The Tennessee Valley Authority (TVA) routinely engages in business meetings and external relationship events to conduct business and develop improved relationships. TVA Standard Programs and Processes 13.063, Business Meetings & External Relationship Events, requires all employees responsible for planning a business meeting or external relationship event to ensure and document that the (1) business need is justified; (2) expense is reasonable, proper, and an efficient use of TVA resources; and (3) cost is appropriate to the occasion or circumstance. Approving managers are responsible for ensuring that purchases are reasonable, for official business use, within the organization’s approved budget, and in accordance with policies and procedures. To add an additional level of oversight for expenditures, TVA management reports these activities annually to the TVA Board of Directors.
Our audit objective was to determine if expenditures reimbursed as business meetings or external relationship events complied with TVA policies and procedures and any other applicable guidance. Our audit scope included approximately $7.1 million in business meetings and external relationship event expenditures occurring from January 1, 2024, through December 31, 2024.
We reviewed expenditures associated with 180 business meetings and external relationship events. We determined that while all expenditures for meetings/events were approved by TVA management or their delegates, a substantial number had expenditures that were not in compliance with policies and procedures. Specifically, these events/meetings included (1) disallowed expenses for team-building events and alcohol and (2) meals that exceeded allowable amounts. In addition, we identified expense reports for meetings/events that were approved that did not comply with documentation requirements. These included expense reports approved without (1) evidence of review, (2) itemized receipts, and (3) obtaining waivers required by the Randolph Sheppard Act.
To improve transparency, the TVA Board of Directors, CEO, and Direct Reports annual Fiscal Year Expense Review Summary could be revised to (1) attribute all support staff expenses authorized by an executive to that executive in the report and (2) identify executive expenses that do not comply with policy and document justifications for the expenses.
The noncompliance issues identified were the result of TVA’s system of internal controls, including the key control, management review and approval of expenses, not operating effectively because policies and procedures were not followed or enforced by approvers of expenditures. This included expenditures made and/or approved by some executives that did not adhere to policies.
