Federal Reports

The Tennessee Valley Authority (TVA) routinely engages in business meetings and external relationship events to conduct business and develop improved relationships.  TVA Standard Programs and Processes 13.063, Business Meetings & External Relationship Events, requires all employees responsible for planning a business meeting or external relationship event to ensure and document that the (1) business need is justified; (2) expense is reasonable, proper, and an efficient use of TVA resources; and (3) cost is appropriate to the occasion or circumstance.  Approving managers are responsible for ensuring that purchases are reasonable, for official business use, within the organization’s approved budget, and in accordance with policies and procedures.  To add an additional level of oversight for expenditures, TVA management reports these activities annually to the TVA Board of Directors.

Our audit objective was to determine if expenditures reimbursed as business meetings or external relationship events complied with TVA policies and procedures and any other applicable guidance.  Our audit scope included approximately $7.1 million in business meetings and external relationship event expenditures occurring from January 1, 2024, through December 31, 2024.

We reviewed expenditures associated with 180 business meetings and external relationship events.  We determined that while all expenditures for meetings/events were approved by TVA management or their delegates, a substantial number had expenditures that were not in compliance with policies and procedures.  Specifically, these events/meetings included (1) disallowed expenses for team-building events and alcohol and (2) meals that exceeded allowable amounts.  In addition, we identified expense reports for meetings/events that were approved that did not comply with documentation requirements.  These included expense reports approved without (1) evidence of review, (2) itemized receipts, and (3) obtaining waivers required by the Randolph Sheppard Act.

To improve transparency, the TVA Board of Directors, CEO, and Direct Reports annual Fiscal Year Expense Review Summary could be revised to (1) attribute all support staff expenses authorized by an executive to that executive in the report and (2) identify executive expenses that do not comply with policy and document justifications for the expenses.

The noncompliance issues identified were the result of TVA’s system of internal controls, including the key control, management review and approval of expenses, not operating effectively because policies and procedures were not followed or enforced by approvers of expenditures.  This included expenditures made and/or approved by some executives that did not adhere to policies. 

During fiscal year 2024, the Tennessee Valley Authority (TVA) communicated its intent to invest approximately $7 billion over the next 20 years to ensure safe and reliable operations of its three nuclear sites.  This investment is to extend and preserve the life of its nuclear units and will be accomplished through nuclear life extension (NLE) projects. Moisture separator reheaters (MSRs) are a major plant asset that will be included in the NLE focus.  Sequoyah Nuclear Plant’s (SQN) Unit 1 includes six MSRs located at the SQN Turbine Building. These MSRs have been in place since SQN Unit 1 entered commercial operation in 1981.  Because of the operational and financial impact to SQN, we performed an evaluation to determine the reasons for cost increases and schedule delays of the MSR Replacement Project.

We determined the primary reason for the cost increases and schedule delays for the MSR Replacement Project was the initial estimate and schedule did not fully consider the scope of the structural modifications necessary to support the increased size and weight of the new MSRs.  As a result, TVA spent more than three years evaluating options without an identified solution, and the project’s forecasted cost increased from $43.6 million in February 2021 to $93.9 million in September 2024. With the cost estimate increasing and over $55 million spent, TVA deferred the MSR Replacement Project.  To address MSR degradation, TVA planned a partial refurbishment project.  As of December 2025, the partial refurbishment project was complete and in‑service with a spend of approximately $37 million.  TVA continues to evaluate the feasibility of utilizing the six purchased MSRs, which cost $25.4 million, on future projects.  We also identified other cost increases related to storage costs resulting from project delays, the initial installation estimate being understated, and contractor costs that could have potentially been avoided.

In addition, we determined the MSRs were not purchased as quality‑related components in accordance with TVA’s Nuclear Regulatory Commission approved Nuclear Quality Assurance Plan (NQAP).  The NQAP details the steps necessary for properly overseeing the manufacture of quality-related nuclear plant components.  Since the MSRs were not manufactured in accordance with the NQAP, they may require additional evaluation to determine if they can be used at Sequoyah Nuclear Plant or another site in the future.  Additionally, we found that the MSR quality-related identification and purchasing issues were not properly documented in TVA’s Corrective Action Program, as required. 

Lastly, we identified actions that increased risk to TVA, including the (1) original equipment manufacturer (OEM) being absolved of liability related to the study of improvement options for the MSRs, (2) contracting officer not being included in some contract changes, and (3) OEM not being held accountable for procuring components from unapproved sources.

Final OIG Letter to OMB on FTC Charge Card Risk Assessment

The following is the U.S. Department of Housing and Urban Development (HUD), Office of Inspector General’s (OIG) Annual Work Plan (AWP) for Fiscal Year (FY) 2026. The OIG conducts audits and evaluations to prevent and detect fraud and abuse and promote the economy, efficiency, and effectiveness of HUD’s programs and operations. 

The AWP highlights audits and evaluations the OIG will initiate in FY 2026, as well as ongoing projects that continue from prior years. All of the projects span HUD programs and operations and take into account HUD’s Top Management and Performance Challenges we identified through our past oversight work, HUD’s priorities as described in its Annual Performance Plan for FY 2026, and recommendations for action we issued to HUD that remain open. The projects also encompass mandatory audits and evaluations required by laws or regulations. 

We organized the AWP by focus areas that correspond to the challenges described in our Top Management and Performance Challenges Report. These focus areas are:

• Improving Business Operations: Modernizing IT Systems and Streamlining Procurement 

• Protecting Taxpayer Funds from Fraud, Waste, and Abuse

• Modernizing the Management of Grant Funds 

• Ensuring the Availability of and Access to Affordable and Quality Housing 

We are committed to providing objective oversight to protect taxpayer funds from fraud and waste and to improve the efficiency and effectiveness of HUD’s programs and operations. As with any plan, the AWP is subject to periodic review and revision to address emerging programmatic issues, priorities, and resource changes and to respond to HUD requests or legislative mandates. One area of developing oversight is the OIG’s work in support of safer homes and communities as mandated by the President’s Executive Orders and Presidential Memoranda.

The Office of Inspector General engaged the independent public accounting firm Harper, Rains, Knight, & Company, P.A. (HRK) to conduct the annual Federal Information Security Modernization Act (FISMA) evaluation and complete the FY 2025 Inspector General (IG) FISMA Reporting Metrics.  

The objective of the evaluation was to assess the effectiveness of the Commission's information security program and practices for FY 2025.  HRK determined the Commission’s maturity levels were consistently implemented and its information security program and practices were effective.

HRK identified one new finding with three corresponding recommendations.

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