Early Payment Discounts on Vendor Invoices Follow-Up

We included an audit of the Tennessee Valley Authority’s (TVA) management of early payment discounts on vendor invoices in our annual audit plan as a follow up to audit 2017-15500, Early Payment Discounts on Vendor Invoices, dated May 30, 2018, where we reported TVA missed 19 percent of all early payment discount opportunities. Our audit objective was to determine if early payment discounts are appropriately managed by TVA. Our audit scope included invoices from Supply Chain contracts and purchase orders with greater than $1 million in spend in any one fiscal year from October 1, 2020, through September 30, 2023.We found TVA’s management of early payment discounts could be improved as 18 percent of all available discounts, totaling $826,252, were not taken during the audit period. Based on our analysis and interviews with relevant personnel, we determined some personnel were often unaware of important aspects of how to manage (1) early payment discount terms, (2) invoices sent by vendors after the discount period expired, and (3) invoices sent by vendors before materials are received. Additionally, we noted TVA Supply Chain maintains dashboards that could be used to help management identify training needs.