Federal Reports

Winning Performance is the process TVA uses to manage its performance. It is a single, integrated process that includes strategic planning, operational planning and budgeting, performance monitoring and reporting, and employee development and compensation. We performed procedures agreed-upon by management to assist in determining the validity of the fiscal year 2005 payout. In summary we found (1) changes to the FY 2005 goals were properly approved with one exception which will not impact the payouts, (2) actual year-to-date inputs for each indicator agreed with the respective reason for improvement sheet with one exception which will not impact the payouts, (3) actual inputs for the eight TVA-wide metrics agreed with the underlying support provided by the Strategic Business Units, and (4) the payout percentages were mathematically accurate after noted exceptions were corrected. Summary Only

The enclosed report presents the results of the audit of the Commission’s financial statements for the fiscal year

The Office of the Inspector General was requested by the Vice President, BFN Unit 1 Restart, to review tool management associated with the restart project. TVA is providing all necessary tools for the BFN Unit 1 Restart. Work is primarily being completed by engineering and modification contractors, 1,500 of which are craft laborers who have tool needs/requirements. We assessed the processes and key control activities used to track and account for tools purchased for the BFN Unit 1 Restart and on-going BFN operations. We found a significant lack of tool accountability/tracking resulting from (1) noncompliance with TVA Nuclear Business Practice 226, Tool and Equipment Accountability, prescribed processes and key control activities and (2) other process/control weaknesses. Management agreed with our findings and plans to initiate corrective actions.

We reviewed a contractor's material cost adjustments and profit sharing calculations and determined the contractor (1) had understated the material cost adjustment due TVA by $5,933 and (2) could not provide verifiable documentation of the material weights used in its catalyst production. TVA management agreed with our findings and is taking action to recover the amount owed to TVA. Additionally, since the contractor could not provide verifiable documentation of its material weights, TVA is negotiating a contract change to limit future cost adjustments to the contractor's preferred customer price. Summary Only

Visitors to the Inspector General's office here at TVA must walk past a large picture of the Fontana Hydro Plant. The inscription at Fontana, etched 63 years ago, reads, “1942 - Built for the people of the United States of America.” This simple phrase epitomizes the vision that gave birth to TVA. TVA was not to be merely another well-intentioned government program. The focus was not bricks and mortar. The focus was the American people. Whether it was power production, navigation, flood control, malaria prevention, reforestation, or erosion control, this New Deal innovation was about making life better in the Tennessee Valley.Today, TVA has many stakeholders, but ultimately it belongs to the people. The return on the investment made by the American people in TVA continues to yield readily observable benefits. The present day stewards of TVA are entrusted with continuing the legacy of public benefit and accountability. The OIG is one of those stewards responsible for identifying fraud, waste, and abuse, and promoting economy and efficiency through our audits, inspections, and investigations. Our work adds an additional level of transparency to TVA. The ultimate result is a more efficient, productive, and accountable organization.With issuance of this semiannual report to Congress, we are for the first time also publishing some audit and inspection reports on our website. My belief is that making these audits and inspections available is consistent with TVA’s obligation to be accountable to the public. In the future, we will post selected audit and inspection reports on our website as they are completed rather than releasing them with the semiannual report. Many of my Inspector General (IG) colleagues who are members of the President’s Council on Integrity and Efficiency (PCIE) follow this practice as well. There are, of course, audit and inspection reports that cannot be released; for example, those containing security information or those which if released would put TVA and/or a contractor at a competitive disadvantage.Finally, I am pleased the PCIE selected an OIG review team for an Award of Excellence in recognition of the team’s efforts to help TVA prepare for compliance with the Sarbanes-Oxley Act of 2002. Congress enacted the Sarbanes-Oxley Act to bring more transparency to corporate financial reporting. The TVA Board and TVA management continue to demonstrate a commitment to making necessary improvements to comply with both the spirit and the letter of the Sarbanes-Oxley Act. To assist in this effort by helping management evaluate the design and operating effectiveness of financial reporting controls, the TVA OIG is performing process control reviews of most major processes across TVA. The PCIE Award of Excellence recognizes the significance of this undertaking as being an achievement at the forefront of the IG community.