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  16     WISCONSIN RURAL ELECTRIC COOPERATIVE ASSOCIATION
                                            February 7, 1938
Mr. H. 0. Melby, President
Wisconsin Rural Electric Co-op. Ass'n.
Madison, Wisconsin
         In accordance with the request of Mr. J. M. Wilson, general
manager, staff accountants of the Public Service Commission have exam-
ined the accounts of the Wisconsin Rural Electric Cooperative Association
for the period from January 31, 1937, to December 31, 1937.
         The examination comprised the verification of recorded cash
receipts and disbursements and a general survey, without detailed verifi-
cation of other accounts. Some limited tests were made of vouchers in
support of cash disbursements but because of the detail involved and
incomplete records no attempt was made to verify the propriety of pay
rolls and traveling expenses, which comprise approximately 90 percent
of the Association's total expenditures.
         Although construction work on several projects was substantially
complete as of December 31, 1937, percentages of payments due contract-
ors and the Association's fees based thereon were being withheld pending
final inventories and adjustments. Accordingly, some further income
and expenses are to be expected on all such contracts. This makes it im-
possible to determine exactly or estimate with reasonable accuracy the
amount of gain or loss realized to date. For this reason costs of service
and income collected on all projects (other than preliminary costs on two
projects taken over by others) are shown as suspense items on the balance
sheet as of December 31, 1937. Details of fees and costs of service under
contracts and other items comprising the balance sheet, together with ex-
planatory comments, are set forth in the schedules and text of this report.
                           Yours very truly,
                  PUBLIC SERVICE COMMISSION OF WISCONSIN,
                                      A. R. COLBERT, Director
                                 Department of Accounts and Finance.