Federal Reports

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>

We found no instance where TVA's external auditors' reviews of TVA interim financial information for the second quarter of FY 2005 did not comply with Government Auditing Standards in all material respects, including required communications to appropriate parties.<br><br>

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements

We reviewed $109.8 million in costs paid by TVA to a contractor for providing engineering services associated with the restart of Browns Ferry Nuclear Plant (BFN) Unit 1. We questioned $2.5 million, including (1) the contractor's inclusion of the labor costs of its affiliate company in its performance base and (2) overcharges for labor and related costs and other direct costs. TVA decided to (1) allow the contractor to include the labor cost of its affiliate in its performance fee base and (2) recover any remaining costs that were not directly billable under the contract. Summary Only

The audit objectives were to determine whether program funds were managed in accordance with the ARC and Federal grant requirements