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089130 1 (1975-07-24)

handle is hein.gao/gaobacvdy0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 RESOURCES AND ECONOMIC JUL 24 1975 DEVELOPMENT DIVISION Lieutenant General W. C. Gribble, Jr. Chief of Engineers Corps of Engineers Department of the Army Dear General Gribble: We have completed a review of certain financial activities of the Southeastern Federal Power Program and the overall results of our review will be included in a separate report to the Congress. During our review at the Corps' Ohio River Division (ORD) and the South Atlantic Division, we noted several problem areas which we believe should be brought to your attention for corrective action. These matters--which will not be included in our report to the Congress--show a need for improvements in management controls and closer adherence to established accounting procedures. Such improvements are important to maintaining the reliability of financial statements for the Southeastern Federal Power Program and to establishing appropriate electric power rates. NEED FOR IMPROVING MANAGEMENT CONTROLS Our review of financial records of Corps multiple- purpose projects showed instances where (1) incorrect cost allocation percentages were used to distribute project costs, (2) incorrect rates were used to compute interest and depreciation expenses, (3) accounting records and reports were not reconciled, and (4) reallocation of pro- ject costs was not made on a timely basis. Incorrect cost allocation percentages Percentages, based on cost allocation studies, are used to allocate the cost of joint use facilities that serve more than one purpose of a multiple-purpose project. Two sets of percentages are developed, one applicable to construction expenditures--which is also used for allocating depreciation costs--and one for operation and maintenance (O&M) costs.

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