All Reports

TVA contracted with Ernst & Young LLP (E&Y) to audit TVA's balance sheet as of September 30, 2008, and the related statements of income, changes in proprietary capital, and cash flows for the year then ended. In addition, the contract called for the review of TVA's fiscal year 2008 interim financial information filed on Form 10-Q with the Securities and Exchange Commission. The contract required the work be performed in accordance with generally accepted government auditing standards. We evaluated E&Y's work to determine compliance with these standards.

The objective of our review was to assess the procedures and key control activities used to track and account for tools on the Watts Bar Nuclear Plant Unit 2 Construction Project (WBN U2 Project).

TVA contracted with the independent certified public accounting firm of PricewaterhouseCoopers LLP (PwC) to audit revisions to the balance sheets and the related statements of income, changes in proprietary capital, and cash flows as of September 30, 2007 and 2006, for the purpose of restating TVA's previously issued financial statements. The contract required the audit be done in accordance with generally accepted government auditing standards.

We reperformed certain procedures due to changes in data previously reviewed by the OIG, the results of which were reported in our October 24, 2008, report under project No. 2008-12062. In reperforming the procedures, we found the (1) actual year-to-date input for the revised fiscal year (FY) 2008 Non-Fuel Operations & Maintenance TVA-wide metric agreed with the underlying support provided by the Controller's organization on December 4, 2008, and (2) revised FY 2008 scorecard and weighted scorecard payout percentages were mathematically accurate. Summary Only

We audited $25.24 million of costs billed to TVA by a contractor for subcontract services between September 30, 2002, and December 31, 2007. The subcontractors provided personnel to perform asbestos abatement and sampling, along with removal and installation of other insulation material at TVA nuclear plants and subsequently in support of the Browns Ferry Nuclear Plant Unit 1 Recovery Project.

We audited the costs billed to TVA by a contractor for providing professional engineering and technical support services associated with the restart of Browns Ferry Nuclear Plant (BFN) Unit 1.

We reviewed TVA's efforts to implement telework as well as any planned telework initiatives.

We performed four agreed-upon procedures solely to assist management in determining the validity of the Winning Performance payout awards for the year ended September 30, 2008. In summary, we found:The fiscal year 2008 Winning Performance goals were properly approved. However, during our review, we noted the definition sheets describing the formulas for the three TVA incentivized measures were not approved by the Board.

The United States is facing an energy crisis of historic proportions and when coupled with the recent national economic instability, these two factors present utility companies like TVA with unique challenges. The electric utility industry is a very capital-intensive industry requiring TVA to make large scale capital investment decisions. Risk is inherent in the process. How TVA manages those risks is particularly important today.

We reviewed the qualifications for contractor and subcontractor employees working on the Watts Bar Nuclear Plant Unit 2 (WBN U2) construction project to assess the hiring process and determine if those hired met minimal qualifications for their designated labor category (grades). We determined:TVA's engineering, procurement, and construction contract did not include minimum requirements for the 20 specified labor categories; moreover, the contractor lacked corporate criteria specifying minimum requirements for filling these positions at WBN U2.