Audit of Eastern Power System and Related Activities of the Corps of Engineers (Civil Functions), Department of the Army, and the Southeastern Power Administration, Department of the Interior, for the Fiscal Years 1959 and 1960

This document presents our report on the audit of the power generating and related activities of the Corps of Engineers (Civil Functions), Department of the Army, in the southeastern area of the United States and the power marketing activities of the Southeastern Power Administration, Department of the Interior, for the fiscal years 1959 and 1960. In the report we repeat our recommendation that the Department of the Interior design statements specifically for the purpose of showing clearly the status of repayment of the Government's investment in the power program. In the absence of agency statements showing this type of information, we prepared a statement which shows that in fiscal year 1960 net power revenues were greater than estimated scheduled repayment requirements by $1 million; however, there was a cumulative estimated repayment deficiency of $l4.3 million at June 30, 1960. Our prior reports to the Congress on Federal water resources development programs in the southeastern area contained matters for consideration by the Congress on allocations of construction costs to power and other purposes and recommendations to the Secretary of the Interior and the Chief of Engineers on accounting and financial practices. At June 30, 1960, the Department of the Interior and the Corps of Engineers had reached general agreement on the cost allocations for 8 of the 11 multiple-purpose projects including power that were then in operation. The basic difference between the two agencies on the cost allocation method and interest factor for the Wolf Creek, Center Hill, and Dale Hollow Projects has not been resolved. Because of the continuing lack of agreement on the cost allocations for these projects and because of certain accounting and financial policy deficiencies, we cannot express an opinion as to whether the financial statements present fairly the financial position of the Southeastern Power System and Related Activities at June 30, 1960, and the financial results of operations for the fiscal year then ended.