ML19318G708
| ML19318G708 | |
| Person / Time | |
|---|---|
| Issue date: | 11/15/2019 |
| From: | Lee D NRC/OIG/AIGA |
| To: | Kristine Svinicki NRC/Chairman |
| References | |
| OIG-20-A-04 | |
| Download: ML19318G708 (39) | |
Text
INDEPENDENT AUDITORS REPORT To: Inspector General United States Nuclear Regulatory Commission Chairman United States Nuclear Regulatory Commission In our audit of the fiscal year 2019 financial statements of the United States Nuclear Regulatory Commission (NRC), we found
- NRCs financial statements as of and for the fiscal year ended September 30, 2019, are presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles;
- NRC maintained, in all material respects, effective internal control over financial reporting as of September 30, 2019; and
- No reportable noncompliance for fiscal year 2019 with provisions of applicable laws, regulations, contracts, and grant agreements we tested.
The following sections discuss in more details (1) our report on the financial statements and on internal control over financial reporting, required supplementary information (RSI) 1, and other information (OI) 2 included in the financial statements; (2) our report on compliance with laws, regulations, contracts, and grants agreements; and (3) agency comments.
Report on the financial statements and on Internal Control over Financial Reporting In accordance with our contract with NRCs Office of Inspector General, we have audited NRCs financial statements. NRCs financial statements comprise of the balance sheet as of September 30, 2019; the related statement of net cost, changes in net position, and budgetary resources for the fiscal year ended; and the related notes to the financial statements. We also audited NRCs internal control over financial reporting as of September 30, 2019, based on criteria established under 31 U.S.C. § 3512(c), (d), commonly known as the Federal Managers Financial Integrity Act (FMFIA).
We conducted our audits in accordance with U.S. generally accepted government auditing standards and OMB Bulletin No. 19-03, Audit Requirements for Federal Financial Statements (OMB 19-03). We believe that the audit evidence we obtained is sufficient and appropriate to provide a basis for our opinions.
1 The RSI consists of Managements Discussion and Analysis (MD&A) and the Combined Statement of Budgetary Resources, which are included with the financial statements.
2 Other Information consists of information included with the financial statements, other than RSI and the auditors report.
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INDEPENDENT AUDITORS REPORT, CONTINUED Managements Responsibility NRC management is responsible for (1) the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; (2) preparing, measuring, and presenting RSI in accordance with U.S. generally accepted accounting principles; (3) preparing and presenting other information included in documents containing the audited financial statements and auditors report, and ensuring the consistency of that information with the audited financial statements and the RSI; (4) maintaining an effective internal control over financial reporting, including the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; (5) evaluating the effectiveness of internal control over financial reporting based on the criteria established under FMFIA; and (6) its assessment included in the MD&A about the effectiveness of internal control over financial reporting as of September 30, 2019.
Auditors Responsibility Our responsibility is to express an opinion on these financial statements and an opinion on NRCs internal control over financial reporting based on our audits. U.S. generally accepted government auditing standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement, and whether effective internal control over financial reporting was maintained in all material respects. We are also responsible for applying certain limited procedures to RSI and OI included with the financial statements.
An audit of financial statements involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. An audit of financial statements also involves evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
An audit of internal control over financial reporting involves performing procedures to obtain evidence about whether a material weakness 3 exists. The procedures selected depend on the auditors judgement, including the assessment of the risk that a material weakness exists. An audit of internal control over financial reporting also includes obtaining an understanding of internal control over financial reporting, and evaluating and testing the design and operating effectiveness of internal control over financial reporting based on the assessed risk. Our audit of internal control also considered NRCs process for evaluating and reporting on internal control over financial reporting based on criteria established under FMFIA. Our audits also included performing such other procedures as we considered necessary in the circumstances.
3 A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entitys financial statements will not be prevented, or detected and corrected, on a timely basis. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis.
2
INDEPENDENT AUDITORS REPORT, CONTINUED We did not evaluate all internal controls relevant to operating objectives as broadly established under FMFIA, such as those controls relevant to preparing performance information and ensuring efficient operations. We limited our internal control testing to testing controls over financial reporting. Our internal control testing was for the purpose of expressing an opinion on whether effective internal control over financial reporting was maintained, in all material respects.
Consequently, our audit may not identify all deficiencies in internal control over financial reporting that are less severe than a material weakness.
Definition and Inherent Limitations of Internal Control over Financial Reporting An entitys internal control over financial reporting is a process effected by those charged with governance, management, and other personnel, the objectives of which are to provide reasonable assurance that (1) transactions are properly recorded, processed, and summarized to permit the preparation of financial statements in accordance with U.S. generally accepted accounting principles, and assets are safeguarded against loss from unauthorized acquisition, use, or disposition, and (2) transactions are executed in accordance with provisions of applicable laws, including those governing the use of budget authority, regulations, contracts, and grant agreements, noncompliance with which could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent, or detect and correct, misstatements due to fraud or error. We also caution that projecting any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion on Financial Statements In our opinion, NRCs financial statements present fairly, in all material respects, NRCs financial position as of September 30, 2019, and its net cost of operations, changes in net position, and budgetary resources for the fiscal year then ended in accordance with U.S. generally accepted accounting principles.
Opinion on Internal Control over Financial Reporting In our opinion, NRC maintained, in all material respects, effective internal control over financial reporting as of September 30, 2019, based on criteria established under FMFIA.
During our 2019 audit, we identified deficiencies in NRCs internal control over financial reporting that we do not consider to be material weaknesses or significant deficiencies 4. Nonetheless, these deficiencies warrant NRCs management attention. We have communicated these matters to NRC management and, where appropriate, will report on them separately.
4 A significant deficiency is a deficiency or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
3
INDEPENDENT AUDITORS REPORT, CONTINUED Other Matters Fiscal year 2018 financial statements The accompanying fiscal year 2018 financial statements of NRC were audited by other auditors whose report thereon dated November 7, 2018, expressed an unmodified opinion on the financial statements and internal control over financial reporting.
Required Supplementary Information U.S. generally accepted accounting principles issued by the Federal Accounting Standards Advisory Board (FASAB) require that the RSI be presented to supplement the financial statements. Although the RSI is not a part of the financial statements, FASAB considers this information to be an essential part of financial reporting for placing the financial statements in appropriate operational, economic, or historical context. We have applied certain limited procedures to the RSI in accordance with U.S. generally accepted government auditing standards, which consisted of inquiries of management about the methods of preparing the RSI and comparing the information for consistency with managements responses to the auditors inquiries, the financial statements, and other knowledge we obtained during the audit of the financial statements, in order to report omissions or material departures from FASAB guidelines, if any, identified by these limited procedures. We did not audit and we do not express an opinion or provide any assurance on the RSI because the limited procedures we applied do not provide sufficient evidence to express an opinion or provide any assurance.
Other Information NRCs other information contains a wide range of information, some of which is not directly related to the financial statements. This information is presented for purposes of additional analysis and is not a required part of the financial statements or the RSI. We read the other information included with the financial statements in order to identify material inconsistencies, if any, with the audited financial statements. Our audit was conducted for the purpose of forming an opinion on NRCs financial statements. We did not audit and do not express an opinion or provide any assurance on the other information.
Report on Compliance with Laws, Regulations, Contracts, and Grant Agreement In connection with our audits of NRCs financial statements, we tested compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements consistent with our auditors responsibility discussed below. We caution that noncompliance may occur and not be detected by these tests. We performed our tests of compliance in accordance with U.S. generally accepted government auditing standards or OMB 19-03.
Managements Responsibility NRC management is responsible for complying with laws, regulations, contracts, and grant agreements applicable to NRC.
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INDEPENDENT AUDITORS REPORT, CONTINUED Auditors Responsibility Our responsibility is to test compliance with selected provisions of laws, regulations, contracts, and grant agreements applicable to NRC that have a direct effect on the determination of material amounts and disclosures in NRCs financial statements, and perform certain other limited procedures. Also, Section 803(b) of Federal Financial Management Improvement Act (FFMIA) requires the auditor to report whether the reporting entitys financial management systems comply substantially with Section 803(a) three requirements, which are (1) federal financial management systems requirements; (2) applicable federal accounting standards; and (3) the U.S. Government Standard General Ledger (USSGL) at the transaction level. Accordingly, we did not test compliance with all laws, regulations, contracts, and grant agreements applicable to NRC.
Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant Agreements Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements disclosed no instances of noncompliance for fiscal year 2019 that would be reportable under U.S. generally accepted government auditing standards. Moreover, the results of our tests disclosed no instances in which the NRCs financial management systems did not substantially comply with the three requirements in Section 803(a) of FFMIA. However, the objective of our tests was not to provide an opinion on compliance with laws, regulations, contracts, and grant agreements applicable to NRC. Accordingly, we do not express such an opinion.
Intended Purpose of Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements The purpose of this report is solely to describe the scope of our testing of compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements, and the results of that testing, and not to provide an opinion on compliance. This report is an integral part of an audit performed in accordance with U.S. generally accepted government auditing standards in considering compliance. Accordingly, this report on compliance with laws, regulations, contracts, and grant agreements is not suitable for any other purpose.
NRC Managements Comments NRC management, in its response to the discussion draft report we provided for comment, stated that it was in agreement with the draft report. The complete text of NRCs response is reprinted in the Agency Financial Report.
CliftonLarsonAllen LLP Arlington, Virginia November 13, 2019 5
Chapter 2 Financial Statements and Auditors Report Financial Statements Balance Sheet (IN THOUSANDS)
As of September 30, 2019 2018 Assets:
Intragovernmental Fund balance with Treasury (Note 2) $ 411,871 $ 386,894 Accounts receivable (Note 3) 5,501 5,680 Advances and prepayments 7,039 9,190 Total intragovernmental 424,411 401,764 Accounts receivable, net (Note 3) 60,902 69,640 Property and equipment, net (Note 4) 55,649 65,073 Other 45 57 Total Assets $ 541,007 $ 536,534 Liabilities:
Intragovernmental Accounts payable $ 7,777 $ 6,211 Other (Note 5) 11,524 5,398 Total intragovernmental 19,301 11,609 Accounts payable 27,671 25,683 Federal employee benefits (Note 6) 4,607 5,259 Other (Note 5) 73,628 72,393 Total Liabilities 125,207 114,944 Net Position:
Unexpended appropriations 340,983 324,998 Cumulative results of operations (Note 8) 74,817 96,592 Total Net Position 415,800 421,590 Total Liabilities and Net Position $ 541,007 $ 536,534 The accompanying notes to the financial statements are an integral part of these statements.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 34
Chapter 2 Financial Statements and Auditors Report Statement of Net Cost (IN THOUSANDS)
For the fiscal years ended September 30, 2019 2018 Nuclear Reactor Safety Gross costs $ 729,946 $ 741,875 Less: Earned revenue (Note 10) (692,962) (692,947)
Total Net Cost of Nuclear Reactor Safety (Note 9) 36,984 48,928 Nuclear Materials and Waste Safety Gross costs 208,364 213,063 Less: Earned revenue (Note 10) (74,900) (81,813)
Total Net Cost of Nuclear Materials and Waste Safety (Note 9) 133,464 131,250 Net Cost of Operations $ 170,448 $ 180,178 The accompanying notes to the financial statements are an integral part of these statements FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 35
Chapter 2 Financial Statements and Auditors Report Statement of Changes in Net Position (IN THOUSANDS)
For the fiscal years ended September 30, 2019 2018 Unexpended Appropriations:
Beginning Balance $ 324,998 $ 306,831 Budgetary Financing Sources:
Appropriations received 138,743 140,171 Appropriations used (Note 11) (122,758) (121,936)
Other adjustments - (68)
Total Budgetary Financing Sources 15,985 18,167 Total Unexpended Appropriations $ 340,983 $ 324,998 Cumulative Results of Operations:
Beginning Balance $ 96,592 $ 124,781 Adjustments (Note 8) (6,692) (368)
Beginning Balance, as adjusted 89,900 124,413 Budgetary Financing Sources:
Appropriations used (Note 11) 122,758 121,936 Non-exchange revenue (Note 11) 667 394 Other Financing Sources:
Imputed financing from costs absorbed by others (Note 11) 32,608 30,421 Other (667) (394)
Total Financing Sources 155,366 152,357 Net Cost of Operations (170,448) (180,178)
Net Change (15,082) (27,821)
Cumulative Results of Operations (Note 8) $ 74,817 $ 96,592 Net Position $ 415,800 $ 421,590 The accompanying notes to the financial statements are an integral part of these statements.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 36
Chapter 2 Financial Statements and Auditors Report Statement of Budgetary Resources (IN THOUSANDS)
For the fiscal years ended September 30, 2019 2018 Budgetary Resources:
Unobligated balance from prior-year budget authority, net $ 49,770 $ 49,226 Appropriations 910,959 921,928 Spending authority from offsetting collections 3,662 4,004 Total Budgetary Resources $ 964,391 $ 975,158 Memorandum Entry:
Net adjustments to unobligated balance brought forward Oct 1 $ 8,626 $ 10,538 Status of Budgetary Resources:
New obligations and upward adjustments (total) (Note 12) $ 895,020 $ 934,014 Unobligated balance, end of year:
Apportioned, unexpired accounts 67,717 39,575 Exempt from apportionment, unexpired accounts 407 431 Unapportioned, unexpired accounts - 3 Unexpired unobligated balance, end of year 68,124 40,009 Expired unobligated balance, end of year 1,247 1,135 Unobligated balance, end of year (total) 69,371 41,144 Total Status of Budgetary Resources $ 964,391 $ 975,158 Outlays, net:
Outlays, net 885,983 900,866 Distributed offsetting receipts (-) (772,216) (781,825)
Agency Outlays, Net $ 113,767 $ 119,041 The accompanying notes to the financial statements are an integral part of these statements.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 37
Chapter 2 Financial Statements and Auditors Report Notes to the Financial Statements (All tables are presented in thousands)
Note 1 - Summary of Significant Accounting Policies A. Reporting Entity The NRC is an independent regulatory agency of the U.S. Federal Government that the Congress created to regulate the Nations civilian use of byproduct, source, and special nuclear materials to ensure adequate protection of public health and safety, to promote the common defense and security, and to protect the environment. Its purposes are defined by the Energy Reorganization Act of 1974, as amended, along with the Atomic Energy Act of 1954, as amended, which provide the foundation for regulating the Nations civilian use of nuclear materials.
The NRC operates through the execution of its congressionally approved appropriations for Salaries and Expenses (which includes funds derived from the Nuclear Waste Fund (NWF)) and the OIG.
B. Basis of Presentation These financial statements for FY 2019 and FY 2018 (prior-year) are presented on a comparative basis. They report the financial position and results of operations of the NRC as required by the Chief Financial Officers Act of 1990 and the Government Management Reform Act of 1994 . These financial statements were prepared from the books and records of the NRC in conformance with generally accepted accounting principles (GAAP) for Federal entities of the United States and the form and content for entity financial statements specified in OMB Circular A-136. GAAP for Federal entities are the standards prescribed by the Federal Accounting Standards Advisory Board (FASAB). The FASAB has been recognized by the American Institute of Certified Public Accountants (AICPA) as the official accounting standard setting authority for the Federal government. These statements are different from the financial reports prepared by the NRC in compliance with OMB directives, which are used to monitor and control the NRC's use of budgetary resources.
Presentation of the budget accounts on the Combining Statement of Budgetary Resources shows columns for the no-year Salaries and Expenses appropriation, which includes funding for the Office of the Commission; no-year and 2-year funds aggregated for the OIG, and the Nuclear Facility Fees, which reflects the Distributed Offsetting receipts.
The NRC collects miscellaneous receipts for information requests under the Freedom of Information Act; civil penalties; and interest, administrative, and penalty charges on delinquent debt. All miscellaneous receipts, when collected, are returned to the U.S. Treasury. The NRC has not presented these amounts on a Statement of Custodial Activity as the amounts involved are immaterial and incidental to the agency's operations and mission.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 38
Chapter 2 Financial Statements and Auditors Report C. Budgets and Budgetary Accounting Budgetary accounting measures appropriation and consumption of budget spending authority or other budgetary resources and facilitates compliance with legal constraints and controls over the use of Federal funds. Under budgetary reporting principles, budgetary resources are used at the time of purchase. Assets and liabilities, which do not use current budgetary resources, are not reported, and only those liabilities for which valid obligations have been established are considered to use budgetary resources.
Congress passed the Energy and Water, Legislative Branch, and Military Construction and Veterans Affairs Appropriations Act, 2019 that funded the NRCs budget at a level of $898.3 million for FY 2019. Not more than $9.5 million of the appropriation was made available for the costs of the Office of the Commission until September 30, 2020. Additionally, Congress enacted a 2-year appropriation of $12.6 million for the OIG, which is available for obligation by the NRC through September 30, 2020.
In FY 2018, Congress passed the Consolidated Appropriations Act, 2018 that funded the NRCs budget at a level of $909.1 million for FY 2018. Not more than $9.5 million of the appropriation was made available for the costs of the Office of the Commission until September 30, 2019.
Additionally, Congress enacted a 2-year appropriation of $12.9 million for the OIG, which was available for obligation by the NRC through September 30, 2019.
D. Basis of Accounting These financial statements reflect both accrual and budgetary accounting transactions. Under the accrual method, revenues are recognized when earned and expenses are recognized when a liability is incurred, without regard to receipt or payment of cash. Budgetary accounting is also used to record the obligation of funds prior to the accrual-based transaction. The Statement of Budgetary Resources (SBR) presents total budgetary resources available to the NRC, the status of total budgetary resources, and net outlays for the year.
E. Revenues and Other Financing Sources The NRC is required to offset its appropriations by revenue received during the FY from the assessment of fees. The NRC assesses two types of fees to recover its appropriation:
Fees assessed to recover the NRCs costs of providing individually identifiable services to specific applicants and licensees under 10 CFR Part 170, Fees for Facilities, Materials, Import and Export Licenses, and Other Regulatory Services under the Atomic Energy Act of 1954, as Amended, for licensing, inspection, and other services under the authority of the Independent Offices Appropriation Act of 1952 Annual fees assessed for nuclear facilities and materials licensees under 10 CFR Part 171, Annual Fees for Reactor Licenses and Fuel Cycle Licenses and Materials Licenses FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 39
Chapter 2 Financial Statements and Auditors Report Licensing revenues are recognized on a straight-line basis over the licensing period. The annual licensing period for reactor and materials fees begins October 1 and ends September
- 30. Annual fees for reactors are invoiced in four quarterly installments, before the end of each quarter. The NRC invoices licensees for materials annual fees in the month the license was originally issued. Inspection fees are recorded as revenues when the services are performed.
For accounting purposes, appropriations are recognized as a financing source (appropriations used) at the time goods and services are received. Periodically during the Fiscal Year (FY),
appropriations recognized are reduced by the amount of assessed fees collected during the FY to the extent of new budget authority for the year. Collections that exceed 90 percent of the NRC's appropriation, excluding amounts appropriated for Waste Incidental to Reprocessing, Generic Homeland Security, Regulatory Infrastructure for Advanced Reactor Technologies, International activities, Integrated University Grants program, and OIG services for the Defense Nuclear Facilities Safety Board (DNFSB), are held to offset subsequent years appropriations.
The NRC recognizes appropriated expenses over the useful life of property and equipment as reflected by depreciation and amortization expense.
F. Fund Balance with Treasury The Treasury processes the NRCs cash receipts and disbursements. The Fund Balance with Treasury is primarily appropriated funds and license fee collections that are available to pay current liabilities and to finance authorized purchase commitments. The Fund Balance with Treasury represents the NRCs right to draw on the U.S. Treasury for allowable expenditures.
G. Accounts Receivable Accounts receivable consist of amounts that other Federal agencies and the public owe to the NRC. Amounts due from the public are presented net of an allowance for uncollectible accounts. The allowance is determined based on the age of the receivable and allowance rates established from historical experience. Receivables from Federal agencies are expected to be collected; therefore, there is no allowance for uncollectible accounts for Federal agencies.
H. Non-Entity Assets Non-entity assets consist of miscellaneous fees assessed for Freedom of Information Act requests; civil penalties; and interest, administrative charges, and penalties assessed on delinquent debt due from the public. Once collected, the funds are transferred to the U.S.
Treasury.
I. Property and Equipment Property and equipment consist primarily of typical office furnishings, leasehold improvements, nuclear reactor simulators, and computer hardware and software. The costs of internal use software include the full cost of salaries and benefits for agency personnel involved in software development. The NRC has no real property as the land and buildings in which the NRC operates are leased through the General Services Administration (GSA). The rent approximates the commercial rental rates for similar properties.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 40
Chapter 2 Financial Statements and Auditors Report Property with a cost of $50,000 or more per unit and a useful life of 2 years or more is capitalized at cost and depreciated using the straight-line method over the useful life of the asset. Other property items are expensed when purchased. Normal repairs and maintenance are charged to expense as incurred.
J. Accounts Payable The NRC uses an estimation methodology to calculate the accounts payable balance, which represents costs for billed and unbilled goods and services received but unpaid before year-end. The NRC calculates the accounts payable amount using an average based on the historical trend of validated accruals. The estimation methodology is validated quarterly.
K. Liabilities Not Covered by Budgetary Resources Liabilities not Covered by Budgetary Resources represents the amount of future funding needed to pay the accrued unfunded expenses as of the end of the FY. These liabilities are not funded from current or prior-year appropriations and assessments, but instead they are funded from future appropriations and assessments.
Liabilities represent the amount of monies or other resources that are likely to be paid by the NRC as a result of a transaction or event that has already occurred. The NRC cannot pay Liabilities without an appropriation. Liabilities for which an appropriation has not been enacted are classified as Liabilities Not Covered by Budgetary Resources" and fall into the following three categories:
Intragovernmental. The NRC records a liability to the U.S. Department of Labor (DOL) for Federal Employees Compensation Act (FECA) benefits paid by the DOL on behalf of the NRC. The NRC also accrued a liability to GSA for Broker Commission Credits (BCC) received by the NRC and annual step rent increases on the occupancy agreements for rent of NRC office space. The NRC amortizes the liability on a straight-line basis and paid to GSA over the life of the occupancy agreements.
Federal Employee Benefits. Federal employee benefits represent the actuarial liability for estimated future FECA disability benefits. The DOL generates the future workers' compensation estimate from an application of actuarial procedures developed to estimate the liability for FECA, which includes the expected liability for death, disability, medical, and miscellaneous costs for approved compensation cases.
Other. This category includes the amount of accrued annual leave earned by the NRC employees, but not yet taken; and contingent liabilities which have the probable likelihood of an adverse outcome.
L. Contingencies Contingent liabilities are those for which the existence or amount of the liability cannot be determined with certainty pending the outcome of future events. The uncertainty should ultimately be resolved when one or more future events occur or fail to occur. Accounting treatment of the contingency depends on if the likely outcome is considered probable, reasonably possible, or remote.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 41
Chapter 2 Financial Statements and Auditors Report A contingency is considered:
probable when the future confirming event or events are more likely than not to occur, with the exception of pending or threatened litigation and unasserted claims. This type of contingency is recorded in the financial statements as a contingent liability (included in Other Liabilities) and as an expense. It should be recorded when a past event or exchange transaction has occurred, a future outflow or other sacrifice of resources is probable, and the future outflow or sacrifice of resources is measurable.
reasonably possible when the chance of the future confirming event or events occurring is more than remote but less than probable. This type of contingency is disclosed in the notes to the financial statements (Note 17) if any of the conditions for liability recognition are not met and there is at least a reasonable possibility that a loss or an additional loss may have been incurred.
remote when the chance of the future event or events occurring is slight. This type of contingency is not recognized as a liability and as an expense in the financial statements, nor is it disclosed in the notes when the chance of the future event or events occurring is remote.
M. Annual, Sick, and Other Leave Annual leave is accrued as it is earned, and the accrual is reduced as leave is taken. Each year, the balance in the accrued annual leave liability account is adjusted to reflect current pay rates.
To the extent that current or prior-year funding is not available to cover annual leave earned but not taken, funding will be obtained from future financing sources. Sick leave and other types of non-vested leave are expensed as taken.
N. Retirement Plans The NRC employees belong to either the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS).
The NRC does not report on its financial statements FERS and CSRS assets, accumulated plan benefits, or unfunded liabilities, if any, applicable to its employees. Reporting such amounts is the responsibility of the U.S. Office of Personnel Management (OPM). The portion of the current and estimated future outlays for FERS and CSRS not paid by the NRC is included in NRCs financial statements as an imputed financing source in the Statement of Changes in Net Position and as program costs on the Statement of Net Cost.
The NRC employees make mandatory contributions to their retirement plans through payroll deductions as required by law. For employees belonging to FERS and receiving an appointment before January 1, 2013, the NRC withheld 0.8 percent of base pay earnings and made an employer contribution of 13.7 percent in 2019 and 2018. In accordance with Public Law 112-96, Section 5001 of the Middle Class Tax Relief and Job Creation Act of 2012, employees hired after January 1, 2013, as Federal Employees Retirement System - Revised Annuity Employees (FERS-RAE) must pay 3.1 percent of their salary to retirement contributions with 11.9 percent in 2019 and 2018 for employer matching contributions. For employees hired after January 1, 2014, as Federal Employees Retirement System - Revised Annuity Employees (FERS-RAE) must pay 4.4 percent of their salary to retirement contributions with 11.9 percent in 2019 and 2018 for employer matching contributions. The sum is transferred to the Federal Employees Retirement FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 42
Chapter 2 Financial Statements and Auditors Report Fund. For employees covered by CSRS, the NRC withholds 7 percent of base pay earnings.
The NRC matched this withholding with a 7 percent contribution in 2019 and 2018.
The Thrift Savings Plan is a retirement savings and investment plan for employees belonging to either FERS or CSRS. The maximum percentage of base pay that an employee participating in FERS or CSRS may contribute is unlimited, but it is subject to the maximum contribution of
$19,000 in 2019 and $18,500 in 2018. For employees participating in FERS, the NRC automatically contributes 1 percent of base pay to the employee's account and matches contributions up to an additional 4 percent. For employees participating in CSRS, the NRC does match the contribution. The sum of the employees and the NRCs contributions is transferred to the Federal Retirement Thrift Investment Board.
O. Leases The NRC has two types of leases: capital leases and operating leases (Note 7):
Capital leases: Capital leases are leases that transfer substantially all the benefits and risks of ownership to the lessee. Capital leases are reported in the Balance Sheet as an asset under Property and Equipment and as a liability under Other Liabilities. If at its inception, a lease meets one or more of the following four criteria, the lessee should classify the lease as a capital lease:
- 1. The lease transfers the ownership of the property to the lessee by the end of the lease term.
- 2. The lease contains an option to purchase the leased property at a bargain price.
- 3. The lease term is equal or greater than 75 percent of the estimated economic life of the leased property.
- 4. The present value of rental or other minimum lease payments, excluding that portion of the payments representing executor cost, equals or exceeds 90 percent of the fair value of the leased property.
The NRC's capital leases are for personal property consisting of reproduction equipment that is installed at the NRC Headquarters.
Operating leases: The FASAB defines an operating lease as a lease in which the Federal entity does not assume the risks of ownership of the property, plant, and equipment (PP&E).
It is an agreement conveying the right to use property for a limited time in exchange for periodic rental payments.
Operating leases at the NRC consist of real property leases with the GSA. The leases are for the NRCs Headquarters, regional offices, and Technical Training Center (TTC). The GSA charges the NRC lease rates that approximate commercial rates for comparable space.
P. Pricing Policy The NRC provides nuclear reactor and materials licensing and inspection services to the public and other Government entities. In accordance with OMB Circular A-25, Transmittal Memorandum #1, User Charges, and the Independent Offices Appropriation Act of 1952 , the FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 43
Chapter 2 Financial Statements and Auditors Report NRC assesses fees under 10 CFR Part 170 for licensing and inspection activities to recover the full cost of providing individually identifiable services.
The NRCs policy is to recover the full cost of goods and services provided to other Government entities where the services performed are not part of the agency's statutory mission and the NRC has not received appropriations for those services. Fees for reimbursable work are assessed at the 10 CFR Part 170 rate with minor exceptions for programs that are nominal activities of the NRC.
Q. Net Position The NRCs net position consists of unexpended appropriations and cumulative results of operations. Unexpended appropriations represent (1) appropriated spending authority that is unobligated and has not been withdrawn by the U.S. Treasury, and (2) unliquidated obligations and expenditures not yet disbursed. Cumulative results of operations represent the excess of financing sources over expenses since inception.
R. Use of Management Estimates The preparation of the accompanying financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates.
S. Transfers of Authority In prior years, the NRC was a party to non-expenditure transfers of funds, as a receiving entity, from the U.S. Agency for International Development. The transfers were for the international development of nuclear safety and regulatory authorities in other countries. Transfers are legal delegations by one agency of its authority to obligate budget authority and outlay funds to another agency. NRC completed its participation in this project and had residual unobligated funds of $68,076.04 remaining from these transfers, which were rescinded in FY 2018.
T. Statement of Net Cost The programs as presented on the Statement of Net Cost are based on the annual performance budget and are described as follows:
The Nuclear Reactor Safety program encompasses all the NRC efforts to ensure that civilian nuclear power reactor facilities and research and test reactors are licensed and operated in a manner that adequately protects public health and safety, and the environment, and protects against radiological sabotage and theft or diversion of special nuclear materials. The Nuclear Reactor Safety program consist of the following activities: operating reactors and new reactors.
The Nuclear Materials and Waste Safety program encompasses all the NRC efforts to protect the public health and safety and the environment and ensures the secure use and management of radioactive materials. The Nuclear Materials and Waste Safety program consist of the following activities: fuel facilities, nuclear materials users, decommissioning and low-level waste, spent fuel storage and transportation, and a high-level waste repository.
For intragovernmental gross costs and revenue, the buyers and sellers are Federal entities. For earned revenues from the public, the buyers of the goods or services are non-Federal entities.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 44
Chapter 2 Financial Statements and Auditors Report Note 2 - Fund Balance with Treasury As of September 30, 2019 2018 Fund Balances:
Appropriated funds $ 411,438 $ 386,433 Nuclear Waste Fund 433 461 Other fund types - -
Total $ 411,871 $ 386,894 Status of Fund Balance with Treasury:
Unobligated balance Available - Appropriated funds $ 68,124 $ 40,006 Unavailable Unapportioned, unexpired accounts - 3 Expired accounts 1,247 1,135 Obligated balance not yet disbursed 342,500 345,750 Total $ 411,871 $ 386,894 The Fund Balance with Treasury consists of the unobligated and obligated budgetary account balances, including NWF activity. The NWF unobligated balance was $0.4 million as of September 30, 2019 and 2018.
Other fund types in the Fund Balance with Treasury represent license fee collections used to offset the NRC current year budget authority, miscellaneous collections, and adjustments that will offset revenue in the following FY.
Note 3 - Accounts Receivable As of September 30, 2019 2018 Intragovernmental:
Fee receivables and reimbursements $ 5,501 $ 5,680 Receivables with the Public:
Materials and facilities fees-billed $ 4,026 $ 6,150 Materials and facilities fees-unbilled 58,622 65,508 Other 671 790 Total Receivables with the Public 63,319 72,448 Less: Allowance for uncollectible accounts (2,417) (2,808)
Total Receivables with the Public, Net $ 60,902 $ 69,640 Total Accounts Receivable $ 68,820 $ 78,128 Less: Allowance for uncollectible accounts (2,417) (2,808)
Total Accounts Receivable, Net $ 66,403 $ 75,320 FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 45
Chapter 2 Financial Statements and Auditors Report Note 4 - Property and Equipment, Net As of September 30, 2019 2018 Accumulated Service Acquisition Net Book Net Book Fixed Assets Class Depreciation and Years Value Value Value Amortization Equipment 5-8 $ 9,364 $ (7,851) $ 1,513 $ 962 Leased equipment 5-8 924 (924) - 105 IT software 5 78,715 (64,940) 13,775 18,392 IT software under development - 1,403 - 1,403 -
Leasehold improvements 20 78,119 (39,948) 38,171 45,232 Leasehold improvements in progress - 787 - 787 382 Total $ 169,312 $ (113,663) $ 55,649 $ 65,073 In accordance with SFFAS No. 44, "Accounting for Impairment of General Property, Plant, and Equipment Remaining in Use," the NRC repairs or replaces capital assets as required and does not recognize impairment losses.
Note 5 - Other Liabilities As of September 30, 2019 2018 Intragovernmental:
Liability to the U.S. Treasury General Fund for misc. receipts $ 14 $ 30 Liability for advances from other agencies 10 18 Accrued workers compensation 970 1,045 Accrued unemployment compensation 9 -
Employee benefit contributions 4,596 4,305 Other liabilities 5,925 -
Total Intragovernmental Other Liabilities $ 11,524 $ 5,398 Other Liabilities:
Accrued annual leave $ 42,004 $ 42,476 Accrued salaries and benefits 16,553 15,598 Employer Contributions & Payroll Taxes Payable 746 688 Contract holdbacks, advances, capital lease liability, and other 815 2,495 Contingent liabilities - -
Grants payable 13,510 11,136 Total Other Liabilities $ 73,628 $ 72,393 Total Intragovernmental and Other Liabilities $ 85,152 $ 77,791 Other Liabilities represents the accrual of BCC received by the NRC and the sum of annual step rent increases paid to GSA for rent of NRC office space. The credits received by the NRC and the step rent increases are amortized on a straight-line basis over the life of the occupancy agreements.
Other liabilities are current except for the $5.9 million accrual for BCC and annual step rent increases on the existing occupancy agreements with GSA.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 46
Chapter 2 Financial Statements and Auditors Report Note 6 - Liabilities Not Covered by Budgetary Resources As of September 30, 2019 2018 Intragovernmental:
FECA paid by DOL $ 970 $ 1,045 Accrued unemployment compensation 9 -
Federal Employee Benefits:
Future FECA 4,607 5,259 Other:
Accrued annual leave 42,004 42,476 Contingent liabilities - -
Other liabilities 5,925 -
Total Liabilities Not Covered by Budgetary Resources 53,515 48,780 Total Liabilities Covered by Budgetary Resources 71,692 66,164 Total Liabilities $ 125,207 $ 114,944 Liabilities Not Covered by Budgetary Resources represents the amount of future funding needed to pay the accrued unfunded expenses as of September 30, 2019, and 2018. These liabilities are not funded from current or prior-year appropriations and assessments, but rather they should be funded from future appropriations and assessments. Accordingly, future funding requirements have been recognized for the expenses that will be paid from future appropriations.
The projected annual benefit payments for FECA are discounted to present value. For FY 2019, projected annual payments were discounted to present value based on the OMBs interest rate assumptions, which were interpolated to reflect the average duration in years for income payments and medical payments. The interest rate assumptions used for FY 2019 discounting were 2.716 percent in year 1 and year 2 for wage benefits, and 2.379 percent in year 1 and year 2 for medical benefits.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 47
Chapter 2 Financial Statements and Auditors Report Note 7 - Leases As of September 30, 2019 2018 Assets Under Capital Leases:
Copiers and booklet maker $ 924 $ 1,318 Accumulated depreciation (924) (1,213)
Net Assets Under Capital Leases $ - $ 105 Future Lease Payments Due:
As of September 30, 2019 2018 Fiscal Year Capital Operating 2018 $ - $ - $ - $ -
2019 - - - 31,269 2020 - 45,318 45,318 37,922 2021 - 43,974 43,974 36,469 2022 - 42,538 42,538 34,999 2023 and thereafter 287,286 287,286 249,780 Total Lease Liability - 419,116 419,116 390,439 Subtract: Imputed Interest - - - -
Total Future Lease Payments $ - $ 419,116 $ 419,116 $ 390,439 The Capital Lease Liability of $175 thousand as of September 30, 2018 for reproduction equipment is included in Other Liabilities (Note 5). For Future Lease Payments, the NRC calculated the Capital Lease Liability as of September 30, 2018 and subtracted the imputed interest to arrive at the Total Future Lease Payments. The reproduction equipment is generally depreciated over 5 years using the straight-line method with no salvage value. The lease agreement ended in the first quarter of FY 2019.
The land and buildings in which the NRC operates are leased through GSA. The NRC Headquarters complex consists of three office buildings and a warehouse located in Rockville, MD, with one of the headquarters office buildings jointly leased with the U.S. Food and Drug Administration (FDA). The NRC has four regional offices that are located in King of Prussia, PA, Atlanta, GA, Lisle, IL, and Arlington, TX. In addition, the NRC operates and maintains the TTC located in Chattanooga, TN.
In the Three White Flint North (3WFN) office building, the NRC occupies 110,109 useable square feet (34.08% of the building) and the NRC is no longer the primary tenant. The FDA occupies the other floors. Future plans to reduce the NRC footprint call for the NRC to release two floors of 3WFN in early FY 2020. The lease bill for 3WFN will be approximately $8.0 million less per year. The NRC will not recognize savings for these floors until another Federal agency leases the space.
The NRC leases for land and buildings do not have renewal options or contingent rental restrictions. The joint lease for the 3WFN office building with the FDA and the leases for the four regional office buildings have escalation clauses. The leases for the two remaining headquarters office buildings, the warehouse, and the TTC do not have escalation clauses.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 48
Chapter 2 Financial Statements and Auditors Report Note 8 - Cumulative Results of Operations As of September 30, 2019 2018 Liabilities not covered by budgetary resources (Note 6) $ (53,515) $ (48,780)
Investment in property and equipment, net (Note 4) 55,649 65,073 Contributions from foreign cooperative research agreements 6,070 5,245 Nuclear Waste Fund 436 461 Office of the Commission (financed by fees) - -
Accounts receivable - fees 63,920 74,256 Other 2,257 337 Cumulative Results of Operations $ 74,817 $ 96,592 A prior period adjustment (PPA) of $6.7 million was recorded in FY 2019 to the beginning Cumulative Results of Operations. The PPA represents $0.8 million for prior year amortization expense recorded on Leasehold Improvement projects and $5.9 million to establish a liability to GSA for broker commission credits received by the NRC on occupancy agreements for rent of office space and the sum of step rent increases paid to GSA for rent of NRC office space. The step rent increases, net of the credits received by the NRC, are amortized on a straight-line basis over the life of the occupancy agreements.
Note 9 - Statement of Net Cost For the fiscal years ended September 30, 2019 2018 Nuclear Reactor Safety:
Intragovernmental gross costs $ 208,573 $ 210,872 Less: Intragovernmental earned revenue (49,153) (48,845)
Intragovernmental net costs 159,420 162,027 Gross costs with the public 521,373 531,003 Less: Earned revenues from the public (643,809) (644,102)
Net costs with the public (122,436) (113,099)
Total Net Cost of Nuclear Reactor Safety $ 36,984 $ 48,928 Nuclear Materials and Waste Safety:
Intragovernmental gross costs $ 57,961 $ 59,148 Less: Intragovernmental earned revenue (5,639) (6,180)
Intragovernmental net costs 52,322 52,968 Gross costs with the public 150,403 153,915 Less: Earned revenues from the public (69,261) (75,633)
Net costs with the public 81,142 78,282 Total Net Cost of Nuclear Materials and Waste Safety $ 133,464 $ 131,250 Earned revenues or exchange revenues arise when an entity provides goods and services to the public or another Government entity for a price. The NRC's revenues are primarily for services provided for inspections, fees for licensing, and reimbursable work.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 49
Chapter 2 Financial Statements and Auditors Report Note 10 - Exchange Revenues For the fiscal years ended September 30, 2019 2018 Fees for licensing, inspection, and other services $ 762,148 $ 769,185 Revenue from reimbursable work 5,714 5,575 Total Exchange Revenues $ 767,862 $ 774,760 Earned revenues or exchange revenues arise when an entity provides goods and services to the public or another Government entity for a price. The NRCs revenues are primarily for services provided for inspections, fees for licensing, and reimbursable work.
Note 11 - Financing Sources Other Than Exchange Revenue For the fiscal years ended September 30, 2019 2018 Appropriations Used Collections are used to reduce the fiscal years appropriations:
Funds consumed $ 895,002 $ 903,906 Less: Collection of fees assessed (772,216) (781,825)
Less: Nuclear Waste Fund Expense (28) (145)
Less: Office of the Commission (financed by fees) - -
Total Appropriations Used $ 122,758 $ 121,936 Funds consumed include $34.7 million and $33.0 million through September 30, 2019, and 2018, respectively, of available funds from prior years. Current year funds consumed were
$860.3 million and $870.9 million through September 30, 2019 and 2018, respectively.
For the fiscal years ended September 30, 2019 2018 Non-Exchange Revenue Civil penalties $ 413 $ 282 Miscellaneous receipts 254 112 NonExchange Revenue 667 394 Contra-Revenue (667) (394)
Total NonExchange Revenue, Net of Funds Returned to the U.S. Treasury General Fund $ - $ -
For the fiscal years ended September 30, 2019 2018 Imputed Financing Civil Service Retirement System $ 3,649 $ 4,391 Federal Employees Retirement System 8,777 6,367 Federal Employee Health Benefit 18,810 19,582 Federal Employee Group Life Insurance 78 81 Judgments/Awards 1,294 -
Total Imputed Financing $ 32,608 $ 30,421 FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 50
Chapter 2 Financial Statements and Auditors Report Note 12 - Total Obligations Incurred For the fiscal years ended September 30, 2019 2018 Direct Obligations Category A $ 891,493 $ 927,959 Exempt from Apportionment 28 101 Total Direct Obligations 891,521 928,060 Reimbursable Obligations 3,499 5,954 Total Obligations Incurred $ 895,020 $ 934,014 Category A obligations consist of the NRC appropriations only. Obligations exempt from apportionment represent funds derived from the NWF.
Note 13 - Undelivered Orders at the End of the Period For the fiscal years ended September 30, 2019 2018 Undelivered Orders - Unpaid Salaries and Expenses $ 271,894 $ 283,929 Inspector General 2,279 1,576 Nuclear Waste Fund 26 30 Total Undelivered Orders - Unpaid $ 274,199 $ 285,535 Undelivered Orders - Paid Salaries and Expenses $ 6,364 $ 8,738 Inspector General 685 619 Nuclear Waste Fund - -
Total Undelivered Orders - Paid 7,049 9,357 Total Undelivered Orders $ 281,248 $ 294,892 Note 14 - Nuclear Waste Fund For FY 2019 and FY 2018, the NRCs budget did not include funds from the NWF. The funding provided to the NRC before FY 2014 and carried forward to subsequent years was for the purpose of performing activities associated with the DOE's application for a high-level waste repository at Yucca Mountain, NV.
The SFFAS 43 "Funds from Dedicated Collections: Amending Statement of Federal Financial Accounting Standards 27, Identifying and Reporting Earmarked Funds," lists three defining criteria for funds from dedicated collections.
A statute committing the Federal government to use specifically identified revenues and/or other financing sources that are originally provided to the Federal government by a non-federal source only for designated activities, benefits or purposes; Explicit authority for the fund to retain revenues and/or other financing sources not used in the current period for future use to finance the designated activities, benefits, or purposes; and A requirement to account for and report on the receipt, use, and retention of the revenues and/or other financing sources that distinguishes the fund from the Federal governments general revenues.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 51
Chapter 2 Financial Statements and Auditors Report In 1982, Congress passed the Nuclear Waste Policy Act of 1982 (Public Law 97-425) establishing the NWF to be administered by the DOE (42 U.S.C. 10222). For the NRC, the NWF transfer is a source of financing from other than non-Federal sources. The NRC collects no revenue on behalf of the NWF and has no administrative control over it. Furthermore, the Treasury has no separate fund symbol for the NWF under the NRCs agency location code. The receipt and expenditure of NWF funding is reported to the U.S. Treasury under the NRCs primary Salaries and Expenses Treasury Account Symbol (X0200).
As a result, the NWF is not a fund from dedicated collections from the NRC's perspective. However, to provide additional information to the users of these financial statements, the table below presents enhanced disclosure of the fund.
For the fiscal years ended September 30, 2019 2018 Appropriations Received $ - $ -
Expended Appropriations $ 28 $ 145 Obligations Incurred $ 28 $ 101 Unobligated Balances (includes recoveries of prior-year
$ 407 $ 431 obligations)
Note 15 - Explanation of Differences between the Statement of Budgetary Resources and the Budget of the U.S. Government SFFAS 7, Accounting for Revenue and Other Financing Sources and Concepts for Reconciling Budgetary and Financial Accounting, dated May 10, 1996, and OMB Circular A-136 require the NRC to reconcile the budgetary resources reported on the SBR to the actual budgetary resources presented in the Presidents Budget and explain any material differences.
The NRC does not have any material differences between the budgetary resources reported on the SBR for FY 2018 and the FY 2018 actuals in the proposed President's Budget for FY 2020.
The reconciliation was based on actual numbers for FY 2018 because the Budget of the United States (also known as the Presidents Budget) was not published at the time that these financial statements were issued.
The FY 2019 actual budgetary resources numbers will be available in the FY 2021 Presidents Budget which is expected to be published in 2020, and will be available on the OMB Web site http://www.whitehouse.gov/omb and through the U.S. Government Publishing Office.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 52
Chapter 2 Financial Statements and Auditors Report Note 16 - Reconciliation of Net Cost of Operations to Budgetary Resources For the fiscal year ended September 30, 2019 Intra- With the governmental Public Net Cost of Operations $ 211,742 $ (41,294) $ 170,448 Components of the Net Cost That Are Not Part of Net Outlays Property, plant, and equipment depreciation - (12,107) (12,107)
- (52) (52)
Property, plant, and equipment disposal & revaluation
- 1,403 1,403 Other- ADP Software Cost Capitalization Subtotal - (10,756) (10,756)
Increase/(decrease) in assets:
Accounts receivable (178) (8,723) (8,901)
Other assets (2,150) (12) (2,162)
Subtotal (2,328) (8,735) (11,063)
(Increase)/decrease in liabilities: -
Accounts payable (1,952) (10) (1,962)
Salaries and benefits (291) (1,012) (1,303)
Other liabilities (5,207) (1,808) (7,015)
Subtotal (7,450) (2,830) (10,280)
Other Financing sources:
Federal employee retirement benefit cost paid by OPM and imputed to the agency (31,314) - (31,314)
Other imputed financing Judgement Fund with Treasury (1,294) - (1,294)
Subtotal (32,608) - (32,608)
Total Components if Net Cost That Are Not Part of
$ (42,386) $ (22,321) (64,707)
Net Outlays Components of Net Outlays That Are Not Part of Net Cost Acquisition of capital assets 1,099 980 2,079 Other Timing Differences Prior Period Adjustment - 5,947 5,947 Total Components of Net Outlays That Are Not Part of 1,099 6,927 8,026 Net Cost Net Outlays $ 170,455 $ (56,688) $ 113,767 FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 53
Chapter 2 Financial Statements and Auditors Report Note 17 - Contingencies The NRC is subject to potential liabilities in various administrative proceedings, legal actions, environmental suits, and claims brought against it. In the opinion of the NRCs management and legal counsel, the ultimate resolution of these proceedings, actions, suits, and claims will not materially affect the financial position or net costs of the NRC.
Probable Likelihood of an Adverse Outcome As of September 30, 2019 and 2018, the NRC was not involved in a case in which the likelihood of loss is probable.
Reasonably Possible Likelihood of an Adverse Outcome As of September 30, 2019, the NRC was involved in a case with the likelihood of an adverse outcome being reasonably possible, with the upper limit of the expected loss being $300. As of September 30, 2018, the NRC was not involved in any case with the likelihood of an adverse outcome being reasonably possible.
Note 18 - Net Adjustments to Unobligated Balance Brought Forward October 1 There were no material adjustments to correct the unobligated balance brought forward, October 1 for FY 2019.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 54
Chapter 2 Financial Statements and Auditors Report Note 19 - Financial Statements to Reclassified Financial Statements For the period ending September 30, 2019 Line Items Used to Prepare the Government-wide NRC Financial Statement Balance sheet Assets Assets Intra-Governmental Assets Intra-Governmental Assets FBWT $ 411,871 $ 411,871 FBWT Accounts Receivable 5,501 5,501 Accounts Receivable Total Accounts Receivable 5,501 5,501 Total Reclassified A/R Other 7,039 7,039 Advances to Others and Prepayments Total Other 7,039 7,039 Total Reclassified Other Total Intra-Governmental Assets 424,411 424,411 Total Intra-Governmental Assets Accounts Receivable, Net 60,902 60,902 Accounts and Taxes Receivable, Net General PP&E, Net 55,649 55,649 PP&E, Net Other 45 45 Other Assets Total Assets $ 541,007 $ 541,007 Total Assets Liabilities Liabilities Intra-Governmental Liabilities Intra-Governmental Liabilities Accounts Payable $ 7,777 $ 13,702 Accounts Payable Total Accounts Payable 7,777 13,702 Total Reclassified Accounts Payable Other - Custodial Liability 14 14 Liability to GF for Custodial and Other Non-Entity Assets 4,396 Benefit Program Contributions Payable Other - Miscellaneous Liabilities 11,510 10 Advances from Other & Deferred 1,179 Other Liabilities Total Other - Miscellaneous Total Reclassified Other -
11,510 5,585 Liabilities Miscellaneous Liabilities Total Intra-Governmental 19,301 19,301 Total Intra-Governmental Liabilities Liabilities Accounts Payable 27,671 27,671 Accounts Payable Federal Employee and Veteran Federal Employee and Veteran 4,607 5,353 Benefits Benefits Payable Miscellaneous Liabilities 73,628 72,882 Other Liabilities Total Liabilities $ 125,207 $ 125,207 Total Liabilities FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 55
Chapter 2 Financial Statements and Auditors Report Net Position Net Position Unexpended Appropriations -
340,983 Funds from Dedicated Collections Net Position - Funds from Dedicated 415,800 Collections Cumulative Results of Operations -
74,817 Funds from Dedicated Collections Total Net Position 415,800 415,800 Total Net Position Total Liabilities & Net Position $ 541,007 $ 541,007 Total Liabilities & Net Position Statement of Net Cost to Reclassified Statement of Net Cost For the period ending September 30, 2019 NRC Financial Statement Line Items Used to Prepare the Government-wide SNC Non-Federal Costs
$ 671,777 Non-Federal Gross Cost 671,777 Total Non-Federal Costs Intragovernmental Costs 82,824 Benefit Program Costs Gross Costs $ 938,310 32,608 Imputed Costs 124,531 Buy/Sell Costs 1,099 Purchase of Assets (1,099) Purchase of Assets Offset 26,570 Other Expenses (w/o Reciprocals) 266,533 Total Intragovernmental Costs Total Gross Costs 938,310 938,310 Total Reclassified Gross Costs 713,070 Non-Federal Earned Revenue 713,070 Total Non-Federal Revenue Earned Revenue 767,862 54,792 Buy/Sell Revenue 54,792 Total Intragovernmental Earned Total Earned Revenue 767,862 767,862 Total Reclassified Earned Revenue Net Cost $ 170,448 $ 170,448 Net Cost FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 56
Chapter 2 Financial Statements and Auditors Report For the period ending September 30, 2019 Line Items Used to Prepare the Government-wide NRC Financial Statement SCNP Unxpended Appropriation Unexpended Appropriations,
$ 324,998 $ 324,998 Net Position, Beginning of Period Beginning Balance Correction of Errors - years Preceding Corrections of Errors - -
the Prior Year Total Reclassified Corrections of Total Corrections of Errors - -
Errors Appropriations Received 138,743 138,743 Appropriations Received as Adjusted Appropriations Used (122,758) (122,758) Appropriations Used (Federal)
Total Unexpended
$ 340,983 $ 340,983 Total Unexpended Appropriations Appropriations Cumulative Results of Operations Cumulative Results, Beginning
$ 96,592 $ 96,592 Net Position, Beginning of Period Balance Appropriations Used 122,758 122,758 Appropriations Used Correction of Errors (6,692) (6,692) Correction of Errors - Years Preceding the Prior Year Non-Federal Non-Exchange 667 Revenues Non-Exchange Revenues 667 Other Taxes and Receipts 667 Total Non-Federal Non-Exchange Revenues Total Reclassified Non-Exchange Total Non-Exchange Revenues 667 667 Revenues Non-Expenditure Transfers-In of 785,206 Unexpended Appropriations and Financing Sources Non-Expenditure Transfers-Out of Transfers In/Out w/o
- (785,206) Unexpended Appropriations and Reimbursement - Budgetary Financing Sources Total Reclassified Transfers In/Out w/o Reimbursement - Budgetary (Federal)
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 57
Chapter 2 Financial Statements and Auditors Report Total Transfers-In/Out w/o - - Total Reclassified Transfers-In/Out w/o Reimbursement - Budgetary Reimbursement - Budgetary Intragovernmental Other (627) Accrual of Collections Yet to be Transferred to a TAS Other than the Other (667) General Fund (40) Other Budgetary Financing Sources (667) Total Intragovernmental Other Total Other (667) (667) Total Reclassified Other Imputed Financing 32,608 32,608 Imputed Financing Sources (Federal)
Total Financing Sources 155,366 155,366 Total Financing Sources Net Cost of Operations (170,448) (170,448) Net Cost of Operations Ending Balance - Cumulative 74,817 74,817 Net Position - Ending Balance Results of Operations Total Net Position $ 415,800 $ 415,800 Total Net Position FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 58
Chapter 2 Financial Statements and Auditors Report Required Supplementary Information Deferred Maintenance and Repairs for General Property, Plant, and Equipment Information on deferred maintenance and repairs (DM&R) is required under SFFAS 42, "Deferred Maintenance and Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29, and 32," dated April 25, 2012.
SFFAS 42 defines DM&R as maintenance and repairs that were not performed when they should have been or were scheduled to be and which are put off or delayed for a future period."
Maintenance and repairs (M&R) are defined as activities directed toward keeping fixed assets in an acceptable condition. Activities include preventive maintenance, replacement of parts, systems, or components; and other activities needed to preserve or maintain the asset. M&R, as distinguished from capital improvements, excludes activities directed towards expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater than, its current use.
DM&R should include funded and unfunded M&R activities that have been delayed to a future period. DM&R on inactive or excess general PP&E should be included to the extent that it is required to maintain those items in acceptable condition. The NRC evaluated DM&R activities for leased facilities, the multiple components of the agency information technology (IT) infrastructure, and individual capital asset purchases with a cost equal to or greater than
$50,000. The NRC did not include noncapitalized PP&E with a cost of less than $50,000, which are deemed immaterial.
Deferred Maintenance and Repairs for the NRC Facilities, Other Structures, and Capital Equipment For the NRCs leased facilities and capital equipment purchases, the NRC typically does not have any DM&R. The NRC had no DM&R for facilities, other structures, and capital equipment as of September 30, 2019, and 2018.
Defining and Implementing Maintenance and Repair Policies in Practice For the NRC Headquarters facilities, the agency uses the GSA guidelines for maintenance activities along with industry best practices to determine the preventive maintenance activities to perform and the schedule for those activities. For the building structures and systems, the maintenance contractor performs all required periodic maintenance to keep the systems and buildings in a good state of repair. The contractor is held to a 98 percent scheduled completion rate, with all the preventive maintenance completed within a reasonable time. When equipment reaches the end of its useful life, it is generally replaced with like-kind or upgraded equipment.
For any type of an emergent failure to facilities, the NRC would request additional funding, as needed, for repairs or replacement to structures and equipment.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 59
Chapter 2 Financial Statements and Auditors Report For the regional offices, the building management (lessor) is responsible for performing all required periodic maintenance to keep the systems and buildings in a good state of repair.
Generally, the regional leases contain the fixed assets, including equipment purchased to support the operations of the agency's leased space, such as diesel generators and chillers for the Incident Response Center, the local area network, and power cooling. Equipment requiring repair results in a service repair call. For those instances where equipment is purchased to support the NRC regional operations, maintenance contracts are put in place to provide periodic service and maintenance on the equipment. When equipment reaches the end of its useful life, it is generally replaced with like-kind or with upgraded equipment. For any type of an emergent failure, the NRC would request additional funding, as needed, for repairs or replacement of equipment.
The TTC facility and associated systems are leased and maintained by the lessor. This includes any emergent repairs that may occur, as well as any scheduled maintenance. Assets within the TTC are predominantly maintained by facilities personnel or in some cases, such as for simulator systems, contractor personnel perform all required emergent and periodic maintenance to keep the simulator systems in a good state of repair. When equipment reaches the end of its useful life, it is replaced with like-kind or upgraded equipment.
Ranking and Prioritization of Maintenance and Repair Activities Personnel safety is a top priority at the NRC leased facilities. Maintenance activity, such as for fire alarms and emergency exits, is given top priority. If a preventative maintenance activity must be deferred, which is typically only for 2 to 4 weeks, the impact to personnel safety and building functionality is considered during the review. Other M&R activities are executed as required so that there is no disruption to the NRC operations and the TTC training schedules.
Factors Considered in Determining Acceptable Condition The NRC's Facilities Management Branch at the headquarters facilities perform the daily inspections and maintenance of the buildings and major systems. The NRC internally reviews planned maintenance activity records and historical logs of M&R to monitor condition information for equipment. Based on the information gathered, the NRC will determine whether planning for replacement or upgrade is needed. Additionally, the GSA conducts onsite inspections every 3 to 5 years at the headquarters facilities to assess the overall condition of the buildings and to determine when major systems and components need to be scheduled for replacement. For the TTC and regional offices, the NRC has a Facilities Management staff person onsite to work with the GSA to manage the buildings with support from the lessors. As a result, the GSA performs more frequent onsite inspections of the facilities. The NRC works in close coordination with the GSA to ensure that M&R activities are performed on a timely basis for all NRC-occupied facilities.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 60
Chapter 2 Financial Statements and Auditors Report Deferred Maintenance and Repairs for Information Technology Infrastructure and Systems There was no DM&R for IT Infrastructure and Systems as of September 30, 2019. The DM&R includes the video teleconference and voicemail systems. The voicemail for Regions 2, 3, and 4 is close to completion, with Regions 1 and the TTC still awaiting upgrades. The video teleconference will require incremental DM&R as the agency encounters units that have passed the obsolete state. The NRC had $0.5 million in DM&R for IT infrastructure and systems as of September 30, 2018.
The NRC IT infrastructure is a network of multiple equipment, software, and service components, taken as a whole, which provides the critical communication network that allows the NRC to accomplish its mission. The NRC IT infrastructure encompasses the following:
End-user systems and support and end-user hardware includes desktop, laptop, and handheld devices; peripherals (local printers, shared printers); software (personal computer operating systems, office automation suites, messaging, and groupware), and hardware and software for help desks. Also included are network operations command centers, wire closets, and cable management. For regional offices, this includes regional end-user support similar to that provided by the Customer Support Center at the NRC Headquarters, which includes contract support and Federal full-time equivalents.
Telecommunications services includes data networks and telecommunications (including wireless, multimedia, and local and long-distance telephone); hardware and software operations; licenses; maintenance; and backup, continuity of operations, and disaster recovery. For regional offices, this includes local telecommunications, which includes contract support and Federal full-time equivalents.
Production operations include mainframes and servers (including Web hosting, but not Web content development and management); hardware and software operations; licenses; maintenance; and backup, continuity of operations, and disaster recovery. Also included resources related to carrying out Homeland Security Presidential Directive-12, Policy for a Common Identification Standard for Federal Employees and Contractors, dated August 27, 2004, which requires all Federal Executive departments and agencies to implement a Government-wide standard for secure and reliable forms of identification for access to Federal facilities and information systems.
The NRC relies on the asset project and program managers to execute the maintenance budget and to establish and modify the M&R schedule as needed. Ranking factors that may impact the M&R schedule include personnel safety, age of the asset, scheduled replacement date, budget constraints, and unforeseen or unexpected events.
Additionally, whether computer-off-the-shelf or internally developed software for IT systems, the NRC relies on the project and program managers to establish a M&R budget and schedule.
Minor repairs, enhancements, and upgrades are completed internally through the regular M&R operations process. For major upgrades and replacement systems, the project manager must submit a request to perform the work to the appropriate IT governance boards for their approval.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 61
Chapter 2 Financial Statements and Auditors Report Defining and Implementing Maintenance and Repair Policies in Practice All of the NRC IT infrastructure M&R activities are performed under various contracts which includes leasing of servers, computers, printers, and software and provides provisions for periodic monitoring, maintenance, and repairs. Replacement of miscellaneous equipment components and software is scheduled as needed when the equipment reaches the end of its useful life and before the equipment and software become obsolete. Desktops and laptops are upgraded on a 3-year rolling schedule so that they do not become obsolete.
Ranking and Prioritization of Maintenance and Repair Activities The NRC program managers determine the requirements for ranking, scheduling, and performing IT infrastructure M&R activities and include them in the contractor statement of work.
For the critical IT infrastructure and support services (ITISS) contract, the main ranking factor is the age of the asset (e.g., desktop, laptop, printer), followed by cost and budget constraints.
However, when applicable, personnel safety is considered and is the highest priority.
Factors Considered in Determining Acceptable Condition In determining acceptable condition, the NRC mainly considers the assets age, remaining useful life, and compatibility with current and required software.
FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 62
Chapter 2 Financial Statements and Auditors Report Combining Statement of Budgetary Resources (IN THOUSANDS)
Salaries and Office of the Nuclear For the fiscal year ended September 30, 2019 Inspector Facility Total Expenses General Fees Budgetary Resources:
Unobligated balance from prior-year budget authority, net $ 46,760 $ 3,010 $ - $ 49,770 Appropriations 898,350 12,609 - 910,959 Spending authority from offsetting collections 3,662 - - 3,662 Total Budgetary Resources $ 948,772 $ 15,619 $ - $ 964,391 Memorandum Entry:
Net adjustments to unobligated balance brought forward $ 8,579 $ 47 $ - $ 8,626 October 1 Status of Budgetary Resources:
New obligations and upward adjustments (total) (Note 12) $ 882,673 $ 12,347 $ - $ 895,020 Unobligated balance, end of period:
Apportioned, unexpired accounts 65,557 2,160 - 67,717 Exempt from apportionment, unexpired accounts 407 - - 407 Unapportioned, unexpired accounts - - - -
Unexpired unobligated balance, end of year 65,964 2,160 - 68,124 Expired unobligated balance, end of year 136 1,111 - 1,247 Unobligated balance, end of year 66,100 3,271 - 69,371 Total Status of Budgetary Resources $ 948,773 $ 15,618 $ - $ 964,391 Outlays Net:
Outlays, net 874,413 11,570 - 885,983 Distributed offsetting receipts - - (772,216) (772,216)
Agency Outlays, Net $ 874,413 $ 11,570 $(772,216) $ 113,767 Salaries and Office of the Nuclear For the fiscal year ended September 30, 2018 Inspector Facility Total Expenses General Fees Budgetary Resources:
Unobligated balance from prior-year budget authority, net $ 45,684 $ 3,542 $ - $ 49,226 Appropriations 909,069 12,859 - 921,928 Spending authority from offsetting collections 4,004 - - 4,004 Total Budgetary Resources $ 958,757 $ 16,401 $ - $ 975,158 Memorandum Entry:
Net adjustments to unobligated balance brought forward $ 9,494 $ 204 $ - $ 9,698 October 1 Status of Budgetary Resources:
New obligations and upward adjustments (total) (Note 12) $ 920,576 $ 13,438 $ - $ 934,014 Unobligated balance, end of period:
Apportioned, unexpired accounts 37,645 1,930 - 39,575 Exempt from apportionment, unexpired accounts 431 - - 431 Unapportioned, unexpired accounts - 3 - 3 Unexpired unobligated balance, end of year 38,076 1,933 - 40,009 Expired unobligated balance, end of year 105 1,030 - 1,135 Unobligated balance, end of year 38,181 2,.963 - 41,144 Total Status of Budgetary Resources $ 958,757 $ 16,401 $ - $ 975,158 Outlays Net:
Outlays, net 888,324 12,542 - 900,866 Distributed offsetting receipts - - (781,825) (781,825)
Agency Outlays, Net $ 888,324 $ 12,542 $(781,825) $ 119,041 FY 2019 Agency Financial Report http://www.nrc.gov Protecting People and the Environment 63