Adequacy of the Invoice Approval Process

The OIG audited TVA's invoice approval process to (1) assess TVA's policies and procedures related to the review and approval of invoices, (2) determine compliance with applicable policies and procedures, and (3) determine if TVA's invoice approvers have adequate information, including clear contractual compensation provisions and sufficient invoice detail to effectively perform their role. The scope of our audit included Supply Chain non-receiving contracts and purchase orders with fiscal year 2013 payments totaling $3,363,603,152.We found policies and procedures were not followed to ensure effective review and approval of supplier invoices. Specifically, our review of 143 invoices totaling $184,339,674 found inadequate reviews were performed on 104 invoices or 73 percent. Based on our review, we identified several possible underlying causes why effective invoice reviews were not performed: (1) contracts contained unclear and/or conflicting compensation provisions; (2) some contracts do not provide specific requirements regarding invoice detail and for those contracts that do, the requirements are not being followed or enforced; (3) not all relevant contract and purchase orders are attached to the invoice or available in TVA's Enterprise Asset Management (EAM) system; (4) required field invoice approver (FIA) training does not include details on how to access and approve invoices in TVA's EAM system; (5) clear and frequent communication does not always exist between the FIA and contracting officer (CO); (6) an approval stamp used at a nuclear plant implied the OIG reviews the invoices; and (7) the current invoice review process is a manual process within an automated system.We recommended TVA management: (1) develop a contract quality assurance program to ensure clear, concise, and easy to follow compensation terms, (2) ensure the FIAs and contract technical stewards have the most up-to-date terms and conditions of a contract by developing an approach to provide access (dependent upon business need) to contract documents, (3) require training for those accessing and approving invoices in TVA's EAM system, (4) revise policies to require the CO to confirm FIAs understand their responsibilities in approving invoices for payment, and (5) revise policies to clarify CO responsibility for monitoring the invoice approval process and verifying the contractor's invoices contain adequate detail in a format that facilitates the review. In addition, we recommended TVA management utilize the technology available to expedite and improve the invoice review process by implementing automated steps in the invoice review process where possible, including: (1) requiring electronic data from vendors that allows for 100 percent review, (2) setting parameters to identify exceptions, (3) following up on items identified as exceptions before making payment on those items, (4) establishing automatic notifications be sent to FIAs, contract managers, and others regarding exceptions to ensure the exceptions are reviewed, and (5) establishing automated analytical reviews, as necessary.TVA management generally agreed with our findings and stated they would take action to address our recommendations.