Business Practice 24

Corporate Accountability and Disclosure Practice

Contents

WHAT

In February 2003, the TVA Board adopted the TVA Corporate Accountability and Disclosure Plan. This plan addresses corporate responsibility, auditor independence, and disclosure and requires TVA to develop corporate practices that reflect the reforms of the Sarbanes-Oxley Act of 2002, including certification of financial statements and related disclosures by the TVA Board of Directors and the Chief Financial Officer.




WHO

  • TVA Board of Directors and Officers
  • TVA's Disclosure Control Committee
  • All Employees




WHY

To the extent possible, TVA conducts its business in an open and forthright manner to instill in Congress and the Administration and in our investors and our customers a high level of confidence in TVA. Congress passed the Sarbanes-Oxley Act of 2002, which requires the Chief Executive and Chief Financial Officers of companies that file reports with the Securities and Exchange Commission (SEC) to certify their annual reports and quarterly financial reports. Although TVA is generally not covered by the terms of the Sarbanes-Oxley Act, the TVA Board has determined that adopting procedures consistent with certain provisions of the Act will better assure current and potential TVA investors and other key stakeholders that TVA is providing complete, accurate, and timely information about TVA.




HOW

TVA Corporate Accountability and Disclosure Plan

TVA's Corporate Accountability and Disclosure Plan adopted by the TVA Board addresses corporate responsibility, auditor independence, and disclosure.


The key provisions are:

  • Certification of financial statements and related disclosures by the Board of Directors and Chief Financial Officer (CFO)
  • Adoption of a code of financial ethics
  • Adoption of a formal disclosure policy and creation of a Disclosure Control Committee to implement the policy
  • Elimination of non-audit services performed by the external auditor
  • Regular involvement by the TVA Inspector General in financial reviews


TVA's Disclosure Control Policy

The purpose of TVA's Disclosure Control Policy (an appendix to the Corporate Accountability and Disclosure Plan) is to provide a framework for TVA's disclosure of “material” information to the investment community and to help investors develop and maintain realistic expectations regarding the performance of TVA and its securities. Information is material if there is a substantial likelihood a reasonable investor would consider the information important in making an investment decision regarding TVA securities.


The Disclosure Control Policy indicates:

  • The Disclosure Control Committee's membership and its responsibilities
  • What information will be considered to be material
  • How and when material information will be publicly disclosed
  • The extent to which TVA will review and comment on investment analysts' draft models or reports
  • How TVA will interact with and respond to inquiries from investors and analysts


TVA's Information Certification Policy

The TVA Board has established an Information Certification Policy (an appendix to the Corporate Accountability and Disclosure Plan) that provides that the: (1) summary analysis portion of the condensed annual report, (2) information statement, and (3) quarterly reports will be certified by the TVA Board and the CFO. Other members of the Business Council will certify information included in the annual financial documents that they are responsible for reviewing, and SBU Business Managers will certify the accuracy and completeness of their SBU's summary financial reports that are included in the consolidated TVA financial reports on a quarterly basis.



Disclosure and Financial Ethics Code

TVA's Board of Directors adopted a Disclosure and Financial Ethics Code which is applicable to officers and employees who certify information contained in quarterly reports, annual reports, or information statements, or who have responsibility for internal controls self-assessments.



Disclosure Controls and Procedures

The Disclosure Controls and Procedures establish procedures for the identification and review of information considered to be potentially material for disclosure purposes in accordance with the Disclosure Control Policy.


These procedures will apply to the Disclosure Control Committee (DCC) and to the Strategic Business Unit (SBU) personnel responsible for submitting information which the DCC will evaluate for materiality and disclosure purposes. The process begins when SBU personnel identify information that qualifies as “potentially material” and concludes when either the information is submitted to the DCC and appropriate action is taken or when, during the notification process, the information is deemed not potentially material and is not submitted to the DCC.




ROLES

All Employees

  • TVA expects the highest levels of ethics and integrity from all its employees.
  • All TVA employees must adhere to the standards of ethical conduct for federal employees ( Federal Ethics Standards ).
  • Officers and employees who certify information included in any quarterly report, annual report, or information statement, or who have responsibility for internal controls self-assessments must also adhere to TVA's disclosure and financial ethics code.




TVA Board Members/Officers

  • TVA Board members and CFO will certify the financial statements and related disclosures in TVA's annual reports, information statements, and quarterly reports.
  • All TVA officers must take ethics training annually.
  • All TVA officers must file financial disclosure statements annually.



Disclosure Control Committee

The Disclosure Control Committee consists of the Chief Financial Officer and Executive Vice President, Financial Services (Chair); President and Chief Operating Officer; Executive Vice President, Communications and Government Relations; Executive Vice President, Customer Service and Marketing; Executive Vice President and General Counsel; Executive Vice President, Administrative Services; Senior Vice President, Treasurer/ Investor Relations ; Vice President & Controller; Vice President, Corporate Finance & Risk Management; Inspector General (advisory member); and External Auditor (advisory member). The committee's responsibilities include:


  • Keeping apprised of all material developments affecting TVA.
  • Determining when developments affecting TVA require disclosure.
  • Reviewing TVA's annual reports, quarterly reports, annual information statements, and the “Other Matters” and “Recent Developments” sections of offering circulars for accuracy and completeness prior to the dissemination of such documents.
  • Advising the Executive Vice President, Communications & Government Relations when requested with respect to the disclosure aspects of major announcements, news releases, speeches, and other material communications by top management.
  • Systematically reviewing TVA's prior material communications and advising whether any updating or correcting is appropriate.
  • Providing guidance that is requested by Directors, Officers, employees, agents, and contractors of TVA regarding disclosure issues that may arise during the course of their duties.
  • Designing and implementing guidelines to assist in classifying information as material.
  • Designing such disclosure controls and procedures necessary to ensure that the financial statements and other financial information relating to TVA is made known during the period in which the annual report, quarterly report, information statements, and offering circulars are prepared.
  • Evaluating the effectiveness of TVA's disclosure controls and procedures as of the end of the period covered by the financial statements and other financial information.
  • Presenting conclusions about the effectiveness of the disclosure controls and procedures based on the evaluation.




RESOURCES

  • TVA's Controller group
  • TVA's Office of the General Counsel
  • TVA's Inspector General
  • TVA Practices list
  • TVA Procedures list





REVISION HISTORY

May, 2004