Audits

The Division of Audits and Accounting (DAA) audit program supports the Commission’s strategic objectives through public risk-based audits.  DAA performs various types of audits that respond to the needs of the Commission, public, and industry, and advises the Commission on compliance and other matters.  The audit program serves as a resource for the Commission to examine risk areas within the regulated industries and inform the Commission’s actions regarding rates, tariffs, financial and operational transparency, policy initiatives, law, reliability, and other areas in the electric, natural gas, and oil industries.  DAA audits also provide jurisdictional entities an opportunity to work with audit staff to evaluate and improve their overall compliance, and to identify potential areas of noncompliance before they escalate.  For the Commission’s regulated industries, DAA’s publicly issued audit commencement letters and audit reports provide insight into and valuable guidance on areas of emphasis and concern.

Commencement letters are sent to the entities being audited and publicly posted on the Commission’s online eLibrary system. The results of completed audits are also published on the eLibrary system, along with the order issuing their release and the comments of the audited entity. Through these means, audit staff provides audited entities and the industry with insight into areas of emphasis and concern. In addition, the detail in the scope and methodology section of the public audit reports is designed to enable company compliance staff to replicate procedures DAA employs in its audits and provides companies with the necessary information to evaluate their compliance programs. The most recently completed audits are summarily reported and trends noted in the Annual Report on Enforcement.

DAA compiled Frequently Asked Questions to provide additional information to the public and regulated industries. FAQs 
 

DAA Audit Branches

DAA audit staff are organized into four audit branches, each assigned to specific industry and audit coverage areas.  The audit branches are organized as follows: Electric (formula rates), Electric (other financial topics), Energy Markets, and Oil and Gas.  This organization enables the audit branches to maintain a high level of expertise on the industries and topics they audit and maximize efficiency and effectiveness on each audit coverage area. 

Annual Audit Plan

DAA prepares an annual audit plan that identifies the audit topics for the upcoming fiscal year. Most audits are planned and prioritized using a risk-based approach.  Audit topics and candidates included in the plan come from many sources including, but not limited to:

• Review of publicly available information;
• Information from a monitoring activity;
• Internally developed screens that considers various risk factors;
• Input from program offices and agency officials;
• Information gleaned from ongoing and completed audits;
• Referrals from investigation activity; and
• Commission orders.

Audit Authority

DAA’s authority to perform audits, access company books and records, and require companies to retain records is found in the applicable regulations and statutes for each industry. 

Audit Process and Initial Data Request

The Division of Audits and Accounting helps ensure compliance with the Commission’s statutes, rules, regulations, and orders by conducting a wide array of audits of jurisdictional entities. DAA’s audit process used to conduct audits is summarized in the Audit Process Description.  

The initial request for information (i.e., data request) typically occurs in the first few weeks following audit commencement.  The initial data request generally gathers background information on the audited entity, including its organization, regulatory matters, compliance practices, and general accounting and operational data.  The data request also caters to the specific facts and circumstances for each individual audit and company.  To assist audited entities in preparing for DAA audits, we are providing a summary of information we typically request in the initial data request .

Contested Audit Procedures

Order Nos. 675  and 675-A  provide procedures and guidance for the handling of proceedings in which audited entities dispute one or more findings or proposed corrective remedies in draft audit reports.  18 C.F.R. Part 41 (audits of public utilities), Part 158 (audits of natural gas companies), Part 286 (audits of entities subject to the Commission’s authority under the Natural Gas Policy Act), and Part 349 (audits of oil pipeline companies) provide guidance on accounts, records, and memoranda, and procedures for the handling of proceedings in which audited entities dispute one or more findings or proposed corrective remedies in draft audit reports. 

Audit Reports –The audit reports cover fiscal year 2015 to current. The Commission’s fiscal year begins October 1 and ends September 30 of the following year. The audit reports detail audit findings of noncompliance and audit staff recommendations for corrective actions in which jurisdictional companies developed robust compliance plans to implement. Audit staff monitors implementation of all of these recommendations until they are properly implemented. Access all final audit reports issued since Fiscal Year 2015 below.

Click on the categories below to view additional information.
Note: The docket number is a link to an image or PDF of the report located in the Commission's eLibrary system.

*An “FA” docket denotes a Financial Audit and a “PA” docket denotes a Non-Financial Audit (e.g. compliance or operational audits).