1. What does DAA do?

The Division of Audits and Accounting (DAA) administers the Office of Enforcement’s (OE) audit,

accounting, and forms administration programs to support the Commission’s mission to assist

consumers in obtaining reliable and efficient energy service, at a reasonable cost, through

appropriate regulatory and market means. DAA’s primary goal is to enable the Commission to

achieve its strategic objectives by assisting in the development of just and reasonable rates and

increasing compliance with Commission regulations and policies.

DAA’s audit program supports the Commission’s strategic objectives through public risk-based

audits. DAA performs various types of audits that respond to the needs of the Commission,

public, and industry, and advises the Commission on compliance and other matters. The audit

program serves as a resource for the Commission to examine risk areas within the regulated

industries and inform the Commission’s actions regarding rates, tariffs, financial and operational

transparency, policy initiatives, law, reliability, and other areas in the electric, natural gas, and

oil industries. DAA audits also provide jurisdictional entities an opportunity to work with audit

staff to evaluate and improve their overall compliance, and to identify potential areas of

noncompliance before they escalate. For the Commission’s regulated industries, DAA’s publicly

issued audit commencement letters and audit reports provide insight into and valuable

guidance on areas of emphasis and concern.

DAA’s accounting program is a vital component of the Commission’s strategic goal of

establishing just and reasonable cost of service rates, terms, and conditions by: (1) overseeing

the accounting and reporting of financial information affecting cost of service rates; (2) acting as

the focal point for interpretive guidance concerning the Commission’s financial accounting and

reporting rules, orders, regulations, and statutes; and (3) advising the Commission and industry

on accounting and other financial issues. The accounting program facilitates the consistent

reporting of financial information and ensures that an entity’s operations are reported in a

manner that most appropriately supports ratemaking analysis. DAA’s accounting program also

provides accounting expertise to the Commission’s other program offices and assists in the

development of Commission policies and proposed rulemakings to ensure these initiatives

properly consider and evaluate the related accounting and financial issues.

DAA’s forms administration program ensures compliance with certain Commission filing

requirements, including the Electric Quarterly Report and FERC Form Nos. 1, 2, 6, and 60. The

Commission requires companies subject to its jurisdiction to submit financial statements,

operational data, and annual and quarterly reports regarding jurisdictional sales, and the

Commission uses these reports for various analyses, such as evaluations of whether existing

rates continue to be just and reasonable. DAA’s forms administration program ensures that

companies report accurate and complete information in these reports and in a timely manner.

2. Why was my company selected for an audit?

DAA selects audit candidates based on its annual audit planning process, which gathers input

from a variety of sources, including but not limited to: DAA data screens, technical research of

Office of Enforcement

Division of Audits and Accounting

Frequently Asked Questions
financial and rate information by DAA staff, and collaboration with other Commission program 

offices. Based on this input, DAA selects audit topics and audit candidates using a risk-based 

methodology that supports the objectives of the Commission’s strategic plan. Additional risk 

factors that impact the selection of audit candidates include the length of time since previous 

audit, company involvement in areas of high audit risk to the Commission, and the results of 

various data screens. 

3. How can an audited company make the audit process most efficient?

DAA strives to carry out a robust and effective audit program while giving appropriate 

consideration to opportunities to add efficiencies to the audit process and possibly shorten the 

length of the audit. In our experience, audits operate most efficiently when there is strong 

communication between the audited company and the audit team, responses to data requests

are timely and complete, and technical discussions are held with the most knowledgeable staff. 

Audits are also most efficient when the audited company is well prepared by following the 

suggestions provided in FAQ #4 (below).

4. How can I prepare for an audit?

Companies with a strong culture of compliance from the top down and design and implement 

compliance controls that are integrated into their operations are best prepared for an audit. 

DAA recommends companies review OE’s Report on Enforcement, which highlights compliance 

areas addressed in recent audits. Also, companies should review DAA’s publicly issued audit 

reports to learn about findings and recommendations that DAA identifies in its audits. In these 

audit reports, the Scope and Methodology section provides insight and details on the types of 

reviews and analyses that are performed during an audit. With this added insight, companies 

can focus its own internal efforts, including internal audit activities and compliance controls, on 

similar areas. All audit reports can be accessed from the Commission’s eLibrary under FA and PA 

dockets.

5. What type of outreach does DAA perform?

DAA actively engages in regular industry outreach with trade associations, such as the Interstate

Natural Gas Association of America, Edison Electric Institute, Association of Oil Pipe Lines, and

Natural Gas Supply Association, and encourages jurisdictional companies to contact DAA with 

any inquiries or concerns. As a result of such interactions, DAA considers opportunities to 

enhance the efficiency, transparency, and effectiveness of its audit and accounting programs. 

For example, in response to industry comments, DAA adopted a process of formally notifying a 

company by email from the Director of DAA of the close of an audit proceeding when the 

compliance implementation stage has been completed. DAA also engages with state regulators 

and the public accounting firms that audit and certify jurisdictional entities’ financial reports. 

Such industry outreach contributes to DAA’s analysis of accounting trends affecting jurisdictional 

entities and issuances of accounting guidance by the Chief Accountant. DAA continues to 

provide formal accounting guidance in response to accounting requests filed with the 

Commission. Informal accounting guidance may be requested and obtained from DAA via email 

(accountinginquiries@ferc.gov) and phone ((202) 502-8877). Informal guidance on all other 

compliance matters may be obtained through the Compliance Help Desk.