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0385 Audit Findings According to Inspector General June Gibbs Brown, cost allocation concepts and procedures have not been applied properly by BuRec on this project. BuRec incorrectly allocated $69 million, exclusive of interest, to non-reimbursable rather than reimbursable features of the project. Over the 50 year repayment period this will accumulate to a $250 million shortfall. This deficit will be borne by the general taxpayers, thus allowing the project's power and water rates, which are already low, to be even lower. . . Shortfall as a kesult of the Inspector General's Findings a) Initial Cost: $69 million b) Accumulated deficit by the year 2024: $250 million Audit Recommendations The Inspector General specifically recommended that BuRec revise cost allocations as follows: 1. keduce non-reimbursable Fish and Wildlife costs by $49.4 million in order to correct the misallocation from the 'use of the outdated Gross Sportsmen's Expenditures method to calculate Fish and Wildlife benefits. 2. Reclassify $8.3 million of certain construction costs from the non-reimbursable Scenery Conservation category to various reimbursable project functions. The purpose of this construction was not solely for conserving scenery, as required by the authorizing legislation for classification as Scenery Conservation. 3. Reclassify a portion ($3.9 million) of the costs assigned to the non-reimbursable Recreation and Scenery Conservation category to Fish and Wildlife separable costs, because the costs of certain features of Pueblo Reservoir and Turquoise Lake which also serve Fish and Wildlife functions were assigned wholly to Recreation and Scenery. The amount classified as separable Fish and Wildlife costs directly affects the amount of joint costs to be allocated to Fish and Wildlife. The end result is to decrease Fish and Wildlife joint costs by $1.7 million with most of chis amount transferred to the projecc's reimbursable functions. 60