ML20083C655
| ML20083C655 | |
| Person / Time | |
|---|---|
| Issue date: | 03/31/1995 |
| From: | NRC OFFICE OF THE CONTROLLER |
| To: | |
| References | |
| NUREG-1470, NUREG-1470-V04, NUREG-1470-V4, NUDOCS 9505180277 | |
| Download: ML20083C655 (84) | |
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PRINCIPLES OF GOOD REGULATION The NRC adheres to the following Principles of Good Regulation:
INDEPENDENT. Nothing but the highest possible standards of ethical performance and professionalism should influence regulation. However, independence does not imply iso-lation. All available facts and opinions must be sought openly from licensees and other interested members of the public. The many and possibly conflicting public interests involved must be considered. Final decisions must be based on objective, unbiased assessments of all information, and must be documented with reasons explicitly stated.
OPEN. Nuclear regulation is the public's business, and it must be transacted publicly and candidly. The public must be informed about and have the opportunity to participate in the regulatory processes as required by law. Open channels of communication must be maintained with Congress, other government agencies, licensees, and the public, as well as with the intemational nuclear community.
EFFICIENT. The American taxpayer, the rate-paying consumer, and licensees are all entitled to the best possible management and administration of regulatory activities. The highest technical and managerial competence is required, and must be a constant agency goal. The NRC must establish means to evaluate and continually upgrade its regulatory capabilities. Regulatory activities should be consistent with the degree of risk reduction they achieve. Where several effective alternatives are available, the option which minimizes the use of resources should be adopted. Regulatory decisions should be made without undue delay.
CLEAR. Regulations should be coherent, logical, and practical. There should be a clear nexus between regulations and agency goals and objectives whether explicitly or implicit-ly stated. Agency positions should be readily understood and easily applied.
RELIABLE. Regulations should be based on the best available knowledge from research and operational experience. Systems interactions, technological uncertainties, and the diversity of licensees and regulatory activities must all be taken into account so that risks are maintained at an acceptably low level. Once established, regulation should be per-ceived to be reliable and not unjustifiably in a state of transition. Regulatory actions should always be fully consistent with written regulations snd should be promptly, fairly, and decisively administered so as to lend stability to the nuclear operational and planning processes.
The effective regulation of users of nuclear materials requires constant vigilance and faith-ful adherence to these basic principles.
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1 CHIEF FINANCIAL OFFICER'S MESSAGE l
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I am pleased to present the Nuclear Regulatory Commission's Fiscal Year 1994 financial l
statement. This is our first unqualified audit opinion in the three years that the agency has been preparing financial statements. An unqualified audit opinion was my goal as Chief Financial Officer and reflects the high priority the NRC places on sound financial manage-ment and public accountability. This unqualified audit opinion results from close coopera-tion between the agency's program and financial managers working with oversight from the NRC's inspector General. Having senior managers committed to addressing and resolving previously identified deficiencies, as well as emphasizing the importance of disci-plined financial practices, has helped to strengthen the financial condition of the agency.
The Office of the inspector General has helped to enhance the NRC's financial processes.
Frequent meetings between NRC and inspector General staff throughout the year provid-ed the opportunity to address and resolve mutual concems. As a result of this closer part-nership, this audited financial statement has been completed three months earlier than last year's statement.
As we face the many new challenges presented by the National Performance Review, the NRC remains committed to ensuring adequate protection for the public health and safety, the common defense and security, and the environment in the civilian use of nuclear mate-rials in the United States. As sound financial management practices are emphasized, the efficiency and effectiveness of the NRC's regulatory mission are also improved. Our goals are both to maintain the standards we have achieved and to seek improved methods to conduct and account for our financial and program performance.
av'
' James M. Taylor
' 'j Chief FinancialOfficer l
1
7.
U CONTENTS OVERVIEW I ntrod uction..................................................... 1 N RC M ission..................................................... 1 Sou rces of Funds............................................... 2 Financial Condition of N RC..........................................3 p
Uses of Funds by Function......................................... 3 Limitations of Principal Statements
..................................4 Program Performance.......................
.........4 R eacto r P rog ra m................................................. 4 Ucensee Safety Performance.................................... 5 Licensing Actions for Operating Power Reactors....................... 7 Inspection Activities.......................................... 8 Nuclear Materials and Nuclear Waste Program.......................10 Materials Licensing..
...... 10 Materials inspections............................
..... 13 PRINCIPAL STATEMENTS Statement of Financial Position
.......................17 Statement of Operations and Changes in Net Position...................19 Statement of Cash Flows.
............................. 20 Statement of Budget and Actual Expenses........
............... 23 Notes to Principal Statements.................................... 24 INDEPENDENT AUDITORS' REPORTS Results of Audit of NRC's FY 1994 Financial Statement..
........... 41 Independent Auditors' Report on Principal Statements
.. 42 Independent Auditors' Report on Internal Control Structure
.. 45 Independent Auditors' Report on Compliance with Laws and Regulations..... 60 L
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' SUPPLEMENTAL FINANCIAL AND i
MANAGEMENT INFORMATION Program Performance Measures.................................... 67 Medical Use Program..
.................67 Review ot Advanced Reactor Designs............................. 67 Transportation Incidents.................................... 69 Remediation of Licensed Uranium Recovery Sites................... 69 Site Decommissioning Management Plan.......................... 70 High-Level Nuclear Waste Regulation Program..................... 71 License Application Review Plan
..... 71 DOE Study Plans for High-Level Waste Repository.............. 71 Regulatory Research........................................ 72 Generic Safety issues...............................
.73 NRC Regulations.........
...................................73 Responsiveness to the Public's Safety Concems.................... 73 Enforcement..
..............................................75 Expenses by Program
. 77 6
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O OVERVIEW asvammamamewaram O
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l Introtlluction
. E The U.S. Nuclear Regulatory Commission (NRC) is an independent regulatory agency of the Federal Govemment that was created by the Energy Reorganization Act of 1974, as amended. This Act, along with the Atomic Energy Act of 1954, as amended, provides the foundation for the regulation of the nation's civilian uses of nuclear materials.
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The NRC is headed by five Commissioners appointed by the President and confirmed by the Senate for 5-year terms. One of them is designated by the President as Chairman, serving as the principal executive officer and official spokesperson of the Commission.
The Executive Director for Operations, as the chief operating and administrative officer of the NRC, carries out the policies and decisions made by the Commission. The Executive Director for Operations has also been designated NRC's Chief Financial Officer.
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The U.S. Congress has determined that the safe use of nuclear materials for peaceful purposes is a legitimate and important national goal. Consistent with this goal, NRC's mission is to ensure adequate protection for the public health and safety, the common defense and security, and the environment in the use of nuclear materials in the United States.
NRC's scope of responsibility includes regulation of commercial nuclear power plants; research, test, and training reactors; fuel cycle facilities; medical, academic, and industrial uses of nuclear materials; and the transport, storage. and disposal of nuclear materials and wastes. The NRC carries out its mission through a system of licensing and regulato-ry activities that includes:
E licensing the construction, operation, and decommissioning of nuclear reactors and other nuclear facilities, such as nuclear fuel cycle facilities, uranium enrichment facili-ties, and nonpower test and research reactors; E licensing the possession, use, processing, handling, and export of nuclear materials; E licensing the siting, design, construction, operation, and closure of low-level radioac-tive waste disposal sites under NRC jurisdiction and the construction, operation, and closure of geologic repositories for high-level radioactive waste; E licensing the operators of nuclear power and nonpower (test and research) reactors; E inspecting licensed facilities and activities; E conducting research to provide independent expertise and information for making timely regulatory judgments and for anticipating problems of potential safety signifi-cance; l
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E developing and implementing rules and regulations that govem licensed nuclear activ-ities; and E collecting, analyzing, and disseminating information about the operational safety of commercial nuclear power reactors and certain nonreactor activities.
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W The NRC has two no-year appropriations, and funds for both are available until expend-ed. One appropriation is for agency salaries and expenses and the other is for the Office of the Inspector General (OlG). The total NRC new budget authority for fiscal year (FY) 1994 was $535.0 million, which consisted of $530.2 million from the Salaries and Expenses appropriation and $4.8 million from the OlG appropriation. Additionally, $72.9 million from prior-year appropriations was available to expend in FY 1994, the NRC accepted new reimbursable work to be performed for others totaling $2.6 million, and the General Services Administration (GSA) authorized the NRC to expend $4.4 million from its appropriation for the operation and repair of certain buildings occupied by the NRC.
The sum of all funds available to expend for FY 1994 was $614.9 mll lion (see Figure 1).
Total Funds Available $614.9M New Budget Authority $535M
,,.. Reimbursable Work $2.6M P
" " Budget Authority from Prior Years $72.9M 3.
'***** General Services Administration Transfer $4.4M Other than appropriated funds, NRC's assets are limited. Capitalized personal property is limited to typical office furnishings, personal property acquired by contractors with NRC funds, nuclear reactor simulators, computer hardware, and off-the-shelf and customized computer software. The NRC has no real property, loan, or loan guarantee programs.
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As of September 30,1994, the financial condition of the NRC is sound with respect to having sufficient funds to meet program needs and sufficient control of these funds to ensure that NRC obligations do not exceed budget authority. The Statement of Financial Position shows a net position (assets minus liabilities) of $218.3 million. Because of the nature of NRC programs and sources of funds, the NRC has no material contingent liabil-ities. Consistent with the requirements of the Omnibus Budget Reconciliation Act of j
1990, the NRC collected 97.4 percent of its new budget authority, excluding the amount l
appropriated from the Nuclear Waste Fund.
r RMWMRM@RETMWM As previously stat d, the total budget authority available for use by the NRC in FY 1994 was $614.9 million. Of that amount, the NRC incurred obligations of $550.0 million, with 47 percent used for salaries and benefits; 32 percent used to obtain technical assistance for NRC's principal regulatory programs and to conduct confirmatory reactor safety research; and 21 percent used for administrative expenses (e.g., building rentals, trans-portation, printing, security services, supplies, office automation, and training), staff travel, and reimbursable work (see Figure 2). The remaining $64.9 million in budget authority that was not obligated in FY 1994 will be available to fund critical needs in FY 1995.
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k Nh Total Obligations $550.0M Salaries and Benefits $259.4M,*..,
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,,..... General Services Reimbursable Work $4.4M.,**
Administration Transfer $3.9M l
Administrative Support S94.8M **
Travel $14.7M '
3
i Lt.mitations of Princip'al Statements The principal statements have been prepared to report the financial position ar,d results of operations of the NRC, pursuant to the requirements of the Chief Financis! Officers (CFOs) Act of 1990. While the statements have been prepared from the books and i
records of the NRC in accordance with the formats prescribed by the 04fice of Management and Budget, the statements are different from the financial reports used to monitor and control budgetary resources that are prepared from the same books and records. The statements should be read with the realization that they are for a sovereign entity, that liabilities not covered by budgetary resources cannot be liquidated without the i
enactment of an appropriation, and that the payment of all liabilities other than for con-tracts can be abrogated by the sovereign entity. Other limitations are included in the foot-notes to the principal statements.
Program Performance 1
This section highlights key aspects of NRC's programs, including performance measures j
that are required by the CFOs Act of 1990. A more complete description of programs and activities can be found in the NRC Annual Report required by the Energy Reorganization Act of 1974. The current program performance measures are related to outcomes such as safety effectiveness, outputs such as inspection effort, and timeliness of actions.
During the next year, the NRC will further evaluate its program performance information in i
order to strengthen quantitative and qualitative measures of outputs and outcomes for meeting the requirements of the Govemment and Performance Results Act of 1993.
Resources for the progrms are included in the Supplemental Financial and Management Information section of this report.
Reactor Program The principal goals of NRC's reactor program are the following:
ensure that nuclear power plants and other licensed facilities are operated safely and that licensees are adequately prepared to respond to accidents;
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ensure that nuclear power plants under construction are designed and constructed properly and are ready for safe operation; and 1
prepare for future standard reactor design licensing and reactor license renewal activi-ties, including revisions to regulatory guidance and standard review plans.
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As of September 30,1994,109 commercial nuclear power reactors were licensed to operate at full power in 32 states (see Figure 3).
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su.S. COMMERCIAL REACTORS WA NH ME O
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O oeterred construction (6) 5 Under Constructu>n (1)
Note: There are no comrnercial reactors in Alaska of Hawad l
These reactors generate approximately 22 percent of the nation's electricity. At the end of i
the fiscal year, seven plants had valid construction permits; however, construction has been halted or deferred on six of these plants. The NRC received no new applications for operating licenses or construction permits and issued no construction permits in FY 1994.
Licensee Safety Performance Safety of operation is the responsibility of NRC licensees. Regulatory oversight of licensee safety is the responsibility of NRC. The safety performance of licensees is par-tially a reflection of NRC's performance; however, it is not possible to isolate the causal relationship or a specific set of factors that directly link NRC's performance to licensee performance. Safety performance indicators reflect the collective results of the efforts of the NRC and the nuclear industry. Certain trends in industry performance indicate that the NRC is succeeding in its mission of protecting the public health and safety.
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OCENSEE PERFOR'MANCE INDICATORS.-
. FOR OPERATING NUCLEAR POWER PI, ANTS AnnualIndustry Averages, CY 1985-1994 AUTOMATIC SCRAMS WHILE CRITICAL SAFETY SYSTEM ACTUATIONS 1,.
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SIGNIFICANT EVENTS SAFETY SYSTEM FAILURES l
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'92 13 14' EQUlPMENT-FORCED OUTAGE RATE FORCED OUTAGE RATE (%)
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'92 13 14 COLLECTIVE RADIATION EXPOSURE hsoo -
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- Based on annual projections from first E 300 9 months of calendar year 1994, zoo
- Based on annual projections from first 6 months of calendar year 1994.
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There are seven NRC-approved indicators of industry safety performance: automatic scrams, safety system actuations, significant events, safety system failures, forced outage rate, equipment-forced outage rate, and collective radiation exposure (see Figure 4).
These indicators, as a set, have demonstrated a correlation with licensee performance.
The general trend of the set of industry safety performance indicators has been toward improved industry performance. Although the overall trend has leveled off in recent years, several of the indicators show continued improvement.
- . Ucens.frigActions'forOperistirigPOWN..,,.neacte,rsi y '.4 Either routine activity or unexpected events at a nuclear facility can result in a need for licensing actions by the NRC. During FY 1994, the NRC completed approximately 1,520 licensing actions for operating power reactors. Over 98 percent of the actions in inventory are plant-specific amendments requested by licensees, and the rest are the result of I
NRC-imposed requirements. The total licensing action inventory has increased slightly from 1,187 licensing actions at the end of FY 1993 to 1,293 under review at the end of FY 1994.
The NRC has established goals to control the size and age of the licensing action inven-tory. These goals call for 80 percent of these actions to be 1 year old or less,95 percent to be 2 years old or less, and all actions to be no more than 3 years old. Figure 5 shows the age of licensing actions in the inventory at the end of FY 1994.
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1 1 AGE OF UCENSING ACT14NSE j 1000 GOALS - FY 1994 Age (Years):
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72%
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<1 Year Old 12 Years Old 2-3 Years Old
>3 Years Old AGE l M 1992 51993 131994 l 7
Although the NRC has not reached its goals for aging, steady progress has been real-ized in reducing the number of older actions in the licensing action inventory. From 1989 to 1994, the percentage of licensing actions more than 3 years old dropped from 23 per-cent to less than 2 percent. Improvement has been made in the other categories as well. At the end of FY 1994, nearly 73 percent of the licensing actions were 1 year old or less (compared to less than 70 percent at the end of FY 1993) and more than 98 percent were 3 years old or less. As Figure 6 shows, the median age of the licensing action inventory has also decreased over time.
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LICENSING ACTIONS l
Median Age of Inventory 14 12 10 s
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h 1990 1991 1992 1993 1994 FISCAL YEAR GM M l
Three essential components of NRC's reactor program are the inspection of licensed reactor facilities to determine the state of reactor safety, to confirm that operations are in compliance with the provisions of the license, and to ascertain whether other conditions exist with safety implications serious enough to warrant corrective action. The NRC's reactor inspection program encompasses all applicant and licensee activity completed in connection with the construction and operation of nuclear facilities. Most inspections are 8
l dedicated to operations at the 109 plants licensed to operate, while a few inspections are of facilities with construction permits.
The NRC assigns at least two resident inspectors to each operating reactor site. The res-ident inspectors concentrate on day-to-day licensee operations, followup of events, licensee management, and staff performance. Region-based and NRC headquarters inspectors supplement the activities carried out by resident inspectors through a variety of program and technical inspections that afford an indepth look at licensee operations.
In FY 1994, the overall direct inspection effort exceeded the planned hours for inspection at operating reactors. Figure 7 shows the use of allocated inspection resources in direct inspection activities by resident and region-based staff. Direct inspection effort in FY 1994 came to approximately 308,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> per plant, which is 5 percent more than the hours planned.
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. DIRECTJN$PECTION-ACTWITY Actual vs. Planned 350 9
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b 50 UJ E5 0-1991 1992 1993 1994 FISCAL YEAR l G Actual M Planned l 1
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Nuclear Materidis an,d f.ildblearMaste Prdgram'......
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l The principal goals of the nuclear materials and nuclear waste program are the following:
m ensure that current and future uses and transportation of nucl ear and radioactive materials are safe and have adequate safeguards; a ensure that high-level and low-level nuclear waste and uranium mill tailings are safe-ly managed and disposed of; and a ensure that facilities no longer in operation are adequately and safely monitored or
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decommissioned.
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Approximately 22,000 licenses are issued for medical, academic, and industrial uses of nuclear material. About 30 percent of these materiallicenses are administered by the i
NRC. The remaining licenses are administered by the 29 States that, through a formal l
agreement with the NRC, have assumed regulatory responsibility over byproduct and i
source materials and small quantities of special nuclear material.
The NRC also licenses and inspects all commercial nuclear fuel facilities involved in the processing and fabrication of uranium ore into reactor fuel. Nine major facilities were licensed to operate in eight States at the end of FY 1994. Additionally, the NRC has the licensing and regulatory responsibility for ensuring the safe management and disposal of low-level and high-level radioactive waste.
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NRC's timeliness goal is to complete 80 percent of new applications and license amend-ments for byproduct materials licenses within 90 calendar days of their receipt, and the remainder within 180 calendar days. The goal for renewal applications is to complete 80 percent within 180 calendar days and the remainder within one year, Backlogged reviews are those reviews which exceed the timeliness goal.
During FY 1994, the NRC completed about 4,800 licensing actions for materials users, which were comprised of approximately 350 new licenses,3,360 amendments to licens-es, and 1,110 license renewals. This number of completions exceeded NRC's budgeted projections by 8 percent. At the end of FY 1994, the backlog consisted of 318 reviews.
For reviews completed during each of the last five years, the chart below shows the aver-age time required to complete new, amendment, and renewal licenses for byproduct l
materials.
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$180 80% of Completions 5160
$140 I'*
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g 1990 1991 1992 1993 1994 Average No. of Days to Complete New Applications, Amendments and Renewals y800 - 20% of Completions
$700 w
1990 1991 1992 1993 1994 Average No. of Days to Complete New Applications, Amendments and Renewals l E New Apps. & Amendmts. E nenewais l Note: This chart contains revised data for 1990 through 1993. During the 1994 update of this chart, NRC discovered an error in its computer program which had caused a miscalculation in prior years' timeliness reports; the charts above reflect the correction for all years.
Two rulemakings, the 1990 decommissioning rule and the 1991 100-percent fee recovery rule, took place in the five-year period which had significant impact on the average num-ber of days to complete reviews. The 1991 100-percent fee recovery rule brought about an unexpectedly high number of requests from licensees to terminate licenses and to combine licenses in order to reduce their fees. These license amendment requests were far more than originally forecasted. This resulted in an increase in the average number of days to complete reviews in FY 1991-1994 and an accumulation of backlogged licensing work (see materials licensing reviews backlog chart below), particularly in FY 1991 and 1992.
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J MATERIALS LICENSING REVIEWS Backlog 500 g
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$ 300 2
1990 1991 1992 1993 1994 FISCAL YEAR l 88 New Applicatione end Amendmente B Renews!s l The materials licensing reviews backlog chart presents a different perspective on NRC's timeliness in processing licensing actions. It measures the number of actions to be completed at the end of each fiscal year that exceed the timeliness goals expressed above. This chart shows that significant reductions have been made in the number of backlogged reviews, particularly license renewals, in the past two years.
This is consistent with the increases shown in the materials licensing reviews timeli-ness chart, with each reflecting the completion of many previously backlogged old reviews. (As the old inventory is cleared out, the backlog drops, but the average time to complete reviews rises.)
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s Materials inspections The NRC completed about 2,200 inspections of materials facilities in FY 1994, which exceeded the planned number of inspections by 4 percent (see Figure 10). Over the last 4 years, there has been a decline in the number of materials licensees; therefore, fewer materials inspections are planned and performed.
Figure 10
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1990 1991 1992 1993 1994 FISCAL YEAR l M Planned M Performed l 13
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PRINCIPAL S TAT E M E N T S
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Statement of Financial Position as of September 30,1994 and 1993 Restated ASSETS 1994 1993 Entity Assets:
Intragovernmental assets:
Fund balances w,a Treasury (Note 2)
$262,192,247
$263,571,022 Accounts receivable, net (Note 3) 1,020,364 1,166,535 Advances and prepayments (Note 4) 2,672,160 1,338,200 Governmental assets:
Accounts receivable, net (Note 3) 63,918,751 68,198,741 Advances and prepayments (Note 4) 860,126 703,908 4'
inventory no' i. eld for sale 630,517 726,603 Property ar.d equipment, not (Note 5) 40,487,377 35,223,653 Tots; $6f', sesets 371,781,542 370,928,662 Non-Entity A.T. ias:
Governmental assets:
Accounts receivable, net (Note 3) 856,102 53,123 Total non-entity assets 856,102 53,123 Total assets
$372,637,644
$370,981,785 The accompanying notes to the principal statements are an integral part of this statement.
17 s
Statement of Financial Position (Continued) as of September 30,1994 and 1993 Restated LIABILITIES 1994 1993 Liabilities Covered by Budgetary Resources:
Intragovernmental liabilities:
Accounts payable and advances (Note 6)
$14,636,020
$ 11,078,625 Other intragovernmental liabilities (Note 8) 64,711,721 67,881,893 Governmental liabilities:
Accounts payable (Note 6) 25,513,612 22,919,867 Other govemmental Liabilities (Note 8) 12,898,358 12,326,007 Accnjed payroll and benefits (Note 7) 9,683,599 8,689,218 Total liabilities covered by budgetary resources 127,443,310 122,895,61_0_
Liabilities not Covered by Budgetary Resources:
Governmental liabilities:
Other governmental liabilities (Note 9) 25,653,480 25,632,700 Total liabilities not covered by budgetary resources 25,653,480 25,632,700 Total liabilities
_153,09_6,790 148,528,310 NET POSITION Balances (Note 11):
Unexpended appropriations 204,076,440 212,135,920 Invested capital 41,117,894 35,950,255 Future funding requirements (25,653,480)
(25,632,700)
Total net position 219,540,854 222,453,475
)
Total liabilities
~ ~
l I
and net position
$372,637,644
$370,981,785 The accompanying notes to the principal statements are an integral part of this statement.
18
i 1
-l Statement of Operations and Changes in Net Position for the years ended September 30,1994 and 1993 Restated REVENUES AND FINANCING SOURCE 1994 1993 Appropriated capital used (Note 12)
$ 48,228,503
$ (5,783,094)
Other revenues and financing sources (Note 13) 502,577,448 518,189,204 Excess current year receipts of fees over billings 4,092,192 (5,076,233)
Less: Receipts transferred to Treasury or other agencies (4,433,637)
(4,896,841)
Total revenues and financing sources 550,464,506 502,433,036 EXPENSES Program Expenses (Note 14}
j Salaries and Expenses 527,572,456 488,478,284 Office of Inspector General 4,673,069 4,657,438 Total program expenses (Note 14) 532,245,5,2_5 493,135,722, l
Depreciation (Note 5) 16,541,573 10,500,724 Interest 18,458 20,868 f
Other expenses (Note 15) 1,679,729 543,030 Total expenses 550,485,285 504,200,344 Excess (shortage) of revenues and financing sources over total expenses (Note 17)
$ (20,779)
$ (1,767,308)
Net position, beginning balance 222,453,475 182,711,392 Excess (shortage) of revenues and financing sources over total expenses (20,779)
(1,767,308) l Plus (minus) non-operating changes (Note 19; (2,891,842) 41,509,391 j
Net position, ending balance
$219,540,854
$222,453,475 The accompanying notes to the principal statements are an integral part ot this statement.
19
('
/
=
Statement of Cash Flows for the years ended September 30,1994 and 1993 CASH PROVIDED (USED)
Restated BY OPERATING ACTIVITIES 1994 1993 Cash Provided:
Fees for licensing and inspection and other services (Note 12) -
$ 499,575,640
$ 507,072,406 Other operating cash provided 14,998,142 11,079,224 Total cash provided 514,573,782 518,151,630 Cash Used:
Personnel services and benefits (260,441,540)
(254,512,623)
Travel and transportation (17,458,136)
(17,196,680)
Rent, communications, and utilities (22,668,680)
(24,258,337)
Printing and reproduction (1,921,611)
(1,946,020)
Other contractual services (216,426,480)
(177,059,057)
Supplies and materials (15,431,525)
(7,655,730)
Insurance claims and indemnities (40,416)
(44,030)
Grants, subsidies, and contributions (1,110,957)
(1,570,106)
Other operat;ng cash used (5,940,601)
(4,429,149)
Total cash used (541,439,946)
(488,671,732)
Net cash provided (used) by operating activities (26,866,164).
29,479,898 CASH PROVIDED (USED) BY INVESTING ACTIVITIES Purchase of property and equipment (19,763,758)
(10,973,642}
Net cash provided (used) by investing activities (19,763,75_8)
(10,973,642)
The accompanying notes to the principal statements are an integral part of this statement.
20
Statement of Cash Flows (Continued) for the years ended September 30,1994 and 1993 CASH PROVIDED (USED) BY Restated FINANCING ACTIVITIES 1994 1993 Appropriations
$ 40,838,847
$ 32,927,594 Add: Transfers of cash from others 4,412,300 2,798,700 Net appropriations 45,251,147 35,726,294 Net cash provided (used) by financing activities 45,251,147 35,726,294 l
Net cash provided (used) by operating, non-operating and financing activities (1,378,775) 54,232,550 Fund balances with Treasury, beginning 263,571,022 209,338,472 Fund balances with Treasury, ending
$ 262,p2,247
$_263g1,022 RECONCILIATION OF EXCESS (SHORTAGE) OF REVENUES FINANCING SOURCES OVER TOTAL EXPENSES:
Excess (shortage) of revenue and financing sources over total expenses (20,779)
(1,767,308)
Adjustments to reconcile shortage of revenues and financing sources over total expenses to net cash provided by operating activities:
Appropriated capital used (48,228,503) 5,783,095 Decrease (increase) in accounts receivable 76,513 (139,749)
Decrease (increase) in other assets (1,394,091) 645,540 Increase (decrease) in accounts payable 1,566,781 9,885,274 The accompanying notes to the principal statements are an integral part of this statement.
21
Statement of Cash Flows (Continued) for the years ended-September 30,1994 and 1993 Restated 1994 1993 Adjustments to reconcile shortage of revenues and financing sources i
over total expenses to net cash provided by operating activities:
increase (decrease) in other liabilities
$ 6,151,142
$ 2,743,940 Depreciation and I
amortization 16,541,573 10,500,724 Other unfunded expenses 20,779 1,767,308 Other adjustments (1,579,579) 61,074 Total adjustments (26,845,385) 31,247,206 Net Cash Provided (Used) by Operating Activities
$(2S,866,164)
$29,479,898 Supplemental Schedule of Financing and Investing Activity:
Property and equipment acquired under capital lease obligations S 894,856
$ 292,181 The accompanying notes to the principal statements are an integral part of this statement.
22
Statement of Budget and Actual Expenses for the years ended September 30,1994 and 1993 Actual Actual 1993 Budget 1994 Restated Obilgations Program Name Resources Direct Reimbursements Expenses Expenses Salaries and expenses
$609,557,908
$541,781,092
$3,368,990
$545,812.216
$499,542,906 Office of Inspector General 5,293,222_
4,834,397 13,110
_ 4.673,069 4,657,438 Total
$614,851,130
$546.615,489
$3,382.100
$550,485,285
$504,200,344 Budget Reconciliation:
Total expenses
$550.485.285
$504,200,344 Add:
Capital acquisitions 23,723,975 12,236,064 Other expended budget authorrty (2,011,258)
Less: Expenses not covered by available budgetary resources:
Depreciation (16,541,573)
(10,500,724)
Unfunded annual leave expense 66,910 (1,601,587)
Unfunded workers' compensation expense (87,689)
(165,721)
Accrued expenditures 555,635,650 504,168,376 Less reimbursements (2,660,362)
(1,143,725)
Accrued expenditures, direct
$552,975,288 $503,024,651 The accornpanying notes to the principal statements are an integral part of this statement.
23 l
Notes to Principal Statements Note 1. Summary of Significant Accounting Policies A. Basis of Presentation These principal statements were prepared to report the financial position and results of operations of the U.S. Nuclear Regulatory Commission (NRC) as required by the Chief Financial Officers Act of 1990. The principal statements were prepared from the books and records of NRC in accordance with the form and content for entity financial state-ments specified by the Office of Management and Budget (OMB) in OMB Bulletin 94-01 i
and NRC accounting policies summarized in this note. These statements are therefore different from the financial reports, also prepared by the NRC pursuant to OMB directives, which are used to monitor and control NRC's use of budgetary resources, B. Reporting Entity / Program Name The NRC is an independent agency of the Federal Govemment created by the Energy Reorganization Act of 1974. Its purposes are defined by the Energy Reorganization Act of 1974, as amended, and the Atomic Energy Act of 1954, as amended. The NRC was created by the U.S. Congress to ensure adequate protection of the public health and safety, common defense and security, and the environment in the civilian use of nuclear materials in the United States.
The NRC has two appropriations:
u 31X0200 - Salaries and Expenses I
e 31X0300 - Office of Inspector General The NRC appropriation, PL 103-126 and 102-377, respectively, includes approximately
$22 million and $21 million for Fiscal Year 1994 and 1993, respectively, of funds trans-ferred from the Department of Energy, Nuclear Waste Fund to NRC in accordance with the provisions of PL 103-126 and PL 102-377 respectively.
in addition, approximately $4.4 million and $2.8 million of the appropriation received by the General Services Administration (GSA), was transferred to the NRC for the operation and repair of certain buildings occupied by the NRC for Fiscal Years 1994 and 1993, respectively. Also, $5.5 million of the appropriation received by the U.S. Agency for International Development was transferred for the Nuclear Safety Assistance Program in Russia and the Ukraine which is under the control of the NRC.
The accompanying financial statements of the NRC include the accounts of all funds under NRC control.
C. Budgets and Budgetary Accounting For the past 20 years, Congress has adopted no-year appropriations which are available for obligation by the NRC until expended. The Omnibus Budget Reconciliation Act (OBRA) of 1990 requires the NRC to recover approximately 100 percent of its new bud-get authority, less the amount appropriated from Nuclear Waste Fund, by assessing fees.
At the end of the fiscal year, NRC's appropriations are reduced by the amount of rev-enues collected during the fiscal year.
l 24
b Notes to Principal Statements (Continued)
D, Basis of Accounting Transactions are recorded on both an accrual accounting basis and on a budgetary basis.
j Under the accrual method, revenues are recognized when eamed and expenses are rec-ognized when a liability is incurred, without regard to receipt or payment of cash.
Budgetary accounting facilitates compliance with legal constraints and controls over the l
use of federal funds.
- E. Revenues and Other Financing Sources Licensing fees and fees for inspections and other services assessed in accordance with OBRA are recognized as other financing sources when camed.
For reporting purposes, appropriations are recognized as revenues (appropriated capital used) at the time expenses are accrued. At the end of the fiscal year, appropriations rec-ognized are reduced by the amount of assessed fees collected during the fiscal year.
Appropriations expended for property and equipment are recognized as expenses when 4
th) asset is consumed in operations (depreciation). Appropriated capital used does not include appropriations used to purchase capital items or expenses incurred but not yet funded by Congress, such as workers' compensation benefits and annual leave expenses.
The differences between the accrual basis recognition of appropriations expensed and the budgetary basis recognition of outlays are presented in the Statement of Budget and Actual Expenses.
Miscellaneous receipts collected by the NRC are not available to the NRC for obligation or expenditure. These receipts must be transferred to the U.S. Treasury when collected.
F.
Funds with the U.S. Treasury and Cash The NRC cash receipts and disbursements are processed by the U.S. Treasury. Funds with the U.S. Treasury and cash are primarily appropriated funds that are available to pay current liabilities and to finance authorized purchase commitments. Cash balances held outside the U.S. Treasury are not material.
G. Accounts Receivable, Net of Allowance The amounts due for receivables are stated net of an allowance for uncollectible accounts. The estimate of the allowance is based on an analysis of the outstanding bal-ances and the application of estimated uncollectible percentages to categories of aged receivab'e balances.
H. Advances The NRC makes cash payments to other Federal agencies, employees, grantees, and
- contractors to provide for future NRC program expenditures. These advance payments tre recorded as assets which are reduced when repor:s of expenditures are received by tha NRC or when accruals of cost estimates are made by the NRC.
25
Notes to Principal Statements (Continued)
L Property and Equipment The land and buildings in which the NRC operates are provided by the GSA, which charges the NRC a standard level user's charge (SLUC) that approximates the commer-cial rental rates for similar properties.
Equipment with a cost greater than $5,000 per unit and a useful life of two years or more and software having a minimum value of $25,000 and a useful life of two years or more are capitalized at cost and depreciated. Other equipment and software are expensed.
when purchased. Normal repairs and maintenance are charged to expense as incurred.
Property and equipment is depreciated using the straight-line method over useful lives which range from 5 to 8 years.
J. Inventory Inventories are comprised of unissued supplies that will be consumed through normal operations. Inventory supply is valued at current replacement cost.
K. Prepaid and Deferred Charges Payments in advance of the receipt of goods and services are recorded as prepaid charges at the time of prepayment and are recognized as expenditures / expenses when the related goods and services are received.
L. Liabilities f
}
Liabilities represent the amount of monies or other resources that are likely to be paid by the NRC as the result of a transaction or event that has already occurred. However, no liability can be paid by the NRC absent an appropriation. Liabilities for which an appropri-ation has not been enacted and for which there is no certainty that an appropriation will be enacted are classified as liabilities not covered by budgetary resources. Also, liabilities of the NRC arising from sources other than contracts can be abrogated by the Government acting in its sovereign capacity.
t M. Contingenc!ss NRC is a party to various administrative proceedings, legal actions, environmental suits, and claims brought by or against it. Based on the advice of legal counsel conceming contingencies, it is the opinion of NRC management that the ultimate resolution of these proceedings, actions, suits, and claims will not materially affect the financial position or results of operations of the NRC.
26
h Notes to Principal Statements (Continued)
N. 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 current or prior year appropriations are not available to fund annual leave earned but not taken, funding will be obtained from future appropria-tions and assessments.
Sick leave and other types of nonvested leave are expensed as taken.
O. Retirement Plans NRC employees hired after December 31,1983 are automatically covered by the Federal Employees' Retirement System (FERS), which was implemented on January 1,1987.
Employees hired prior to that date could elect to join FERS or to remain in the Civil Service Retirement System (CSRS). Approximately 60 percent of the NRC employees belong to CSRS and 40 percent belong to FERS. For employees in FERS, the NRC withholds.80 percent of base pay eamings in addition to Federal Insurance Contribution Act (FICA) and matches the withholding with a 12.9 percent contribution. The sum is trans-ferred to the Federal Employees Retirement Fund. For employees covered by CSRS, the NRC withholds 7 pcrcent of their base pay eamings. This withholding is matched by the NRC and the sum of the withholding and the match is transferred to the CSRS.
On April 1,1987, the Federal Government initiated the Thrift Savings Plan (TSP) which is a retirement savings and investment plan for employees covered by either FERS or l
CSRS. For employees covered by FERS, the NRC automatically contributes 1 percent of base pay to their account and matches contributions up to an additional 4 percent. The maximum percentage that an employee participating in FERS may contribute is 10 per-cent of base pay. Employees covered by CSRS may contribute up to 5 percent of their base pay, but there is no NRC matching of the contribution. The maximum amount that either FERS or CSRS employees may contribute to the plan in a calendar year is $9,240.
The sum of the employee and the NRC contributions is transferred to the Federal Retirement Thrift Investment Board.
The NRC does not report on its financial statements FERS and CSRS assets, accumulat-ed plan benefits, or unfunded liabilities, if any, applicable to its employees. Reporting such amounts is the responsibifty of the Office of Personnel Management.
P.
Net Position NRC's net position comprises the following components:
- 1. Unexpended appropriations include the undelivered orders and unobligated balances of NRC's funds. All appropriations remain available for obligation until expended.
- 2. Invested capital represents U.S. Govemment resources invested in NRC's property and equipment and inventory not held for sale. Increases to invested capital are recorded when assets are acquired with direct appropriations, and decreases are recorded as a result of the depreciation, disposition of capital assets, or consumption of inventory.
27
Notes to Principal Statements (Continued)
- 3. Future funding requirements represent (a) accumulated annualleave eamed but not taken as of the financial statement date and (b) accrued workers' compensation. The i
expense for these accruals is not funded from current appropriations but rather will be funded from future appropriations and assessments.
i O. Department of Energy (DOE) Charges Financial transactions between the DOE and NRC are fully automated through th9 U.S.
Treasury's On-Line Payment and Collection (OPAC) System. The OPAC System c!!cws the DOE to collect amounts due from the NRC directly from NRC's account at Treasury for goods and/or services rendered. Project manager verification of the goods and/or ser-vices received is subsequently accomplished through a system generated voucher approval system. The vouchers are returned to the Division of Accounting and Finance -
documenting that the charges have been accepted. Annually, the NRC makes approxi-mately $107 million in payments to the DOE in this manner for research conducted by the DOE National Laboratories.
R. Reclassifications Certain amounts for 1993 have been reclassified to conform with the 1994 presentation.
Note 2. Fund Balances with Treasury Fund balances with Treasury consist of the following amounts as of September 30,1994 and 1993:
1994 1993 Appropriated funds:
Obligated
$195,056,128
$209,048,481 Unobligated
_ 54,238,253 43,000,283_
249,294,381 252,048,764 Other fund types 12,897,866 11,522,258
$262,192,247
$263,571,022 2 =
U.S. Government cash is handled on an overall consolidated basis by Treasury. " Funds with Treasury" represents the NRC's right to draw on Treasury for allowable expenditures.
All amounts are available to the NRC for current use. The obligated and unobligated bal-ances exclude amounts related to unfilled customers orders.
i 28
Notes to Principal Statements (Continued)
Note 3. Accounts Receivable, Net Entity Assets:
Intragovernmental accounts receivable consist primarily of receivables and reimburse -
monts due from other Federal agencies ($1,020,364 and $1,166,535 at September 30.
1994 and 1993, respectively).
Govemmental accounts receivable is composed of the following amounts as of September 30,1994 and 1993:
1994 1993 Materials and facilities fees - billed
$17,791,262
$19,907,913 Materials and facilities l
fees - unbilled 51,215,363 54,073,882 Other
_j94,504 143,805 Total accounts receivable-non-Federal 69,201,129 74,125,600 Less: Allowance for uncollectible accounts (5,282,378)
(5,926,859)
Accounts receivable, net
$63,918 751
$68,198,741_
Govemmental accounts receivable represents primarily amounts due for fees assessed related to licens,ng and inspections of nuclear facilities and radioactive materials and other services. In the year collected, the amounts will be used to offset NRC's appropriations.
Non-Entity Assets:
Intragovernmental accounts receivable, net represents miscellaneous amounts due from the public ($856,102 and $53,123 at September 30,1994 and 1993, respectively), which when collected must be transferred to the Treasury.
NRC's methodology to estimate the allowance for uncollectible accounts is based on an analysis of the outstanding balances and the application of estimated uncollectible per-centages to categories of aged receivable balances.
1 1
l J
i i
2oJ
Notes to Principal Statements (Continued)
Note 4. Advances and Prepayments Advances and prepayments as of September 30,1994 and 1993, consist primarily of l
the following:_
)
i 1994 1993 Entity Assets intragovernmental:
Advances -
other Federal agencies
$2,672,160
$1,338,200
.7 _.. -.
._ 7 Governmental:
Travel advances
$ 852,933
$ 698,908 Advances - other 7,193
. _ _.5,000
.. $_ 860,126
$ 703.,908 Advances and prepayments are recorded as assets until receipt of the goods or services involved or until contract terms are met. When goods or services are received or contract terms are met, the advance or prepayment is reduced and the expense or acquired asset is recognized. There were no outstanding prepayments as of September 30,1994 and 1993.
Note 5. Property and Equipment, Net i
Property and equipment, net consists of the following as of September 30,1994 l
and 1993:
1 1994 1993 Fixed Assets Service Acquisition Accumulated Net Book Restated Net
_ Class Years Value Depreciation Value Book Value Equipment 5-8
$29.865,523
$16,784,956 $13,080,567
$16,300,264 ADP software 5
43,817,482 32,430,670 11,386,812 15,274,519 Leasehold improvements 5
15,918,683 1,512,689 14,405,994 3,553,870 l
ADP software under development 1,614,004 0
1,614,004 95,000 Total
.$91,215,692
$50,728,315 $40,487,377
$35,223,653 The straight-line depreciation method is used for all classes of fixed assets. Depreciation expense for Fiscal Years 1994 and 1993 was $16,541,573 and $10,500,724, respectively.
30
i l
Notes to Principal Statements (Continued) in 1994, the NRC revised the useful life of the majority of its equipment to better reflect NRC's experience which has shown that the majority of equipment had a useful life of five i
to eight years. In addition, the NRC reduced the salvage value on most of its equipment to one dollar. The se.lvage value was revised because the majority of the equipment is disposed of by the U.S. General Services Administration (GSA). Because GSA retains the sale proceeds for all dispositions, NRC's interest in the property is transferred to GSA
.at disposal, As a result of revising the service lives and salvage values of its equipment, the NRC recalculated the depreciation on its equipment, resulting in $4.95 million of additional depreciation expense in 199-4. Had the NRC not revised the useful lives of its equipment, the total depreciation expense in 1994 would have been approximately $11.59 million.
The remaining book value of the equipment will be depreciated over the remaining ser-4 vice lives of the equipment. The additional depreciation will be approximately $1.65 mil-lion in FY95, $1.25 million in FY96, $.75 milion in FY97 and $.42 million in FY98.
The land and buildings occupied by the NRC are provided by the GSA. For Fiscal Years 1994 and 1993, the GSA charged the NRC $18,594,586 and $17,579,350, respectively, for the use of these facilities based on SLUC which is to approximate the commercial rates for similar properties.
Note 6. Accounts Payable and Advances i
Accounts payable consist of the following as of September 30,1994 and 1993:
1994 1993 Intragovernmental:
Accounts payablo Department of Energy
$ 8,072,650
$10,437,436 Other Federal agencies
_6,17_4,148
_ 615,500
)
14,246,798 11,052,936 Advances
_389,222
__ 25,689
$14,636,020
$11,078,625 Govemmental:
Account payable Vendor payables
$24,100,634
$21,706,759 Contract holdbacks 1,412,978
_ 1_,213,1_ 8 0
1
$25,513 612
$22,919,867 The account payables are all current. Current account payables represent amounts which are expected to be paid within the fiscal year following the reporting date.
31
Notes to Principal Statements (Continued)
Note 7. Accrued Payroll and Benefits Accrued payroll and benefits as of September 30,1994 and 1993 consists of:
1994 1993 Accrued payroll
$8,200,211
$7,386,062 Accrued benefits
_1,103,388
__1,303,156_
$9,683,599
$8,689,21.8 Accrued payroll and benefits represent wages and benefits which have been camed but not paid as of the financial statements' date.
Note 8. Other Liabilities Covered by Budgetary Resources Other liabilities as of September 30,1994 and 1993 include:
1994 1993 Governmental:
Liability for deposit funds
$12,897,866
$12,137,425 Advances from others 492
__. 88,582 1
$12,898,358
$12,326,007
(
mn=ur-
- = nr=
The liability for deposit funds consists of special fund advances from other govemments under cooperative research agreements and liabilities arising from payroll deductions and tax withholdings.
l 1994 1993 Intragovernmental:
Liability to offset net accounts receivable for fees assessed
$63,855,619
$67,828,770 Liability to offset net miscellaneous accounts receivable
_ 856,102
.53,123
$64,711,721_
__$_67,881,893__
The liability to offset the net accounts receivable for fees assessed represents amounts which, when collected, will be used to offset NRC's appropriations in the year collected.
The liability to offset net miscellaneous accounts receivable represents amounts which will be reverted to the U.S. Treasury when collected.
1.
I 32
Notes to Principal Statements (Continued) i Other liabilities are current. Current liabilities represent amounts which are expected to be paid within the fiscal year following the reporting date.
Note 9. Other Liabilities Not Covered by Budgetary Resources Unfunded liabilities consist of the following as of September 30,1994 and 1993:
1994 1993 Governmental:
Accrued annual leave
$24,423,350
$24,490,259 Accrued workers' compensation 1..,230,130
_ 1,142 441
$25,653 48_0_
$25,632,700 Accrued annual leave represents the amount of annual leave earned by NRC employees but not yet taken. Accrued workers' compensation represents Federal Employees Compensation Act (FECA) benefits paid by the Department of Labor on NRC's behalf which had not been billed to or paid by the NRC as of September 30,1994 and 1993. The actuarial amounts for future disability benefits are not included in the principal statements.
Accrued annual leave and accrued workers' compensation are not funded by current or prior years' appropriations and assessments. Funding will be provided from future years' appropriations and assessments (see Note 11).
1 Note 10. Intragovernmental Activities The NRC reporting entity's financial activities interact with and are dependent upon those I
of the Federal Government as a whole. Other Federal agencies make financial decisions and report certain financial matters on behalf of all Federal agencies. The practice of
.j having Federal agencies record or report only those govemment-wide financial matters
' j for which they are directly responsible is consistent with generally accepted accounting principles for Federal agencies which seek to identify financial matters to the department or agency that has been granted budget authority and resources to manage them.
Activities which are parformed or reported by other Federal agencies in which the NRC is indirectly involved are as follows:
)
m The NRC funds a portion of its employee pension benefits under the CSRS and the FERS but does not disclose actuarial data with respect to accumulated plan benefits, plan assets, or the unfunded pension liability relative to its employees. Reporting of these amounts is the responsibility of the Office of Personnel Management.
In addition, the NRC makes contributions to the TSP on behalf of its employees. The NRC does not have control over the plan's assets. The TSP is administered by the National Finance Center of the Department of Agriculture.
33
Notes to Principal Statements (Continued) m Certain legal matters to which the NRC may be a named party are administered, and in some cases, litigated by other Federal agencies. Amounts paid under any deci-sion, settlement, or award pertaining thereto are generally funded through the
- Treasury, in most cases, claims (including personal injury claims) are administered and resolved by the Department of Justice and any amounts necessary for resolution are obtained from a special fund maintained by the Treasury. Any legal actions for workers' com-pensation claims brought by NRC employees fall under FECA, which is administered by the Employment Standards Administration of the U.S. Department of Labor. The cost of administering, litigating, and settling these legal matters has not been allocat-ed to individual Federal agencies, a Interest on borrowings of the U.S. Treasury is not included as a cost to NRC's pro-grams and is not included in the accompanying financial statements.
NOTE 11. Net Position l
The net position consists of the following as of September 30,1994 and September 301993:
Restated 1994 1993 Unexpended appropriations:
Unobligated
$ 56,926,694
. $ 45,094,881 Undelivered orders
_147,1_49.,74_6 167.,041,039 204,076,440 212,135,920 invested capital 41,117,894 35,950,255 Future funding requirements (Note 9)
(25,653,480)
(25,632 700)
$219,540,854
$222,453175 Unexpended appropriations include (1) unobligated appropriation balances and (2) unde-livered orders, which are amounts which have been obligated but not yet expended. The unobligated appropriations balance does not include $7,929,695 and $8,581902 in unfilled customer orders - unobligated as of September 30,1994 and 1993 respectively.
The undelivered orders balance does not include $2,688,440 and $2,094,599 in unfilled customer orders - obligated as of September 30,1994 and 1993, respectively.
Invested capital represents the net investment of the U.S. Govemment appropriations expended for NRC's capitalized property, equipment and supplies inventory.
Future funding requirements represent the amount of future funding needed to pay the accrued expenses as of September 30,1994 and 1993. These accruals are not funded from current or prior appropriations and assesments, but rather should be funded from future appropriations and assessments. Accordingly, future funding requirements have been recognized for those expenses that will be paid from future appropriations. See Note 9.
34 1
1 4
Notes to Principal Statements (Continued) l-
)
!1 Note 12. Appropriated Capital Used Appropriated capital used, a financing source, is recognized to the extent that appropriat-ed funds have been consumed less the amount collected from fees assessed for licens-ing, inspections, and other services. During Fiscal Years 1994 and 1993, $499,575,640
- and $507,072,406, respectively, were collected from fees assessed for licensing, inspec-tions and other services. OBRA requires the NRC to recover approximately 100 percent of its new budget authority, less the amount appropriated from the Nuclear Waste Fund,'
by assessing fees. NRC's appropriations are reduced at year end by the amount of rev-l cnues collected during the fiscal year.
- {
1994 1993 i
Appropriated funds consumed
$ 547,804,143
$ 501,289,312 l
Less: Collection from fees assessed (499,575,640)
(507,072,406) i
$ 48,22_8,503
$_(5,783_,094)
Other operating cash provided of $14,998,142 and $11,079,224 for September 30,1994 and 1993, respectively, represents miscellaneous receipts, reimbursements and deposit l
funds collected by NRC.
j Note 13. Other Revenues and Financing Sources i
Other revenues and financing sources for September 30,1994 and 1993 were:
I 1994 1993 Fees for licensing, inspection and other services
$494,600,470
$512,111,524 Other miscellaneous receipts 5,316,616 4,933,955 Appropriation reimbursements 2,660,362
_1,143,725
$502,577,448
$518,189,204 35
L
=
Notes to Principal Statements (Continued)
Note 14. Operating Expenses Operating expenses by object class are as follows:
1994 1993 Personnel services and benefits
$260,529,990
$256,549,438 Travel and transportation 17,472,506 18,967,539 Rent, communication and utilities 23,082,990 24,875,537 Printing and reproduction 1,903,611 1,954,204 Contractual services 214,987,115 179,520,784 Supplies and materials 13,115,150 9,317,682 Grants, subsidies and contributions 1,110,957 1,902,584 Insurance claims and indemnities 40,416 44,030 Other 2,790
_. _3,924
$532,245,525
$493,135,722 Note 15. Other Expenses Other expenses as of September 30,1994 and 1993 consist of:
1994 1993 Loss on disposal of property
.$1,679,729_.
__ S543,030 Note 16. Employee Retirement Plans Total NRC contributions for employee retirement plans for September 30,1994 and 1993 were as follows:
1994 1993 Civil Service Retirement System (CSRS)
$ 9,410,751
$ 9,436,303 Federal Employees' Retirement System (FERS) 9,844,803 9,302,092 Federal Insurance Contribution Act (FICA) 5,753,528 5,607,584 Thrift Savings Plan (TSP) 3,361,939 3,062,849
$28,371,021
$27,408,828 36
Notes to Principal Statements (Continued)
Data on the actuarial present value of accumulated benefits, assets available for benefits, cnd unfunded pension liability are maintained by other Federal agencies and are not allo-cated to individual departments and agencies.
Note 17. Shortage of Revenues and Financing Sources Over Total Expense The shortage of revenues and financing sources over total expenses represents expenses not covered by budgetary resources for the years ended September 30,1994 and 1993, and consists of:
1994 1993 Accrued annualleave
$(66,910)
$1,601,587 Accrued workers' compensation
_ 87,689
_165,72_1
$_20,779
$1,767,308 Expenses not covered by budgetary resources are not funded from current appropriations but are to be funded from future appropriations and assessments.
Note 18. Prior Period Adjustment Based on corrections to the property system made during Fiscal Year 1994, $2.96 million of additional property and equipment (Leasehold improvements) was identified and recorded. The impact of this adjustment on the " Statement of Operations and Changes in Net Position" was to (1) decrease appropriated capital used and total expenses by $2.96 million, and (2) increase invested capital by $2.96 million, representing the net book value of the previously unrecorded leasehold improvements.
Note 19. Non-Operating Changes Non-operating changes for September 30,1994 and 1993 consist of the following:
1994 1993 Change in unexpended appropriations
$(8,059,480)
$40,355,478 Change in invested capital 5,167,638 1,153,913
$(2,891,842)
.$41_,509,391 This section identifies additional program performance measures not previously dis-cussed in the Overview section.
37
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UNITED STATES j
NUCLEAR REGULATORY COMMISSION
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WASHINGTON, D.C. 20555 j
March 29,1995 i
OFFICE OF THE INSPECTOR GENERAL i
MEMORANDUM TO:
The Chairman Commissioner Rogers Commissioner de Planque 2)aJC %
FROM:
David C.' Williams Inspector General
SUBJECT:
RESULTS OF AUDIT OF U.S. NUCLEAR i
REGULATORY COMMISSION'S (NRC)
FISCAL YEAR 1994 FINANCIAL STATEMENTS j
Attached is our audit report of NRC's Fiscal Year 1994 financial statements. The report consists of five sections: a synopsis of the various individual audit reports which comprise the overall report; the independent auditor's report on principal state-ments; the principal statements; the independent auditor's report on intemal control structure; and the independent auditor's report on compliance with laws and regula-tions. Written comments on the sections covering the internal control structure and the compliance with laws and regulations were obtained from the Chief Financial Officer (CFO) and are included as an appendix to the contractor's reports. The CFO t
had no comments on the independent auditor's report on principal statements.
In the auditor's report on the NRC's Fiscal Year 1994 Principal Financial Statements, the contractor issued an unqualified opinion on the Statement of Financial Position,
- and the Statements of Operations, Cash Flows, and Budget and Actual Expenses.
in the Report on Intemal Control Structure, the contractor identified conditions that -
existed diring Fiscal Year 1994 which needed to be addressed. Consequently, the contractor made seven recommendations for improving the internal control structure.
In addition, an issue regarding the charging of fees to the appropriate licensee was reported in the Report on Compliance with Laws and Regulations. There were four recommendations regarding the action necessary to correct the reported condition.
in commenting on the subject reports, the CFO has indicated general agreement with the reports. We appreciate NRC staff's cooperation and continued interest in improv-ing financial management within NRC.
Attachments:
As Stated 41
u, ;. 33;.- _-.
independent. Audtorp' Report on PrincipafStatements:.....
We have audited the accompanying principal statements of financial position of the U.S.
Nuclear Regulatory Commission (NRC), as of September 30,1994 and 1993 and the related principal statements of operations and changes in net position, cash flows, and budget and actual expenses for the fiscal years then ended. These financial statements are the responsibility of NRC's management. Our responsibility is to express an opinion on these financial statements based on our audits.
Scope Except as discussed in the scope restriction paragraphs, we conducted our audits in accordance with generally accepted auditing standards, Government Auditina Standards.
issued by the Comptroller General of the United States, and Office of Management and Budget Bulletin 93-06, Audit Reauirements for Federal Financial Statements. Those stan-dards require that we plan and perform the audit to obtain reasonable assurance about whether the principal statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in these statements, including the notes thereto. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as, evaluating the overall statement presentation. We believe that our audits provide a reasonable basis for our opinion.
Accounting principles are currently being studied by the Federal Accounting Standards Advisory Board. Generally accepted accounting principles for Federal entities will be pro-mulgated by the Comptroller General and the Director of the Office of Management and Budget based on advice from the Board. In the interim, Federal agencies follow the j
applicable accounting standards contained in agency accounting policy, procedures man-l uals, and/or related guidance. The summary of significant accounting principles included l
in the Notes to Principal Statements, Note 1, describes the accounting principles used by the U.S. Nuclear Regulatory Come ission to prepare the principal statements.
f Matter of Emphasis The NRC principal statements include reimbursable expenses of the U.S. Department of Energy (DOE) National Laboratories. For fiscal year 1994 the Statement of Operations included $107 million of reimbursable expenses, which represent approximately 20% of the NRC's total expenses. Our 1994 audit included testing of these expenses and financ-ing sources for compliance with laws and regulations within NRC. The work placed with DOE are under the auspices of a Memorandum of Understanding between NRC and DOE. The examination of the DOE National Laboratories for compliance with laws and regulations is DOE's responsibility. This responsibility was further clarified by a memoran-dum of the General Accounting Office's Assistant General Counsel, dated March 6,1995, where he opined that ".. DOE's inability to assure that its contractors' costs [ National Laboratories) are legal and proper...does not compel a conclusion that the NRC has failed 42 t
h
J
,to comply with iaws and regulations." DOE also has the cognizant responsibility to F
assure audit resolution and should provide the results of its audits to NRC. (See the
' Independent Auditors' Reports on Internal Control Structure and on Compliance with
? Laws and Regulations.)
- Scope Restrictions Compliance with Laws and Regulations NRC's principal statements for the fiscal year ended September 30,1993 include $97.3 j
million of reimbursable expenses incurred by the Department of Energy (DOE), which l
represent approximately 20% of the agency's total expenses for the fiscal year. The funds were transferred under the provisions of the Energy Reorganization Act (P.L. 95-91) which are embodied in a Memorandum of Understanding (MOU) between NRC and DOE dated February 24,1978. The MOU establishes guidelines for program planning, imple-l mentation, control, funding, and management of NRC funds. The responsibility to design,
(
implement and evaluate the system of controls to assure compliance with laws and regu-4 lations rests with the Department of Energy.
]
Our assessment of compliance with laws and regulations, which could have a material 1
and direct effect on the NRC financial statements, did not provide for a review of DOE's extent of compliance with laws and regulations for the NRC funds DOE expended. Our assessment of compliance with laws and regulations over the funds transferred to DOE was limited to testing the controls maintained at NRC over the disbursing and recording of these fund transfers.-
Property, Plant and Equipment Because of the lack of complete historical accounting records on the pre-1992 property, plant and equipment with a net book value of $9,576,469, at September 30,1993, we were unable to form an opinion regarding the amounts reflected for Property, Plant and Equipment - net (stated at $ 35,223,653) on the Statement of Financial Position at September 30,1993, and the related amount of depreciation, $10,500,724, included on the Statement of Operations and Changes in Net Position at September 30,1993.
43
Opinion in our opinion, except for the effect on the' September 30,1993 principal statements of '
such adjustments, if any, as might have been determined to be necessary had we been able to examine sufficient evidence to satisfy ourselves as to the extent of compliance with laws and regulations for funds transferred to DOE, and the adjustments that may have been made to property, plant and equipment and depreciation expense at September 30,1993, the principal statements referred to in the first paragraph present
. fairly, in all material respects, the financial position of the U.S. Nuclear Regulatory Commission at September 30,1994 and 1993 and the results of its operations and changes in net position, the cash flows and the status of budget to actual expenses for the fiscal years then ended in conformity with the accounting principles described in Note 1.
l Our audits were conducted for the purpose of forming an opinion on the principal state-j ments described above. We did not review the financial information presented in man-j agement's overview. The informatio_n presented in the overview was reviewed by the 4
Inspector General. Accordingly, we do not express an opinion on this information.
4M% d /JmA San Diego, Califomia March 10,1995 l
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- - Independeht Auditors? Report on Intemal Control Structure -
We have audited the principal statements of the U.S. Nuclear Regulatory Commission (NRC), as of and for the year ended September 30,1994, and have issued our report thereon dated March 10,1995.
We conducted our audit in accordance with generally accepted auditing standards, Govemment Auditing Standards. issued by the Comptroller General of the United. States, and Office of Management and Budget Bulletin 93-06, Audit Reouirements for Federal Financial Statements. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the principal financial statements are free of material misstatements.
In planning and performing our audit of the principal financial statements of NRC for the year ended September 30,1994, we assessed the agency's intemal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the principal statements and to determine whether the intemal control structure meets the objectives of the preceding paragraph. This included obtaining an understanding of the intemal control policies and procedures and assessing the level of control risk relevant to all significant cycles, classes of transactions, or account balances; and for those signifi-cant control policies and procedures that have been properly designed and placed in operation, performing sufficient tests to provide reasonable assurance that the controls are effective and working as designed.
NRC management is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of intemal con"ol structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that obligations and costs are in compliance with applicable laws; funds, property and other assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and revenues and expenses applicable to agency operations are properly recorded and accounted for to permit the preparation of accounts and reliable financial and statistical reports to maintain account-ability over assets.
For the purpose of this report, we have classified NRC's significant intemal control struc-i ture cycles in the following categories:
f i
a Funds with U.S. Treasury, l
m Accounts receivable, m Fixed asset management, f
1 m Accounts payable and accrued liabilities, i
a Fee Revenue, a Expenses - Personnel, m Expenses - Non-personnel, 45
a Fund control, a Financial reporting, and a Performance Measures.
For all the internal control cycles listed above, except performance measures, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk. The review of the per-formance measures and the related assessment thereto was not included in the scope of our work as prescribed by the Office of Inspector General. The Inspector General's assessment and the related management letter will be issued under separate cover and is not part of this report. We considered NRC's Federal Managers' Financial Integrity Act (FMFIA) reports, as well as the Office of inspector General's (OlG) reports on financial matters and internal accounting control policies and procedures, in making our risk assessment.
We noted certain matters involving the intemal control structure and its operation that we considered reportab;e conditions urider standards established by the American Institute of Certified Public Accountants and Office of Management and Budget (OMB) Bulletin 93-
- 06. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judg-ment, could adversely affect the entity's ability to ensure that obligations and costs are in compliance with applicable laws; funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and revenues and expenses applicable to agency operations are properly recorded and cccounted for to permit the preparation of accounts and reliable financial and statistical reports in accordance with applicable accounting standards and to maintain accountability over assets.
Reportable Conditions The following matters involving the design or operation of the internal control structure warrant disclosure as reportable conditions in this report:
m Lack of DOE Audit Assurance a Billing Practices Need improvement a Fee Recovery System Lacks intemal Controls a Property System Should be Formalized The Independent Auditors' Report on the Intemal Control Structure for fiscal year (FY) 1993 contained audit follow-up on six reportable conditions relating to:
a General Accounting Controls at the General Ledger Level Not Maintained; i
m Interagency Responsibilities Over Reimbursement to Department of Energy (DOE)
Work Not Adequate; 46
p u Lack of Timely Billing of Fees a Capitalization Policies for Supplies Inventory, Leasehold improvements and Automated Data Processing (ADP) Software Were Nonexistent; e Accounting System Does Not Provide Object Class and Program Information; and l
m Accounting Record for Reversionary Interest in Property, Plant, Equipment Not Mainta;ned.
NRC implemented a number of corrective actions which have resolved elements of FY'92 and FY'93 reportable conditions, but has not fully implemented all actions necessary to completely eliminate the first five prior reportable conditions list above. The reportable conditions relating to lack of DOE audit assurance, timeliness of 10 CFR Part 170 fee billings, and the capitalization policies are included as current year reportable conditions, as well. A summary of the prior years' reportable conditions and the resolution status is discussed immediately following the current year reportable conditions.
Our consideration of the internal control structure would not necessarily disclose all mat-ters in the intemal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that could be considered to be material weaknesses. There are no reportable conditions which should be classifiable as material weaknesses. The reportable conditions are discussed in detail in the Reportable Conditions and Recommendations section immediately following this report.
Commento of the Chief Financial Officer The Chief Financial Officer (CFO) responded to our report findings in memoranda to the inspector General on March 24,1995. The responses included general comments on the report's findings, the status of prior findings as well as specific comments to the report's recommendations. The CFO's specific comments are included at the conclusion of our discussion of each reportable condition in this report and summary comments of the CFO are appended to this report in their entirety.
This report is intended solely for the use of NRC management and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report, which, upon acceptance by the NRC, is a matter of public record.
k Y-stro m b &
San Diego, California March 10,1995 t
(The summary comments of the CFO are not included in this report but are available in l
the OlG audit report)
I l
47 1
Reportable Condition 3 and Recommendation 3 Current Year 1.
Lack of DOE Audit Assurance The FY '92 and FY'93 audit of NRC's principal statements contained two scope restric-tions. One of these restrictions was due to the lack of audit assurance for interagency reimbursable work performed by the DOE National Laboratories. As a result of lack of audit assurance over the funds expended by DOE, a scope restriction regarding NRC's compliance with laws and regulations was included in the FY '92 and '93 reports. In addi-tion, the Independent Auditors' Report on internal Control Structure reported the lack of adequate administrative controls over the interagency work as a material weakness.
1 As in FY'93, NRC continued to aggressively pursue the resolution of this condition as follows:
l u in May 1994, NRC issued Management Directive 11.7, NRC's Procedures for Placement and Monitoring of Work with DOE, providing policy direction to NRC per-sonnel for services placed with DOE National Laboratories. Although, the Directive was not in place for all of FY'94, it appears that adequate review and approval processes were prescribed by the policy.
m in November 1994, subsequent to the fiscal year end, NRC sought the advice of the Office of Management and Budget for methods to address this condition. The GAO, through an internal memorandum dated March 6,1995 prepared by the GAO's General Counsel staff, clarified the contractual relationship between NRC and the DOE as it relates to the DOE National Laboratories. The GAO clarification serves to minimize the potential effect of a non-compliance on the NRC principal statements.
m in March 1995, subsequent to the fiscal year 6nd, the NRC Inspector General per-formed a special purpose assessment of the management control system over the DOE billing certification and review process for FY'94 projects in place at the DOE National Laboratories. The NRC Inspector General concluded that significant progress had been made to assure the integrity of the project managers' review and approval process of DOE billings.
The steps taken by the NRC collectively provide the basis to reduce this material weak-ness to a reportable condition. NRC initiatives along with those of the inspector General provide evidence of NRC's commitment to a sound system of management controls over the certification and review process. A GAO internal memorandum clarified that "..NRC's 48
contractual r;lationship is with DOE". How:.v r, a review of the NRC - DOE memoran-dum of understanding noted that the MOU does not provide for information regarding audit responsibilities, audit plans, coverage goals, and implementation information regard-ing directives (e.g. Management Directive 11.7) etc. A provision of this nature would enable NRC to have stronger management control system over DOE activities. A scope restriction to the Independent Auditors' Report on Compliance with Laws and Regulations continues to exist for FY'94.
Recommendation The Chief Financial Officer should initiate actions to:
1.
Revise the MOU and clearly delineate the responsibilities and expectations of each party regarding audit assurance concerning NRC funds spent by the DOE National Laboratories. The MOU, serving as the contract between the two Agencies, at a mini-mum should provide the following:
a Assignment of responsibility.
m Methodology for providing on-going audit results to NRC.
m Audit Coverage minimums.
- 2. Develop and internal NRC mechanism designed to track, review and assess the audit results provided by DOE in order to enable the NRC to better oversee audit actions related to their service activities placed with DOE.
Comments of the Chief Financial Officer We agree it would be desirable to formalize the responsibilities and expectations of each party regarding audit assurance. However, since we would be dealing with the DOE Inspector General, we believe the NRC Inspector General should be a party to the process. The DCAA audit process is analogous in that the DCAA audits are provided to the NRC IG and the NRC contract staff is brought in to address audit issues.
We are prepared to work with you to formalize this process with the DOE IG.
Auditors' Conclusion We commend the Chief Financial Officer for recognizing the need to formalize responsi-bilities and expectations between the NRC and the DOE regarding audit assurance.
However, we caution the NRC IG to participate in an advisory capacity only. It is essen-tial that the enhancement of management's control systems, to include the process described previously, is driven by management's oversight goals.
d,Q
s.
2.
Ellling Practices Need Improvement The audit of the NRC's accounts receivable for FY'92 and FY'93 disclosed that billings and collections nf 10 CFR Part 170 fees were not being made timely. This condition con-tinued to exist in FY'94.10 CFR Part 170 fees consist of license and inspection fees, established under the authority of the independent Offices Appropriation Act (IOAA) (31 U.S.C. 9701), to recover the NRC's costs of providing individually identifiable services to specific applicants and licensees. The services provided by NRC for which these fees are assessed are generally for the review of applications for the issuance of new licenses, amendments to or renewal of licenses, and inspections of licensed activities. Billings for these services were delayed for extended periods of time, billings were restricted to quar-terly processing, and the billings for inspection services were not billed on a progress basis but on a completed services basis.
l The NRC billing process continued to have delays for FY'94; however, NRC management established a work group to study, define and implement corrective action during the final quarter of the fiscal year. The streamlined process provides that 30 days from the end of the billing quarter, all billings should be mailed to licensees.
i Although the fourth quarter was the Agency's pild period, the streamlined process was viewed by management as providing the desired results. The related reliability of billings processed under inis streamlined process has not been assessed; however, our under-standing of the procese causes us to reduce this previously reported material weakness to a reportable condition.
Recommendation The Chief Financial Officer should request an analysis of the reliability of the new process. The review should provide assessment of:
- 1. Data reliability.
- 2. Resolution and exception processes.
- 3. Risks associated with quality assurance processes of data used for billings.
- 4. Continued review of the process to streamline further, as necessary.
t 50
I Comment 3 of the Chief Financial Officer l
Agree.. I will request an assessment of the reliability of the new billing process. However, j
progress to date has been promising. The agency has successfully billed within 30 days at the end of the 4th quarter FY-1994 and the end of the 1st quarter FY 1995. This new process of billing within 30 days demands a high level of review and scrutiny within the program offices and has a further review with quality checks performed by the License Fee and Debt Collection Branch. An indicator of how accurate our quarterly bills have been are the challenges to the bills received from licensees. The level of complaints and
- . challenges from licensees on the last two quar;crti billings has been very low.
Furthermore, the 30-day billing working group contimes to meet regularly to work out
'l problems, share information, agree to the quarterly L illing schedule, and assure the process works accurately and timely.
Auditors' Conclusion We commend the Agency for improving its billing process. An independent assessment
)
of the reliability of the streamlined process should be performed by the IG.
3.
Fee Recovery System Lacks Internal Control ~
i The intemal control review of the license fee and debt collection process disclosed a lack of controls for the contract costs billing system, specifically those relating to 10 CFR Part 170 fees.
i 10 CFR Part 170 fees consist of license and inspection fees, established under the l
authority of the Independent Offices Appropriation Act (IOAA) (31 U.S.C. 9701), to recov-j er the NRC's costs of providing individually identifiable services to specific applicants and j
licensees. The services provided by the NRC for which these fees are assessed are gen-l erally for the review of new licenses applicants, amendments to or renewal of licenses and inspection of licensed activities, j
The FY'93 audit disclosed that the billings and collections of 10 CFR Part 170 fees were f
not being made timely. The NRC experienced delays in billings and collections mainly due to problems with the billing systems and extensive edit and certification procedures.
l In FY'94 the NRC established a work group to look into the problems existing with the -
billing and collection process. The work group's recommendations resulted in corrective -
actions in FY'95 (The pilot billing period related to the fourth quarter of FY'94) in the F'
1 51 I
l
billing syst:ms and a reduc + ion in the edit and catification procedur:s. The r:vi w and edit procedures performed by the License Fee and Debt Collection Branch (LFDCB) were reduced to a cursory review of invoices to identify obvious errors. However, by reducing the output review and edit procedures in LFDCB, more reliability was placed on the inter-nal controls in place for the input of data into the systems that feed the billing systems.
The diagram below illustrates the flow of information between systems and related reportable conditions.
4 MLSRs are icceived by TAPSS stores the costs LFDCB prepares the the Program & Management input by PMSB and down-invoices for licensees with Support Branch (PMSB),
loads the data into the the data downloaded from and Part 170 costs are input LFDCB billing systems TAPSS.
into TAPSS.
every quarter.
Internal Control Compliance Reportable Reportable Condition Condition The objective of our review was to obtain an understanding of the intemal control system in place for the input systems since they had become the focal point of the billing process. There are two key input systems. The first is the Regulatory Information Tracking System (RITS). RITS tracks the hours expended by NRC employees on Part 170 activities. The second system is the Technical Assistance Program Support System (TAPSS). TAPSS is used by the Office of Nuclear Reactor Regulation (NRR) to track all contract costs reported for Part 170 activity. The Office of Nuclear Materials Safety and Safeguards adopted a version of TAPSS that is referred to as NMSS-TAPSS. NMSS-TAPSS also tracks monthly costs provided by contractors, j
in general, our audit disclosed that the controls for RITS and NMSS-TAPSS were ade-quate; however, the controls for inputing data into TAPSS in NRR were not effective and did not ensure that complete and reliable data was being transmitted to LFDCB. We found that Part 170 fee recoverable activities were not being charged to the specific licensee receiving the services but were included in the Part 171 fees which are allocated l
i l 52
crnong all licensees. The controls in place for TAPSS ara not sufficirnt to provide r:ason-
.l able assurance of recording and transferring complete and reliable Part 170 fee recover-
' able data to LFDCB.
Factors contributing to this weakness include:
LO NRR did not have control procedures to assure the completeness of Monthly Letter Status Reports (MLSRs) received with Part 170 fee recoverable activity.
O The processing of MLSRs is performed by an employee on a part time basis; however, the input and research requirements relative to fee recoverable activities dictate more than a part time basis workload.
i O Two contractors, with' multiple contracts, did not provide MLSRs with the proper fee receverable schedule or did not segregate the Part 170 fee recoverable activity in the prest ribed format to facilitate posting.
i The laci'. of effective controls over TAPSS reduces LFDCB's ability to provide reasonable assurance of compliance with 10 CFR Part 170.10 CFR Part 170 fees that are identifi-'
able to a specific licensee should be billed and recovered from that specific licensee. - See.
reportable condition in the Independent Auditors' Report on Compliance with Laws and.
Regulations as well.
Recommendations q
The Chief Financial Officer should direct:
- 1. NRR to improve coordination between the PMs and the Program Management Support Branch (PMSB) to prevent costs being reported to the PMs and not being captured in TAPSS.
i
- 2. PMSB to update a master checklist at least quarterly to ensure that any new contracts or task orders with Part 170 fee costs are controlled and recorded in TAPSS.
Comments of the Chief Financial Officer
^
Agree. The PMSB instituted a process in December 1994, to keep track of Monthly.
Status Letter Reports (MSLRs). Each month PMSB will record receipt of the MSLRs on a Monthly Business Letter Checklist. After the 20th of each month, PMSB will identify which MSLRs are missing and will request a copy of the missing report from the appropriate PM. The appropriate contractor or laboratory will also be notified to add PMSB to their mailing list.
i 53
The Monthly Business Letter Checklist will be modified to include new contracts and/or task orders with Part 170 fee costs as they are issued. A system of quality controls is being developed to ensure that the information received on the MSLRs is entered into TAPSS and this system will be completed by July 1,1995. The Part 170 fee costs report-ed on the MSLRs are entered into TAPSS by PMSB.
Auditors' Conclusion We commend the Agency for its prompt response in pursuing internal control improve-ments within its Part 170 fee recoverable costs system.
4.
Property System Should Be Formalized The FY'92 and FY'93 audits of NRC's principal statements contained two scope restric-tions. One of the restrictions dealt with the lack of historical accounting records to enable an opinion regarding the amounts reflected as Property, Plant and Equipment-net on the Statement of Financial Position and the related depreciation included in the Statement of Operations and Changes in Net Position. In addition to the problem associated with the Property, Plant, Equipment and depreciation, the FY'92 and FY'93 audit disclosed that capitalization policies for supply inventory, leasehold improvements and ADP software were nonexistent.
The lack of historical accounting records for property, plant and equipment was attributed to the use of a stand alone property and inventory subsystem which was not designed for financial reporting purposes nor integrated or reconciled with the NRC general ledger.
NRC's Property and Supply System (PASS) was cited as one of the incompatible and non-integrated subsystems.
The PASS is a property system designed to facilitate the NRC's custodial requirements for the location of the property and not for recording financial activity. The system does not provide reliable acquisition cost from vendor invoices, depreciation basis, depreciation schedules, enhancements made to assets, and an integrated feed to the FFS. Instead the informal property management system relies on input of information in one form (i.e. a con-tract payment) and the subsequent identification and reversal of the transaction manually.
Also, the lack of capitalization policies for supply inventory, leasehold improvements, and ADP software was also cited as a material weakness in the FY'92 and FY'93.
While the PASS subsystem was used in FY'94 as the basic source for recording informa-tion into NRC'S general ledger, NRC has implemented informal procedures to input accounting information into the FFS general ledger on a monthly basis. NRC also adopt-ed other informal procedures to capitalize supplies inventory, leasehold improvements and ADP software.
54
f in the curr:nt y:ar, th3 NRC continued to use th3 PASS syst m and other labor int::nsive manual processes to record property related activity. This process continues to preclude i
NRC from establishing a reliable system of controls that can provide accurate data for capitalized property, it is our understanding that acquisition of a replacement system is being pursued. No specific implementation dates are known. As it relates to the reten-tion of historical records, this year NRC undertook a project to identify, through a!!ernative approaches, improved valuation information for capitalized items. This project, which was cssessed as part of this year's examination, provided for the following:
O Compilation of invoices, purchase orders and receiving reports; O Reassessment of salvage values; and a Reassessment of usefullives.
Footnote 5, Property and Equipment, to the principal statements describes the change in estimates made by NRC in the current year. These efforts have reduced the book value of the pre-1992 Property and Equipment thereby eliminating the qualification in the FY'94 Independent Auditors' Report on the Principal Statements.
Recommendations The Chief Financial Officer should continue to pursue the:
- 1. Design and implemention of a complete property management system. The frame-work for the system should provide for posting of financial activities related to property transactions only once without the manual intervention of accounting personnel. The property management should be implemented as an integrated module to the general ledger system.
t
- 2. Issuance of capitalization policies related to property, plant and equipment which are formally incorporated in NRC's policies and procedures manual.
Comments of the Chief Financial Officer Agree. We initiated actions for the replacement of the existing property management sys-tem in response to the audit recommendation in the FY 1993 financial statement. Actions completed so far include identification of the required functions for the new system, a market survey of available off-the-shelf software products, development of initial mile-stones and establishment of a diverse PASS replacement review team. The first order of business for this review team will be to determine how best to meet the identified agency requirements for interfacing and reporting.
55
7 The Division of Accounting and Finance has drafted intemal operating policies to cover the capitalization of property, plant, equipment, software and the supplies inventory. This policy will be issued formally by June 1995. ' The NRC continues to comply with govem-ment-wide accounting policies issued by the GAO, OMB and the Treasury as noted in the financial statement.
Auditors' Conclusion None.
Status of Prior Year Reportable Conditions
- 1. General Accounting Controls at the General Ledger Level Not Maintained The NRC general ledger as maintained during FY '92 did not include all of the necessary general accounting controls to produce timely and accurate financial information needed.
to prepare complete financial reports as required by OMB Bulletin 93-02 (replaced by OMB Bulletin 94-01). The principal weaknesses and issues needing correction involved:
- a the compatibility and integration of the NRC generalledger and subsystems used by NRC for payroll, travel and property.
a heavy reliance on manual inputs due to the use of incompatible subsystems, e inadequate general ledger / subsystem reconciliations, e inappropriate accounting procedures for inventories and software.
NRC has partially resolved the compatibility and integration weaknesses with the installa-tion of a new FFS general ledger system and a fully compatible FFS travel module. NRC was also looking at a number of different payroll systems as replacement for its present non-compatible payroll subsystem and was reconciling the payroll subsystem with the FFS general ledger on a monthly and year end basis.
NRC also informally changed its accounting practices for inventories and software but did L
not formally incorporate these changes in NRC's Accounting Policies and Practices man-ual nor issued a new Management Directive incorporating these changes.
56
1 To fully resolve the FY' 92 reportable condition, NRC needs to:
A.. Replace its presently used non-compatible payroll subsystem with a payroll subsys-tem which is fully integrated and compatible with the FFS general ledger system.
B. Replace its present property and supply system (PASS) with a property subsystem which is fully irtegrated and compatible with the FFS general ledger system.
)
C. Formaiiy adopt its accounting practices for inventories and software through the f issuance of a new Management Directive or Accounting Manual change.
l Status - FY'94 as NRC continues to work toward resolution of the three remaining unresolved issues described in this condition.
l A. The payroll system has not been replaced with a new subsystem which is integrated to FFS. However, steps are being taken to make this change.
1 B. Search and assessment continues to identify a system which provides NRC an i
improved property management system.
C. An accounting policy for inventories and software is being developed. No projected issuance date was available.
2.
Interagency Responsibility Over Reimbursement to Department of Energy (DOE) Work Not Adequate The status and actions needed to resolve this reportable condition have been incorporat-ed in current reportable condition " Lack of DOE Audit Assurance."
i 3.
Lack of Timely Billings of Fees The status and actions needed to resolve this reportable condition have been incorporat-
)
ed in current reportable condition " Billing Practices Need improvement."
4.
Capitalization Policies for Supplies Inventory, Leasehold improvements and ADP Software Were Nonexistent The status and actions needed to resolve this reportable condition have been incorporat-ed in current reportable condition
- Property System Needs to be Formalized."
e 57
a
- 5.
Accounting System Does Not Provide Object Class and Program Information -
The accounting system in use during F_Y' 92 could not readily provide object class infor-l mation and was incapable of providing program information for the financial statements.
These accounting system design deficiencies precluded NRC frorn reporting its expenses _
j in the OMB Bulletin 93-02 (replaced by OMB Bulletin 94-01) recommended financial reporting formats on NRC principal statements.
This reportable condition has been partially resolved with the installation of the FFS gen-eral ledger system. The FFS general ledger readily produces reports at the object class level and is capable of producing information on a program basis provided the payroll subsystem has labor distribution capabilities. However, NRC's present payroll system '
does not contain labor distribution capabilities. NRC management is pursuing the acqui-sition~of a payroll system that will provide labor distribution capabilities.
j Actions needed to fully resolve this reportable condition are:
a The implementation and operation of an FFS compatible payroll system possessing -
the necessary labor distribution capabilities.
m Recording of each transaction at the program level for all other NRC financial activities.
m Installation and use of the system in producing reports in the formats recommended by OMB Bulletin 94-01 (formerly OMB Bulletin 93-02).
1 Status - FY'94 As discussed in the status to condition 1, General Accounting Controls at the General Ledger Level Not Maintained, actions are underway to acquire and implement a payroll subsystem. The replacement system should provide the capacity for labor distributions j
by program. These conditions continue unresolved until implementation is complete.
l 58 l
n
, =
Comments of the Chief Financial Officer General Accounting Controls at the General Ledger Level Not Maintained Progress has been made in identifying and beginning the process of testing a payroll sys-tem that will be compatible with the NRC accounting system. An existing payroll system
' has been acquired from the FBI and programming changes are currently in progress to modernize and adapt the system to NRC requirements. The final product will include a labor cost distribution capability. The schedule currently is to implement the automated time and attendance recording by the Fall 1995 and to complete implementation of the fully integrated system approximately one year later.
Accounting System Does Not Provide Object Class and Program Information The NRC accounting system currently has the capability to capture transaction data by object class and program. The Federal Financial System (FFS), which was implemented beginning in FY 1993, has the capability to record transactions at the object class and program level. Transactions associated with payroll are currently recorded at a summary level by object class within the Management and Support Program. When the new pay-roll system if fully implemented, individual payroll transactions will be generated for FFS update within the Program receiving the direct benefit of the expenditure.
Auditors' Conclusion We encourage the Chief Financial Officer continue the implementation process described in his two responses in order to resolve previously raised concems.
59
(
C L
Independent Auditors' Report on Compilance - '
With 1.aws and Regulations'-
3 We have audited the principal financial statements of the U.S. Nuclear Regulatory Commission (NRC), as of and for the years ended September 30,1994 and 1993, and have issued our report thereon dated March 10,1995. As part of our audit, we tested the NRC's compliance with certain laws and regulations that, if not followed, could have a direct and material effect on the financial statements. This report pertains only to our con-sideration of compliance with laws and regulations for the year ended September 30,1994.
We conducted our audit in accordance with generally accepted auditing standards, Govemment Auditing Standards, issued by the Comptroller General of the United States, and Office of Management and Budget Bulletin 93-06 Audit Requirements for Federal Financial Statements. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the principal financial statements are free of material misstatements.
Scope Restriction Compliance with laws and regulations applicable to NRC is the responsibility of agency management. As part of obtaining reasonable assurance as to whether the principal financial statements are free of material misstatement, we tested NRC's compliance with laws and regulations that may directly affect the financial statements and certain other laws and regulations designated by OMB as listed below. However, our primary objective was not to provide an opinion on overall compliance with such provisions. Accordingly, we do not express such an opinion, a Anti-Deficiency Act (Title 31 U.S.C.),
m National Defense Appropriations Act (PL 101-510),
m Omnibus Budget Reconciliation Act of 1990 m Debt Collection Act of 1982 (PL 97-365),
a Prompt Pay Act (PL 97-177),
a Civil Service Retirement Act, a Civil Service Reform Act (PL 95-454),
a Federal Managers Financial Integrity Act (PL 97-255),
a Chief Financial Officers' Act (PL 101-576), and a Budget and Accounting Act.
60
~
<As part of our audit, we relied on the Office of Inspector Generars review of manage-l ment's reporting of intemal control and accounting systems as required by the Federal
_ Managers' Financial Integrity Act (FMFIA) and compared the agency's most recent FMFIA' l
- reports with the evaluations we conducted of the entity's intemal control system.
- The results of our test indicate that with respect to the items tested, NRC complied in all '
- material respects with the provisions referred to above. With respect to the items not i
tested, nothing came to our attention that caused us to believe that NRC had not com-plied, in all material respects, with those provisions.
l
- This report is intended solely for the use of management of the U.S. Nuclear Regulatory Commission. This restriction is not intended to limit the distribution of this report, which, -
. upon acceptance by the NRC, is a matter of public record.
I d,b eod b San Diego, Califomia l
March 10,1995
.l I
i I
i l
t J
i 9
61 l
1
s
- Compliance Finding NRR's lack of effective intemal controls over the billing of fee recoverable activities results in non-compliance with 10 CFR Part 170.
10 CFR Part 170, under the authority of the Independent Offices Appropriation Act (IOAA)
(31 U.S.C. 9701), requires NRC to assesses fees to recover the NRC's costs of providing _
individually identifiable services to specific applicants and licensees. The services provid-ed by the NRC for which these fees are assessed include the review of new licensee applicants or approvals, amendments to or renewal of licenses or approvals, and inspec.
tion of licensed activities.
The License Fee and Debt Collection Branch (LFDCB) is responsible for billing and col-lecting Part 170 and 171 fees. : LFDCB prepares invoices for licensees from data received from the Office of Nuclear Reactor Regulation (NRR) and the Office of Nuclear Materials Safety and Safeguards (NMSS). LFDCB relies on NRR and NMSS controls to prepare complete and reliable billings.
We reviewed the systems used by NRR and NMSS that are used to record Pad 170 fee recoverable costs. We found that NMSS, in general, had, adequate controls to ensure that Part 170 foo recoverable costs were eported; however, NRR's controls were insufficient.
r NRR uses the Technical Assistance Program Support System (TAPSS) to report Part 170 l
fee recoverable costs. NRR contractors submit costs through Monthly Letter Status Reports (MLSR). Each MLSR has a fee recovery report that details Part 170 costs, and -
the NRR accounting clerk inputs the cost reported in the MLSR to TAPSS. The results of our testing revealed that the Part 170 fees reported to LFDCB were incomplete and understated. NRR does not have control procedures in place to ensure all Part 170 fee recoverable costs are received and input into TAPSS; therefore, unrecorded fee recover-able costs are inappropriately included in Part 171 reactor annual fees that are allocated i
to all reactors. For example, any facility fees that are not identifiable to a specific licensee are considered " generic" and are divided equally among all licensees without regard to
]
the benefit gained by each licensee. The Part 171 reactor annual fees represent 83% of all Part 171 fees.
The following table details the amount of Part 170 fees billed by contractors as fee recovi
'i erable activity in FY '94.
I Nuclear Reactor Regulation (NRR)
$8,534,829 -
j l Nuclear Materials Safety and Safeguards (NMSS) -
l
$2,768,047 l I
l Total Part 170 Fees Reported l
$11,302,876 l l
l Total Part 170 Fee Tested in FY'94 Audit l
$10,754,083 l
- j i
?
62
NRR's lack of controls is causing NRC to be non-compliant with 10 CFR Part 170. Part
.170 fees are inappropriately billed and allocated among all the reactors instead of being charged to the specific reactor receiving the services.
The following table shows the amount of Part 170 fee recoverable costs that we identified as reported by the NRR contractors and not input to TAPSS and, therefore, not transmitted i
to LFDCB.
i
.PART 170 COSTS REPORTED TO' NRR BUT NOT INPUT INTO TIPSS
~
DIVISION
- .~. COST 1.
Division of System Safety and Analysis (DSSA)
$152,885 l2.
Division of Reactor Controls and Human Factors (DRCH) l 218,111 l I3.
Associate Directorate for Advance reactors and License Renewal (ADAR) 64,503 l 4.
Division of Engineering (DE) l 508,938 l5.
Division of Technical Support (DOTS) l 3,341,567 l TOTAL PART 170 FEES NOT RECOVERED IN TAPSS IN FOR FY'94.
';4,28S,054 j
When NRR personnel were informed of the errors that were identified through our testing, they acted quickly to address the problems identified. An initial checklist was developed and circulated to appropriate project managers for their input as to the completeness of the list. A letter was drafted and sent to each contractor reminding them that the proper j
fee recovery schedules must be included in each MLSR.
1 Recommendations The Chief Financial Officer should direct NRR to:
- 1. Develop a control sheet of contract costs that could be utilized to ensure that all Part 170 fee recoverable costs are captured in TAPSS. The control sheet, at a minimum, should list all contracts that involved Part 170 fee recoverable activity for each division l
of NRR. This list should be reviewed by the Program Management Support Branch to I
verify that all MLSRs have been received and input into TAPSS.
- 2. Contractors should be required to submit a MLSR even if no Part 170 fee recoverable l
costs were incurred in the period.
- 3. Assure project managers enforce contractors requirements to submit MLSR's within the guidelines established.
63
L
- 4. Evaluate those contracts with Part 170 fee recoverable costs where no input was made into TAPSS and assess whether Part 170 fee recoverable activity from prior years should be recovered.
Comments of the Chief Financial Officer Agree. As previously mentioned, a Monthly Business Letter Checklist has been devel-oped by NRR and is currently being used to track all incoming MSLRs. In addition, a fol-low-up procedure is in place should an MSLR be identified as not received. Part 170 fee recoverable costs are entered into TAPSS by PMSB based on the information provided in the MSLR.
The existing practice within NRR and NMSS is for contractors (Commercial and DOE lab-oratory) to submit an MSLR even if no Part 170 fee recoverable costs were incurred dur-ing the month. Changes to the appropriate management directives will be made to incor-porate the requirement for contractors and DOE laboratories to notify the agency that no fee recoverable costs have been incurred during the month.
A letter was sent to all NRR commercial contractors and DOE laboratories on January 17,1995, that emphasized the requirement on their part to provide fee recoverable cost information.
PMSB staff worked with the auditors and ioentified the missing Part 170 fee recoverable costs. Alisting of the FY 1994 costs was prepared and submitted to the License Fee and Debt Collection Branch (LFDCB). The LFDCB is reviewing the submitted information and will be billing the licensees in FY 1995. An assessment will be made by July 1,1995 as to the disposition of the remaining prior year unbilled Part 170 fee recoverable costs.
Auditors' Conclusion The Chief Financial Officer should continue to aggressively pursue resolution of this issue. The steps taken to date appear to provide a sound corrective action plan.
64
k i
l eee 6
S U P P L E M E N T,A L FIN ANCI AL AND MANAGEMENT I N F O R M ATI O N i
O t
i O
i O
OOOOOOOOOOOOOOOO l
f
' Program Performance Measufes This section identifies additional program performance measures not previously dis-cussed in the Overview section.
. j]
Medical Use Program.
The NRC administers approximately 2,000 licenses for the possession and use of byproduct materials for medical applications, and the Agreement States administer approximately 4,500 licenses. In an effort to provide improved guidance and direction for the medical use regulatory program, NRC developed and implemented a medical man-agement plan. The plan identifies major program areas such as misadministration and patient followup, rulemaking, licensing, and inspection programs and provides manage-ment direction for the program over the next 5 years. NRC conducted an intemal audit to determine how the agency is implementing existing programs and the results of this review were included in the development of the medical management plan. NRC antici-pates that the medical management plan will be dynamic and will require periodic review and modification to adjust for new initiatives. In addition, at the request of the NRC, the National Academy of Sciences is conducting an independent review of regulatory rules, policies, practices, and procedures to assess whether NRC's current framework for med-ical use of byproduct materials is appropriate to satisfy statutory responsibilities to protect the public health and safety.
Revikw of A Rel actor Designs The NRC has encouraged the nuclear industry to standardize nuclear power reactor designs. Figure 11 on the following page shows NRC's progress as of December 31, 1994, in reviewing each accepted standard plant design application and major industry generic requirements document by measuring the major staff output documents [ requests for additional information (RA!), draft safety evaluation report (DSER), and final safety evaluation report (FSER)j against the schedule milestones.
67
1 ;. 1.. 51oure 4' -
.q ApVANCED REACTORflEVIEWS,J Design Certified Complete Complete Final Design b
b Approved Complete Complete E
E l
FSER issued to Applicant l
E E
FSER to l
Commission l
Applicant Responds to DSER Commission
".m DSER to D
R Als issued to Applicant Receipt of Application EPRI EPRI ABWR SYS 80+
AP600 SBWR CANDU EVOL PASS.
- Review suspended except for testing-related issues.
EPRI EVOL. - NRC completed the FSER on the Electric Power Research institute (EPRI) Utiliy Requirements Document for evolutionary light-water reactors (LWRs) in December 1993, as scheduled.
EPRI PASS - NRC completed the FSER on the EPRI Utility Requirements Document for passive LWRs in August 1994.
ABWR - NRC issued the FSER and the final design approval for the GE Nuclear Energy (GE) advanced boiling water reactor (ABWR) in July 1994.
SYS 80+ - NRC issued the FSER and the final design approval for the ASEA Brown Boveri-Combustion Engineering (ABB/CE) System 80+ design in August 1994.
AP600 - NRC continued the review of the Westinghouse AP600 design in preparation for issuing the DSER in November 1994.
SBWR - in June 1994, GE requested that NRC limit the scope of the simplified boiling water reactor (SBWR) design review to focus only on the resolution of testing and analysis issues. At the time of the GE request, NRC was issuing RAls on the information in the initial application and on issuos resulting from interaction between NRC and the vendors.
CANDU - ACEL Technologies Inc. submitted its application for design certfication for its Canadian deuterium reactor design (CANDU 3) on September 30,1994. NRC completed the acceptance review in December 1994.
68
Transportation: Incidents Approximately three million packages containing radioactive materials are shipped each year, and estimates are that 200,000 of these are shipped in NRC-certified packaging.
Because NRC-certified packaging is designed to withstand severe accidents, the likeli-hood of a release occurring is minimal. This is supported by Table 1, which shows that there have been no transportation incidents involving radioactive releases from NRC-certified packaging in the past 5 years. In fact, only one incident has been identified in the past 21 years involving a release of a radioactive source from NRC-certified packag-ing. This incident occurred in FY 1988 when a radiography camera fell from a truck and was struck and dragged by an automobile.
1 l
FY FY FY FY FY 1990 1991 1992 1993 1994*
[
Incidents involving 3
13 4
7 1
NRC-Certified Packaging Releases involving 0
0 0
0 0
NRC-Certified Packaging
- information is through March 1994
- - flemedia. tion of U. censed. ' Uranium Recovery Sites.
In FY 1994,27 licensed uranium recovery sites remained to be remediated. For FY 1994, it was projected that no licensed uranium recovery site would be remediated to the point at which the licensee would request license termination. The 27 sites are either undergoing remediation or will begin remediation some time in the future following com-pletion of operations. The remediation of sites by fiscal year is shown in Table 2.
69
A1990 i
FY FY FY FY FY 1991 1992 1993 1994 Sites 1
1 1
1 0
Remediated i
Sif6 Decommissioning Managemenf Plan Z
Several hundred NRC materials licenses are terminated each yasr. Most of NRC-licensed operations result in little or no contamination of buildings or soil, and decommis-sioning actions leading to the termination of these licenses normally proceed in a routine fashion. Non-routine cases may involve sites where buildings, former waste-disposal areas, large piles of tailings from metal extraction operations, groundwater, and/or soil are contaminated with uranium, thorium, or other radionuclides. These non-routine cases present varying degrees of radiological hazard, remediation complexity, and associated cost.
The site decommissioning management plan (SDMP), which encompasses these more difficult sites, is used to ensure that generic and case-by-case issues affecting the timely decommissioning of these contaminated sites receive the appropriate level of manage-ment attention. There are currently 47 sites on the SDMP list; although 8 sites were planned for remediation, only 3 were removed in FY 1994 (see Table 3). The remediation and removal of sites from the SDMP list have been delayed by policy issues and techni-cal problems related to cleanup. Many potential impediments in the decommissioning process may be unforeseen when planning for release of sites from the SDMP list, which makes it difficult to establish a timetable for the release of these sites.
4 FY FY FY FY 1991 1992 1993 1994 l Sites Planned for 2
2 4
8 Remediation Sites 0
1 1
3 Remediated 70
i i
'. High-Level NucleniWaste. Regulation -
~ The highJevel nuclear waste regulation program includes all of NRC's public health and safety licensing, inspection, and environmental reviews for the safe management and dis-posal of high-level radioactive wastes; research to assess the safety of high-level waste management, storage, and disposal; independent safety advice on NRC regulatory actions; and the use of the Licensing Support System for the submission and manage-ment of documents in the repository licensing process.
License Application Review Plan NRC is developing a license application review plan (LARP), NUREG-1323, for use by the NRC staff in its review of DOE's license application for a high-level waste repository and its prelicensing reviews of DOE's site characterization program. Individual review plans are sections within the LARP that consist of the compliance determination strategy, applicable regulatory requirements, and review procedures and acceptance criteria for the 97 regulatory requirements of 10 CFR Part 60, " Disposal of High-Level Radioactive Wastes in Geologic Repositories."
In FY 1994, NRC had planned to complete nine individual review plans and actually com-pleted five (or 56 percent of those planned). Of the four incomplete review plans, three were related to safeguards and were completed in draft form but were deferred until addi-tional work is conducted on a rulemaking to amend 10 CFR Part 70 to address inconsis-tencies with other NRC regulations. The fourth incomplete review plan, " Assessment of Compliance With Design Criteria for Shafts and Ramps," was completed in draft but was determined to need revision in order for the acceptance criteria to be applicable for other design review plans, for surface facilities, underground facilities, and the engineered barrier system. This revision will help ensure approach consistency and will facilitate the preparation of future repository design review plans. All four will be completed in FY 1995.
DOE Study Plans for High-Level Waste Repository in the site characterization plan (SCP) for Yucca Mountain, DOE laid out its plans for con-ducting investigations of the proposed high-level waste site. Investigations are subdivid-ed into studies, and details of those studies are laid out in 104 individual study plans.
NRC reviews each of these study plans as part of the SCP to assess whether work pro-l posed will affect the ability of the proposed site to isolate waste and whether the tests proposed in the study plan will affect other tests necessary to characterize the site. When f
l warranted, NRC's reviews also provide technical guidance to DOE on whether data col-lected under the study plan will be sufficient for use in the repository license application. A review is considered to be complete when the review results are provided by letter to DOE.
In FY 1994, NRC planned to complete the review of 22 DOE study plans and completed
- 18. Three of the reviews not completed in FY 1994 will be completed by February 1995.
The remaining review not completed was of particular technical complexity and required additional assistance from the Center for Nuclear Waste Regulatory Analyses.
71
Regulatory Research
!' - 1 The primary goal of NRC's research program is to ensure that research provides sound technical bases for timely rulemaking and decisions in support of regulatory licensing and inspection activities. As part of its regulatory program, NRC conducts research to provide independent information and expertise to support its safety decisionmaking and to assess the safety significance of potential technical issues. Research is generally planned and initi-ated in response to needs of the regulatory licensing and inspection programs or directed in response to Commission decisions. Priorities for research are determined by the overall value, importance, and impact that the research findings may have in responding to these program needs. Major research accomplishments in FY 1994 include the following:
Completed facility modifications and the first eight tests in the ROSA-V facility in m
Japan to provide confirmatory data on the performance of advanced pressurized water reactor safety systems that can be used to assess the Ability of NRC codes to independently analyze the AP 600 design. Initiated construction of a test facility at Purdue University to carry out a similar test program to support analysis of safety sys-tem performance of a simplified boiling water reactor (SBWR).
issued proposed NRC staff and industry guidelines for reviewing advanced control m
room designs to reduce the likelihood of human error. Negotiated a contract with the National Academy of Sciences to conduct a study of the safety and reliability issues associated with the increased use of digital control systems and computer-assisted operations in nuclear plants.
m Published draft regulatory guides, " Evaluation of Reactor Pressure Vessels With Charpy Upper Shelf Energy Less Than 50 ft-lb" and " Methods for Determining Pressure Vessel Neutron Fluence."
Changes to 10 CFR 50.61 explicitly incorporating reference to annealing and corre-m sponding changes to Appendixes G and H to 10 CFR Part 50, together with a new rule addressing thermal annealing are in the final approval process with public com-ments due at the end of January 1995.
Developed for publication in the Federal Register (59 FR 52255) a proposed rule m
updating 10 CFR Part 100, " Reactor Site Criteria," and an outline of the proposed accompanying regulatory guides.
m Substantially resolved longstanding controversies regarding seismic hazard assess-ment. Resolutions being reviewed by National Academy of Sciences peer panel, which will issue a letter report early in calendar year 1995.
Published proposed rule for comment that would amend 10 CFR 50.55a to incorpo-m rate by reference Subsections IWE and IWL of Section XI, Division 1 of the American Society of Mechanical Engineers Boiler and Pressure Vessel Code. Subsection IWE 72
i I
deals with the inservice inspection of certain metallic containment pressure-bearing components, and Subsection IWL deals with reinforced concrete and post-tensioning concrete containments.
O Developed technical basis for guidance to control upsets and malfunctions in safety-<:ritical digital instrumentation and control caused by electromagnetic and radiofrequency waves and power surges.
fL
{. Generic safetyissuesl i Generic safety issues (GSIs) involve safety concerns that may affect the design, con-struction, or operation of all, several, or a class of reactors or facilities and that may have potential safety improvements and the issuance of new or revised requirements or guid-ance. During FY 1994, NRC identified one new generic issue, prioritized three issues, and resolved five. The resolution of the large backlog of GSis of a few years ago is essentially completed.
M
.j NRC establishes the rules that operators of nuclear facilities and users of radioactive materials must follow. These rules are intended to protect persons using radioactive materials and the general public from the potential hazards of radioactivity. NRC regula-tions are established or changed, as necessary, on the basis of recommendations of NRC staff. Members of the public and interested organizations can also request changes in regulations. The views of the public, the industry being regulated, and other interested parties are usually solicited before new rules or changes are adopted. In FY 1994, NRC completed 15 rules.
nispenshtenes toinsnandssrety cseess-All allegations are initially considered to have a potential effect on public health and safe-ty. Each allegation is reviewed to determine its safety significance and the effect on health and safety. NRC has established standards for closure of allegations. If a safety analysis is required but wrongdoing is not suspected, the standard calls for the allegation to be closed within an average of 6 months from receipt. If both a safety analysis and a wrongdoing investigation are required because wrongdoing is suspected, the standard calls for the allegation to be closed within an average of 18 months from receipt. An alle-73
l l
gation requiring review outside NRC (e.g., Department of Justice or Labor) is not subject l
to these standards. Figure 12 shows the mean time in months to close the two types of allegations for which standards have been established.
NRC's mean time to close allegations has shown improvement over previous years pri-marily because of an increased emphasis and focus on case inventory management-throughout NRC. In addition, NRC investigative staff have finalized a streamlined inves-
. tigative process enabling safety analysis and wrongdoing investigations to be conducted simultaneously, thus enhancing productivity. The new process involves a preliminary investigation before and in conjunction with determining the safety priority of an issue involving wrongdoing. These preliminary investigation-s have increased the investigative caseload but considerably improved efficiency, as demonstrated by the 32-percent decrease in average time to close a wrongdcing investigation.
fQj QQ f 4 inure $2'
%WinANTIMETOCLOSE AL y ;
ei 20 Goal Cases g
investigations u) 12 02 8
Goal Cases Q
Not Requiring 4
f investigations q
g 1990 1991 1992 1993 1994 j
FISCAL YEAR l
l l ElNo lnvestigation Einvestigation Flequired l l
74
i
('.
~ Enforcementu.
l-
- ~
The purpose of NRC's enforcement program is to protect the public health and safety by cnsuring compliance with regulations and license conditions, obtaining prompt correction in areas of noncompliance, deterring further noncompliance, and encouraging improve-ment of licensee performance. Three primary enforcement sanctions are availab!e:
notices of violation, civil penalties, and orders to modify, suspend, or revoke licenses.
Violations are classified by severity level based on regulatory or safety significance.
Severity levels range from Severity Level I for the most significant violations to Severity Lcvel V for the least serious. Civil penalties are normally assessed for violations of Severity Level lli or higher.
The average time to issue escalated enforcement actions (Severity Levels I through lil) continues to be a performance measure. In FY 1993, the measurement period for the issuance of these enforcement actions was modified. For actions that do not involve an investigation, the measurement period begins on the date of the inspection exit meeting.
For actions that involve an investigation but no referral to the Department of Justice (DOJ), the measurement period begins on the date of issuance of the report of investiga-tion. For actions that involve an investigation and referral to DOJ, the measurement peri-od begins on the date that DOJ informs NRC that NRC may proceed with the actions.
For actions that involve discrimination and Department of Labor (DOL) proceedings, the measurement penod begins when there is an appropriate decision in the DOL process or sufficient evidence from NRC's processes to support the actions.
On the basis of the defined measurement period, escalated enforcement actions are to be issued within an average of no more than 90 days; this standard was met for FY 1994.
During FY 1994, NRC issued 139 Severity Level I,11, or Ill enforcement actions in an average time of 88.9 days.
Table 4 shows the amount of civil penalties assessed and the amount collected in FYs 1989 through 1994, distributed according to the year in which the civil penalty was collect-ed. The amount of each civil penalty assessed reflects the amount that NRC ultimately decides is appropriate in each case through its enforcement or hearing process.
75
=
Fiscal Percent Year Assessed Collected Collected l
1989 l
$4,896,825
$4,896,825' 100.00 l
l 1990 l
$2,933,025
$2,925,268 99.74 l
l.
1991.
l
$2,724,873
$2,724,873 -
100.00 l
l
'1992 l
$4,630,8158
$4,610,815 99.57 l
l 1993 l
$4,180,875
$4,178,5574 99.94 l
8 I
1994 l
$3,885,675
$3,885,675 100.00 l
Afte hearing the licensees' arguments, NRC ' ubsequently refunded penalties paid in 1989 and 1991 in the amounts of $125 and $417, respectively.
2 This amount includes $20,000 for two cases that were withdrawn after further consideration following the licensees' responses.
S in some cases, the amount has been changed to reflect a settlement.
4 This amount reflects the total amount assessed for Enforcement Actions93-201 for which an agreement was reached to pay in full, but in installments. Only a portion has actually been collected this fiscal year, but the licensee has committed to full payment.
l 76
j""
.Expens~es by, Program
. Operating expenses by program for FY 1994 are as follows:
Reactor Safety and Safeguards Regulations
$157,595,133 l
Reactor Safety Research 100,707,169 Reactor Special and Reviews, investigation and Enforcement 31,565,130 Nuclear Material and Low-Level Waste Safety and Safeguards Regulation 63,487,616 High-Level Nuclear Waste Regulation 28,490,372 Nuclear Safety Management & Support 139,388,200 Inspection General 4,681,827 GSATransfer Appropriation 3,209,920 Reimbursable Work 3.120.158 Total
$532.245.525 l
l l
i i
77
1 i
i' on recycled paper Federal Recycling Program
(,.
i 1
NRC PRINCIPLES OF GOOD FINANCIAL MANAGEMENT,.
Those who handle public resources havela special responsibility to safeguard the resources entrusted to them and to use them properly. Poor financial management by_
NRC can undermine the confidence that we are effectively accomplishing our health and safety mission. NRC managers must ensure that public funds are used for authorized purposes only and that they are used economically, efficiently, and within established lim-1 its. Toward these ends, the NRC uses the following Principles of. Good Financial :
Management:
PLANNING. Good financial management begins with good planning. NRC's strategic.
planning should be based on sound assumptions and accurate information and should.-
provide the foundation for the entire fiscal process. Resource requests must be consis-tent with program goals, guidance, and planning assumptions, and must consider current financial status. Plans should be developed for commitment and obligation of funds -
based on program needs, procurement lead times, and the need for continuity of funding.-
CONTROL. Good financial management requires good financial control. Appropriate effective cost controls throughout the financial management process ensure adequate accounting of funds expended, prevent over-obligation of funds and inappropriate expen-ditures, identify early instances where funds should be reallocated, and produce valuable information for the planning process.
COMMUNICATION Good financial management requires good communication among those involved in the financial management process. Complete, accurate, and timely financial information must be readily available, and financial implications must be consid-ered in decisionmaking. Financial systems should be integrated and meet both agency and office data needs. New information and ideas must be shared throughout the
. organization.
COST EFFECTIVENESS. ' Good financial management balances expenditures and results. Managers at alllevels must ensure that NRC gets what it pays for and that the results are what NRC needs to accomplish its mission. Ongoing projects should be eval-uated to ensure results justify continued funding. Appropriate precautions ensure that waste is avoided. To ensure maximum utility of available resources, funds should be obligated as early as practicable during the fiscal year, and excess funds should be deob-ligated as soon as practical after project completion.
EVALUATION. Good financial management requires periodic evaluation of pedormance against meaningful financial and program performance measures. Such performan'.e assessment should evaluate planned versus actual program results as well as the com-parison of program costs with program accomplishments.
PERSONNEL Good financial management is the product of competent and motivated people. Those who are given financial management responsibility must have integrity, dedication and be well trained and qualified. They must have authority commensurate with their responsibility, and they must be recognized when they achieve superior perfor-mance.
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