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Confidential

Enron Assurance Services. Enron Americas. Natural Gas Trading Audit August 7, 2001. Confidential. Enron Assurance Services. Natural Gas Trading. Project Objective :

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Confidential

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  1. Enron Assurance Services Enron Americas Natural Gas Trading Audit August 7, 2001 Confidential

  2. Enron Assurance Services Natural Gas Trading Project Objective: Our review was designed to identify and test key policies, procedures, and controls related to 1) critical business processes (capture, documentation, confirmation, logistics, reporting and accounting), 2) adequate identification of key risks (i.e. valuation of transport deals, inventory/storage), 3) adequate information to support changes in portfolio valuations (i.e., curve adjustments), 4) adequate interface controls and validation checks between Sitara and other systems, 5) proper calculation and reporting of portfolio results, 6) monitoring of long-term and requirements basis deals, 7) Chicago desk review and integration, 8) EES’s integration into ENA, 9) proper accounting for portfolio under accrual or mark-to-market accounting, 10) proper involvement of legal group in creation of contracts and standard confirmation templates. AA Team Members: Enron Team Members: Tom Bauer Michael Schultz Jeff Gossett Georganne Hodges Kate Agnew Russell Bouwhuis Errol McLauglin Leslie Reeves Mark Meador Sean Sipko Darron Giron Todd Warwick Sharon Smith Bethany Denson David Baumbach Tracy Irvin Mark Austin Phillip Love Kim Theriot Jennifer Staton Jeff Hodge Bob Hall Anne Bike Bob Supperty Bill Hare Jay Krishnaswamy

  3. Natural Gas Trading Deal Test Summary • Tested 21 Gas Deals • 18 EnronOnline Deals, 3 Non EnronOnline Deals • Attributes tested • Deal Capture • Deal executed by an authorized trader • Complete deal ticket • Deal correctly captured in ERMS and/or Sitara • Counterparty set-up in Global Counterparty • Documentation • Timely confirmation procedure • Executed contract and/or confirmation • Contract, confirmation and deal ticket agree • Confirmation signed by authorized personnel • Proper confirmation status in DCAF • Broker confirmation agrees to deal ticket • Valuation • Proper curve utilized to value deal • Proper bridge of deal terms into the valuation engine • Deal Test Timeline • Review of deals executed throughout the year. Additional testing to be performed in September/ October timeframe. • Summary of key deal test findings • One positive confirmation was not signed by the counterparty. • For one deal, the fax number per Global Counterparty did not equal the fax number per the deal log. • Two deal tickets did not include the trader’s name. • Summary of Open Items • Five curve strips and twelve forward details have not been supplied as requested for the deal test (originally requested: June 26).

  4. Enron Assurance Services Natural Gas Trading Audit High Priority Items

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  8. Enron Assurance Services Natural Gas Trading Audit

  9. Enron Assurance Services Natural Gas Trading Audit Low Priority Items

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  11. Enron Assurance Services Natural Gas Trading Audit

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