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Brought to you by the Council of the Inspectors General on Integrity and Efficiency
As part of our annual audit plan, our office reviewed the risks associated with the Tennessee Valley Authority's (TVA) pension plan and how those risks are mitigated. Our audit covered areas such as (1) controls designed to mitigate pension risk, (2) the TVA Retirement System's (TVARS) financial statement audit performed by their external auditor as it relates to the existence and valuation of assets, (3) the work of TVARS' actuary in determining TVA's pension liability, (4) funding and benefits decisions and other factors impacting the financial status of TVARS, and (5) concerns raised during the audit by TVARS members.Our review determined TVARS' (1) controls were suitably designed and operating with sufficient effectiveness to provide reasonable assurance that the control objectives specified were achieved, (2) external auditor performed the work according to their audit program, and we found nothing to question their work or conclusions, and (3) method used to calculate the pension liability and funding contribution was acceptable.We also determined that a combination of factors resulted in TVARS experiencing a significant shortfall between assets and projected obligations and being funded at a lower level relative to obligations than most other comparison utilities.
We audited $10.16 million in costs billed to TVA by a contractor for providiing professional engineering and technical support services associated with the detailed, scoping, estimating, and planning study related to the potential completion of Unit 2 at Watts Bar Nuclear Plant. In summary, we found (1) the contractor directly billed TVA $175,094 for home office senior management and administrative personnel that should have been recovered through its overhead rate; (2) the contractor overbilled TVA an estimated $9,393 due to miscellaneous unsupported and ineligible billings for payroll additive costs, relocation expenses, and travel costs; and (3) TVA paid the contractor an additional $33,000 in fees due to conflicting contract language regarding the application of fees for travel costs. We recommended TVA management (1) take action to recover the $184,487 in overbilled costs, and (2) determine the appropriateness of including travel costs in the contractor's fee base. Summary Only
