TVA's Accounting for Insurable Losses

April 3, 2006

2006-515I

Audit

We assessed the adequacy of controls applicable to the accounting for costs associated with non-nuclear insurable losses. TVA has negotiated and obtained insurance to cover two areas of non-nuclear operations: (1) non-nuclear property and (2) unplanned outages. The unplanned outage insurance covers Fossil's nine baseload units. In summary, we found that the Corporate Insurance Risk & Analysis Group (CIR&A) is in the process of developing policies and procedures to ensure identification of non-nuclear insurable losses and the accounting for associated costs. According to CIR&A, interim actions have been undertaken to capture the costs of non-nuclear insurable losses, including:The Risk Management Information System was implemented in 2002 for the purpose of capturing insurable loss information as it relates to TVA's non-nuclear operations.Insurable loss incidents are identified by maintaining contact with designated site personnel. CIR&A also reviews various reports and data generated within TVA to identify potential insurable loss incidents. CIR&A has trained TVA business managers and designated site personnel to identify the costs that need to be captured in the event an insurable loss occurs. Since this process is currently in a development stage, we plan to defer any further audit work until the process is fully implemented.

Yes

Yes (agency-wide)

$0

$0