The link is:
www.sec.gov/ix?doc=/Archives/edgar/data/49648/000105787722
000014/ida-20211231.htm
As with any business there are a variety of risks involved. The major
risks for Idaho Power are rate adjustments, litigation, and customer
demand. a Customer demand is the most volatile and includes such
environmental factors as weather, economic conditions, and
efficiency. These risks are all beyond management’s control and are
difficult to predict or forecast.
Risk of overstating receipts and revenues:
• Idaho Power is required to purchase power from alternate
sources at a set rate even if their main source (hydroelectric) is
cheaper. a The rate for the alternate power is not subject to
fluctuations dictated by usage or demand and can result in
higher costs associated with a lower earning period.
Expectation of higher revenues can then be deterred by the
purchase of power at a higher price.
• Excess power must be sold if the capacity reaches a particular
point and Idaho Power is required to sell at the current market
price even if that sale creates a net loss. In prime environmental
conditions, Idaho Power may reach such levels and be forced to
make a sale at an unexpected time or rate and incur a loss
therefore reducing its projected revenue.
• Capital projects are continually being proposed and
implemented to improve infrastructure and expand service. a
These projects are partially if not fully funded by loans,
investments, and partnerships with other entities. a In these
instances, it behooves Idaho Power to present strong revenue
numbers and present the best financial scenario possible. This
could lead to possible overstatement.
• Issuance of credit and legal restrictions could also affect the
overstatement of revenue. Idaho Power extends limited credit
to customers which allows for some unpredictability of revenue
or receipts. Legal restrictions disallow for service termination
for certain households during the winter months and the
number of households that may fail to pay during those times is
also difficult to predict and could make overstatement possible.
Risks of understating payments and liabilities:
• Like the overstatement risks, capital projects are an area where
understating payments and liabilities may occur. a In an effort to
present the most positive portfolio in securing loans,
investments, and partnerships, it could be that payments or
liabilities would be understated to ensure that positivity.
• Shareholder interest is an area that may create understatement
risk as well. The desire to keep shareholders happy and keep
stock prices elevated could create the possibility of
understating debt and other liabilities.
Auditing tests to implement:
• The best auditing tests would be the standard audits of internal
controls of cash and investments as well as accounts receivable
and accounts payable with confirmations of financial
documents and conducting audits of sample periods of
reconciliations and records.
• Using historical data comparisons within the company to assess
any anomalies between past and present.
• Conducting research to verify if assumptions and estimations
were made reasonably and based on accurate information and is
in-line with industry standard.
