Federal Reports

The Office of the Inspector General performed an audit of the TVA's compliance with the Improper Payment Information Act (IPIA) for FY 2011. In summary, we found TVA was in compliance with IPIA requirements that were applicable to TVA. In our opinion, TVA was only required to comply with the IPIA requirement to conduct a program specific risk assessment. We reviewed the process used by TVA to identify programs susceptible to improper payments and noted it is in compliance with IPIA guidance. TVA performed a risk assessment for FY 2011, and its primary programs susceptible to improper payments are its supply chain programs. IPIA defines an improper payment as any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirements.While we found TVA was in compliance with IPIA requirements that were applicable to TVA, we noted areas where TVA can improve its process for IPIA reporting and better ensure that it meets IPIA requirements with a more formal process. Specifically, we recommended TVA (1) document all processes related to complying with IPIA (these processes may include, but are not limited to, the identification, calculation, and recapture of improper payments), (2) maintain documentation of all reports used to identify potential improper payments as well as documentation related to actual improper payments, (3) consider posting TVA's Improper Payments Information Report - FY 2011 on the agency Website to increase transparency and better align its policy with that of other agencies, and (4) document a formal review process to help ensure TVA accurately reports improper payments. TVA management generally agreed with our recommendations and has taken or is taking corrective actions.

We are pleased to present our report for the period October 1, 2011, through March 31, 2012. The theme of our semiannual is "Managing Change," and our feature highlights the challenges with managing one particular change-the decision to increase the Tennessee Valley Authority's (TVA) reliance on nuclear energy.In TVA's lengthy history, one thing that has remained constant is change. This is especially true today as TVA works to realign its generation portfolio, which includes constructing new plants and idling others while keeping rates low and continuing high reliability. The utility industry has always faced the need to be nimble in adjusting to a volatile market. Today, however, the challenges for companies like TVA seem to come more quickly. The effective management of change has become even more critical. The role of the Office of the Inspector General (OIG) in this area is: (1) providing an objective, fact-based look at how well TVA is managing change; (2) identifying risk areas associated with managing change; and (3) providing recommendations to reduce risks.As you will see from the results of this semiannual period, the hard work of our OIG team has resulted in about $12 million in recoveries, fines/penalties, potential savings, questioned costs, or funds put to better use. We also identified other monetary losses resulting from a capital project that had no realized benefits. Finally, we have provided numerous recommendations to help TVA improve.