2026 Audit Statement of Work attachment 1.pdf

United States Department of Energy Southeastern Power Administration

89503508102026 Attachment 1

U. S. Department of Energy Southeastern Power Administration

Performance Work Statement for Fiscal Year 2026 Financial Statement Audit of the Southeastern Federal Power Program

TABLE OF CONTENTS

Page

I INTRODUCTION 3

II PERFORMANCE OBJECTIVE 3

III STANDARDS AND GUIDES 5

IV PERFORMANCE MEASURES AND EXPECTATIONS 5

V SUBMISSION DATES FOR DELIVERABLES 6

VI FILES ON AUDIT 6

EXHIBITS

A. Detailed Work Tasks 7

B. Special Instructions 14

C. Organization and Background 16

D. Federal and Departmental Accounting, Auditing, Information

System Security, and Budgetary Standards and Guidance 19

I. INTRODUCTION

Public Accountant (Contractor) shall provide financial audit services to perform the financial audit of the Southeastern Federal Power Program (SeFPP) combined financial statements for fiscal year (FY) 2026. SeFPP includes applicable portions of two U.S. Departments: the Department of Energy (Department), Southeastern Power Administration (Southeastern); and the Department of the U.S. Army Corps of Engineers (Corps). Background information on the reporting entity's organizational structure, mission, program management, operating locations, financial structure, and audit history are presented in Exhibit C.

II. PERFORMANCE OBJECTIVE

A. The financial statements that require audit are the consolidated results of operations of Southeastern and expenses and revenues related to power at the Corps. These statements cover those income/expense and balance sheet accounts reflecting elements subject to repayment. Southeastern and the Corps maintain separate accounting systems and are separately managed and financed. Accounting for Southeastern's activities are centralized in Elberton, Georgia. The Corps’ centralized accounting activities are in: Atlanta, Georgia; Savannah, Georgia; Mobile, Alabama; Nashville, Tennessee; and Wilmington, North Carolina.

B. The Contractor shall conduct an audit of and issue an opinion on management's representation of the SeFPP's combined financial statements and schedules in accordance with all applicable requirements, such as: (1) Generally Accepted Auditing Standard (GAAS) issued by the American Institute of Certified Public Accountants (AICPA); (2) the standards applicable to financial audits contained in generally accepted Government Auditing Standards (GAGAS) issued by the Comptroller General of the United States; (3) the current Office of Management and Budget (OMB) Bulletin on Audit Requirements for Federal Financial Statements (as amended); (4) the GAO's Federal Information System Controls Audit Manual; (5) the Office of Inspector General (DOE-OIG) Audit Manual;

and, (6) Federal Energy Regulatory Commission (FERC) accounting requirements. The Contractor should also perform a review of the management overview, performance measures, and other supplemental data in the SeFPP Annual Report package (including minimal review of supporting documentation) for consistency with the audited financial statements and notes per OMB audit requirements and any updates.

C. The financial audits for the Fiscal Year (FY26) ending September 30, 2026, at a minimum, shall include SeFPP principle statements, disclosures, and supporting schedules as follows:

• Balance Sheet;

• Statements of Revenues and Expenses;

• Statement of Changes in Capitalization; and,

• Statement of Cash Flow.

D. The Contractor will also be required to issue reports (management letters) on internal controls over financial reporting and compliance with laws and regulations.

E. Audit services are for a comparative set of financial statements for the current and prior year.

F. In compliance with DOE requirements, the contractor shall provide to the Office of

Inspector General (OIG) and the Contracting Officer’s Representative (COR), a special purpose opinion on Southeastern’s federal basis financial statements, accompanied by a statement of independence. This special purpose opinion, which will be used in the preparation of DOE’s consolidated financial statements, will be based on accounting standards issued by the Federal Accounting Standards Advisory Board (FASAB) OMB Circular A-136. The basis of this presentation differs from SeFPP financial statements, which are prepared in accordance with Generally Accepted Accounting Principles.

G. In conjunction with the special purpose opinion, the Contractor shall verify that the compilation of Southeastern’s Federal Agencies Centralized Trial Balance System (FACTS) submission via the Standard General Ledger (SGL) chart of accounts as maintained by the Department of Treasury (Treasury) agrees with the Department portion of the financial statements under audit and explains any exceptions. Subsequent to the FY-end, this portion of Southeastern's data is electronically transferred by the Department to the Treasury's SGL accounts via the Treasury Inter-Agency System for consolidation into the financial statements of the U.S. Government. The Contractor will be required to trace the statement line items back to the reporting entity's Trial Balance General Ledger accounts.

H. The Contractor shall also assess Southeastern's compliance with the Federal Financial Management Improvement Act of 1996 (FFMIA) in support of the special purpose opinion. The FFMIA requires each agency to implement and maintain financial management systems that "comply substantially with Federal financial management systems requirements, applicable Federal accounting standards, and the United States Government SGL at the transaction level."

I. Southeastern’s financial data becomes part of Department’s consolidated financial statements. As such, the principal auditor of the Department’s consolidated financial statements shall refer to the Contractor’s special purpose opinion in its final report.

J. The Contractor will review Southeastern’s assessment of OMB A-123 Appendix A, which is intended to provide the Department with assurance that Southeastern’s internal controls over financial reporting are appropriately designed and operating effectively.

The Contractor will also test Southeastern’s internal control work under OMB A-123 for the purpose of assessing internal controls in connection with the audit of the financial statements.

III. STANDARDS AND GUIDES

A. Audit work must follow the GAGAS which incorporate the AICPA standards for field work and reporting for financial audits. The contractor should be alert for additional Department, GAO, and OMB accounting and auditing guidance which the Contractor, and Southeastern will jointly determine to apply under the current task.

B. The audit work must also incorporate reporting guidance as found in DOE Order RA6120 which establishes financial reporting policies, procedures, and methodology for all Department Power Marketing Administrations (PMAs) except where deviations therefrom are specifically approved by the Secretary, authorized by statute, or identified and explained in a transmittal memorandum or in the footnotes to the reports.

C. Generally Accepted Accounting Principles (GAAP) for the Federal government are issued from various sources. As a Federal PMA, Southeastern follows FERC-prescribed utility accounting. On March 30, 1993, OMB approved the Department’s March 26, 1993, letter that requested a waiver for the PMAs from the OMB Bulletin reporting formats, but the overview and performance measures requirements remain in effect.

D. The major references for Federal and Departmental accounting, auditing, and budgetary standards, and guidance, along with related laws and regulations, are listed in Exhibit D.

IV. PERFORMANCE MEASURES AND EXPECTATIONS

The following performance measures and expectations will be applied to the specific work tasks detailed in Exhibit A and the Contractor must give consideration to the special instructions detailed in Exhibit B of this work order.

(a) Completeness: The Contractor will provide 100% of all services and deliverables identified in this work order in a complete, effective, and efficient manner.

(b) Contractor demonstrates 100% commitment to quality by assuring only the highest ethics and auditing standards are applied to work under the contract.

(c) 100% of all deliverables are delivered on time.

(d) No deliverable is rejected for inaccurate data or information.

The Contractor will provide qualified personnel, material, equipment, and travel to assist in the planning work tasks. The Contractor will not begin work under this work order until notified by the Southeastern COR that the work has been approved. The Contractor will also notify the COR, who is responsible for overall monitoring and quality assurance for the audit, immediately of any required deviations from this work order.

V. SUBMISSION DATES FOR DELIVERABLES

The Contractor shall furnish the following deliverables (hard copies and electronic files) to the COR for review and approval: (See Exhibit A for detailed work tasks and Exhibit B for special instructions.)

Item Description of Deliverable Date of Delivery

1. Work/task plan submitted and approved by the COR before the entrance conference.

10 days after receipt of work order

2. Entrance conference At initiation of fieldwork

3. Audit programs Within 30 days of Entrance Conference

4. Required adjusting entries (if any) provided to the Department and contractor financial reporting personnel.

See note below*.

5. SeFPP draft opinion report on consolidated financial statements.

See note below*.

6. SeFPP draft consolidated financial audit report including opinion, compliance, and internal control reports, and management letter indexed to and accompanied by the supporting work papers.

See note below*.

7. Final consolidated SeFPP financial audit reports, management letter accompanied by the work papers. The Contractor shall prepare and submit to Southeastern 10 signed and bound copies, a camera-ready copy, and an electronic (preferable Adobe PDF) copy of their financial report as specified in Special Instructions.

See note below*.

8. Audit Status Reports. Written (e-mailed) audit status reports every Friday following entrance conference.

*Delivery dates will be adjusted as negotiated by the COR and Contractor should there be delays caused by Southeastern or the Corps.

VI. FILES ON AUDIT

The Contractor shall maintain complete working files, including electronic files. These supporting files should include all work documentation including calculations, assumptions, interpretations of regulations, sources of information, and other raw data required in the performance of this contract. The DOE-OIG and/or the GAO shall have access to review and photocopy the Contractor's workpapers during the course of the audit and upon completion of the work. Based upon this review and any finding of sub-standard work, the Contractor will be required to perform corrective or additional work within the work order's scope at the Contractor's expense. The DOE-OIG reserves the right to have access to all audit workpapers and other analytical documents.

Exhibit A

DETAILED WORK TASKS

To conduct the audit, the Contractor is generally required to perform the following work tasks:

1. Handle administrative and coordination matters;

2. Sufficiently plan the audit;

3. Develop audit programs;

4. Follow up on past audit findings;

5. Evaluate internal controls over financial reporting;

6. Evaluate compliance with laws and regulations;

7. Conduct substantive testwork and statement verification; and,

8. Prepare an audit report, or separate reports, on the financial statements of Southeastern, internal control, and compliance plus a management letter.

Details for accomplishing the above work tasks are described below:

Work Task 1. Administrative and Coordination Matters: The Contractor shall develop a work plan, hold an entrance conference, and handle other administrative and coordination matters.

Sub-Work Task 1a. Work Plan Development: The Contractor shall, within 10 days after receipt of this work order, prepare a work plan for conducting the audit. The Contractor's work plan shall include a management plan, milestone and labor-hour schedules, statement of independence, and a detailed budgeted cost estimate by audit program area. The budgeted cost estimate, for example, shall delineate the labor-hours and costs for performing its work on Information Systems, Payroll, Property, Plant and Equipment, etc. Further, the Contractor shall also detail its plan and budget for relying on the work performed by the Principal Auditor of the Corps financial statements. Prior to the Entrance Conference, the Contractor shall obtain the COR’s approval for the plan.

Statement of independence – The Contractor shall provide the Contracting Officer (CO)/COR, as part of the Task Plan, a written statement certifying that the Contractor is free both in fact and appearance from personal, external, and organizational impairments to independence per the special instructions in Exhibit B. The Contractor is responsible for establishing and maintaining independence so that its opinions, conclusions, judgments, and recommendations will be impartial and will be viewed as impartial by others.

Sub-Work Task 1b. Entrance Conference: The Contractor will hold entrance conferences with Corps and Southeastern’s management at the initiation of field work. The purpose of the entrance conferences will be to inform management of audit objectives, scope, and methodology;

to establish points of contact for the audit; and to coordinate administrative matters. The Contractor will give advance notice to the COR about the time and location of the entrance conferences. (Note: Teleconferencing is acceptable.)

Sub-Work Task 1c. Staff Qualifications and Education: Within 30 days of the Entrance Conference, the Contractor shall provide resumes of its partners, senior managers, and managers assigned to the audit showing their qualifications meet the GAGAS requirements per the special instructions in Exhibit B.

Sub-Work Task 1d. Exit Conference: Prior to issuance of the final audit report(s), the Contractor shall hold exit conferences with Corps and Southeastern management to present its finding(s) and recommendation(s). The COR shall be notified of the date of the exit conferences before the conferences are to be held. The Contractor must obtain the Corps and Southeastern’s approval to waive the exit conferences. (Note: Teleconferencing is acceptable.)

Sub-Work Task 1e. Conduct Status Report Meetings: The Contractor shall conduct status report meetings on site or via telephone with the Corps and Southeastern on a monthly basis.

When the Contractor discovers issues to resolve or potential findings, the Contractor shall advise the COR as they arise.

Sub-Work Task 1f. Prepare Audit Status Reports: The Contractor shall provide written status reports to Southeastern on a monthly basis. The reports, at a minimum, shall include:

1. Significant accomplishments for the reporting period;

2. Discussions of significant problem areas, including a definitive plan, target dates for resolving each problem, and any impact on the deliverable due dates;

3. Comparative schedules showing planned completion of each major planning segment versus actual completion dates, as well as updated estimates to complete each major planning segment; and,

4. Both the actual costs to date and projected cost to complete the task compared to the detail budget estimate.

Work Task 2. Planning: The Contractor shall sufficiently plan the audit. The planning documents, at minimum, shall demonstrate the following:

a. Obtained an understanding of Corps operations.

b. Performed preliminary analytical procedures.

c. Determined planning, design, and test materiality.

d. Identified significant line items, accounts, and assertions.

e. Identified significant cycles, accounting applications, and financial management systems.

f. Identified significant provisions of laws and regulations.

g. Identified relevant budget restrictions.

h. Assessed risk factors.

i. Determined likelihood of effective information system (IS) controls.

j. Identified relevant operations controls, including IS controls, to evaluate and test.

k. Developed an audit sampling plan, including site selections and sample sizes.

l. Planned other audit procedures.

m. Considered locations to visit.

Further, the planning documents should also include an audit timeline that shows the Contractor can complete the audit work and required deliverables by the established deadlines.

Work Task 3. Audit Programs: The Contractor shall, within 30 days of the Entrance Conference, prepare updated audit programs that meet applicable standards and requirements.

The audit programs should include an introduction and audit objective section, a scope and methodology section, and detailed audit steps. At a minimum, the programs should include procedures to:

a. Follow up on past audit findings.

b. Evaluate internal controls.

c. Evaluate compliance with laws and regulations that may have a direct and material effect on the financial statements.

d. Conduct substantive testwork and verification of the financial statements and notes.

e. Prepare an auditors' report on the financial statements and other components, internal control, and compliance with laws and regulations.

f. Prepare a management letter, if necessary.

The audit programs utilized in the prior year will serve as the basis for completing this work.

Work Task 4. Prior Audit Findings: The Contractor shall perform an analysis of prior audit coverage to determine whether issues reported in prior years could affect the audit objectives.

Audit reports affecting the Corps would include reports issued by the DOE-OIG, GAO, internal auditors, or others.

For significant findings and recommendations, including IS-related findings and recommendations, issued under prior year financial statement audits, the audit workpapers must document the extent and appropriateness of management's corrective actions. This is necessary for disclosing the status of significant uncorrected weaknesses in the audit reports and/or management letter.

Work Task 5. Internal Control: The Contractor shall evaluate the Corps’ internal control over financial reporting to determine the extent of audit test work in accordance with GAGAS, and GAAS, specifically, Statements on Auditing Standards (SAS) 55, as amended by SAS 78 and 94, 109 and 110. This should be an extension of the internal control and compliance test work performed during prior year financial audits.

1. The Contractor shall proceed with an evaluation of the entity's internal controls to determine the extent of audit test work. Because Southeastern is a part of the Department and combines the financial information of the Corps, such evaluation must include appropriate controls with all entities on materially related matters.

2. Statement on Auditing Standards (SAS) No. 55, Consideration of the Internal Control Structure in a Financial Statement Audit, as amended by SAS No. 78, 94, 109 and 110, requires that, in every audit, the Contractor: (1) obtain an understanding of each of the components (control environment, accounting system, and control activities) of the internal control structure sufficient to plan the audit; and, (2) assess control risk for assertions related to account balances and transaction classes. Further, description of the components of internal control is summarized in SAS No. 78. SAS No. 55 is additionally amended by SAS No. 94, which discusses the effect of information technology on the internal control structure and on the auditor's understanding of internal controls and assessment of control risk. An entity's internal control structure comprises the policies and procedures established to provide reasonable assurance that specific entity objectives, relevant to the entity's financial statement audit, will be achieved.

Work Task 6. Compliance with Laws and Regulations: The Contractor shall evaluate the Corps internal controls to ensure compliance with laws and regulations in accordance with GAAS and GAGAS. The Contractor shall evaluate the entity's internal controls to ensure compliance with laws and regulations that may have a direct and material effect on the financial statements and to determine the extent of audit test work. This should be an extension of the internal control and compliance test work performed during prior years' financial audits. At a minimum, the tests for compliance should cover the standards identified in Exhibit D.

Work Task 7. Reporting: The Contractor shall prepare an audit report, or separate reports, on the financial statements and other components, internal control, and compliance with applicable laws and regulations. Additionally, the Contractor shall prepare a management letter to communicate other findings that were not required to be included in the audit report(s), but that need management attention. The audit report(s) and management letter shall be prepared in accordance with GAAS and GAGAS, including special reporting requirements defined in AU Sec. 623.04.

1. Contractor's Report Content – Note that the Audit Opinion, Report of Compliance with Laws and Regulations, and the Report on Internal Controls (see a, b, and c following) may be combined into one report at the Contractor's discretion.

a. Audit Opinion: A report on the financial statement audit shall include an Opinion on whether the financial statements and accompanying disclosure notes and schedules were presented fairly in accordance with GAAP (see Exhibit D). The Opinion shall also report on or refer to separate reports on compliance with laws and regulations and internal controls.

b. Internal Control: The Contractor will report on internal control over financial reporting as part of its Opinion or in a separate report. Regardless of the vehicle, the Contractor shall state that, with respect to the internal controls pertaining to the financial statements, the auditor obtained an understanding of the design of significant internal controls, determined whether they have been placed in operation, assessed control risk, and performed tests of the internal controls. The report shall identify significant internal controls deficiencies and any material weaknesses. At a minimum, this report shall identify the controls that are materially weak or involve significant deficiencies as a result of the evaluation. For these deficiencies, the report shall include specific recommendations for improvement, the estimated monetary impact where feasible, and management comments.

c. Management Letter: The Contractor shall prepare a management letter to communicate other deficiencies in internal control that were not required to be included in the audit report(s), but that need management attention. Further, the management letter shall describe internal control weaknesses and recommendations on how to improve the financial management aspects of these operations.

d. Audit Findings: As the audit work progresses, the Contractor shall prepare its audit findings for management comments. The audit findings shall include information on each of the following elements as required by GAGAS:

• Criteria – The standards or goals that were used to determine whether the auditee's accounting system, controls, compliance with laws and regulations, or other activities meet expectations.

• Condition – The situation that exists. As determined and documented by the audit, the condition should describe the control weakness, non-compliance, poor performance, or other circumstances that did not meet expectations defined by the criteria.

• Cause – The explanation as to why the control weakness, noncompliance, error, poor performance, or other circumstances occurred.

• Effect – The measure of the actual or potential consequences of the condition. Where possible, the effect should be expressed in monetary terms for the transactions, assets, or liabilities described in the condition and, if known, for all similar transactions, assets, or liabilities included in the financial statements.

In addition to the four elements above, Findings and Recommendations (F&Rs) should include background information where appropriate, references to related weaknesses issued in prior years, and recommendations that address the cause of the adverse condition. Further, the Contractor shall obtain management comments on each F&R. All F&Rs shall be indexed to the supporting workpapers and documented in the audit workpapers.

2. The Contractor Shall Submit Draft Opinion and Audit Reports as follows:

a. Special Purpose Opinion

(1) The Contractor shall submit the draft special purpose opinion report on Southeastern-only financial statements to the OIG and Southeastern’s COR by October 27, 2026, for the previous fiscal year’s audit, provided that Southeastern management provides the Contractor with a final trial balance and completed draft financial statements, to include footnotes, by October 15, 2026. Both parties (Contractor/Southeastern) agree that the above dates may change as stipulated by the Department of Energy.

(2) The Contractor shall submit the special purpose opinion report on Southeastern-only financial statements and statement of independence to the OIG and Southeastern’s COR by October 29, 2026, for the previous year’s audit, provided that Southeastern management provides the Contractor with a final trial balance and completed draft financial statements, to include footnotes, by October 15, 2026. Both parties (Contractor/Southeastern) agree that the above date may change as stipulated by the Department of Energy.

b. Opinion on Southeastern’s Combined Financial Statements

(1) The Contractor shall submit five copies of their draft audit report on Southeastern’s combined financial statements to Southeastern’s COR, Corps, and Southeastern for comment. The Corps and Southeastern will provide written comments on the draft report(s) and management letter. The Contractor shall consider all comments with regard to its draft report(s) and management letter and make changes as necessary.

Further, the Contractor will include management's comments to the audit report(s) and management letter, as necessary. The Contractor shall insert additional comments where disagreement exists, or further clarification is needed. If management's comments are under extensive deliberation, the audit report(s) and management letter shall include an appropriate reference and proceed with DOE-OIG-approved issuance. These deliverables cannot be finalized without the DOE-IG's approval. The draft audit report shall include the opinion, report on compliance with laws and regulations, report on internal controls, and management letter. Should any part of the draft audit report be prepared for issuance separately, that portion must be submitted to the COR in time for adequate review by the DOE OIG before it is issued. Delivery date is January 31, 2027, for the draft fiscal year 2026 audit, provided: a) Southeastern management provides final combined financial statement schedules by December 30, 2026, and b) Southeastern provides draft of combined financial statements including preliminary footnotes and supplemental schedules by January 09, 2026.

(2) The Contractor shall prepare and deliver to the COR a signed and unbound copy and an electronic copy in PDF format (without page numbers) of its final audit report(s) and management letter. Further, it shall deliver 10 signed and bound copies to the Corps and Southeastern. Delivery date is February 13, 2027, for the fiscal year 2026 audit.

c. Draft and final reports should be addressed to Southeastern’s management.

d. The Contractor’s Opinion published in Southeastern’s Annual Report should be on the

Contractor’s letterhead and must be provided too Southeastern. Audit programs and draft and final reports shall be cross-indexed to supporting workpapers and provided to the DOE OIG (when requested for oversight purposes [See Section VI of this task order]).

Management comments on the draft report shall be added to the final reports and additional comments shall be inserted by the Contractor where disagreement exists, or further clarification is needed. The Contractor shall also resolve any audit report references questioned by the DOE OIG. (Reference: DOE OIG Audit Manual).

Exhibit B

SPECIAL INSTRUCTIONS

1. Statement of Independence: The Contractor shall provide the COR a written statement certifying that it, its auditors, and its specialists are free both in fact and appearance from personal, external, and organizational impairments to independence in all matters relating to the audit work as described in GAGAS. Specifically, the Contractor shall certify that it (1) is not biased because of its past, present or currently planned interests (financial, contractual, organizational, professional, individual or otherwise) which relate to the financial audit work;

(2) is not providing non-audit or consulting services to the Department of Energy or to the entities whose financial information are combined with Southeastern’s financial statements;

and (3) does not obtain any unfair competitive advantage over other parties by virtue of its performance of this work. After the audit has commenced, the Contractor shall immediately notify the COR of possible impairments to independence, including contemplation of non-audit services. The Contractor shall consider not only whether it is independent and whether its attitudes and beliefs permit it to be independent, but also whether there is anything about its situation which might lead others to question its independence.

2. Fraud & Illegal Acts: In accordance with GAGAS, the Contractor is responsible for being aware of the characteristics and types of vulnerabilities and potential illegal acts associated with the area being audited in order to identify indications that illegal acts may have occurred. Also, where an assessment of compliance with laws, regulations, and terms of contracts is required, contractor auditors are to assess the risk of fraud, abuse, or illegal acts occurring. If the assessment shows the risk is high, the auditor should design audit steps to provide reasonable assurance of detecting fraud, abuse, or illegal acts. The audit steps should be consistent with AU-C 240, Consideration of Fraud in a Financial Statement Audit requirements.

If, during the course of the examination, contractor auditors uncover characteristics of illegal acts, including fraud or other situations that need to be brought to attention of management, they shall immediately notify the COR and DOE-IG for the assigned work order by telephone and confirm the conversations in writing. As specified by the COR and DOE-IG, the contractor auditors may be required to do additional fieldwork sufficient to be able to describe and document the conditions noted. Further, the Contractor shall submit copies of the documents in question to the COR and DOE-IG and shall not discuss the condition with management without specific direction from the COR and DOE-IG.

Examples of the types of situations that need to be brought to the management's attention are the apparent commission of or intent to commit an illegal or wrongful act or series of acts to achieve a purpose inconsistent with a contract, the law, or public policy in order to obtain money, property, or personal advantage. Specific examples might include: deceit; trickery;

cheating; intentional deception; misrepresentation; deliberate misconduct, such as keeping a double set of books; making alterations, false invoices, or false documents; destruction of records; concealment of assets; covering up sources of income; handling of one's affairs to avoid making records that are customary in business transactions; and any other conduct that would tend to be misleading or conceal relevant information or data.

Exhibit B

3. Staff Qualifications and Education: The staff assigned to the audit engagement should meet the staff qualification and continuing education requirements prescribed by GAGAS.

The Contractor shall provide resumes of its partners, senior managers, and managers assigned to the audit showing their qualifications meet the GAGAS requirements.

Additionally, the Contractor shall provide documentation that the contractor auditors meet the continuing education requirements prescribed by GAGAS.

4. Workpapers: The Contractor shall prepare all workpapers in accordance with GAGAS. The

DOE-OIG and/or the GAO shall have access to review and photocopy the Contractor's work papers and other analytical documents during the course of the audit and upon completion of the work. Based upon this review and any finding of sub-standard work, the Contractor will be required to perform corrective or additional work within the work order's scope at the Contractor's expense.

Exhibit C

ORGANIZATION AND BACKGROUND

A. SOUTHEASTERN

The Southeastern Power Administration was created in 1950 by the Secretary of the Interior to perform activities assigned to the Secretary by Section 5 of the Flood Control Act of 1944. In 1977, Southeastern was transferred to the newly-created United States Department of Energy.

Southeastern, headquartered in Elberton, Georgia, is responsible for marketing electric power and energy generated at reservoirs operated by the Corps. This power is marketed in ten states:

Virginia, West Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Tennessee, and Kentucky. By special delegations, power is also marketed in Illinois.

B. SOUTHEASTERN FEDERAL POWER PROGRAM (SeFPP)

The Southeastern Federal Power Program consists of all activities associated with the production, transmission, and disposition of all Federal power marketed under Section 5 of the Flood Control Act of 1944. The program includes certain accounts of two separate Federal Government Agencies – Southeastern and the Corps. Southeastern and the Corps are separately managed and financed and each maintains its own accounting records.

Southeastern purchases, transmits, and markets power within four separate power systems:

Georgia-Alabama-South Carolina; Jim Woodruff; Cumberland Basin; and Kerr-Philpott. As of September 30, 2025, the four power systems include twenty-two hydroelectric generating projects owned and operated by the Corps. The projects serve multiple purposes, including power, recreation, navigation, and flood control. However, these combined financial statements include only those expenses and net assets that are expected to be recovered through sales of hydroelectric power and other related income.

The objectives of Southeastern are to market electric power and energy generated by the Federal reservoirs and to encourage widespread use of this power at the lowest possible cost to customers. Power rate preference, regarding power sales, is granted to public bodies and cooperatives given that Southeastern does not own transmission facilities and must contract with other facilities to provide transmission of this Federal power. Southeastern’s responsibilities include the negotiation, preparation, execution, and administration of contracts for the sale of electric power; preparation of repayment studies to set wholesale rates; and activities pertaining to the operation of power facilities to ensure and maintain continuity of electric service to customers.

Costs of multi-purpose Corps projects are allocated to individual purposes through a cost allocation process. The portion of total project costs allocated to power is included in the accompanying combined balance sheet as utility plant and Federal investment. An amount covering Corps employees’ salaries, pensions, and other benefits allocated to power is included in operations and maintenance expenses.

1. Operating Expenses and Financing Sources

For the FY 2026 budget, Southeastern re $9.3 million for Program Direction and $81.8 million for Purchase Power and Wheeling. Southeastern’s financing sources include offsetting collections from customer receipts for Program Direction. Purchase Power and Wheeling expenses are funded through offsetting collections from customer receipts and net billing. Revenues received from power sales are deposited into the U.S. Treasury General Fund. These deposits generally offset and reimburse the appropriated funds in full and are sufficient to allow repayment of the Federal investment in the projects.

2. Southeastern's Accounting Organization and Location

Southeastern's ORACLE Integrated Accounting System (OIAS) is designed to comply with applicable laws and regulations. The Southeastern OIAS is comprised of subsystems covering; 1) General Ledger; 2) purchasing; 3) accounts payable; and 4) accounts receivable. Southeastern’s detailed transaction records are maintained on the OIAS with supporting documentation. Key Southeastern accounting personnel are:

• Carter Edge

Chief Financial Officer (CFO) and Assistant Administrator, Finance & Marketing 1166 Athens Tech Road Elberton, GA 30635-6711 Phone: (706) 213-3844 carter.edge@sepa.doe.gov

• Charcey Gaines (COR) Accountant 1166 Athens Tech Road Elberton, GA 30635-6711 Phone: (706) 213-3835 Fax: (706) 213-3884 charcey.gaines@sepa.doe.gov

3. Corps' Accounting Organization and Locations

Southeastern markets power for 22 hydroelectric plants operated by the Corps. A substantial portion of the work will be performed at any or all of the Corps District Offices. The Corps locations that maintain the financial records are:

• Savannah, Georgia

• Mobile, Alabama

• Nashville, Tennessee

• Wilmington, North Carolina mailto:carter.edge@sepa.doe.gov Charcey Gaines Need to send to Coral 1.16.25

4. Southeastern's Summary Financial Data

Summary Financial Data is sent to the Office of Financial Control and Reporting of the Controller's Office at Germantown, MD, where it is entered into the Department’s Standard Accounting and Reporting System (STARS) for consolidation and external reporting to Treasury for other Government-wide reporting.

C. AUDIT HISTORY

Southeastern officials stated that no major audit findings remain open from prior years.

The FMFIA of 1982 requires the head of each executive agency to prepare an Annual Report on the evaluation of its internal control system. Southeastern's Administrator annually submits a report for the year ended September 30th. The latest FMFIA report, covering FY 2026 stated that no material weaknesses were uncovered.

Department of Energy Office of Inspector General (DOE-OIG):

The primary point of contact for the DOE-OIG activity is:

Andre Smith, CPA U. S. Department of Energy Office of Inspector General 19901 Germantown Road IG-371.1, Room J-411 Germantown, MD 20874 Phone: (301) 903-0599 Fax: (301) 903-4656 E-mail: andre.smith@hq.doe.gov mailto:andre.smith@hq.doe.gov

Exhibit D

FEDERAL AND DEPARTMENTAL ACCOUNTING, AUDITING, INFORMATION

SYSTEM SECURITY, AND BUDGETARY STANDARDS AND GUIDANCE

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP): The Office of Management and Budget (OMB) Circular A-136, Financial Reporting Requirements, provides a hierarchy describing the generally accepted accounting principles for the Federal Government.

The OMB Circular incorporates the concepts and standards contained in the Statements of Federal Financial Accounting Concepts (SFFAC) and Statements of Federal Financial Accounting Standards (SFFAS) recommended by the Federal Accounting Standards Advisory Board (FASAB) and approved by the Secretary of the Treasury, the Director of the OMB, and the Comptroller General.

Hierarchy of Accounting Principles and Standards: OMB Circular A-136 states that the FASAB is the body designated by the American Institute of Certified Public Accountants (AICPA) as the source of GAAP for Federal reporting entities. The AICPA through Statement on Auditing Standards (SAS) No. 69, The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles (GAAP) in the Independent Auditors' Report, as amended by SAS No. 91, Federal GAAP Hierarchy, established the following hierarchy of accounting principles for Federal governmental entities. SSFAS No. 34 incorporates this hierarchy into the FASAB’s authoritative literature:

1. FASAB Statements and Interpretations plus AICPA and Financial Accounting Standards Board (FASB) pronouncements if made applicable to Federal governmental entities by a FASAB Statement or Interpretation;

2. FASAB Technical Bulletins and the following pronouncements if specifically made applicable to Federal governmental entities by the AICPA and cleared by the FASAB:

AICPA Industry Audit and Accounting Guides and AICPA Statements of Position;

3. AICPA Accounting Standards Executive Committee (ACSEC) Practice Bulletins if specifically made applicable to Federal governmental entities and cleared by the FASAB and Technical Releases of the Accounting and Auditing Policy Committee of the FASAB; and,

4. Implementation guides published by the FASAB staff, as well as practices that are widely recognized and prevalent in the Federal government.

GENERALLY ACCEPTED GOVERNMENT AUDITING STANDARDS (GAGAS):

GAGAS, including any subsequent revisions, are to be applied in these financial audits. AICPA standards for fieldwork and reporting have been incorporated into GAGAS for financial audits.

DEPARTMENT OF ENERGY (Department) DIRECTIVES: The Department issues Policies, Orders, Notices, Manuals, and Guides which are intended to direct, guide, inform, and instruct employees in the performance of their jobs, and enable them to work effectively within DOE and with agencies, contractors, and the public. Departmental Directives include:

• DOE M 135.1-1A, Department of Energy Budget Execution Funds Distribution and Control Manual, January 9, 2006;

• DOE O 200.1A, Information Technology Management, December 23, 2008;

• DOE O 205.1B, Department of Energy Cyber Security Program, May 16, 2011;

• DOE P 205.1, Departmental Cyber Security Management Policy, May 8, 2001;

• DOE O 221.1A, Reporting Fraud, Waste and Abuse to the OIG, April 19, 2008;

• DOE O 221.3A, Establishment of Management Decisions on Office of Inspector General

Reports; April 19, 2008;

• DOE O 224.3, Audit Resolution and Follow-up Program, January 24, 2005;

• DOE O 226.1B Implementation of Department of Energy Oversight Policy, April 25, 2011;

• DOE P 226.1B, Department of Energy Oversight Policy, March 4, 2011;

• DOE O 413.1B, Internal Control Program, October 28, 2008;

• DOE O 520.1A, Chief Financial Officer Responsibilities, November 21, 2006;

• DOE O 523.1, Financial Management Oversight, August 31, 2006;

• DOE O 534.1B, Accounting, January 6, 2003;

Department of Energy Acquisition Regulations (DEAR): The DEAR establishes uniform acquisition policies which implement and supplement the Federal Acquisition Regulation (FAR).

The DEAR and amendments thereto are issued by the Procurement Executive pursuant to a delegation from the Secretary in accordance with the authority of section 644 of the Department of Energy Organization Act (42 U.S.C. 7254), section 205(c) of the Federal Property and Administrative Services Act of 1949, as amended, (40 U.S.C. 486(c)), and other applicable law.

The FAR and DEAR apply to all DOE acquisitions of supplies and services, which obligate appropriated funds, unless otherwise specified in this chapter. The DEAR requirement identified includes:

• Department of Energy Acquisition Regulation (DEAR), Part 931 - Contract Cost Principles and Procedures.

Department of Energy Accounting Handbook:

• DOE's Chief Financial Officer's Accounting Handbook

FEDERAL ACQUISITION REGULATION: The FAR was established to codify uniform policies for acquisition of supplies and services by executive agencies. It is issued and maintained jointly, pursuant to the OFPP Reauthorization Act, under the statutory authorities granted to the Secretary of Defense, Department of Defense (DOD); Administrator, General Services Administration (GSA); and the Administrator, National Aeronautics and Space Administration. Statutory authorities to issue and revise the FAR have been delegated to the Procurement Executives in DOD, GSA, and NASA. The FAR requirements identified include:

• Federal Acquisition Regulation (FAR) Part 31 - Contract Cost Principles and Procedures.

FINANCIAL SYSTEMS INTEGRATION OFFICE (FSIO): The FSIO within the General Services Administration was formerly known as the Joint Financial Management Improvement Program (JFMIP), which was a joint and cooperative undertaking of Treasury, GAO, OMB, and the Office of Personnel Management (OPM) working in cooperation with each other and other agencies to improve financial management practices in government. The Program was given statutory authorization in the Budget and Accounting Procedures Act of 1950 (31 USC 65) to promote strategies and guide financial management improvement across government; review and coordinate central agencies activities and policy promulgations; and act as a catalyst and clearinghouse for sharing and disseminating information about good financial management practices. However, in December 2004, the JFMIP Principals voted to modify the JFMIP roles and responsibilities, and, as a result, OMB, and the Chief Financial Officers (CFO) Council worked with FSIO to update the FSIO mission and activities scope. As such, the FSIO currently is responsible for three major areas of activities: 1) core financial systems requirements development, testing and product certification; 2) supporting the Federal financial community on priority projects; and 3) conducting outreach through an annual financial management conference and other related activities. In Fiscal Year 2006, the FSIO’s priority is to complete the Financial Management Line of Business (FMLOB) work streams: 1) develop performance measures (cost, quality, timeliness) to assess the performance of financial services offered by a financial service organization; 2) develop standard business processes, data specifications and business roles for core financial management functions to be adopted by all federal agencies; and

3) develop a common government-wide accounting code structure, including an applicable set of definitions and the layout to which federal agencies’ new financial systems must adhere.

• Acquisition Financial System Requirements, June 2002;

• Benefit System Requirements, September 2001;

• Core Financial Systems Requirements, January 2006;

• Core Financial Systems Requirements, Crosswalk Document, January 2006;

• Financial Requirements Source Matrix Document, July 2002;

• Framework for Federal Financial Management Systems, May 2004;

• Glossary for Core Financial Systems Requirements, June 2006;

• Grant Financial System Requirements, June 2000;

• Human Resources and Payroll System Requirements, April 1999;

• Insurance Systems Requirements, June 2006;

• Inventory, Supplies, and Materials System Requirements, August 2003;

• JFMIP Plan for an Integrated Requirements Database, May 2004;

• Property Management System Requirements, October 2000;

• Revenue System Requirements Document, January 2003; and

• Travel System Requirements, July 1999.

OFFICE OF MANAGEMENT BUDGET (OMB): OMB requirements include, but are not limited to, the following Circulars, Bulletins, and Memorandums:

OMB Circulars:

• Circular A-11, Preparation and Submission of Budget Estimates, dated June 21, 2010;

• Circular A-50, Audit Follow-up (and Resolutions), dated September 29, 1982;

• Circular A-123, Management’s Responsibility for Internal Control, revisions dated

December 21, 2004;

• Circular A-127, Financial Management Systems, dated July 23, 1993, revised January 9, 2009;

• Circular A-130, Management of Federal Information Resources, as revised; Transmittal Memorandum #4, dated November 28, 2000;

• OMB Circular A-130, Appendix III, Security of Federal Automated Information Resources;

• Circular A-134, Financial Accounting Principles and Standards, dated May 20, 1993, and updates; and,

• OMB Circular A-136, Financial Reporting Requirements, dated October 27, 2011.

OMB Bulletins:

• Bulletin No. 98-08, Audited Financial Statements, dated August 24, 1998;

• Bulletin No. 21-4, Audit Requirements for Federal Financial Statements, amended

September 23, 2009, and any subsequent revisions or replacements of the OMB Bulletin;

and,

• Bulletin No. 09-02, Budget Execution of the American Recovery and Reinvestment Act of 2009 Appropriations, dated February 25, 2009.

OMB Memorandum:

• M-00-07, Incorporating and Funding Security in Information Systems Investments, dated

February 28, 2000;

• M-02-01, Guidance for Preparing and Submitting Security Plans of Action and

Milestones, October 19, 2001;

• M-06-15, Safeguarding Personally Identifiable Information, May 22, 2006;

• M-06-16, Protection of Sensitive Agency Information, June 23, 2006;

• M-06-19, Reporting Incidents Involving Personally Identifiable Information and

Incorporating the Cost for Security in Agency Information Technology Investments, July 12, 2006;

• M-07-16, Safeguarding Against and Responding to the Breach of Personally Identifiable Information, May 22, 2007;

• M-09-02, Information Technology Management Structure and Governance Framework, October 21, 2008;

• M-09-06, Implementation Guidance for the Federal Financial Management Improvement Act, January 9, 2009;

• M-09-10, Initial Implementing Guidance for the American Recovery and Reinvestment Act of 2009, February 18, 2009;

• M-09-14, Recovery Act Implementation – Improving Grants.gov and Other Critical Systems, March 9, 2009;

• M-09-15, Updated Implementing Guidance for the American Recovery and Reinvestment Act of 2009, April 3, 2009;

• M-09-18, Payments to State Grantees for Administrative Costs of Recovery Act Activities, May 11, 2009;

• M-09-19, Guidance on Data Submission under the Federal Funding Accountability and Transparency Act (FFATA), June 1, 2009;

• M-09-21, Implementing Guidance for the Reports on Use of Funds Pursuant to the American Recovery and Reinvestment Act of 2009, June 22, 2009;

• M-09-30, Improving Recovery Act Recipient Reporting, September 11, 2009; and…