Audit Process
What Types of Audit Reviews Does the OIG Conduct?
The OIG audit organization performs four primary types of reviews the results of which are generally communicated through a written report. They are audits, management advisory reviews, congressional advisory reviews, and consulting reviews.
Audits -- are those reviews designed to contribute to accountability over resources by providing independent reports on (1) fairness of financial information presentation, (2) adequacy of internal controls, (3) compliance with laws and regulations, (4) compliance with contract provisions, and/or (5) performance of organizations, programs, activities, or functions. Audit reports include recommendations, as appropriate, to which management must respond. Audits are conducted in accordance with Generally Accepted Government Auditing Standards.
Management Advisory Reviews -- are conducted to develop information useful to managers in decision making and program implementation and improvement initiatives. They are usually initiated by the OIG. Reports do not include recommendations but may include suggestions to management. They are conducted in accordance with the President's Council on Integrity and Efficiency Quality Standards for Inspections.
Congressional Advisory Reviews -- are conducted to develop information requested by a member of the United States Congress. These reports provide an analysis of the specific data or information requested and do not generally contain recommendations or suggestions.
Consulting Reviews -- are primarily conducted to develop information to provide management or oversight bodies with answers to specific questions. These are performed at the request of management or other oversight bodies and are limited to specific areas and procedures agreed on between the requester and the OIG. The reports do not include recommendations, but may include suggestions to management. They are conducted in accordance with the AICPA Standards for Consulting Services.
Reports resulting from each of these audits/reviews will usually be issued in draft, providing TVA management with the opportunity to comment. However, audits or reviews with no recommendations may be issued as a final report only.
What Can I Expect During the Review Process?
OIG audits and reviews are performed in accordance with relevent standards. Our goal during the process is to keep management informed through every phase of the audit or review process. These phases include:
Notification -- The OIG notifies the client, and TVA management if different, before the review begins, usually by letter or memorandum.
Entrance Conference --The review team conducts an entrance conference with the audit/review client to discuss the objectives, scope and timing of the review.
Performance of Fieldwork -- During the performance of fieldwork, the review team gathers data and performs analyses necessary to meet the review objectives. Data may be gathered through interviews, by survey, or by reviews of documents, records, and reports, or by accessing computerized data. The team briefs the client on any findings identified during this phase, especially those requiring immediate corrective action.
Exit Conferences -- Upon completion of the auditors' fieldwork and prior to the issuance of the draft report, the OIG will offer management the opportunity for an exit conference during which results can be discussed.
Draft Report -- The draft review report is a preliminary report issued to inform management and other interested parties of the audit/review results. Reports are generally addressed to the cognizant management official who can ensure corrective actions are implemented. This official will generally be the TVA Vice President responsible for the organizations, program, activity, or function addressed in the report. When the draft report is issued, the OIG requests this official and other interested parties to provide written comments regarding findings and recommendations or suggestions. Internal TVA comments may be requested before issuing a draft to other interested parties. TVA officials are encouraged to arrange meetings with the OIG staff to clarify draft report issues, as needed.
Management Response/Decision -- In responding to draft reports, management is requested to (1) indicate their agreement or disagreement with the facts, conclusions, and recommendations or suggestions; and (2) provide actions taken or planned, including dates actions were completed or are planned to be completed. The management official addressee should ensure that comments provided to the OIG represent the fully coordinated position of TVA management. Written responses are expected within 30 calendar days from the date of the draft report. In extraordinary circumstances (e.g., reports addressing time-sensitive issues), the comment period allowed may be shortened.
Final Report -- A final review report is issued after consideration of comments on and actions taken or planned in response to the draft report. Final OIG reports include a summary of management's comments on individual findings, observations, and recommendations or suggestions and the OIG's evaluation of those comments in the body of the report. In addition, the full text of management's comments are included in the report as an appendix.
Final Action -- This is TVA management's completion of all planned actions to resolve review findings and recommendations. The OIG should be notified by management when final action is taken. The OIG is required by law to notify Congress when final action is not complete within a year after management issues its decision on audit findings and recommendations.
What Do Cost-Related Report Terms Mean?
The following definitions are from the Inspector General Act. The OIG uses this terminology to describe audit findings in its reports to TVA management and Congress.
Questioned Cost -- A cost the OIG has questioned because (1) of an alleged violation of law, regulation, contract, or other agreement governing the expenditure of funds (ineligible cost); (2) such cost is not supported by adequate documentation (unsupported cost); or (3) the expenditure of funds was unncessary or unreasonable (unrecoverable waste).
Disallowed Cost -- A questioned cost that management has sustained or agreed should not be charged to TVA.
Funds To Be Put To Better Use -- Funds the OIG recommends could be used more efficiently by reducing expenditures, improving TVA or contractor operations, avoiding unnecessary expenditures noted in preaward contract audits, deobligating program or operational funds, or taking other efficiency measures.
How are Comments on Draft Reports Evaluated?
When comments on OIG reports are received, they are evaluated to ensure (1) comments address all issues raised in the draft report, (2) estimated completion dates of action are reasonable, and (3) comments are responsive.
Responses for each finding/observation and associated recommendations or suggestions are characterized as responsive or not responsive as follows.
Responsive -- In the OIG's opinion management actions taken or planned should correct the problem or resolve the issues identified in the report.
Not Responsive -- In the OIG's opinion, management actions taken or planned will not correct the problem or resolve the issues identified in the report.
How are Nonresponsive Comments on OIG Reports Resolved?
In the event the OIG determines comments are not responsive, the audit team leader and/or OIG management will discuss areas of disagreement with appropriate TVA management in an attempt to reach a mutually acceptable compromise. If acceptable compromise is not reached on any aspect of the management decision, a memorandum is prepared indicating the areas of agreement and disagreement and the bases for disagreement. If the disagreement is significant enough, the TVA Board and Congress may be notified.
How are Review Recommendations and Management Actions Tracked?
The OIG enters all reports and their associated findings/observations and recommendations/suggestions into an audit tracking system maintained by the OIG. The OIG monitors the status of corrective actions on its recommendations and suggestions and determines whether and when follow-up reviews will be conducted to verify that management took corrective action and that the action corrected the identified problems. Follow-up work may be reported in a separate report.
Every six months the OIG summarizes the status of corrective actions on all findings/observations and recommendations/suggestions in its Semiannual Report to Congress in accordance with the Inspector General Act of 1978, as amended.
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