Semiannual Report

This is the third "Semiannual Report" of the Office of the Inspector General. It describes our significant audit and investigatory activities from April through September 1987.During this period, we audited and investigated matters of critical importance to TVA and the public. We investigated bomb threats, drug abuse, concerns by employees about TVA's nuclear program, and allegations of fraud and misconduct. At the request of the Office of Government Ethics, we have monitored TVA's compliance with the guidelines TVA adopted to help pre­ vent conflicts of interest from occurring in its nuclear program.We have reviewed management's guidelines for developing information for the TVA Board of Directors, as well as other management processes. We have audited claims by contractors seeking millions of dollars from TVA, and we are currently reviewing TVA's financial processes.One matter which we identified in our last semiannual report continues to be unresolved. The TVA Retirement System Board of Directors objects to a full­ scope OIG review of the economy, efficiency, and effectiveness of the system's operations. However, the TVA Board of Directors has recently received an opinion from TVA's General Counsel which describes the Board's rights and obligations with respect to the Retirement System, including advice on the Board's authority to require the system to submit to a comprehensive audit.The last six months have been productive. The first year of organizing and staffing the office is returning benefits. To the advantage of the ratepayers and the public, we are affecting the reasonableness of costs, assurances of safety, fairness of practices, and accountability processes.Since the OIG's inception, we have been supported by the TVA Board of Directors, senior TVA managers, TVA employees, Members of Congress, and the public. We draw strength from this strong support and will continue to work to justify the confidence that has been placed in us.Sincerely,Norman A. Zigrossi