Federal Reports

We determined a wireless carrier issued credits to TVA employees due to an internal system error. The credits pertained to inactive accounts and therefore had no impact on TVA's master account. The carrier was unable to validate (1) who the checks were issued to, (2) how many checks were issued, and (3) the total amount of the credits. Summary Only

We determined TVA's depreciation policy and procedures do not accurately reflect (1) control activities described in TVA's Risk Control Tracking System and (2) current management practice. TVA management is assessing our recommendations.

We reviewed $104.4 million in costs paid by TVA to a contractor for providing construction services for the restart of BFN Unit 1. We found the contractor overbilled TVA $1.5 million due to (1) the use of a craft labor category, incentive fee, and safety awards not provided for by the contract, (2) wrong indirect cost markups and unsupported labor costs, and (3) other miscellaneous overbillings. Additionally, we estimated TVA would save $995,000 by disallowing the use of an unauthorized labor classification. TVA subsequently decided to disallow $1,087,914 of the questioned costs and to discontinue use of the labor classification. Summary Only

We determined TVA's inventory receiving and inspecting (R&I) process controls were designed to prevent or detect material misstatements in significant accounts and the related inventory disclosures on a timely basis. However, TVA's Risk Control Tracking System could be updated to more accurately reflect key financial controls of the R&I process. TVA management agreed with our findings and has completed final action.<br><br>

Semiannual Report to Congress

We found no evidence of fraud in connection with different vendors sharing the same bank account. Most vendors were related and there was no evidence that non-related vendors bid on contracts under different names, double billed TVA, or appeared to be shell companies. We noted, however, that some vendor records in Passport appeared to be inactive, and we suggested Procurement periodically purge inactive vendor records.<br><br>

At the Chief Financial Officer organization's request, we assessed the cost effectiveness of the actual travel expense reimbursement program and the Chief Operating Officer (COO) flat rate reimbursement program. We determined that the COO flat rate method of travel expense reimbursement cost about $115,000 more than the actual expense reimbursement method during a 3-month period that we reviewed. We also identified control weaknesses, including a lack of system edits to prevent flat rate reimbursements which exceeded the allowable rate, and numerous instances where employees were reimbursed for direct billed hotel expenses under both methods of travel reimbursement. TVA management is considering appropriate corrective actions.<br><br>