Internal Control Weaknesses Identified During the Southwestern Federal Power System’s Fiscal Year 2025 Combined Financial Statements Audit

September 25, 2026

Internal Control Weaknesses Identified During the Southwestern Federal Power System's Fiscal Year 2025 Combined Financial Statements Audit

The Office of Inspector General engaged the independent public accounting firm of KPMG LLP (KPMG) to conduct the fiscal year 2025 combined financial statements audit of the Southwestern Federal Power System (SWFPS), subject to our review.

The Office of Inspector General monitored audit progress and reviewed the audit report and related documentation. This review disclosed no instances where KPMG did not comply, in all material respects, with generally accepted government auditing standards.

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.

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 two findings, including one repeat prior year finding, and four recommendations that were issued to Southwestern Power Administration during the audit of The Southwestern Federal Power Systems Fiscal Year 2025 Combined Financial Statements Audit. Management concurred with three of the recommendations included in the management letter and had taken or planned to take corrective actions. Management nonconcurred with one of the findings and the associated recommendation but planned certain corrective actions to develop a non-Generally Accepted Accounting Principles policy to address the finding. Management's responses are included with each finding.

• DOE-OIG-26-50.pdf (1.01 MB)