Federal Reports

OIG reviewed the Dickson Electric System (Dickson), a distributor for TVA power based in Dickson, Tennessee. The OIG's review found (1) customer classification issues that could impact the proper reporting of electric sales and/or nondiscrimination in providing power to members of the same rate class; (2) noncompliance with certain power contract provisions in following the Federal Energy Regulatory Commission chart of accounts; and (3) internal controls could be strengthened related to certification documentation for manufacturing customers, accuracy of contract demand entered in the billing system, and executed contracts for accounts with a contract demand value in the billing system. We also found TVA could enhance oversight of the distributors by clarifying that the Standard Industrial Classification (SIC) code to be used to determine eligibility for the manufacturing schedules should be the SIC code for the customer's facility that's located in the distributor's service area.TVA and Dickson agreed with the OIG's recommendations and have or are taking actions to correct the identified issues.

As part of our annual audit plan, we reviewed the process for ensuring that counterparty credit analysis is performed and monitored. We identified issues related to the cultural factors affecting the credit risk monitoring process, performance of initial credit analysis, and monitoring of counterparty creditworthiness. Specifically, we determined that Corporate Credit has historically lacked authority to determine which counterparties require a credit analysis and when performance assurance is required. Because of the lack of a central, governing body, the process has become siloed with business units establishing their own criteria for requiring a credit analysis and deciding whether to implement Corporate Credit's recommendations. As a result, we identified counterparties that met the business unit's (BU) guidelines or Corporate Credit's expectations of requiring a credit review, but a request for credit analysis was not made by the business unit. We also identified issues related to lack of documentation supporting the credit analysis and the counterparty creditworthiness monitoring processes. In addition, we determined that Corporate Credit relies heavily on commercial credit ratings in both initially determining and monitoring a counterparty's creditworthiness.The credit analysis, performance assurance, and monitoring processes were not always performed timely. Specifically, we identified (1) BU requests for credit analysis made either less than one week prior to or after the contract start date; (2) credit memos dated after the contract date; (3) financial analyses conducted with outdated financial statements; (4) contracts executed with outdated credit memos; and (5) contract-required performance assurance not obtained in a timely manner. In addition, we determined that active counterparties were not being consistently monitored. Treasury agreed with all of the recommendations, with the exception of one related to the monitoring of the BU activity by Corporate Credit to ensure compliance with the Credit Standard Program and Processes and specific BU policies related to counterparty credit risk management. The OIG revised the report and recommendations, as necessary, to address the disagreement. Summary Only

EAC OIG, through the independent public accounting firm of Clifton Gunderson LLP, audited $34.1 million in funds received by the Connecticut Secretary of State under the Help America Vote Act. The objectives of the audit were to determine whether the Secretary of State (1) used payments authorized by Sections 101, 102, and 251 of HAVA in accordance with HAVA and applicable requirements; (2) accurately and properly accounted for property purchased with HAVA payments and for program income; and (3) met HAVA requirements for Section 251 funds for an election fund and for a matching contribution.