ML20040D152
| ML20040D152 | |
| Person / Time | |
|---|---|
| Issue date: | 12/29/1981 |
| From: | Palladino N NRC COMMISSION (OCM) |
| To: | Brooks J HOUSE OF REP., GOVERNMENT OPERATIONS |
| Shared Package | |
| ML20040D153 | List: |
| References | |
| NUDOCS 8201300331 | |
| Download: ML20040D152 (8) | |
Text
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o UNITED STATES
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December 29, 1931 CHAIRMAN The Honorable Jack Brooks, Chairman Committee on Government Operations U. S. House of Representatives Washington, D. C.
20515
Dear Mr. Chairman:
This is in response to your November 20,.1981 letter asking for the steps taken by the Nuclear Regulatory Commission (NRC) to insure the existence of an effective system for resolving audit findings.
On August 6,1981 NRC issued Bulletin 1201-1 entitled Procedures for Follow-up of Audit Recommendations." Those procedures are applicable to all recommendations made by the Office of Inspector and Auditor, NRC's internal audit organization, as well as the follow-up of all questioned costs resulting from audits of NRC contracts by the Defense Contract Audit Agency, the Department of Health and Human Services, and the De-partment of Education.
A copy of'NRC Bulletin 1201-1 is enclosed for your information.
The issuance of-these procedures establishes a follow-up system within.
NRC which is fully consistent with OMB. Circular A-73 and resolves the problems identified by the General Accounting Office in their January 23, 1981 report entitled " Disappointing Progress In Improving Systems For Resolving Billions In Audit Findings." These procedures have been fully implemented within NRC. and we believe have resulted in an effec-tive system for resolving audit findings.
Sincerely, 6.k
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Nunzio J. Palladino l
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Enclosure:
l NRC Bulletin 1201-1 i
cc:
Rep. Frank Horton i
l 8201300331 811229 PDR COMMS NRCC CORRESPONDENCE PDR Ln
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Published in advance of incorporation in NRC Manual Chaoter 1201
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.j UNITED STATES NUCLEAR REGULATORY COMMISSION NRC MANUAL
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BULLETIN
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NO. 1201-1 DATE:
August 6, 1981
SUBJECT:
PROCEDURES FOR FOLLOW-UP 0F AUDIT RECOMMENDATIONS l
A.
Pu rpcse Office of Management and Budget (0MB) Circular. A-73,.as revised
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December 3,1979, requires that "Each Agency wi.11 establish policies
";r' for prompt and proper resolution of audit recommendations." The i
procedures set forth in this Bulletin are intended to implement the guidance provided by OMB Circular A-73 and. General Accounting Office standards in the U.S. Nuclear Regulatory Commission (NRC).
B.
Background
i The Office of Inspector and Auditor (01A) is responsibl' for e
conducting NRC's day-to-day internal audit activities at all levels of operations.
OIA has, however, entered into an agreement with NRC's Division of Contracts whereby pre-award and closeout audits of NRC contracts are carried out by the Defense Contract Audit Agency (DCAA), the Department of Health and Human Services (HHS),
or'the Department of Education audit staffs.
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These procedures apply to the follow-up of all recommendations contained in 01A audit reports and all questioned costs resulting from audits of NRC contracts by DCAA, HHS, and the Department of 1
Education.
These procedures do not apply to recommendations addressed to NRC in audit reports issued by the U.S. General Accounting Office.
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Although OIA has audit respcasibility for all NRC offices, 01A 6".;;
audit reports, for the most part, address programs under the w
direction of the Executive Director for Operations (ED0).
For this reason, these procedures will generally refer to the ED0 when discussing the agency official ' responsible' for responding to and implementing audit recommendations.
To the extent that audit reports address agency programs outside the purview of the EDO (e.g., Commission staff offices and the licensing boards), the head of that organization will bear the same-responsibility for response to and implementation of audit recommendations as that set out for the EDO in the following procedures.
C.
Responsibility for Follow-up 1.
The Executive Director for Operations:
follows up on OIA audit recommendations; a.
b.
tracks implementation of audit recommendations; and periodically advises 0IA as to the status of acfions-
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c.
underway.
I 2.
The Director, Office of Inspector and Auditor:
a.
evaluates whether actions taken in response 'to OIA audit if;_
recommendations are satisfactory; Yg b.
reports the results of OIA's ev'aluations in follow-up reports to the Commission; and
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c.
infoms the Controller of any money to be collected by NRC as a result of OIA audits.
3.
The Director, Division of Contracts:
a.
follows up on DCAA, HHS' and' Department of Education audit findings relating to NRC as a.res0lt 6f audits of NRC's contracts; and b.
infoms the ControllE.r7of any monej to' be Collected by NRC as a result of DCAA, HHS.or Department of Education audits of NRC contracts.
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4.
The Controller takes actions to' collect mone) due NRC in
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accordance with NRC Appendix 1101.-
D.
Procedures for Responding tu Draft Audit Reports 1.
OIA will generally provide the EDO with an opportunity (usually about 30 days) to fomally comment on draft at dit reports before they are sent to the Commission.
As ne cessary, the OIA staff will meet with the ED0 an'd other appropriate Agency officials to discuss facts contained in the draft reports and the actions necessary to resolve the findiags contained in the repor ts.
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The ED0's fomal response to each draft audit report will identify for each recommendation whether or not he agrees with i t.
If he agrees with a recommendation he will state what l
action will be taken.and by whora and a date by which each i
action will be completed. These commitments will be included f
in 01A's final report issued to the Commission.
j, 3.
If the EDO disagrees with a recommendation contained in an
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audit report his response will state the reason for the j
disagreement as well as any alternative action he believes is l
necessary.
If the EDO believes no corrective action is needed j
or if OIA does not believe alternative actions proposed by the i
ED0 will resolve the findings, these disagreements will be brought to the Commission's attention for resolution in 0IA's final report.
l 4.
Under certain circumstances 0IA may issue audit reports to the Commission which contain recommendations to the EDO without providing the EDO a prior opportunity for formal comment.
Similarly, under certain circumstances the E00 may defer cmmenting on recommendations contained in a draft report until after the final report is issued, to allow additional time for evaluating the findings contained in the report.
In these cases the EDO will provide OIA with a written statement on what actions will be taken on the recommendations preferably g;
within 30 days, but in no case later than six months, after
~=e the date of the final report.
All reports and recommendations on which the EDO has not provided a written determination of actions to be taken within six months will' be referred to the Commission.
Any disagreements between OIA and the EDO on the need for corrective actions will immediately be brought to the Commission's attention for resolution.
E.
Follow-up of Audit Recommendations 1.
The ED0 assures that audit recommendations to which he has agreed are implemented and advises OIA, no later than the date specified for completing the action, either (a) that the action is completed or (b) the status of the action underway and a revised target date for completing the action and again
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responding to 01A.
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2.
The EDO tracks actions on audit recommendations on the Work Items Tracking System (WITS).
A copy of each WITS report relating to audit recommendations is provided to OIA and serves as the primary mechanism for notifying OIA of action status, schedule chaages, and completed actions.
3.
When the ED0 detemines that actions on recommendations tracked on WITS are completed, the supporting documentation will be provided to, or identified for, 01A.
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After the ED0 has notified OIA that all actions have been h
completed on an audit report, OIA will perfom sufficient 6
checks to assure itself that all recommendations have been satisfactorily implemented and will issue a follow-up report to the Commission.
In any cases in which some recommendations in a report require an extended period of time to implement (i.e. more than two years), a follow-up review should be performed within two years of the report's issuance to determine if other recommendations requiring less time to implement can be closed out.
5.
In some cases, OIA's follow-up review on prior reports may result in new or revised recommendations.
In these cases, the ED0 will be pr.ovided with a draft of the follow-up report for comment prior to its issuance to the Commission.
The procedures set out in this section for responding to, implementing, tracking and following up on recommendations will apply to these new or revised recommendations.
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6.
If the ED0 and OIA di'sagree on the adequacy of corrective actions taken in response to an audit recommendation, this disagreement will be elevated to the Commission for resolution in 01A's follow-up report.
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7.
OIA will maintain sufficient records on audit recommendations to show which are open and what action has been taken on those siin.
closed.
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F.
_ Resolution of Findinas on Contract Audits 1.
The Director, Division of Contracts (DC), will resolve questioned costs relating to NRC contracts which result from DCAA, HHS, or Department of Education audits of NRC contracts.
2.
DC will maintain sufficient records to show how questioned costs on NRC contracts are resolved.
3.
DC will provide OIA with copies of all DCAA, HHS, and Department I
of Education audit reports of NRC contracts.
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4.
To assure that resolution of questioned costs is consistent with laws and regulations governing NRC operations, any decisions I
by DC not to recover questioned costs as a result of audit reports will be in writing.
When deemed necessary by the cognizant contracting officer, the advice of the NRC's Office of the Executive Legal Director will be sought.
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.Infennation relating to DCAA, HHS and Department of Education t
h audits of NRC contracts needed for the semiannual report to the Commission (see Section H below) will be provided to OIA by DC within two weeks after June 30 and December 31 of each year.
G.
Coordination of Actions on Audit Findings The ED0 wi.11 coordinate the actions taken by the various offices I
under his direction in. responding to and implementing audit recom-mendations.
In the event that resolution of a recommendation in an OIA audi.t report requires coordination with an NRC office outside i
the pury.iew ~of the EDO or with another Federal agency or other organiza'tfon out' side of NRC, the EDO will also coordinate with that other organization to eni:o'urage satisfactory implementation of the audit recommenda' tion.
H.
Semiannual Reports to Commission 0IA will provide semiannual reports to the Commission as of June 30
,,and December 31 of.each year on the status of all audit reports over six months old. The semiannual reports will include:
1.
For OIA audit reports:
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a.
an aged list of reports over six months old containing ci-~7~
open recommendations (Note: "open recommendations" are
~U" those on which (1) 01A has n'ot perfonned its follcw-up review, (2) the ED0 has not completed implementation, or (3) OIA and the ED0 disagree as to the adequacy of corrective actions taken);
b.
each open recommendation, the EDO response to each open recommendation at the time the report was issued, and the current status of actions to implement each open recommendation as known by 0IA; and c.
the number of audit recommendations closea during the preceeding six months.
2.
For outside audit reports on NRC contracts, the following information will be provided to 0IA by DC:
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an aged list of audit reports over six months old containing unresolved questioned costs, an identification of the contract on which the audit was made, the amount of the questioned costs, and efforts unden<ay to resolve the questioned costs; b.
the number of audit reports resolved during the preceeding six months; y
N.:;s c.
the amount of collections and offsets made during the preceeding six months; and
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the number and dollar amount of demands for payment made by NRC to contractors during the preceding six months as WP
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a result of questioned costs in audit reports.
1 I.
Evaluations of Follow-up System OMB Circular A-73 requires that agencies periodically evaluate their audit follow-up system to determine if it is adequate and 1
results in timely and proper resolution of audit findings and recomendations. This revision of NRC's follow-up procedures is based on an evaluation of the first year's experience since NRC's i
procedures were formalized as well as the results of recent GA0 audits of HRC's follow-up procedures. These procedures will be revised, as necessary, based on experience in the future.
In addition, the system will be reevaluated by OIA and the E00 every
'i two years.
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Implementation
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- i These procedures supersede those set forth in SECY-78-660, approved by the Comission in January 1979.
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William J. Dircks Executive Director for Operations
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, Jn e U8r5="Ea^'=2 ggggy November 20, 1981
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Honorable Nunzio Palladino Chairman Nuclear Regulatory Commission 1717 H Street, N.W.
Washington, D.C.
20555
Dear Mr. Chairman:
Enclosed for your review and comment is a copy of the Government Operations
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Committee report entitled " Continued Failure of Departments and Agencies to Take Effective Action on.\\udit Findings."
The Committee found that audit resolution in the Federal Government is still ineffective and untimely and, as a result, the Government is not realizing savings.
Other finding included in the report are that audit resolution remains a low priority in many agencies; and management is not fully accountab1'e nor co=mitted to effective and timely audit resolution.
I would appreciate your reviewing this report and advising me of the steps you are taking to insure that your commission has an effective syste= for resolving audit findings.
Sincerely, M
JACK ROOKS Chaiban Enclosure 1
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