Federal Reports

This review evaluates the use of 4 different methods of grant funding by NEA. The report includes recommendations to strengthen controls to assure grantees are reimbursed only for allowable and reasonable costs, while decreasing the administrative burden for grantees and NEA staff.

Emerging markets offer posts a chance to diversify and support their core postal mission. We recently looked at four of these emerging markets – international mail forwarding, continuity shipping, digital printing, and private locked bags – and found the first three offer revenue generating opportunities for the U.S. Postal Service. In those cases the Postal Service can leverage existing assets, such as trusted brand, transportation network, excess facilities, or printing capabilities, to gain market share without excessive investment.

We found that the Department established and implemented an extensive and effective process for assessing SEA’s compliance with approved ESEA flexibility requests based on the information the SEAs submitted during monitoring. However, we noted that the Department could improve its oversight of SEAs by taking steps to ensure the accuracy of the data that SEAs submit. Specifically, the Department relied on SEAs to ensure the accuracy of the information but did not verify that the SEAs had policies and procedures to ensure accuracy. In addition, the Department did not require SEAs to provide assurance statements regarding data accuracy and did not have procedures requiring SEAs to disclose any limitations of the data or their data validation processes. Although the Department lacked procedures for verifying data accuracy, all nine SEAs we reviewed followed their respective State policies and procedures for ensuring the accuracy of the data submitted to the Department. However, because we did not review all SEAs, there is a risk that the remaining SEAs may not be taking steps to ensure data accuracy.

The Federal Information Security Management Act of 2002 (FISMA) is meant to bolster computer and network security within the federal government. In accordance with FISMA and guidance from the U.S. Office of Management and Budget, TVA and the TVA OIG are required to report on agency-wide IT security and privacy practices annually. In our 2014 review of TVA's information security program, we found TVA was in compliance in the areas of: (1) incident response and reporting, (2) plan of action and milestones, (3) remote access management, (4) contingency planning, and (5) security capital planning. However, TVA needs improvements in the areas of: (1) continuous monitoring management, (2) configuration management, (3) identity and access management, (4) risk management, (5) security training, and (6) contractor systems. We recommended TVA implement additional improvements in its security configuration management program, update its security awareness and training, update interconnection security agreements, and update the FISMA system inventory. TVA management agreed with our findings and recommendations and is implementing its remediation plan. Summary Only

Increasingly, companies large and small are moving toward flexible workforce policies, which allow employees, among other things, to adjust their work schedules to their personal lives as much as possible. In general, the strategic value of such policies is that they help employees establish a healthy work-life balance, which can yield benefits all around. Research we conducted and have chronicled in this white paper shows that the U.S. Postal Service could similarly benefit by attracting and retaining high-quality employees through adoption of flexible workforce policies.

The Commonwealth Council for Arts and Culture of the Northern Mariana Islands (CCAC) is on the cost reimbursement methof of funding and submitted a payment request for an award. The NEA OIG conducted a review of the payment request and identified repeated deficiencies, such as inadequate oversight of subrecipient awards, inadequate support documentation for expenses, unallowable costs, incomplete personnel activity reports, ineffective management of program plans, and inadequate staff training. Based on the review, we determined that the CCAC failed to comply with grant terms and conditions and as not demonstrated the ability to adequately manage federal awards.

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

Section 11(d)(9) of the Inspector General Act of 1978, as amended, requires the Council of the Inspectors General on Integrity and Efficiency to submit to Congress and the President an annual report on the activities of the Integrity Committee. For more informatoin about the Integrity Committee, please visit the link below.

Limited scope audits involve a limited review of financial and non-financial information of grant recipients to ensure validity and accuracy of reported information, and compliance with state and Federal requirements. Our audit was conducted in accordance with the Government Auditing Standards (2011), issued by the Comptroller General of the United States, and concluded that the Louisiana Division of the Arts (LDOA) generally complied with financial management system requirements. However, we found that LDOA did not submit the Final Descriptive Report (FDR) timely. We also could not determine whether LDOA is in compliance with the Rehabilitation Act of 1973, as amended.

While, generally, TVA effectively monitors gas and pipeline transportation costs and efficiently manages storage capacity, the OIG identified opportunities to improve the monitoring of natural gas and transportation costs. Specifically, we determined TVA did not (1) track the financial impact of penalties, (2) consistently witness pipeline meter testing, and (3) verify the accuracy of the variable cost portion of pipeline transportation invoices. We also determined TVA's reconciliation process addressed the risk of overpayments to natural gas suppliers; however, we identified a $20,000 credit provided to TVA by a natural gas supplier that management determined was credited in error. Additionally, TVA was efficiently managing storage capacity; however, TVA did not actively manage pipeline transportation capacity due to a strategic decision to base firm transportation capacity needs on a percentage of the plants' capacities to ensure reliability. We recommended the Senior Vice President, Power Operations, perform a periodic assessment of gas pipeline penalties and require meter tests be consistently witnessed by appropriately trained personnel. We recommended the Senior Vice President, Power Operations, in collaboration with the Vice President and Controller, Corporate Accounting, implement a process to verify the accuracy of transportation invoices and take action to reimburse the $20,000 mistakenly credited to TVA.

As part of our annual audit plan, the OIG performed an interim audit of costs billed to the Tennessee Valley Authority (TVA) by Canal Barge Company, Inc. (Canal) for transporting coal by barge to the Cumberland Fossil Plant under contract number 40753. Our audit included $141.3 million in costs paid by TVA from February 1, 2009, through May 7, 2014. The contract's original compensation provisions were effective February 1, 2009, through December 31, 2011, and provided for TVA to pay per ton rates to Canal for barge services based on the origin loading point. The compensation provisions were amended effective January 1, 2012, to provide for (1) fixed monthly rate(s) for the number of boats Canal utilized and (2) a variable rate per ton based on the origin loading point. Our objectives were to determine if (1) the costs Canal billed to TVA were in accordance with the contract terms and conditions and (2) the data and assumptions TVA used in its analysis to support the amended pricing structure were reasonable. In summary, we found Canal billed costs to TVA in accordance with the contract terms and conditions. However, TVA's analysis for determining a revised pricing methodology for its contract with Canal used assumptions that were not supported by the contract or available historical information. As a result, the amended pricing structure will result in TVA paying up to an estimated $6 million more from January 1, 2012, to December 31, 2014, than would have been incurred under the original pricing structure. In response to our draft audit report, TVA management stated they agreed with the conclusions and recommendation and will (1) work to ensure that measures used in the analysis are reasonable based on contract provisions and (2) utilize historical information where it is relevant and available. However, management also stated (1) Coal and Gas Services (C&GS) had received differing legal opinions regarding how to value liquidated damages when it constructed the contract amendments, and (2) historical information is only one of several inputs utilized in generating potential scenarios. We agreed with TVA management's stated actions. However, with regard to management's other statements, (1) C&GS could not provide documentation that it had received differing legal opinions regarding how to value liquidated damages, and (2) historical information was the most reliable data source to determine towing capacity scenarios, but it was not a key data component used in TVA's analysis. Summary Only

The OIG audited approximately $3.36 million in costs billed to TVA by Bristol Tennessee Essential Services (BTES) as of September 30, 2014. In summary, we found costs billed to TVA were supported by invoices paid to third parties by BTES. However, we noted (1) instances where costs billed were not supported by evidence the work associated with invoices had been completed, (2) BTES had not completed all actions required under the contract, and (3) TVA had not determined the benefits of the project. Finally, we noted TVA was providing excessive credits to BTES each month under an existing Direct Load Control (DLC) program based on documentation provided to us by BTES. We recommended TVA (1) ensure all payments made to BTES under contract number 00072597 are for work completed in accordance with the specifications and timelines required by the contract and determine what actions to take if all switches are not installed and working properly by January 30, 2015, (2) receive adequate support to ensure all work related to an invoice has been completed prior to payment and make receipt of key deliverables a requirement for payment under any future research and development related contracts, and (3) determine, based on the findings of the project, whether load control schemes produce the desired effect for TVA, distributors, and residential customers before moving into a new program. Additionally, we recommended TVA reduce the monthly credits given to BTES under the existing DLC program to reflect BTES documentation of switches installed under that program. TVA management is working on plans to address the recommendations in the report. Summary Only

Throughout its history, the U.S. Postal Service has been part of the nation’s vital infrastructure, facilitating economic activity, improving quality of life, and benefiting wider society in a variety of ways. But the Postal Service is also mandated to operate like a business, which can pose challenges to its public service mission. The resulting tension between the two was easier to manage when postal revenues were sufficient to fully cover the agency’s costs and obligations. But today, the Digital Age is cutting into the volume of the product that contributes more than half of the funds to support the network. This white paper presents three broad options the Postal Service and its stakeholders could consider when deciding how to adapt the Postal Service’s role for the future.