SEC Final Audit Report 08-01-2009

Final ReportShelby Energy CooperativeManagement and OperationsAuditOn Behalf of the Kentucky Public ServiceCommissionSubmitted By890 Hillview Court, Suite 130Milpitas, California 95035, U.S.A.August 1, 2009Shelby Energy Cooperative, Inc.Management and Operations Audit ReportTable of Contents1 EXECUTIVE SUMMARY..................................................................................... 1-12 INTRODUCTION.................................. 2-12.1 Objective and Scope.......................... 2-12.2 Approach and Methodology.............. 2-22.3 Report Structure ................................................................ 2-23 COMPANY INFORMATION................................................................................ 3-13.1 Shelby Energy Cooperative Data...... 3-23.2 Electric Distribution Network........... 3-23.3 Power Supply .................................................................................................... 3-33.4 SEC Organization.............................. 3-34 GENERAL MANAGEMENT................ 4-14.1 Corporate Governance....................................................................................... 4-14.2 Board of Directors............................. 4-14.3 The Chief Executive Officer............. 4-95 FINANCIAL MANAGEMENT ................................................................ 5-15.1 Financial Planning (Budgeting) Process........................... 5-15.2 Accounting Policies, ...