All Reports

As a result of our review of the procedures and key control activities used to track and account for tools at Browns Ferry Nuclear Plant (Inspection No. 2005-526I), we performed an inspection to asses the processes and key control activities used to track and account for tools at WBN. TVA Nuclear (TVAN) Business Practice 226 (BP-226), Tool and Equipment Accountability, dated August 27, 2000:<br><br>Established and implemented a plant accountability system for tools and equipment. Strengthened and standardized existing tool and equipment accountability practices.

We reviewed and evaluated the control design and documentation for the time reporting process to determine whether key financial reporting risks were addressed in the control framework. In summary, we determined process control documentation was inadequate in the areas of establishing responsibility for accurate time reporting, and monitoring of time reported, which resulted in inconsistencies in time reporting processes used at TVA sites. TVA management agreed with our findings and initiated corrective actions to improve guidance. Summary Only

We reviewed $64.5 million of costs billed to TVA by a contractor for subcontracted engineering services performed at Browns Ferry Nuclear Plant Unit 1. We determined TVA had been over billed $34,958.

To assist TVA in preparing for compliance in fiscal year 2007 with Section 404 of the Sarbanes Oxley Act of 2002 (SOX 404), we reviewed the documentation and design of certain financial reporting controls determined by the Controller's organization to be in scope for SOX 404 compliance and reporting. In summary, we reviewed 15 processes and made recommendations to management for improvements and obtained information about management's remedial actions planned or taken. Summary Only

We reviewed $5.1 million of cost billed to TVA by a contractor for subcontracted welding services performed at Browns Ferry Nuclear Plant Unit 1. We determined TVA had been billed $295,067 for (1) per diem payments that exceeded contract per diem limits; (2) ineligible and unsupported per diem, relocation, and equipment costs; and (3) ineligible fees. TVA management informed us they agreed with our audit findings and plan to take action to recover the overbilled amounts from the contractor. Summary Only

We completed agreed-upon procedures and issued a report to the U.S. Treasury Financial Management Service and Government Accountability Office to assist in the preparation and audit of the fiscal year 2006 U.S. government-wide consolidated financial report. Summary Only

Each quarter federal agencies, including TVA, submit intragovernmental balances by federal trading partner (TP) to the U.S. Treasury (UST) to assist in preparing the annual governmentwide consolidated financial report. To facilitate TVA's reconciliation with its TPs at yearend, we reviewed the FY 2005 3rd quarter intragovernmental information reported to UST. In summary, we found (1) Intragovernmental balance information as reported generally agreed with the third-quarter financial statements, (2) some inaccuracies in the data submitted in the U.S.

We performed an inspection to determine why Tennessee Valley Authority (TVA) has incurred significant coal adjustments stemming from TVA's receipt of coal through Calvert City Terminal (CC). TVA has contracted with CC through 2008 for transloading, stockpiling, and blending coal.

TVA contracted with the independent certified public accounting firm of PricewaterhouseCoopers LLP to audit the balance sheets as of September 30, 2005 and 2004, and the related statements of income, changes in proprietary capital, and cash flows for each of the three years in the period ended September 30, 2005. The contract required the audit be done in accordance with generally accepted government auditing standards. Our review disclosed no instances where PricewaterhouseCoopers did not comply, in all material respects, with generally accepted government auditing standards.

We audited $18.4 million of payments TVA made to a contractor for chemicals and water treatment services during Fiscal Year 2004 and found 23 percent of the payments were authorized by technical contract managers who did not have adequate controls in place to ensure the products or services had been received. Additionally, we found the prices billed by the contractor were in compliance with the contract except for (1) $6,266 of overbillings, and (2) an estimated $322,579 of payments for products with unsupported prices.