METROPOLITAN EDISON COMPANY - Pennsylvania Public Utility ...

the internal audit was to determine if the mapping was accurate. Key controls evaluatedduring the internal audit included:• Restriction of access to the FERC software and to the SAP FERC module toappropriate personnel.• Appropriate FERC account mapping, including direct accounts, tracedaccounts, new general ledger accounts and new cost centers.• Completeness of the quarterly variance analysis.• Completeness and accuracy of General Accounting procedures.• Appropriate review processes in place to ensure accurate FERC reporting.Based on sample testing, Internal Auditing concluded that the controlssurrounding the FERC account mapping process were appropriate to ensure accurateFERC reporting. Internal Auditing identified opportunities for improving the accountmapping process in the following areas:• Summarized account disbursement – The FERC mapping process includes agroup of small dollar accounts that fall below established thresholds which aresummarized into one small dollar line item in the FERC trace table. IADrecommended that the summarized bucket be further analyzed to determine ifthe limited review of the summarized bucket tracing was representative of thetotal population of dollars in the summarized bucket. Internal Auditing alsorecommended periodic monitoring to ensure allocated costs do not aggregateto significant or material costs.• Quarterly variance review process – Each quarter, the FERC accountbalances are compared to the prior year’s balances for the same time period,and variances of plus or minus $500,000 are analyzed for reasonableness.Testing confirmed that variances exceeding the threshold are explained;however, management or supervisory review did not occur. Internal Auditingrecommended that a review process be implemented to confirm thecompleteness and accuracy of the explanations and question any that werenot clear.• Desktop procedures for the FERC account mapping process – InternalAuditing reviewed the process and procedures documenting the FERCmonthly processing, the FERC Form No. 3-Q report preparation, and theFERC Form No. 1 report preparation to ensure completeness ofdocumentation for the purposes of cross-training and knowledge sharing ofthe complex FERC account mapping process. Several areas forimprovement were recommended, including: Documenting all steps performed in the monthly process. Documenting assumptions, expectations, and checkpoints. Documenting all steps performed in the Form 3-Q process.- 30 -