Federal Reports

Each quarter federal agencies, including TVA, submit intragovernmental balances by federal trading partner (TP) to the U.S. Treasury (UST) to assist in preparing the annual governmentwide consolidated financial report. To facilitate TVA's reconciliation with its TPs at yearend, we reviewed the FY 2005 3rd quarter intragovernmental information reported to UST. In summary, we found (1) Intragovernmental balance information as reported generally agreed with the third-quarter financial statements, (2) some inaccuracies in the data submitted in the U.S. Treasury Intragovernmental Reporting and Analysis System, indicated the need for better controls to ensure data reported is accurate and representative of balances in TVA's financial statements, and (3) the Controller organization made reasonable efforts to explain and resolve any material differences in the balances reported by TVA and those reported by its federal trading partners.

We performed an inspection to determine why Tennessee Valley Authority (TVA) has incurred significant coal adjustments stemming from TVA's receipt of coal through Calvert City Terminal (CC). TVA has contracted with CC through 2008 for transloading, stockpiling, and blending coal. We determined that the inventory adjustments on coal received through CC may be a result of several issues, including (1) differences in CC and TVA Fuel Management System recorded weights, (2) CC's rail unloader scale and barge unloader scale not being certified, (3) missing rail cars included in inventory as received because they were still listed on the manifest, and (4) stockpiles continuing to have coal removed and added after lines are drawn for inventory flyovers.However, we also noted CC is now requiring scale certification, and the results of the coal inventory flyovers were within the acceptable margin of error. Accordingly, the report was issued to management for informational purposes, and management has requested a follow-up review one year after scale certification has occurred. Summary Only

TVA contracted with the independent certified public accounting firm of PricewaterhouseCoopers LLP to audit the balance sheets as of September 30, 2005 and 2004, and the related statements of income, changes in proprietary capital, and cash flows for each of the three years in the period ended September 30, 2005. The contract required the audit be done in accordance with generally accepted government auditing standards. Our review disclosed no instances where PricewaterhouseCoopers did not comply, in all material respects, with generally accepted government auditing standards.

This report is Sensitive But Unclassified. To obtain further information, please contact the OIG Office of Counsel at OIGCounsel@oig.treas.gov, (202) 927-0650, or by mail at Office of Treasury Inspector General, 1500 Pennsylvania Avenue, Washington DC 20220.

Audit of FLRA Financial Statement Audit for FY 2005