Federal Reports

This is our fourth Semiannual Report and it marks the second full year of the Office of the Inspector General's (OIG) operations. The report describes our major activities from October 1, 1987 to March31. 1988.This has been an eventful six months and a productive two years.As of the date of this report, we have closed nearly 90 percent of the employee concerns that. fell within our investigative jurisdiction and were reported to the Quality Technology Company. In addition, since the OIG's inception, TVA management has agreed-with 80 percent of our audit recommendations. To date, these management actions have resulted in more than $126 million in avoided costs.There were also significant accomplishments this reporting period. An OIG-recommended change in TVA's accounting procedures resulted in a $92 million increase in TVA's revenues. On the investigative side,we closed over 450 cases•, referred 74 matters to Federal or Stateprosecutors, and issued over 200 investigative reports. In addition, significant criminal investigations are underway that already have resulted in the recent indictment of over 25 TVA employees.These accomplishments demonstrate the OIG is a catalyst for change within TVA and is striving to promote integrity and efficiency in TVA's programs. We believe our activities will continue to benefit TVA management and employees, the ratepayers, and the taxpayers­ which is what the Board of Directors intended when it established the OIG as an independent ·office within TVA.Throughout the last two years, the TVA Board of Directors, TVA managers and employees, Members of Congress, and the public have strongly supported the OIG. We continue to draw strength and encouragement from this support and will continue to work to justify this trust.Sincerely,Norman A. Zigrossi

This is the third "Semiannual Report" of the Office of the Inspector General. It describes our significant audit and investigatory activities from April through September 1987.During this period, we audited and investigated matters of critical importance to TVA and the public. We investigated bomb threats, drug abuse, concerns by employees about TVA's nuclear program, and allegations of fraud and misconduct. At the request of the Office of Government Ethics, we have monitored TVA's compliance with the guidelines TVA adopted to help pre­ vent conflicts of interest from occurring in its nuclear program.We have reviewed management's guidelines for developing information for the TVA Board of Directors, as well as other management processes. We have audited claims by contractors seeking millions of dollars from TVA, and we are currently reviewing TVA's financial processes.One matter which we identified in our last semiannual report continues to be unresolved. The TVA Retirement System Board of Directors objects to a full­ scope OIG review of the economy, efficiency, and effectiveness of the system's operations. However, the TVA Board of Directors has recently received an opinion from TVA's General Counsel which describes the Board's rights and obligations with respect to the Retirement System, including advice on the Board's authority to require the system to submit to a comprehensive audit.The last six months have been productive. The first year of organizing and staffing the office is returning benefits. To the advantage of the ratepayers and the public, we are affecting the reasonableness of costs, assurances of safety, fairness of practices, and accountability processes.Since the OIG's inception, we have been supported by the TVA Board of Directors, senior TVA managers, TVA employees, Members of Congress, and the public. We draw strength from this strong support and will continue to work to justify the confidence that has been placed in us.Sincerely,Norman A. Zigrossi

This is the second ''Semiannual Report" of the Tennessee Valley Authority Inspector General. It describes the significant audit and investigatory activities of the office during the reporting period from October 1, 1986 to March 31, 1987.During this period, the Office of the Inspector General (OIG) has audited and investigated matters of critical importance to TVA, its employees, the public, and other Governmental officials. The OIG has investigated a number of employee concerns, nearly half of which involved issues raised by employees about TVA 's nuclear program. The OIG has investigated and reported on allegations of harassment, misconduct, and management deficiency. At the request of the Office of Government Ethics, the OIG has also been monitoring the guidelines TVA adopted to help prevent conflicts of interest from occurring in the management of its nuclear program.Our auditors have also evaluated TVA's program for handling employee concerns. They have audited contested claims by contractors seeking millions of dollars from TVA. They are currently reviewing TVA 's policy formulation, nuclear quality assurance, and financial processes. However, one audit remains impaired. The TVA Retirement System (TVARS) Board of Directors continues to object to the OIG conducting a full scope review of the economy, efficiency, and effectiveness of TVARS.The last six months have been a period of learning and growth. OIG managers and employees---many of whom came to TVA from other Federal agencies --have been challenged to learn and appreciate the diversity and scope of TVA 's activities and operations. Other TVA managers and employees have also had an opportunity to learn about the OIG and witness firsthand our effort to make a positive contribution as an independent and objective audit and investigatory organization within TVA.Since the OIG's inception, we have been supported by the TVA Board of Directors, senior TVA managers, TVA employees, members of the Congress, and the public. We draw strength from this continued support and will continue to work to justify the confidence that has been placed in us.Sincerely,Norman A. Zigrossi

This is the first Semiannual Report of the Inspector General of the Tennessee Valley Authority. It summarizes the significant organizational. audit. and investigative activities undertaken by the Office of the Inspector General (OIG) for the period ending September 30, 1986. This report has been prepared by the Inspector General for transmittal to Congress by the TVA Board of Directors in accordance with the Board's October 18. 1985 Resolution establishing an OIG within TVA.When we began organizing the Office of the Inspector General eight months ago. we set out to accomplish two objectives. We planned to complete the organization and be fully operational by October 1. 1986. And we planned to address those issues that led to the creation of the OIG. The OIG is now fully operational. Our examinations of nuclear program issues and of related employee concerns are under way.Two important reviews were concluded during this reporting period. Our investigation of the contract conflict of interest issues surrounding the manager of nuclear power concluded that there were no criminal violations but there were management shortcomings in the contract process. Our audit of personal services contracts revealed that TVA has not complied with Public Law No. 98-72 in its contract to acquire annual financial audits. This law is intended to promote competition in Government contracting.During the OIG's formative period there have been two instances in which the independent authority of the Inspector General has been challenged. First, a proposed OIG audit of TVA's Retirement System was seriously impaired due to a limitation imposed on the scope and procedures of the audit by the Retirement System's Board of Directors. Second. TVA management officials have been reluctant to turn over to the OIG management of the annual financial audit of TVA. The TVA Board is now considering whether to let the OIG manage the audit contract in the future. The TVA Board Resolution which established the OIG clearly assigned all audit responsibility to the OIG.In order to ensure an effective program. we have selected five goals and developed a Master Plan for achieving them. The OIG will undertake a balanced program of investigative and audit projects that will improve TVA.During the next six months. the OIG will focus on three areas: (l) gaining an understanding of TVA goals and the factors critical to their accomplishment. (2) continuing to address those issues that led to establishment of an OIG, and (3) developing a program for achieving professional excellence as an office.We appreciate the support of the TVA Board of Directors. TVA employees, the public. and TVA's friends and constructive critics in the Congress who have provided useful advice and assistance. We would like to assure all of you that the men and women of the OIG are dedicated to maintaining the trust and support that have been bestowed on them.Sincerely,Norman A. Zigrossi