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Report
of Independent
Accountants
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To
the Board of Directors of the Tennessee Valley Authority
In our
opinion, the accompanying balance sheets (power program and all programs)
and the related statements of income (power program), changes in proprietary
capital (power program and nonpower programs), net expense (nonpower
programs), and of cash flows (power program and all programs) present
fairly, in all material respects, the financial position of the power
program and all programs of the Tennessee Valley Authority as of September
30, 1999, and 1998, the results of operations of the power program and
nonpower programs and cash flows of the power program and all programs
for each of the three years in the period ended September 30, 1999,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Tennessee Valley Authority’s
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements
in accordance with generally accepted auditing standards and Government
Auditing Standards issued by the Comptroller General of the United States
which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion
expressed above.
In accordance with
Government Auditing Standards, we have also issued a report, dated October
22, 1999, on our consideration of the Tennessee Valley Authority’s
internal controls over financial reporting and our tests of compliance
with certain provisions of laws, regulations, contracts and grants.
As discussed in
note 7
to the financial statements, TVA changed its method for determining
the market-related value of pension assets in 1999.
PricewaterhouseCoopers
LLP
Knoxville, Tennessee
October 22, 1999
Report
of Management
Management
is responsible for the preparation, integrity, and objectivity of the
financial statements of the Tennessee Valley Authority as well as all
other information contained in the annual report. The financial statements
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis and, in some cases, reflect
amounts based on the best estimates and judgments of management, giving
due consideration to materiality. Financial information contained in
the annual report is consistent with that in the financial statements.
The Tennessee Valley
Authority maintains an adequate system of internal controls to provide
reasonable assurance that transactions are executed in accordance with
management’s authorization, that financial statements are prepared
in accordance with generally accepted accounting principles, and that
the assets of the corporation are properly safeguarded. The system of
internal controls is documented, evaluated, and tested on a continuing
basis. No internal control system can provide absolute assurance that
errors and irregularities will not occur due to the inherent limitations
of the effectiveness of internal controls; however, management strives
to maintain a balance, recognizing that the cost of such a system should
not exceed the benefits derived. No material internal control weaknesses
have been reported to management.
PricewaterhouseCoopers
LLP was engaged to audit the financial statements of the Tennessee Valley
Authority and issue reports thereon. Its audits were conducted in accordance
with generally accepted auditing standards. Such standards require a
review of internal controls and an examination of selected transactions
and other procedures sufficient to provide reasonable assurance that
the financial statements neither are misleading nor contain material
errors. The Report of Independent Accountants does not limit the responsibility
of management for information contained in the financial statements
and elsewhere in the annual report.
David N. Smith
Chief Financial Officer
and Executive Vice President of Financial Services
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