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:012~Z ' D-R - A - F - T \. P:\User\Thomas\95Rate\Iss $41M.Rat May 12. 1993 $41 Million Audit Adiustment (alt Note: "0 Finance is wor~inq to qive us a brea~down of the contents of the $41 million. so we will revise the Issue Paper and put in heavy-duty details when we qet it.) Issue . The FY 1992 Western Annual Report indicated a 541 million inconsistency between the CRSP PRS and Western's audited financial statements. Background . In FY 1987, Western began implementing a new automated Financial .0 Management System (FMS). It took over three years to get the FMS -Operational. During that time, the closing of the financial records each year was incomplete and required numerous adjustments. . Regular crosswalks (documented reconciliation) between the F/S and PRS were conducted during this period, and agreed-upon audit adjustments were made in the PRS. However, because of the operating problems within FMS, those same adjustments (or related adjustments) were not made in the F/S. They were maintained in separate schedules by the auditors. ( . During the FY 1992 audit of the financial records, it was determined that the adjustments should be recognized in the F/S. The adjustments were shown in Western's Annual Report. These adjustments are being made to the financial records during FY 1993. Problem: . The Annual Report shows revenues in FY 1992 of SI48 million, while operations data show only SI07 million. The difference is due to auditors' revisions. Estimated revenues recorded since FY 1986 have been replaced with actual figures. These adjustments were not recorded in the F/S until FY 1993. Recommendation: . This is a non-issue, as far as the rate process is concerned. It can be ignored. A 11 of the adjustments were made in the PRS in the years in which they originally occurred. They have no further rate impact beyond that already seen, The financial records are merely being adjusted to match the changes already made in the PRS. , \ I