ML20005F267
| ML20005F267 | |
| Person / Time | |
|---|---|
| Issue date: | 12/22/1989 |
| From: | Carr K NRC COMMISSION (OCM) |
| To: | Foley T, Quayle J HOUSE OF REP., SPEAKER OF THE HOUSE, SENATE, PRESIDENT OF THE SENATE |
| References | |
| CCS, NUDOCS 9001160107 | |
| Download: ML20005F267 (16) | |
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UNITED STATES -
-8 NUCLEAR REGULATORY COMMISSION.
I WASHINGTON, D. C,30906
-... **/
n December 22, 1989 1
CHAIRMAN i
-The: Honorable Thomas S. Foley w,
~ Speaker of-the United States House,of Representatives E
Washington,-D. C.
20515
Dear.Mr. Speaker:
The-Nuclear Regulatory Commission (NRC) evaluated its system of
~
internal accounting and administrative-control in.effect during
.1 FY 1989 as' required by the Federal Managers' Financial' Integrity Act of'1982 (FMFIA) and OMB Circular'A-123, " Internal Control Systems." The evaluation was conducted in accordance with i
?" Guidelines for the Evaluation and Improvement of and Reporting on j
Internal Control Systems in the Federal Government" issued by'the Director of the Office of Management and Budget, in -consultation
' il with the Comptroller General.
The results indicate that NRC's internal-control and financial management systems, taken as a whole.. provide. reasonable assurance that the objectives of the FMFIA have been achieved.
lIn-1989, program. staff performed 16 detailed internal control reviews, with all the corrective actions tracked centrally.
Special emphasis-was placed on. technical program areas, including region-based inspections, review of reactor applications, safe-
~
guards: licensing and inspection, regulation of the transport of nuclear materials, severe accident policy implementation, and high-level waste research.
Detailed reviews also were conducted in, administrative and support areas such as information resources management, the.small and disadvantaged business program, and the headquarters consolidation program.
Also, we are evaluating and i
enhancing agency-wide quality assurance _ measures in major program mission'ereas which will assist in strengthening internal controls throughout NRC.
In_1988, a more sophisticated tracking system was implemented to centrally track material weaknesses, nonconformances, and correc-4 tive actions.
The tracking system was significantly modified in 1989 to provide improved planning, control and monitoring of internal control reviews and corrective actions, including alter-native reviews such as Inspector General and General Accounting Office audits.
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.Our report contains two enclosures:: a statistical summary-of performance under the FMFIA (Enclosure A) and a description-of the i(Enclosure B) process and our internal control. tracking-system-Our progress in s FMFIA review-and an agency-level commitment to this process will continue in L
.the fu.ture.
Sincerely, 2 n a_%,
Kenneth M. Carr
Enclosures:
JA.
Statistical' summary B.
. Review Process cc w/ enclosures:
.The Honorable Richard G. Darman R
Director, Office of Management l:
and Budget t.
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Enclosure A, STATISTICAL
SUMMARY
OF PERFORMANCE
- ! ection' 2. '-Internal Control Systems S
O'verall compliance X Yes
~No Year achieved: NRC has been in compliance since the enactment of FMFIA.
I Number of Material Weaknesses Period Reported Reported Corrected Pending
-Prior years 0
0 0
- 1987 report-1 0
0 1988 report' 0-1 0
1989 report 0
0 0
Totals:-
1 1
-T-l Pending Material Weaknesses 1
-None l:
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L 1
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2 l
p F
f 'a v
Section 4.
Financial Management Systems Overall compliance-X Yes No-Year' achieved: NRC has been in-compliance since the enactment of FMFIA..
h o'
Number of Section 4 Systems in-Operation Type of System 1988 1989 Core Financial System.
2 1*
Subsidiary systems:
-Budget planning / formulation 1.
1 Payroll / personnel 1
1 Purchasing / grants Credit Management **
1 1
Cash Management.
Property / inventory.
I 1
Travel /small' purchases L
' Other:
Budget execution 1
0*
h
. Manpower accounting 1
1 L.?
. Technical assistance costs and grants 1
1
~ License fee management system **
1 1
Totals:
T.
8 In.1989, the functions of. one core financial management system' and the i
l~
budget execution system have been incorporated into the agency's single j
core financial management system.
In.1990, the' credit management system will be incorporated in the license o
L fee management system-(see chart on p. 4).
L There is.no intention to incorporate payroll into the core financial system.
The remaining systems are small and play a relatively insignificant role in providing data to our fully integrated financial managment system (one of the few accounting systems that has fully implemented the Federal Government
. standard general ledger).
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Number of Material Non-conformances
.i.
. Period Reported Reported Corrected Pending l
' Prior years 0
0 0
1987 Report.
0 0
0 1988 Report 0.
0 0
1989. Report 0
0 0
.l e
Total.
T T
T l
Pending Non-conformances i
L
.None.
1 I
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4
.____.-.__%m..
Fin a n cia l Syste m s l
Consolidation and Compliance l
1983 1992
,o.
_____~
~
LEGEND j
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Subsidiary 16--
O m Syst m 3 j i
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1983198419851986198719881989199019911992 Year I
(All Systems in Compliance)
. l. -
o s
Enclosure B REVIEW PROCESS Description of Agency Section 2 Review Process The internal control process is described in NRC Manual Chapter 0801, " Internal Controls," which sets forth the manner in which NRC is to implement the require-ments-of the Federal Managers' Financial Integrity Act of 1982" (FMFIA). An Internal Control Comittee (ICC), composed of high-level managers from the major components of the agency, sets the policy for evaluating internal controls and reviews major actions. The Chairman of the ICC, who is also NRC's Deputy Con-troller, aided by a senior staff member, organizes and monitors the internal control progro;n and prepares the report to the President and the Congress.
I
~
NRC structures'its internal control program around a management control plan (MCP). The MCP is based on the programs and program elements in NRC's agency-wide Five-Year Plan. Internal control reviews are scheduled based on-risk assessments of these programs and program elements, with the most vulnerable areas being reviewed first. The 16 internal control reviews performed in 1989 cover a cross-section of NRC's program mission areas.
In 1989, detailed internal control reviews were perfomed in all program mission areas except l
Nuclear Waste Regulation. Detailed reviews were conducted in that mission area in 1988.
Programs selected for review are grouped according to like characteristics, and review teams are fomed from these groups. Each program organization is repre-sented on the review team. The advantage of this approach is to bring reviewers with similar professional backgrounds together to work on familiar subjects.
Training on the internal control review process is provided to the team members and their program managers before initiating the reviews.
Reviews are conducted on a staggered schedule to permit a level workload through-out the year, making it possible for the team members to work on several reviews.
The' staggered schedule also permits any problems that might arise with the reviews to be resolved with little adverse effect on the schedule for preparing the year-end report.
1989 Statistical Data for Section 2 Review Assessable Units 89 Vulnerability Assessments Planned 0*
Conducted 0
Internal Control Reviews Planned 16 Conducted 16 Alternative Reviews Planned 0
Conducted 0
Conducted by Inspector General /
Government Accounting Office 13
- Vulnerability assessments of the agency's 89 programs were conducted in 1987.
V
+
v i
2 Description of the Section 4 Review Process NRC Manual Chapter 1103 " Financial Management Systems," addresses the agency's requirement under Section 4 of the FMFIA and OMB Circular A-127 to submit an annual report to the President and Congress regarding the agency's accounting system. The ICC and the Chairman, ICC, have the same responsibilities with respect to the Section 4 review process as they have in the Section 2 review process described earlier.
Each year program managers are asked to perform reviews of their financial systems.
In 1989 limited reviews were conducted in accordance with OMB's
" Guidelines for Evaluating Financial Management / Accounting Systems," May 1985, 1989 Statistical Data for Section 4 Review Process Financial Management Systems 8
Annual Reviews Perfonned-6*
Detailed Cyclical Reviews Performed 0**
Principal Findings: No significant deficiencies were identified.
- The Inspector General is currently conducting an audit which will encompass the remaining systems.
- Detailed cyclical reviews of all systems not reviewed by the Inspector General are planned for 1990.
Internal Control Tracking System In 1988 a more sophisticated tracking system was implemented to centrally track material weaknesses, nonconformances, and corrective actions. The tracking system was substantially modified in 1989 to (1) provide improved controls over corrective actions and (2) include additional information such as internal control reviews completed and in progress, including alternative reviews by the Inspector General, General Accounting Office, and others.
Program managers are asked to provide periodic status reports on corrective actions that have not been implemented, including the estimated dates for completion. Corrective actions are tracked until the program manager advises the Chairman, ICC, that the items have been addressed and describes the actions that were taken. Status reports are reviewed by the program manager's office director before they are submitted to the ICC Chairman.
Inspector General audit followup reports are reviewed and monitored by the ICC staff to identify any areas where the Inspector General believes the corrective action taken is not responsive to the internal control deficiency.
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UNITED STATES
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= NUCLEAR REGULATORY COMMISSION.
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. wAswiwoToN, D. C. 20986
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December 22, 1989 CHAMMAN
'i
-The HonorableLJ.;Danforth-Quayle President of the Senate
-Washington
-D.
C.
- 20510-i
Dear Mr. President:
.The. Nuclear. Regulatory Commission (NRC) evaluated its system of-
. internal-accounting and administrative control in effect during Act.of 1982 (quired:by the Federal Managers' Financial Integrity FY11989 as re FMFIA) and OMB Circular A-123,:" Internal Control
_ Systems."4The. evaluation was conducted in accordance with-
" Guidelines for the Evaluation and Improvement of and Reporting on-Internal Control Systems in the-Federal Government"_ issued by-the-
- Director of the Office of Management and Budget, tin-consultation withithe Comptroller-General.
The results indicate that'NRC's iinternal. control and financial management systems, taken as a whole, provide reasonable assurance that the objectives of the-g U
FMFIA.haveLbeen achieved.-
iInL1989, program' staff performed 16 detailed internal control
~
reviews, with all the corrective actions tracked centrally.
Special emphasis was placed on technical program areas, including region-based inspections,-review of reactor' applications,. safe-l guards 1 licensing and inspection, regulation of the transport of
' nuclear materials, severe. accident policy implementation, and high-level waste research.
Detailed reviews also were conducted in administrative and support areas such as information resources management, the small.and disadvantaged business program, and the L
headquarters consolidation program.
Also, we are evaluating and enhancing-agency-wide quality assurance measures in major program.
mission areas which will assist in strengthening internal controls throughout NRC.
In-1988, a more sophisticated tracking system was implemented to
^
centrally track material weaknesses, nonconformances, and correc-tive_ actions.
The tracking system was significantly modified in h
1989 to provide improved planning, control and monitoring of internal control reviews and corrective actions, including alter-native reviews such as Inspector General and General Accounting Office audits.
m
g
.I '
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i.
g,,
- Our. report.contains'two enclosures:
- a. statistical summary of 4
1 performance under-the FMFIA (Enclosure A) and a description of the
-(Enclosure B) process and our internal control tracking system-Our progress in FMFIA' review R
-and an agency-level commitment-to this process will. continue in-Lthe future.
Sincerely, mnh.
Kenneth M. Carr 1
Enclosures A.
Statistical. summary l
B.
Review Process cc w/ enclosures:
The Honorable Richard G. Darman Director, Office of Management and. Budget 4
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Enclosure A i
y STATISTICAL SUP94ARY-0F PERFORMANCE
.i; Section 2.
Internal Control Systems T
-Overalll compliance X Yes No' Year achieved: NRC has been in compliance since the enactment of FMFIA.
Number of Material Weaknesses
. Period Reported -
Reported Corrected Pending Prior years 0
0 0
-l 1987 report 1~
0 0
1988 report 0
1 0-
~1989. report 0
0 0
Totals:
1 T
T Pending Material Weaknesses L.
None-l 4
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1 2
1 1
^Section 4.
Financial Management Systems I
Overall: compliance; X Yes No sa -
Year achieved: NRC has been in compliance since the enactment of FMFIA.
Number of Section 4 Systems in'0peration J
> Type of System 1988 1989 f
. Core Financial System 2
1*
l Subsidiary systems:
Budget planning / formulation 1
1 Payroll / personnel 1
1 Purchasing / grants Credit Management **
1-1 Cash Management
' Property / inventory 1
1
' Travel /small purchases l-Other:t l=
' Budget execution 1
0*
L Manpower accounting 1
1-l-
Technical assistance costs L
and grants 1
1 License fee managenent system **
1 1
Totals:
T 8
In 1989, the functions of one core financial management system and the budget execution system have been incorporated into the agency's single core financial management system.
In 1990, the credit management system will be incorporated in the license fee management system (see chart on p. 4).
[
There is no. intention to. incorporate payroll into the core financial system, The remaining systems are small and play a relatively insignificant role in i
providing data to our fully integrated financial managment system (one of the few accounting systems that has fully implemented the Federal Government standard general ledger).
L l'
i l
l
c7.
.l l
c
,=
- _v 3-Number of Material Non-confomances Period Reported Reported Corrected Pending Prior years 0
0 0
't 1987 Report 0
0 0
l 1988 Report 0
0' O
1989 Report-0 0
0 Total.
T "T
T Pending Non-conformances None r
t h
_s 1
J J
Fi n a n cia l Syste m s Consolidation and Compliance 1983 1992 20 -
LEGEND 1
Subsidiary 18--
c.
WM Core Systems j l
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l 1983198419851986198719881989199019911992 1
1 l
Year l
(All Systems in Compliance)
A j,'.-
Enclosure B REVIEW PROCESS Description of Agency Section 2 Review Process The internal control process is described in NRC Manual Chapter 0801, " Internal Controls," which sets forth the manner in which NRC is to implement the require-ments of the Federal Managers' Financial Integrity Act of 1982" (FMFIA). An Internal Control Connittee (ICC), composed of high-level managers from the major components of the agency, sets the policy for evaluating internal controls and reviews major actions. The Chairman of the ICC, who is also NRC's Deputy Con-troller, aided by a senior staff member, organizes and monitors the internal control program and prepares the report to the Pres.ident and the Congress.
NRC structures its internal control program around a management control plan (MCP). The MCP is based on the programs and program elements in NRC's agency-wide Five-Year Plan.
Internal control reviews are scheduled based on risk assessments of these programs and program elements, with the most vulnerable areas being reviewed first. The 16 internal control reviews performed in 1989 cover a cross-section of NRC's program mission areas.
In 1989, detailed internal control reviews were perfonned in all program mission areas except Nuclear Waste Regulation. Detailed reviews were conducted in that mission area in 1988.
Programs selected for review are grouped according to like characteristics, and review teams are formed from these groups. Each program organization is repre-sented on the review team. The advantage of this approach is to bring reviewers with similar professional backgrounds together to work on familiar subjects.
1 Training on the internal control review process is provided to the team members and their program managers before initiating the reviews.
Reviews are conducted on a staggered schedule to permit a level workload through-out the year, making it possible for the team members to work on several reviews.
The staggered schedule also permits any problems that might arise with the reviews to be resolved with little adverse effect on the schedule for preparing the year-end report.
1989 Statistical Data for Section 2 Review Assessable Units 89 Vulnerability Assessments Planned 0*
Conducted 0
Internal Control Reviews Planned 16 Conducted 16 Alternative Reviews Planned 0
Conducted 0
Conducted by Inspector General /
Government Accounting Office 13
- Vulnerability assessments of the agency's 89 programs were conducted in 1987.
-c e-
.y' 2
Description of the Section,4 Review Process NRC Manual Chapter 1103, " Financial Management Systems," addresses the agency's i
requirement under Section 4 of the FMFIA and OMB Circular A-127 to submit an annual report to the President and Congress regarding the agency's accounting system. The ICC.and the Chairman, ICC, have the same responsibilities with respect to the Section 4 review process as they have in the Section 2 review process described earlier.
l Each year program managers are asked to perform reviews of their financial systems.
In 1989 limited reviews were conducted in accordance with OM8's
" Guidelines for Evaluating Financial Management / Accounting Systems," May 1985.
i 1989 Statistical Data for Section 4 Review Process Financial Management Systems 8
Annual Reviews Performed 6*
Detailed Cyclical Reviews Performed 0**
Principal Findings: No significant deficiencies were identified.
l L
- The Inspector General is currently conducting an audit
.which will encompass the remaining systems.
- Detailed cyclical reviews of all systems not reviewed by the Inspector General are planned for 1990.
L f
Internal Control Tracking Sys_t_em l
In 1988 a more sophisticated tracking system was implemented to centrally track material weaknesses, nonconformances, and corrective actions. The tracking system was substantially modified in 1989 to (1) provide improved controls over corrective actions and (2) include additional information such as internal control reviews completed aad in progress, including alternative reviews by the Inspector General, General Accounting Office, and others.
Program managers are asked to provide periodic status reports on corrective actions that have not been implemented, including the estimated dates for completion. Corrective actions are tracked until the program manager advises the Chainnan, ICC, that the items have been addressed and describes the actions that were taken. Status reports are reviewed by the program manager's office director before they are submitted to the ICC Chainnan.
Inspector General audit followup reports are reviewed and monitored by the ICC staff to identify any areas where the Inspector General believes the corrective action taken is not responsive to the internal control deficiency.