Departmental Audit Report Tracking System; therefore, an additional response is not required.

The Office of Inspector General engaged the independent public accounting firm of KPMG LLP (KPMG) to conduct the fiscal year 2024 combined financial statements audit of the Southwestern Federal Power System (SWFPS), subject to our review. As part of this audit, KPMG considered SWFPS’ internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing its opinion on the financial statements but not for the purpose of expressing an opinion on the effectiveness of SWFPS’ internal control.

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

During the audit, KPMG identified certain deficiencies in SWFPS’ internal control related to entity level controls, post-retirement benefits, workers’ compensation, personal protective equipment, and operation and maintenance expenses that are included in the attached management letter.  

The attached letter contains 5 findings and 17 recommendations that were issued to Southwestern Power Administration during The Southwestern Federal Power System’s Fiscal Year 2024 Combined Financial Statements Audit. Management concurred with the findings and recommendations and had taken or planned to take corrective actions. Management’s responses are included with each finding.

We found that since 2016 the company has made targeted improvements to the processes and data it uses to manage its state-of-good-repair (SOGR) work, and other improvement initiatives are underway. Despite these efforts, the company’s infrastructure asset management capabilities have not advanced significantly because it has not yet taken some foundational steps, including fully establishing a governance framework and strengthening its SOGR infrastructure asset data. Until it addresses these issues, it cannot reasonably demonstrate how the federal funds it receives will reduce its SOGR backlog or the timeline to eliminate it.

We recommended that the company fully establish a governance framework for infrastructure asset management that includes specific objectives and performance metrics, as well as defined activities and resources needed to achieve a state of good repair. Further, we recommended that the company better communicate roles and responsibilities of staff and departments involved in SOGR work. We also recommended advancing ongoing data improvement efforts and developing additional controls to help maintain a complete, accurate inventory.

We found that UCRC misclassified its agreements and did not verify whether subcontractors were on an exclusions list prior to awarding funds. 

We found that BOR complied with required laws and regulations when awarding drought mitigation funds but there are opportunities for improvement. 

Background

The U.S. Postal Service needs effective and productive operations to fulfill its mission of providing prompt, reliable, and affordable mail service to the American public. It has a vast transportation network that moves mail and equipment among approximately 308 processing facilities and 31,100 post offices, stations, and branches. The Postal Service is transforming its processing and logistics networks to become more scalable, reliable, visible, efficient, automated, and digitally integrated. This includes modernizing operating plans and aligning the workforce to meet marketplace needs; leveraging emerging technologies to provide world-class visibility and tracking of mail and packages in near real time; and optimizing the surface and air transportation network. The U.S. Postal Service Office of Inspector General (OIG) reviews the efficiency of mail processing operations at facilities across the country and provides management with timely feedback to further the Postal Service’s mission.

Background 

The U.S. Postal Service’s mission is to provide timely, reliable, secure, and affordable mail and package delivery to more than 160 million residential and business addresses across the country. The U.S. Postal Service Office of Inspector General (OIG) reviews delivery operations at facilities across the country and provides management with timely feedback in furtherance of this mission. 

This interim report presents the results of our self-initiated audit of delivery operations and property conditions at the Lynchburg Main Post Office (MPO) in Lynchburg, VA. The Lynchburg MPO is in the Virginia District of the Atlantic Area and serves about 104,574 people in ZIP Codes 24501, 24502, 24503, and 24504, which are considered a predominantly urban area. Specifically, 95,077 (91 percent) live in urban communities and 9,497 (9 percent) live in rural communities.1 The unit also services ZIP Codes 24506, 24513, 24514, and 24515 for PO Box routes and business customers.