Federal Reports

The OIG investigated allegations that TVA Board Chairman William "Bill" Sansom's personal financial interests and position at TVA constituted a conflict of interest and that he had a relative who worked at TVA in violation of TVA's nepotism policy. Federal conflict of interest law prohibits federal officials and employees from acting on a particular matter in their official capacity which affects personal financial interests. There was no evidence Mr. Sansom participated in any particular matter as part of his TVA duties which was related to his personal financial interests. In addition to the conflict of interest law, TVA has a policy which prohibits Board members from owning investments in distributors, entities in the electricity business and companies adversely affected by TVA's success. None of Mr. Sansom's financial interests fell into these categories. The nepotism claim was unfounded. The TVA employee in question had the same name as Mr. Sansom's son-in-law but was unrelated.

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

The Office of Inspector General (OIG) conducted the Audit of the Federal Election Commission’s Office of Human Resources (OHR) based on the numerous findings identified in the 2009 Office of Personnel Management’s (OPM) Human Capital Management Evaluation Report, concerns about the effectiveness of the OHR raised by FEC senior leaders during the OIG’s 2012 annual audit planning process, and the numerous unsatisfactory responses included in the 2011 OHR’s annual customer service survey.

We reported on how LEAs that received increased IDEA funds through the Recovery Act exercised IDEA’s maintenance of effort (MOE) flexibility provision. MOE flexibility permits an eligible LEA to reduce the level of local expenditures for the education of children with disabilities by up to 50 percent of any increase in its annual IDEA, Part B, Section 611 subgrant allocation. We found that the 17 LEAs and 6 SEAs reviewed did not always comply with applicable laws and regulations associated with exercising MOE flexibility or properly use and account for freed-up funds resulting from exercising MOE flexibility. We made 12 recommendations to address the issues identified, including that the Department perform additional program monitoring, verify that SEAs have implemented appropriate policies and procedures, and determine the amount SEAs are required to remit to the Department.

SIGTARP's Quarterly Report to Congress

Our audit concluded that the required financial statements submitted to the Department by proprietary schools generally do not include transparent information about the schools’ use of Title IV funds sufficient to allow FSA to make informed decisions about program effectiveness. Our review of the FY 2010 audited financial statements for 521 proprietary schools found that the financial statements did not provide transparent information because the presentation of instruction and marketing expenses was not consistent across schools. As a result, the data were generally not useful to FSA in identifying how schools spent Title IV funds, nor were they useful in making meaningful comparisons of financial information across schools participating in the Title IV programs. As a result, the audited financial statements are generally not useful to the Department, a major financer of postsecondary education for this sector, in evaluating schools and the Title IV programs. Based on our findings, we recommended that FSA work with Congress to obtain statutory authority to establish uniform account classification rules and procedures for all postsecondary schools, including proprietary schools, create a standard chart of accounts for use by schools that includes expense classifications that clearly define the types of costs to be recorded under each expense account, and determine what detailed financial statement information would provide the necessary insight into the operations of schools participating in the Title IV programs and develop common reporting requirements for that information.

Inspection re climate in request to Congressional request.

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

Our nationwide review of how LEAs obligated and spent Recovery Act money in the final year of funding covered the Puerto Rico Department of Education (as both a State educational agency (SEA) and an LEA), four other SEAs, and eight LEAs. Our review did not find that the LEAs used Recovery Act funds in an inappropriate or wasteful manner to avoid lapsing funds for the programs in our scope.1 We also determined that the SEAs and LEAs generally obligated and spent Recovery Act funds in accordance with applicable laws, regulations, guidance, and program requirements. However, we identified some issues involving Puerto Rico and LEAs in Arkansas, Delaware, and Florida that were included in separate reports to the SEAs.

The OIG completed agreed-upon procedures to assist the Center for Resource Solutions (CRS) in determining TVA's compliance with the annual reporting requirements of the CRS Green Pricing Accreditation Program for the year ended December 31, 2012. The results of the procedures performed, which were related to TVA's renewable energy initiative, "Green Power Switch," were provided to the CRS. Summary Only

We audited the risk program at Bellefonte Nuclear Plant (BLN) to determine the adequacy of TVA's consideration of risks associated with the construction of BLN Unit 1. The scope included BLN construction risk management program activities beginning August 2009 through November 2011 and subsequent changes to the risk management program. We determined that while a renewed emphasis has been placed on BLN's risk management program, previous program failures indicated significant improvements to the program were needed. Specifically, we identified a lack of a strong continuity in the risk management process, which affected program effectiveness. This lack of continuity included ineffective guidance and oversight of BLN's risk program by former TVA management and a lack of documentation for key risk information allowing for facilitation of the risk program. A new risk manager has been assigned to pilot and implement a new risk management process. As part of these renewed efforts, the new Risk Manager has taken steps to address these actions. We commend current BLN project management for taking steps to address guidance, oversight, and documentation. Current BLN project management recognized the failures of the initial attempts to develop and implement the risk management program, and the new processes being implemented are steps in the right direction. We verbally communicated an additional action that can be taken to ensure history does not repeat itself as the project moves forward. This action included the clarification and clear communication of (1) whether risk mitigation activities are to be included in the contingency estimate controlled at the project level and the management reserve amount controlled at the corporate level and (2) what that means in terms of the project's estimated cost. Summary Only

We found that for the time period covered by our audit, Miami-Dade County Public Schools could not reconcile about $2.3 million in Recovery Act Title I funds and about $1.2 million in IDEA funds with the Florida Department of Education’s Cash Advance and Reporting of Disbursements System. As a result, we could not determine whether data that Miami-Dade reported to the Florida Department of Education, which was in turn reported on the Recovery Act Web site, was accurate. We also found that Miami-Dade improperly classified more than $400,000 in transportation costs as supply costs. We recommended that the Florida Department of Education require Miami-Dade to develop and implement adequate fiscal and management controls to maintain reliable financial records.

As a result of delays and overruns on the Tennessee Valley Authority (TVA) Watts Bar Nuclear Unit 2 (WBN U2) construction project, questions have been raised about the quality of the work performed. Nuclear Construction (NC) Quality Assurance (QA) plays a key role in ensuring that work completed meets high-quality standards. The objective of our review was to determine if the NC QA program was effective in its oversight of the WBN U2 construction project. We found NC QA has generally been effective in its oversight of the construction project; however, a breakdown in the QA program resulted in a lack of oversight in one area. With the exception of the breakdown in QA discussed below, no significant issues were identified. In addition, we reviewed documentation that showed NC QA conducted oversight activities and Bechtel performed QA activities. As issues were identified, Problem Evaluation Reports (PERs) were generated to address those issues. A breakdown in the QA program related to the commercial-grade dedication program was identified by the Nuclear Regulatory Commission (NRC). Specifically, there was no oversight of the commercial-grade dedication program by QA since 2008. In response, TVA conducted an evaluation to see if problems existed in other areas. TVA's evaluation found a few areas that required minor adjustments, and those adjustments were made. Furthermore, TVA assembled an independent, technical team to review commercial-grade dedication packages, and as of May 2013, no significant issues had been identified. We also found, that while the turnover of one system has occurred, a process for transitioning the authority for the execution of the QA program from Bechtel QA to NC QA has not been implemented, which could limit the effectiveness of the NC QA's oversight efforts. The process for transition of authority from Bechtel QA to NC QA will provide evidence that the construction phase QA requirements in the Nuclear Quality Assurance Plan have been met and also help to prevent any steps or reviews from being missed. We made recommendations to management to address the findings in the report.

The paper recommends the Postal Service consider opportunities for public-private partnerships (PPPs) to reduce its costs, make its outlays flexible so that they vary along with volume, and leverage private sector expertise in developing new products for the digital age. The paper reviews lessons learned from PPPs in the postal sector and from nonpostal government agencies in the United States. Over the years, government agencies have developed a set of best practices to ensure that a PPP is a good deal for the public. There are significant benefits to creating a central office to facilitate PPPs, coordinating with private entities, and collecting and sharing best practices throughout an agency.

Our audit to determine whether the Department effectively monitored and tracked 21st Century Community Learning Centers program performance measures and controls at four SEAs identified areas needing improvement. The four SEAs reviewed were the Alabama State Department of Education, the Florida Department of Education, the Mississippi Department of Education, and the Puerto Rico Department of Education. We found that although the Department tracked program performance measures at the SEAs, neither the Department nor three of the SEAs (Alabama, Mississippi, and Puerto Rico) validated the performance data that the subgrantees submitted. As a result, the Department was unable to ensure that grantees met program objectives. We also found that although the Department monitored the SEAs’ processes to award and monitor subgrants and reported some deficiencies it identified, it did not identify the internal control weaknesses that we found at the selected SEAs. Based on our findings, we made a number of recommendations, including that the Department ensure that SEAs implement written policies, procedures, and monitoring instruments to sufficiently test 21st Century Community Learning Centers performance data and provide reasonable assurance of the accuracy, reliability, and completeness of data reported to the Department. We also recommended that the Department provide sufficient monitoring and oversight of SEAs’ processes to award and monitor 21st Century Community Learning Centers grants to subgrantees.

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

This report is Sensitive But Unclassified. To obtain further information, please contact the OIG Office of Counsel at OIGCounsel@oig.treas.gov, (202) 927-0650, or by mail at Office of Treasury Inspector General, 1500 Pennsylvania Avenue, Washington DC 20220.

We determined that the El Paso Independent School District, Bowie High School, and Coronado High School Adequate Yearly Progress results for 2009, 2010, and 2011, and the graduation rate data used for the 2009 and 2012 Adequate Yearly Progress calculations cannot be relied on because not all students took the necessary tests due to policies El Paso Independent School District put into place that prevented all applicable students from taking the test. We also determined that the Texas Education Agency (TEA) and El Paso Independent School District violated the academic and assessment requirements of the ESEA by allowing students to graduate from high school without taking the required test that counted towards Adequate Yearly Progress. In addition, we found that school district leadership designed an inadequate control environment and lacked adequate control activities to provide reasonable assurance of compliance with laws and regulations. As a result of the issues identified during the audit, El Paso Independent School District students’ civil rights may have been violated. Based on our audit findings, we recommended that the Department require TEA to determine the impact of these findings on El Paso, Bowie, and Coronado Adequate Yearly Progress results for 2009, 2010, 2011, and 2012, reconsider the previous Adequate Yearly Progress results, and take appropriate action; require TEA to develop policies, guidance, and internal controls and require TEA to direct El Paso to implement specific oversight mechanisms and internal controls; and work with the Assistant Secretary for Civil Rights to determine whether students’ civil rights were violated.

The OIG audited the costs billed to the Tennessee Valley Authority (TVA) by MPW Industrial Services, Inc. (MPW) for providing hydroblasting services at TVA locations under Contract No. 38764. Our scope included $2.33 million in costs paid by TVA from January 7, 2009, to December 27, 2011. This amount included $1.88 million paid under Contract No. 38764 and $0.45 million paid under stand-alone purchase orders which incorporated the pricing terms of Contract No. 38764. Our objective was to determine if MPW billed TVA in accordance with the contract terms and conditions.In summary, we determined MPW overbilled TVA $397,519 as follows:$323,654 was overbilled for equipment and labor costs, including (1) $212,443 for ineligible equipment and labor costs; (2) $96,975 for excessive crew costs; and (3) $14,236 in fuel surcharges, per diem, and labor escalation associated with the ineligible equipment and labor costs that were billed.$73,865 of ineligible mobilization/demobilization costs were overbilled, including (1) $64,307 in setup and breakdown costs not provided for by the contract and (2) $9,558 in mobilization/demobilization costs billed for ineligible equipment.Additionally, MPW was overpaid $38,066 because certain invoices were paid twice by TVA. Summary Only

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