Federal Reports

The Loan Programs Office’s (LPO) mission is to be the premier public financing partner that accelerates high-impact energy and manufacturing investments to advance the economic future of the United States. The LPO received $385 billion in loan authority through the Infrastructure Investment and Jobs Act, Inflation Reduction Act, and related legislation, of which approximately $31 billion in loans were included in the audit’s scope.

The LPO’s Federal employees and contractors assist with loan application processing by reviewing loan applications with expertise in legal, engineering/ technical, market analysis, and financial/credit aspects.

Given the significant amount of loan authority and congressional interest, we performed this audit to determine whether the LPO was managing conflicts of interest (COI) for its Federal employees, as required.

We found that the LPO did not always manage COI for Federal employees, as required. Although we did not identify issues with required ethics training, the LPO did not always ensure compliance with Federal Government ethics regulations. Specifically, the LPO did not always: (1) identify or mitigate instances of potential COI and the appearance of loss of impartiality; (2) ensure outside positions were disclosed or approved; (3) provide accurate or sufficient information to the Department of Energy’s Office of the General Counsel; (4) properly vet Federal employees for potential COI; and (5) file financial disclosure reports timely with required information.

These issues occurred because the LPO did not comply with ethics regulations and internal policies. We also found that the lack of a COI standard operating procedure and a designated ethics official in its legal division contributed to the LPO’s COI and impartiality issues identified.

Our audit results show that the LPO could not provide reasonable assurance that it managed COI and/or the appearance of loss of impartiality concerns. Given the importance and sensitivity of the LPO’s mission, it is critical for LPO Federal employees to be impartial and free from COI with companies conducting business with the LPO. Any real or apparent COI may undermine public trust, accountability, and the LPO’s integrity.

To address the issues identified in this report, we made three recommendations that, if fully implemented, should help ensure that potential COI and the appearance of loss of impartiality in performing official duties are mitigated for LPO Federal employees.

The Office of Inspector General is required by statute to annually identify what it considers to be the most significant management challenges facing the Department of Energy. The Office of Inspector General’s goal is to focus attention on significant issues with the objective of working with Department officials to enhance the effectiveness of agency programs. 

This year’s management challenges report provides a high-level view of five challenge areas with specific challenges facing the Department in each area. We identified the different challenges based on our completed and ongoing work, including audits, inspections, investigations, our prior Management Challenges reporting, our risk assessments, and our assessment of ongoing national and Congressional interest. Our intent is to provide the Secretary, other policymakers, and the public with a brief overview of the challenges facing the Department and a starting point to learn more. 

This report should assist the Secretary and senior Department officials in addressing its challenges, as well as illustrate the progress that the Department has made to address the challenges.

Audit of the Federal Labor Relations Authority's Financial Statements for Fiscal Year 2025

The Tennessee Valley Authority (TVA) has 109 conventional hydroelectric generating units with a capacity of 3,783 megawatts (MW). The hydro fleet supports TVA’s mission of providing clean, reliable, and affordable electricity to people and businesses of the Tennessee Valley.  As of 2021, 53 of TVA’s 109 hydro units had low asset health scores indicating the need for repair.  To extend the life of the hydro fleet, the Hydro Life Extension (HLE) program was formed in 2021.  Due to the importance of TVA’s hydro fleet in providing low cost, clean, and reliable energy, we performed an evaluation of TVA’s HLE program to determine if the program was achieving intended results.

We determined the HLE program achieved the intended results on completed projects for availability, efficiency, and flexibility, but did not meet the efficient project execution goal for some projects.  Specifically: 

• All hydro units that have completed an HLE project have availability greater than 85 percent.
• All 4 hydro units that have completed a turbine replacement as part of an HLE project met contractual vendor efficiency guarantees and increased efficiency.
• All hydro units that have completed an HLE project achieved their intended result to increase generation output capability.  In total, the HLE projects added an additional 29 MWs of capacity.
• All HLE projects met budget targets, but only two met In Service Date (ISD) targets.  Variances between target and actual ISDs ranged from 59 to 261 days. 

While HLE projects have increased the maximum output capability, these additional MWs cannot be transmitted to the system due to transmission limits for the hydro sites. The transmission limits (1) were not evaluated during HLE project planning and (2) have not been increased due to a lack of funding.  In addition, we found one lesson learned related to cost and schedule had not been incorporated into future projects as required.

Statement on Auditing Standards AU-C 260 Letter

AU-C 265 Management Letter

The Office of Inspector General (OIG) has published its annual report outlining the most significant management and performance challenges facing the U.S. Department of Housing and Urban Development (HUD) as it enters Fiscal Year 2026. These challenges were identified through OIG’s oversight work and an assessment of anticipated changes to HUD’s programs and operations. The report is required by statute to be included in HUD’s Agency Financial Report.

Challenges Identified:

• Improving Business Operations: Modernizing IT Systems and Streamlining Procurement
• Protecting Taxpayer Funds from Fraud, Waste, and Abuse
• Modernizing the Management of Grant Funds
• Ensuring the Availability of Affordable and Quality Housing

While these challenges are longstanding, HUD has made progress in addressing some areas and continues to develop strategies for those that remain. The report aims to support HUD in improving program effectiveness, strengthening operations, and meeting its mission to provide affordable, quality housing.

OIG looks forward to collaborating with HUD in the coming year to address these critical issues.

This report includes EAC OIG’s independent assessment of the top management challenges facing the EAC in fiscal year 2026.