BUSINESS PRACTICE 6

Financial Management

WHAT

TVA uses several financial management tools to ensure that it accomplishes its business and corporate objectives in a responsible manner. In addition, TVA manages its assets and liabilities prudently to keep power rates as low as feasible and to fulfill its financial responsibilities to employees, ratepayers, taxpayers and bondholders.

TVA complies with generally accepted accounting principles and with applicable laws, regulations and policies.

WHO

• All employees

WHY

TVA is fiscally accountable to its customers in the power service sector and, as a government agency, to all U.S. citizens. TVA must be able to identify and justify its costs of doing business.

HOW

BUDGET

• TVA develops an annual budget that specifies funding levels for all TVA activities and identifies both sources and intended uses of funds.
• Power rates are based in part on the power revenue needs identified in this budget.

CONTROLS

• TVA's system of administrative controls applies to all TVA funds. Over-obligation or over-spending of appropriated and non-power funds violates the Anti-Deficiency Act, which can lead to administrative or legal penalties.
• TVA also implements financial controls to safeguard its assets and income against various risks and to ensure that financial reports are reliable. Financial controls form an integral part of the systems that management uses to guide its operations and achieve the positive aims of its programs.

FINANCIAL FUNCTIONS

• TVA receives cash from power revenues and proceeds from power financings, such as proceeds from the issuance of debt.  Since 1999, TVA has not received any congressional appropriations.
• TVA in turn pays employees, vendors, bondholders and others to whom TVA owes money for services or materials.
• TVA makes financial investments and collects and disburses cash through its Cash Management, Accounts Payable, Accounts Receivable and Payroll functions.
• TVA controls its financial functions through a system of financial controls and through its corporate and organizational budgeting process.

REPORTING

• Annual and Quarterly Reports - TVA reports financial data accumulated through its accounting system and publishes annual and quarterly financial statements. The Annual Statements are independently audited. Bondholders, ratepayers and others can rely on these reports as accurate representations of TVA's financial condition.
• Internal Reports - Throughout the fiscal year, various financial and management reports are produced and distributed to employees.

ROLES

All Employees

• Are expected to use TVA's fiscal resources in a prudent and productive manner.
• Should report apparent weaknesses in financial controls to their supervisors, the Inspector General or the Executive Vice President and Chief Financial Officer.

All Organizations

• Are encouraged to control spending within appropriate levels.

Controller

• Develops and implements appropriate financial controls.
• Develops, maintains and interprets financial procedures that provide more detail about the subject areas.

Executive Vice President and Chief Financial Officer

• Manages TVA finances.
• Approves write-offs of assets up to Board-approved limits after coordinating with appropriate organizations.

Board of Directors

• Approves TVA's annual report, which includes the agency's official financial statements.
• Sets power rates.
• Approves TVA's power-funded budget and the appropriation budget request which is submitted to Congress.
• Authorizes the sale and redemption of bonds used to finance the power program.
• Is responsible if obligations or expenditures exceed the available appropriations or statutory limitations.
• Approves the final annual payments in lieu of taxes due to states and counties.
• Takes other financial actions as required by the TVA Act or other federal legislation.

 

RESOURCES

• General Ledger Operations - 865/632-3087
• Accountants
• Financial Analysts
• Program Managers

This practice is based on various Board actions.

 

Last Revised 09/04