Audit 302894

Finding 2022-001: Significant Deficiency in Internal Control over Compliance, – Cash Management Agency: U.S. Department of Energy Award Number: DE-IE0000098 Assistance Listing Number: 81.087 Program Name: Research and Development Program Cluster: Renewable Energy Research and Development Criteria: Based on 2 CFR section § 200.514, auditors are required to test that internal controls are effective in preventing or detecting noncompliance. Management is responsible for the design, implementation, and maintenance of internal controls over compliance. There were inadequate controls over cash management. Condition: Alaska Village Electric Cooperative, Inc. and Subsidiary started drawing down on this award for the first time in the current year. A single request was made during the year for reimbursement of funds. During examination the support for request for reimbursement, there was no noncompliance identified. However, it was determined there were not sufficient review controls implemented to prevent or detect potential noncompliance with cash management requirements. Cause: The method for requesting reimbursement over the award are different than other programs operated by Alaska Village Electric Cooperative, Inc. and Subsidiary Requests are entirely electronic and controls were not originally in place to address the method of reimbursement requests. Effect or potential effect: Without sufficient review, it would be possible for funds to be requested for unallowable costs or prematurely resulting in funds not being properly tracked for potential earnings requiring repayment to the granting agency. Questioned costs: None identified. Context: In accordance with Uniform Guidance, the auditor performed inquiries with staff and management surrounding to controls and procedures surrounding the compliance requirements of the major programs. Through this inquiry it was identified that sufficient controls were not in place for cash management of the program. Identification as a repeat finding: Not applicable, not a repeat finding. Recommendation: We recommend Alaska Village Electric Cooperative, Inc. and Subsidiary develop controls procedures to ensure compliance with cash management requirements are met. Views of responsible officials: Management acknowledges the observed recommendation. New controls will be implemented to ensure proper review of requests for reimbursement are performed.

Finding 2022-002: Significant Deficiency in Internal Control over Compliance, Noncompliance – Reporting Agency U.S. Department of Energy and the Denali Commission Award number DE-IE0000098 and Various Denali Commission Awards Assistance listing number: 81.087 and 90.100 Program names: Research and Development Program Cluster: Renewable Energy Research and Development and Denali Commission Programs Criteria: Alaska Village Electric Cooperative, Inc. and Subsidiary is required to submit the single audit report and Form SF-SAC within nine months of the fiscal year end. Cause: The single audit was not completed in time to file the form, due to a delay in preparation of records. Effect or potential effect: Alaska Village Electric Cooperative, Inc. and Subsidiary was not able to file the Form FS-SAC by the required time. Questioned Costs: None Context: The Form SF-SAC is due nine months after the fiscal year-end. The form for the fiscal year ending December 31, 2022 was filed late. Identification as a repeat finding: Not applicable, not a repeat finding Recommendation: We recommend Alaska Village Electric Cooperative, Inc. and Subsidiary implement internal controls and procedures to ensure single audit records are timely prepared and reconciled to ensure timely submission of the form SF-SAC in the future. View of responsible Officials: Management acknowledges the observed recommendation. Management will ensure timely preparation and reconciliation of audit schedules related to single audit to ensure timely reporting.

Finding 2022-002: Significant Deficiency in Internal Control over Compliance, Noncompliance – Reporting Agency U.S. Department of Energy and the Denali Commission Award number DE-IE0000098 and Various Denali Commission Awards Assistance listing number: 81.087 and 90.100 Program names: Research and Development Program Cluster: Renewable Energy Research and Development and Denali Commission Programs Criteria: Alaska Village Electric Cooperative, Inc. and Subsidiary is required to submit the single audit report and Form SF-SAC within nine months of the fiscal year end. Cause: The single audit was not completed in time to file the form, due to a delay in preparation of records. Effect or potential effect: Alaska Village Electric Cooperative, Inc. and Subsidiary was not able to file the Form FS-SAC by the required time. Questioned Costs: None Context: The Form SF-SAC is due nine months after the fiscal year-end. The form for the fiscal year ending December 31, 2022 was filed late. Identification as a repeat finding: Not applicable, not a repeat finding Recommendation: We recommend Alaska Village Electric Cooperative, Inc. and Subsidiary implement internal controls and procedures to ensure single audit records are timely prepared and reconciled to ensure timely submission of the form SF-SAC in the future. View of responsible Officials: Management acknowledges the observed recommendation. Management will ensure timely preparation and reconciliation of audit schedules related to single audit to ensure timely reporting.

Finding 2022-001: Significant Deficiency in Internal Control over Compliance, – Cash Management Agency: U.S. Department of Energy Award Number: DE-IE0000098 Assistance Listing Number: 81.087 Program Name: Research and Development Program Cluster: Renewable Energy Research and Development Criteria: Based on 2 CFR section § 200.514, auditors are required to test that internal controls are effective in preventing or detecting noncompliance. Management is responsible for the design, implementation, and maintenance of internal controls over compliance. There were inadequate controls over cash management. Condition: Alaska Village Electric Cooperative, Inc. and Subsidiary started drawing down on this award for the first time in the current year. A single request was made during the year for reimbursement of funds. During examination the support for request for reimbursement, there was no noncompliance identified. However, it was determined there were not sufficient review controls implemented to prevent or detect potential noncompliance with cash management requirements. Cause: The method for requesting reimbursement over the award are different than other programs operated by Alaska Village Electric Cooperative, Inc. and Subsidiary Requests are entirely electronic and controls were not originally in place to address the method of reimbursement requests. Effect or potential effect: Without sufficient review, it would be possible for funds to be requested for unallowable costs or prematurely resulting in funds not being properly tracked for potential earnings requiring repayment to the granting agency. Questioned costs: None identified. Context: In accordance with Uniform Guidance, the auditor performed inquiries with staff and management surrounding to controls and procedures surrounding the compliance requirements of the major programs. Through this inquiry it was identified that sufficient controls were not in place for cash management of the program. Identification as a repeat finding: Not applicable, not a repeat finding. Recommendation: We recommend Alaska Village Electric Cooperative, Inc. and Subsidiary develop controls procedures to ensure compliance with cash management requirements are met. Views of responsible officials: Management acknowledges the observed recommendation. New controls will be implemented to ensure proper review of requests for reimbursement are performed.

Finding 2022-002: Significant Deficiency in Internal Control over Compliance, Noncompliance – Reporting Agency U.S. Department of Energy and the Denali Commission Award number DE-IE0000098 and Various Denali Commission Awards Assistance listing number: 81.087 and 90.100 Program names: Research and Development Program Cluster: Renewable Energy Research and Development and Denali Commission Programs Criteria: Alaska Village Electric Cooperative, Inc. and Subsidiary is required to submit the single audit report and Form SF-SAC within nine months of the fiscal year end. Cause: The single audit was not completed in time to file the form, due to a delay in preparation of records. Effect or potential effect: Alaska Village Electric Cooperative, Inc. and Subsidiary was not able to file the Form FS-SAC by the required time. Questioned Costs: None Context: The Form SF-SAC is due nine months after the fiscal year-end. The form for the fiscal year ending December 31, 2022 was filed late. Identification as a repeat finding: Not applicable, not a repeat finding Recommendation: We recommend Alaska Village Electric Cooperative, Inc. and Subsidiary implement internal controls and procedures to ensure single audit records are timely prepared and reconciled to ensure timely submission of the form SF-SAC in the future. View of responsible Officials: Management acknowledges the observed recommendation. Management will ensure timely preparation and reconciliation of audit schedules related to single audit to ensure timely reporting.

Finding 2022-002: Significant Deficiency in Internal Control over Compliance, Noncompliance – Reporting Agency U.S. Department of Energy and the Denali Commission Award number DE-IE0000098 and Various Denali Commission Awards Assistance listing number: 81.087 and 90.100 Program names: Research and Development Program Cluster: Renewable Energy Research and Development and Denali Commission Programs Criteria: Alaska Village Electric Cooperative, Inc. and Subsidiary is required to submit the single audit report and Form SF-SAC within nine months of the fiscal year end. Cause: The single audit was not completed in time to file the form, due to a delay in preparation of records. Effect or potential effect: Alaska Village Electric Cooperative, Inc. and Subsidiary was not able to file the Form FS-SAC by the required time. Questioned Costs: None Context: The Form SF-SAC is due nine months after the fiscal year-end. The form for the fiscal year ending December 31, 2022 was filed late. Identification as a repeat finding: Not applicable, not a repeat finding Recommendation: We recommend Alaska Village Electric Cooperative, Inc. and Subsidiary implement internal controls and procedures to ensure single audit records are timely prepared and reconciled to ensure timely submission of the form SF-SAC in the future. View of responsible Officials: Management acknowledges the observed recommendation. Management will ensure timely preparation and reconciliation of audit schedules related to single audit to ensure timely reporting.