Semiannual Report

This is the first Semiannual Report of the Inspector General of the Tennessee Valley Authority. It summarizes the significant organizational. audit. and investigative activities undertaken by the Office of the Inspector General (OIG) for the period ending September 30, 1986. This report has been prepared by the Inspector General for transmittal to Congress by the TVA Board of Directors in accordance with the Board's October 18. 1985 Resolution establishing an OIG within TVA.When we began organizing the Office of the Inspector General eight months ago. we set out to accomplish two objectives. We planned to complete the organization and be fully operational by October 1. 1986. And we planned to address those issues that led to the creation of the OIG. The OIG is now fully operational. Our examinations of nuclear program issues and of related employee concerns are under way.Two important reviews were concluded during this reporting period. Our investigation of the contract conflict of interest issues surrounding the manager of nuclear power concluded that there were no criminal violations but there were management shortcomings in the contract process. Our audit of personal services contracts revealed that TVA has not complied with Public Law No. 98-72 in its contract to acquire annual financial audits. This law is intended to promote competition in Government contracting.During the OIG's formative period there have been two instances in which the independent authority of the Inspector General has been challenged. First, a proposed OIG audit of TVA's Retirement System was seriously impaired due to a limitation imposed on the scope and procedures of the audit by the Retirement System's Board of Directors. Second. TVA management officials have been reluctant to turn over to the OIG management of the annual financial audit of TVA. The TVA Board is now considering whether to let the OIG manage the audit contract in the future. The TVA Board Resolution which established the OIG clearly assigned all audit responsibility to the OIG.In order to ensure an effective program. we have selected five goals and developed a Master Plan for achieving them. The OIG will undertake a balanced program of investigative and audit projects that will improve TVA.During the next six months. the OIG will focus on three areas: (l) gaining an understanding of TVA goals and the factors critical to their accomplishment. (2) continuing to address those issues that led to establishment of an OIG, and (3) developing a program for achieving professional excellence as an office.We appreciate the support of the TVA Board of Directors. TVA employees, the public. and TVA's friends and constructive critics in the Congress who have provided useful advice and assistance. We would like to assure all of you that the men and women of the OIG are dedicated to maintaining the trust and support that have been bestowed on them.Sincerely,Norman A. Zigrossi