Review of Contract for Hydrated Lime Injection Systems

As part of our annual audit plan, we audited $11.3million in costs billed to TVA by a contractor, to design and install hydrated lime injection systems at various TVA fossil plants. Our audit objective was to determine if the costs the contractor billed to TVA were in compliance with the provisions of the contract. In summary, we determined the contractor billed TVA an estimated $310,818 for costs that were unsupported or not in accordance with the contract provisions. TVA management stated that discussions with the contractor are currently underway to reach a final resolution of all the audit issues and to address each of the recommendations.