ML20056F403

OIG/93A-08, Review of NRC Sys to Followup on Audit Recommendations

ML20056F403
Person / Time
Issue date:	08/02/1993
From:	NRC OFFICE OF THE INSPECTOR GENERAL (OIG)
To:
References
OIG-93A-08, OIG-93A-8, NUDOCS 9308270138
Download: ML20056F403 (15)

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lI OFFICE OF THE INSPECTOR GENERAL

s US NUCLEAR REGULATORY COMMISSION l

REVIEW OF NRC'S SYSTEM TO FOLLOWUP ON i

AUDIT RECOMMENDATIONS I

OIG/93A-08 August 2,1993 I

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NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20665 August 2,1993 OFFICE OF THE INSPECTOR GENERAL MEMORANDUM FOR: The Chairman Commissioner Rogers Commissioner Remick

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Commissioner de Planque buLo FROM:

David C. Williams Inspector General

SUBJECT:

REVIEW OF NRCS SYSTEM FOR AUDIT FOLLOWUP

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Attached is the Office of the Inspector General's (OIG) subject report which discusses NRC's system for following up on audit recommendations contained in OIG audit

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reports.

OIG found, overall, that NRCs audit followup system conforms to the Office of

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Management and Budget's standards for audit followup systems and that NRC officials have been effective in implementing and closing out recommendations. However, OIG also found one area in which the system could be improved. OIG found that NRCs Audit Followup Official (AFO) lacks the authority to track and repcrt on final actions made to Commission level offices.

This report recommends that the AFO be granted the authority and responsibility for tracking and following up on audit recommendations made to Commission leve.'. offices.

It also recommends that NRCs Management Directive 6.1 " Resolution and Followup of Audit Recommendations", be revised to reflect the new authority and responsibility of the AFO. The Executive Director for Operations, who also serves as NRCs AFO, has agreed with our recommendations and will begin tracking recommendations made to Commission level offices when granted that authority by the Commission.

I am available to meet with you at your convenience if you have any questions regarding this report.

Attachment:

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NRC's System for Audit Followup

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REPORT SYNOPSIS OMB Circular A-50 requires agency heads to designate a senior agency official to oversee followup activity within their agencies. The Audit Followup Official (AFO) is responsible for establishing an audit followup system to ensure the prompt and effective resolution and implementation of audit recommendations. NRC's Executive Director for Operations (EDO) serves

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as the agency's AFO. The EDO has established an audit followup system that J

is prescribed in NRC Management Directive 6.1.

OIG's review of NRC's audit followup system found, overall, that it conforms with OMB standards and that NRC officials have been effective in implementing and closing out audit recommendations. However, OIG found one area in which the audit followup system could be improved.

OIG found that NRC's AFO lacks the authority to track and report on final actions on recommendations made to Commission level offices. While the number of OIG recommendations made to such offices are few, OIG believes,

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nonetheless, that these recommendations should be formally tracked in the

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AFO's centralized tracking system. This would enhance the audit followup system's effectiveness and efficiency in assuring that such recommendations are included in the Chairman's semi-annual reports to Congress.

OIG's report contains two recommendations to grant the AFO the authority to track audit recommendations made to Commission level offices in the agency's centralized tracking system.

By memo dated 7/27/93, the EDO commented on the findings of our report and agreed to implement the two recommendations.

GIG /93AR Page i

NRC's System for Audit Followup TABLE OF CONTENTS REPORT SYNOPSIS...............................

i INTR ODU CTI O N.................................

1 BACKG ROUND.............................

I FIND IN G S.......................................

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NRC Audit Followup System Established

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in Accordance with OMB Standards...............

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AFO Authority to Track and Ensure Final Action 4

CONCLUSION S...................................

5 RECOMM EN DATIONS.............................

5 AG ENCY COMMENTS.............................

6 APPENDICES I

Objectives, Scope, and Methodology II U.S. NRC Organizational Chart III Agency Comments on Draft Report IV Major Contributors To This Report L

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NRC's System for Audit Followup i

INTRODUCTION Audit followup is an integral part of good management and is a shared responsibility of agency management and the audit entity.

Agency i

management is responsible for establishing an audit followup system to ensure that audit recommendations are re. solved promptly and effectively l

implemented. The audit entity is responsible for conducting periodic audits of agency audit followup performance.

NRC's Office of Inspector General (OIG) made 152 recommendations in 51 internal audit reports issued by OIG since its inception in 1989 through September 30,1992. Although OIG has performed followup reviews on some of these reports, OIG has not previously performed a review of NRC's system established to follow up on audit recommendations.

This review was performed to assess the adequacy of NRC's system for audit followup and to g

determine how effectively NRC's followup system is for resolving, monitoring i5 and closing-out recommendations. (See Appendix I for additional details regarding our objective, scope and methodology.)

il BACKGROUND

.I Agency management's responsibility for resolving and implementing audit j

recommendations evolves from the provisions of several statutes, including the

E Budget and Accounting Act of 1921, as amended, and the Budget and Accounting Procedures Act of 1950 as amended.

In 1978, the Office of Management and Budget (OMB) directed all Federal

.g agencies to improve their systems for prompt, proper resolution of audit g

reports and for ensuring the completion of agreed-upon management actions.

The Supplemental Appropriations and Rescissions Act of 1980 (Public Law 96-304) specified that Federal audit reports were to be resolved within six months of the date of their issuance.

j OMB Circular A-50, " Audit Followup", requires each agency to establish systems to ensure the prompt and proper resolution and implementation of audit recommendations.

These systems are required to provide for a I

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NRC's System for Audit Followup complete record of action taken on both monetary and nonmonetary findings l

and recommendations.

Agency heads are responsible for designating a top management official to oversee audit followup, including resolution and corrective action. The Audit Followup Official (AFO) has personal responsibility for ensuring that (1) systems of audit followup, resolution, and corrective action are documented and in place, (2) timely responses are made to all audit reports, (3) disagreements are resolved, (4) corrective actions are actually taken, and (5) l semi annual reports are sent to the head of the agency on the status of audit reports and report recommendations.

l The Inspector General Amendments Act of 1988 requires that Inspector General semi-annual reports to the Congress indicate the status of agency g

actions on significant audit recommendations described m previous semi-E l

annual reports on which corrective action has not been completed. Inspectors General are responsible for conducting periodic audits of agency audit l

l followup performance.

Inspectors General also are responsible for j

maintaining audit records and including followup statistics and information in semi-annual reports to the Congress.

FINDINGS Our review found that overall, NRC has an adequate followup system in place and that NRC officials have been effective in implementing and closing out g) recommendations. All of the recommendations we reviewed were either resolved, tracked, implemented or closed out in a timely and effective manner, i

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However, we found one area in which the system could be made more efficient. This area involves the tracking and reporting of activities related to audit recommendations made to Commission level offices.

We found that NRC's followup system is established in accordance with OMB's standards. We also found that although the AFO maintains the gl agency's centralized audit followup system, the AFO currently does not have the authority to track and report on fm' al decisions on recommendations made to Commission level staff offices.

While we did not identify any I

OIG/7.WO8 Page 2 i:

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recommendation made to Commission level staff offices that had not been implemented, we believe it would be more efficient to centralize the tracking of all report recommendations and actions under the AFO system.

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NRC AUDIT FOLLOWUP SYSTEM ESTABL,lSHED IN ACCORDANCE WITH OMB STANDARDS The provisions of OMB Circular A-50 charge agency and deputy agency heads of Executive agencies and establishments,with the responsibility of appointing a senior management official to oversee followup activity in such agencies.

I The standards cited in A-50 require that followup activity of such agencies provide for followup systems and that followup activities be documented, g

receive formal management attention and utilize standard definitions defined in the Circular.

We compared the provisions of NRC's Management Directive 6.1 to the requirements of OMB Circular A-50 and found them to be in accordance with those requirements. We found for example, that at NRC, the Executive I

Director for Operations (EDO) has been appointed the agency's AFO. The system itself, including written policies and procedures for audit followup, is g

described in NRC's Management Directive and Handbook 6.1, " Resolution and Followup of Audit Recommendations". This Directive outlines specific responsibilities for senior management personnel and require the documentation of management actions and decisions related to followup activity. In addition, the agency utilizes a computerized tracking system to monitor the status of audit reports and recommendations.

NRC's audit followup system was established on the basis of the proposed g

revision to Circular A-50. We believe, however, that any changes to the circular would not significantly effect NRC's audit followup system.

OIG also examined NRC followup activities performed on 89 recommendations contained in 13 of the 51 reports issued by OlG. This I

examination included a review of actions taken to ensure agreement between OIG and management officials on audit recommendations, tracking reports and documents utilized to monitor followup activity.

It also included g

interviews of persons performing followup reviews on behalf of the AFO. We

I NRC's System for Audit Followup found that all of the recommendations examined had been resolved, tracked l

and certified as closed in accordance with NRC policies and procedures.

I AFO AUTHORITY TO TRACK AND ENSURE FINAL ACTION l

I As discussed, the EDO has been appointed the agency's Audit Followup Official (AFO).

As AFO, the EDO has the authority to resolve disagreements involving internal audit findings and recommendations, between OIG and management officials over which he has supervisory authority.

Presently, the EDO does not have the authority to resolve such disagreements g

between OIG and Commission level staff offices. Such disagreements are 5

resolved by the Commission.

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As AFO, the EDO is also responsible for maintaining the agency's centralized l

system for tracking the status of audit reports and recommendations. Even j

so, the EDO has not been provided the authority to track recommendations l

l made to Commission level offices; although, he does track some of these recommendations on an informal basis. NRC Management Directive 6.1 g

provides that, the Directors of Commission level staff offices, Panels and 5

Advisory Committees are responsible for resolving, tracking and advising the g

AFO and OlG of actions taken on audi: recommendations.

In our discussions with the AFO and his staff, we determined that the AFO has no objection to tracking and reporting on final action determinations on l

recommendations made to Commission level staff offices. Since the AFO already tracks audit recommendations of Commission level staff offices on an informal basis, we believe Management Directive 6.1 should be revised to provide the AFO with formal authority and responsibility to track such recommendations. This would make the audit followup system more effective and efficient in assuring that all audit recommendations are accounted for and included in the Chairman's semi-annual audit report to the Congress.

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NRC's System for Audit Followup CONCLUSIONS NRC has established an audit followup system that complies with OMB's audit followup standards. We believe as a result of our review of selected aspects of the system, that it can be relied upon to track and effectively implement audit recommendations. Our review of audit recommendations implemented under this system also indicates that NRC has been effective in monitoring and closing out these recommendations.

Although this system appears to be adequate overall, we found one area where NRC could improve its management control for audit followup. We found that the AFO does not have the authority to track and monitor audit recommendations made to Commission level offices. We believe that granting the AFO authority to track such recommendations would enhance the audit followup system's effectiveness and efficiency in assuring that all recommendations are included in the Chairman's semi-annual reports to Congress.

We believe NRC needs to revise its audit followup policies and procedures to provide the AFO with the authority to track and report on final actions on audit recommendations made to Commission level offices.

RECOMMENDATIONS In order to improve the efficiency and effectiveness over audit followup activity within NRC, we recommend the Commission:

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Grant the AFO the authority and responsibility for tracking and re porting on final action determinations on audit recommendations for Commission level offices.

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l NRC's System for Audit FoHowup l

To do this, the EDO should:

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Revise Management Directive 6.1 to incorporate the revised authority and responsibilities of the AFO for tracking and reporting on audit recommendations made to Commission level g

offices.

l AGENCY COMMENTS On July 27, 1993, the Executive Director for Operations (EDO) provided g

comments on our draft report. His comments are included as Appendix III.

l The EDO agreed with our recommendations to have the AFO granted the l

l authority and responsibility for tracking and reporting on final action determinations on audit recommendations for Commission level offices and g

to revise Management Directive 6.1 to incorporate the AFO's revised 3

authority and responsibility. The EDO will officially begin tracking and reporting on recommendations made to Commission level offices once g

Commission authority to do so is granted; but, will continue to unofficially track such recommendations until the new authority is granted.

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Appendix l NRC's System for Audit Followup OBJECTIVES, SCOPE, AND METHODOLOGY The objective of this review was to determine the adequacy of NRC's audit followup system for promptly resolving, tracking and closing out recommendations.

To accomplish this objective, we reviewed NRC's policies and procedures regarding audit followup, tracking reports generated on follow-up activity, the authorities and responsibilities delegated to NRC managers, and processes for resolving, tracking, implementing and closing-out recommendations. We interviewed the EDO, members of the EDO's staff responsible for followup activity, the Directors of the Office of the Secretary (SECY) and the Division of Contracts and Property Management (DCPM), and other persons assigned to perform followup reviews on behalf of the AFO.

In addition, we examined the documentation supporting corrective action taken on recommeudations and management decisions on the implementation of 89 of 152 OIG recommendations issued.

Our review was performed at NRC Headquarters during the period January through April 1993 in accordance with generally accepted Government auditing standards.

OIG/93ME Page 1 of 1

Appendix 11 NRC's System for Audh Followup U.Se NRC ORGANIZATIONAL CHART NRC Commissioners Executive Director for Operations M

Assesensa ser C-Depuny &

Droster for Depsey E.naruarve DWessur le, Pansy hadser Manetans asissy, Pendser 8Lamrser Ram Safeireerds & Operseums Seppers Regmesanic a Research y

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Regime IV Dname Resias v see a rense Areas Aedhed l

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Appendbc Ill NRC's System for Audit Followup AGENCY COMMENTS ON DRAFT REPORT y...% *t UNITED STATES

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July 27, 1993 MEMORANDUM FOR: David C. Williams Inspector General FROM:

James M. Taylor Executive Director for Operations

SUBJECT:

DRAFT REPORT - REVIEW OF NRC'S SYSTEM FOR AUDIT FOLLOW-UP This responds to the July 6, 1993, memorandum transmitting the subject audit report. We are pleased to note that your review concluded that the existing follow-up system was effective in monitoring and closing out recommendations.

With respect to your specific reconcendations, the following is submitted:

Secomendation 1 in order to improve the efficiency and effectiveness over audit follow-up activity within the NRC, we recomend the Commission grant the AFO the authority and responsibility for tracking and reporting on final action determinations on audit recomendations for Commission level offices.

Response.

There is no objection to tracking and reporting on Countssion level office audit recocuendations once Comission authority is provided.

Recomendation 2.

Revise Management Directive 6.1 to incorporate the revised authority and responsibilities of the AFO for tracking and reporting on audit recocmendations made to Commission level offices.

Resconse.

Agree. Management Directive 6.1 will be changed within 120 days of receipt of Coenission authority to incorporate revised authority and responsibility. As the OEDO is already unofficially tracking and reporting on Commission level audit recomendations, this process will continue until receipt of new authority.

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l lI i)l Appendix IV jE NRC's System for Audit Followup

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MAJOR CONTRIBUTORS TO THIS REPORT i

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a Richard J. Donovan, Team Leader f

Elmo Allen, Auditor I

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