Business Context and Reporting Period
This Form 8-K is a current report filed by the Tennessee Valley Authority (TVA), a corporate agency of the United States, on September 27, 2007. The filing addresses a change in the registrant's certifying accountant.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on the appointment of a new independent registered public accounting firm.
Material Changes
- Accountant Change: The Board of Directors approved the appointment of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending September 30, 2008.
- Dismissal of Prior Firm: PricewaterhouseCoopers LLP was dismissed effective upon completion of its procedures for the fiscal year ending September 30, 2007.
- Transition Status: PricewaterhouseCoopers remains the auditor for the fiscal year ending September 30, 2007, pending the completion of its audit procedures and the filing of the Annual Report on Form 10-K.
Guidance, Risks, and Contingencies
The filing discloses two material weaknesses in internal controls identified during the fiscal years ended September 30, 2006 and 2005, which were communicated to the outgoing auditor:
- A material weakness related to end-use billing arrangements with wholesale power customers.
- A material weakness related to controls over the completeness, accuracy, and authorization of property, plant, and equipment transactions, including the calculation of the allowance for funds used during construction and the review of construction work in progress accounts.
There were no disagreements with PricewaterhouseCoopers regarding accounting principles, financial statement disclosure, or auditing scope. The outgoing auditor's reports for 2005 and 2006 did not contain adverse opinions, disclaimers, or qualifications.
Investor Verification Checklist
- Verify the status of the two disclosed material weaknesses in internal controls in the most recent Form 10-K/A and Form 10-Q.
- Confirm the completion of PricewaterhouseCoopers' audit procedures for the fiscal year ending September 30, 2007.
- Review the letter from PricewaterhouseCoopers (Exhibit 16.1) to ensure they agree with the disclosures regarding the change in auditors.
- Monitor the upcoming Form 10-K for the fiscal year ending September 30, 2007, to be audited by PricewaterhouseCoopers.