Federal Reports

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

As part of a series of reviews to evaluate the Tennessee Valley Authority's (TVA) actions to address key risks, we evaluated TVA's outage scheduling risk. The objective of this review was to evaluate TVA's outage scheduling risk to identify opportunities to improve mitigation strategies and assess whether mitigation strategies were designed appropriately to address the identified risk. Outage Scheduling was identified as a top five strategic business unit risk in the Internal Process and Procedures Risk category in FY 2011. The risk refers to failure in coordination of the outage schedule for TVA. Adherence to Standard Programs and Processes (SPP) 33.4, Outage and Derate Concurrence Process (Outage Concurrence Process), will ensure a formal outage change request process is followed by asset organizations requesting outage changes, and concurrence with outage schedules is given by all impacted organizations. This mitigation is currently ongoing.While mitigation strategy for addressing TVA's outage scheduling risk is designed appropriately and has reduced risk, opportunities exist to improve the outage scheduling process. We found (1) the control overseeing the Outage Concurrence Process is manual and time consuming; (2) the control in place over quality checks is not being completed; and (3) the Outage Concurrence Process does not align with SPP-30.004, TVA Chief Operating Officer Approved Method to Optimize TVA Asset Availability (Asset Availability Optimization Process), in regard to the use of Asset Availability in entering outages.We recommended the Vice President, System Planning, (1) work in conjunction with the Asset Availability owners to determine if a control can be added to Asset Availability to prevent outages from being entered without first completing the Outage Concurrence Process; (2) take steps to make sure that quality checks are performed as prescribed in the Outage Concurrence Process; and (3) work in collaboration with the owner for the Asset Availability Optimization Process to address conflict between the Outage Concurrence Process and the Asset Availability Optimization Process to align the process for entering outages into Asset Availability. TVA management agreed with the recommendations.

The OIG audited $2.5 million in costs billed to the Tennessee Valley Authority (TVA) by G&A Environmental Contractors, Inc., for vacuuming services. Our objective was to determine if the costs billed to TVA for the period January 1, 2010, through September 30, 2011, were in compliance with the terms and conditions of the contract. In summary, we determined G&A overbilled TVA $254,060 including:$153,619 due to the use of ineligible firm price billings.$60,991 for hydro-blasting work which was not included in the contract's scope.$20,229 of ineligible billings for materials and miscellaneous costs.$19,221 of labor billings that were overstated because G&A did not use the billing rates in the contract. Summary Only

The OIG audited costs billed to the Tennessee Valley Authority (TVA) by Day & Zimmermann NPS, Inc. (DZNPS) for the Watts Bar Nuclear Plant's Unit 1 refueling outage during 2011. Under the contract, DZNPS was to provide the services of qualified personnel to perform modification, outage and supplemental maintenance services, and technical support services at TVA generating plants. Our audit included $27.7 million in costs billed by DZNPS from January 24, 2011, through June 19, 2011. Our objective was to determine if the costs billed were in compliance with the terms and conditions of the contract.In summary, we determined DZNPS overbilled TVA an estimated $215,042, which included $186,798 in nonmanual labor costs and $28,244 in craft labor costs. In addition, DZNPS did not use the Hourly Craft Superintendent (HCS) classification in TVA's labor agreements and instead, classified all superintendents as nonmanual employees, including six employees promoted from craft general foreman. Because a 15-percent general and administrative cost markup is applied to nonmanual labor, TVA paid an additional $35,867 for these six employees, which would not have been incurred if they had been classified as HCS. Summary Only

The OIG audited costs billed to the Tennessee Valley Authority (TVA) by Day & Zimmermann NPS, Inc. (DZNPS) for the Watts Bar Nuclear Plant's Unit 1 refueling outage during 2011. Under the contract, DZNPS was to provide the services of qualified personnel to perform modification, outage and supplemental maintenance services, and technical support services at TVA generating plants. Our audit included $27.7 million in costs billed by DZNPS from January 24, 2011, through June 19, 2011. Our objective was to determine if the costs billed were in compliance with the terms and conditions of the contract.In summary, we determined DZNPS overbilled TVA an estimated $215,042, which included $186,798 in nonmanual labor costs and $28,244 in craft labor costs. In addition, DZNPS did not use the Hourly Craft Superintendent (HCS) classification in TVA's labor agreements and instead, classified all superintendents as nonmanual employees, including six employees promoted from craft general foreman. Because a 15-percent general and administrative cost markup is applied to nonmanual labor, TVA paid an additional $35,867 for these six employees, which would not have been incurred if they had been classified as HCS. Summary Only

This management information report provided the Office of Federal Student Aid (FSA) and the Office of Postsecondary Education (OPE) with the results of our risk analysis regarding student aid fraud ring activity associated with the electronic processing of Federal student aid applications.

As part of a series of reviews to evaluate the Tennessee Valley Authority's (TVA) actions to address key risks, the OIG evaluated TVA's load forecast risk. Load forecast was identified as a top five strategic business unit risk in the Long Range Planning Process Risk Category in fiscal year (FY) 2011. The objective of this review was to evaluate TVA's load forecast risk to identify opportunities to improve mitigation strategies and assess whether mitigation strategies were designed appropriately to address the identified risk.While EL&RF is taking actions to mitigate risk associated with load forecasting, we found opportunities exist to improve the mitigation strategy documentation. The documented mitigation strategy does not reflect planned actions to improve data integrity or the regular updates to the forecast models and economic drivers. Additionally, we found mitigations are generally designed appropriately. However, we noted EL&RF does not have any compensating controls to prevent inadvertent modifications to data until the Demand & Data Consolidation Process is completed.We recommended the Senior Vice President, Strategy, Financial Planning & Business Development, (1) enhance the load forecast documented mitigation strategy to include the mitigations planned, or already occurring but not listed, as part of the strategy and (2) implement measures to reduce the likelihood of inadvertent modifications to data until the Demand & Data Consolidation Process is completed. TVA management agreed with our findings and recommendations and has taken actions to address them.

The Reports Consolidation Act of 2000 requires the U.S. Department of Education (Department) Office of Inspector General (OIG) to identify and report annually on the most serious management challenges the Department faces. The Government Performance and Results Modernization Act of 2010 requires the Department to include in its agency performance plan information on its planned actions, including performance goals, indicators, and milestones, to address these challenges. To identify management challenges, we routinely examine past audit, inspection, and investigative work, as well as issued reports where corrective actions have yet to be taken; assess ongoing audit, inspection, and investigative work to identify significant vulnerabilities; and analyze new programs and activities that could post significant challenges because of their breadth and complexity.Last year, we presented four management challenges: improper payments, information technology security, oversight and monitoring, and data quality and reporting. Although we noted some progress by the Department in addressing these areas, each remains as a management challenge for fiscal year (FY) 2013. We previously provided the executive summary of the FY 2013 management challenges for inclusion in theDepartment’s Agency Financial Report.

At the request of the Chief Administrative Officer (CAO), the Office of Inspector General (OIG) and its contractor, Cotton & Company LLP, conducted a performance audit of the United States Capitol Police (USCP or the Department)'s Building Access Card (BAC) process. The objectives of this audit were to determine (1) if the Department had established adequate internal controls and procedures over USCP's badging and fingerprinting process to ensure that the risk of unauthorized personnel on the U.S. Capitol Complex was reduced to an acceptable level and (2) if USCP complied with applicable policies and procedures. The audit scope included controls, processes, and operations in place at USCP as of August 1, 2012.

This paper provides a documented overview of P2P digital commerce. It includes an examination of specific market facilitators that may be familiar names (eBay, Craigslist, etsy, and others) as well as newer P2P service facilitators such as Airbnb, Getaround, and TaskRabbit. Common attributes of facilitators are discussed, along with how payment processing and various customer service issues may be handled. The paper also identifies gaps and problems in today’s marketplace and discusses Postal Service products and services that exist today or may be developed in the future to facilitate this market.

As a follow-up to its paper, A Primer on Postal Costing Issues, the OIG asked Professor Michael D. Bradley of the Economics Department of George Washington University, an expert in postal economics, to co-author a paper on pricing and short-run costs. This paper defines what is meant by short-run and long-run costs, explores the issues associated with using short-run costs when developing prices, outlines what information is needed to measure short-run costs, and develops a multistep algorithm for estimating short-run costs that is consistent with the existing Postal Service cost system.

e-Government has developed over the past 20 years in response to the changing needs of an increasingly digital society. Nevertheless, there are still lingering gaps in security, access, and ease of use that have hindered full, public adoption of existing e-Government services, as well as the development of new services. This paper discusses the opportunity for the Postal Service to establish a one-stop, shared, multi-channel service platform to help all levels of government fill these gaps, while addressing massive duplicative costs across agencies.

We found that Recovery Act expenditures by the Maryland State Department of Education, Maryland Department of Public Safety and Correction, and two LEAs, Baltimore City Public Schools and Prince George’s County Public Schools, were generally allowable, reasonable, and accounted for in accordance with the recipients’ plans, approved applications, and applicable laws and regulations. However, we identified more than $736,400 in unallowable, unsupported, and inadequately supported expenditures at the two LEAs. For example, we found that Prince George’s County spent more than $108,800 for unapproved travel, and Baltimore City could not adequately support personnel expenditures totaling more than $249,700. In addition, although we found that the Recovery Act data reported by the State were generally accurate, complete, and in compliance with Recovery Act reporting requirements, the jobs data reported by the Maryland Department of Public Safety and Correction and the two LEAs were not accurate or complete. We made several recommendations, including that the Department require the Maryland State Department of Education to revise its monitoring instruments to ensure adequate oversight of LEA compliance with requirements for Federal grant funds’ use and accounting, return to the Department funds that were used for unallowable purposes, and provide documentation to support unsupported and inadequately supported expenditures or return the amount of those expenditures to the Department.

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.

This report details the results of our evaluation ofthe Bureau of Land Management's (BLM), National Park Service's (NPS), and Office of Surface Mining Reclamation and Enforcement's (OSM) emergency preparedness at their high hazard dams. High hazard dams under the purview of BLM, NPS, and OSM either have no requirement for emergency action plans (EAP) or have EAPs that have been inadequately exercised or reviewed or that have not been formalized. In addition, we found an absence of a uniform approach to monitoring high hazard dams not owned by BLM or NPS but located on BLM and NPS lands. We include 11 recommendations in our report that, if implemented, will help to improve emergency action planning at the three bureaus.

Our review of Recovery Act expenditures at two LEAs—the El Dorado School District and the Little Rock School District—found that the LEAs generally obligated and spent stimulus funds in accordance with applicable laws, regulations, guidance, and program requirements. However, we did identify areas of concern at each LEA. At El Dorado, we questioned its use of more than $237,300 in funds for a purpose prohibited by the Recovery Act: it improperly spent Recovery Act funds to replace a gymnasium roof at a high school that was no longer used as a school. In response to this finding, the district superintendent and business manager stated that the district reversed the costs and transferred other expenditures to offset those funds. At Little Rock, we identified control weaknesses in its asset inventory system that resulted in the district not properly accounting for and safeguarding equipment purchased with Recovery Act funds (and potentially other Federal funds) in a timely manner. Four of the seven purchases that we reviewed totaled almost $196,000. We recommended that the Department determine whether El Dorado’s transfer of expenditures to offset the questioned costs was an allowable activity more than 6 months after the grant had ended and that it require the Arkansas Department of Education to ensure that Little Rock strengthens internal controls over assets purchased with Federal funds.

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.

2012 Financial Statement

We reviewed Recovery Act expenditures at two LEAs—the Red Clay Consolidated School District and the Christina School District—and found that both districts generally obligated and spent stimulus funds in accordance with applicable laws, regulations, guidance, and program requirements. However, we identified an internal control weakness in the Christina School District’s payroll adjustment process that resulted in it obligating about $41,100 in Recovery Act funds for personnel expenditures after the grant period ended on September 30, 2011. We recommended that the Department require the Delaware Department of Education to direct the district to return the funds to the Department and implement sufficient internal controls to help ensure this does not happen in the future.

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

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

We found that the Debt Management Collection System 2 (DMCS2), the Federal Student Aid office’s (FSA) system for managing defaulted student loans, was unable to accept the transfer of certain defaulted student loans from FSA’s Title IV Servicers. At the time of our audit, the entities that service Federal student aid loans had accumulated more than $1.1 billion in defaulted loans that should have been transferred to the Department for management and collection. DMCS2 has been unable to accept transfer of these loans and, as a result, the Department is hampered in pursuing collection remedies and borrowers are unable to take steps to remove their loans from default status. The inability of DMCS2 to accept these transfers also contributed to a material weakness in internal control over financial reporting that was identified in FSA’s FY 2012 financial statement audit. Based on our interaction with FSA officials to date, FSA has yet to implement effective corrective action to bring these affected loans into collection and to correct the problems with DMCS2. Our report included a number of recommendations, including that the Department identify each problem related to DMCS2 loan transfers, the source of each problem, and the entire population of loans adversely affected and establish dates for resolving the cause of each identified problem related to DMCS2 loan transfers.

We performed an audit of costs billed to the Tennessee Valley Authority (TVA) by Jacobs Engineering Group, Inc. for providing project planning, management, oversight, and environmental services to assist TVA in the recovery and remediation associated with the Kingston Fossil Plant Dredge Cell Incident. Our audit included about $37 million in costs billed to TVA from February 6, 2009, to December 31, 2011. Our audit objective was to determine if Jacobs billed TVA in accordance with the contract terms and conditions.We determined Jacobs overbilled TVA an estimated $15,667 including $9,285 in ineligible overtime labor costs and $6,382 in excessive and ineligible travel and miscellaneous costs. In addition, at the start of our audit, TVA was performing an assessment of temporary living allowance (TLA) costs billed and identified $84,628 in overbilled TLA costs. Jacobs disputed TVA's assessment and stated the overbilled costs were $64,785. We determined TVA's calculation of overbilled TLA costs was correct, and Jacobs subsequently agreed to refund $84,628 and issued a credit to TVA in its September 2012 invoice.We also found several instances of inadequate contract administration including (1) $266,788 paid by TVA for a labor classification, which was not included in the contract's "Schedule of Prices;" (2) $21,717 in additional travel costs paid by TVA because TLA compensation terms were not made part of the contract until January 1, 2010; and (3) failure by the contractor to obtain advance written approval from TVA prior to billing subcontractor TLA and relocation costs. Summary Only

As part of a series of reviews to evaluate Tennessee Valley Authority's (TVA) actions to address key risks, the OIG evaluated TVA's physical assaults risk. Physical assaults risk was identified in the 2011 Enterprise Risk Management Program. The objective of our review was to evaluate TVA employee, contractor, and visitor physical assaults risk, identifying opportunities to improve mitigation strategies and assess whether mitigation strategies were designed appropriately to address the identified risk. TVA developed a mitigation strategy to reduce risk that included (1) creating a comprehensive physical security plan, (2) expanding employee education, (3) replacing communication infrastructure and equipment, and (4) implementing a guard program.Our review found TVA has implemented or was implementing actions to reduce the risk of physical assaults on TVA employees, contractors, and visitors. The mitigations were generally designed appropriately to address the risk. However, TVA identified that workplace-violence incidents were not always reported to TVA Security and Emergency Management. This prevented TVA from recognizing emerging patterns and identifying possible training that could lower the risk of similar future incidents.We recommended a procedure be created for individuals who receive workplace-violence incident reports detailing which workplace-violence incidents should be reported to TVA Security and Emergency Management along with a uniform way of submitting that information. TVA management generally agreed with our findings and recommendations and plans to take measures to address them.

As part of a series of reviews to evaluate Tennessee Valley Authority's (TVA) actions to address key risks, the OIG evaluated TVA's physical assaults risk. Physical assaults risk was identified in the 2011 Enterprise Risk Management Program. The objective of our review was to evaluate TVA employee, contractor, and visitor physical assaults risk, identifying opportunities to improve mitigation strategies and assess whether mitigation strategies were designed appropriately to address the identified risk. TVA developed a mitigation strategy to reduce risk that included (1) creating a comprehensive physical security plan, (2) expanding employee education, (3) replacing communication infrastructure and equipment, and (4) implementing a guard program.Our review found TVA has implemented or was implementing actions to reduce the risk of physical assaults on TVA employees, contractors, and visitors. The mitigations were generally designed appropriately to address the risk. However, TVA identified that workplace-violence incidents were not always reported to TVA Security and Emergency Management. This prevented TVA from recognizing emerging patterns and identifying possible training that could lower the risk of similar future incidents.We recommended a procedure be created for individuals who receive workplace-violence incident reports detailing which workplace-violence incidents should be reported to TVA Security and Emergency Management along with a uniform way of submitting that information. TVA management generally agreed with our findings and recommendations and plans to take measures to address them.

KPMG LLC, the auditor under contract having performed the audits of the Office of D.C. Pension’s (ODCP) consolidated financial statements as of and for the years ended 2010, 2011, and 2012, has withdrawn its opinions on those respective consolidated financial statements. Accordingly, we have removed the auditors’ reports from the OIG website.