Federal Reports

This is my first report to the Board of Directors and to the United States Congress after being nominated by President Bush in February and later confirmed by the United States Senate in May. I am appreciative of the trust and confidence placed in me by the President given what I view as significant challenges for both my office and TVA. President Bush met with the Inspectors General (IGs) in Washington on October 14, 2003, and expressed his support of our efforts to bring about good government in our respective federal agencies. The President met with us in the Indian Treaty Room of the Eisenhower Executive Office Building to underscore his commitment to achieving the necessary changes in government to make it work better for the American people. He noted that IGs are regarded as “agents of positive change.” Our meeting with the President was part of our celebration of the 25th anniversary of the enactment of the IG Act.These past six months have confirmed my belief that the OIG at TVA has an admirable history of promoting positive change. That has been true despite the inherent limitations that come with IGs having been previously appointed by the Board rather than the President. Promoting positive change is not always universally heralded in federal agencies, and IGs must have absolute independence in their audits and investigations if their work is to be credible. In 2000, Congress recognized the need for greater independence for the IG at TVA by enacting Public Law No. 106-422 which converted the IG from Board-appointed to one appointed by the President with the advice and consent of the Senate. My commitment, given this new level of independence, is to ensure that we continue to promote excellence at TVA and to do so with increased vigor. I firmly believe that TVA will benefit from a truly independent IG, and Congress will be better served in its oversight responsibilities of TVA.The OIG here at TVA is blessed with a cadre of highly trained professionals who until my appointment were ably led by Acting IG Don Hickman. Under Mr. Hickman’s leadership, significant accomplishments were achieved as noted in prior reports to the Board and to Congress. I appreciate Mr. Hickman’s commitment and leadership which continue to be an asset to our office.As this report indicates, we have tackled significant issues, and we have made progress in protecting TVA’s assets and in identifying ways that programs can be better run. Perhaps more importantly, we serve the equally important role of deterring others who witness our aggressive audits and investigations. As a former federal prosecutor, I am particularly sensitive to fraud indicators in an organization. Systemic fraud is easily perpetrated when controls are weak and the financial incentive is high. We have marshaled the talents of some of our best auditors and investigators to focus on fraud against TVA. The Inspections unit in Chattanooga has been charged with the mission of identifying fraud against TVA and following the evidence wherever it leads. I have every reason to believe they will be successful.Finally, I want to acknowledge the many courtesies extended to me by Chairman McCullough, Director Baxter, and Director Harris in assisting me during this transition time. Their continued recognition of the importance of the work of the OIG at TVA has been encouraging. We are all fortunate to live and work in East Tennessee and the Tennessee Valley Region, and I look forward making progress together over the coming years.

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