ML20115C764
| ML20115C764 | |
| Person / Time | |
|---|---|
| Issue date: | 04/30/1996 |
| From: | Connelly S NRC OFFICE OF THE CONTROLLER |
| To: | |
| References | |
| NUREG-1542, NUREG-1542-V01, NUREG-1542-V1, NUDOCS 9607120159 | |
| Download: ML20115C764 (85) | |
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NRC Principles of Good Financial Management Tthem and to use them properly. Poc-financial management by NRC can u hose who handle public resources have a special responsibility to safeguard the resources entrusted to 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 limits. Toward these ends, the NRC t.ses 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 consistent 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 expenditures, identify early instances where funds should be reallocated, and produce valuable information for the planning process.
COMMUNICATION. Good financial management requires gmvJ communication among those in-volved in the financial management process. Complete, accurate, and timely financial information must be readily available, and financial implications must be considered in decision making. 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 all levels must ensure that NRC gets what it pays for and that the results are what NRC needs to accom-plish its mission. Ongoing projects should be evaluated to ensure results justify continued funding. Appro-priate 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 deobligated as soon as practical after project completion.
EVALUATION. Good financial management requires periodic evaluation of performance against meaningful financial and program performance measures. Such performance assessment should evaluate I
planned versus actual program results as well as the comparison of program costs with program accom-plishments.
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 recogni7.ed when they achieve superior performance.
1 NUREG-1542.
Vol.1 Fisca Year 995 I
U.S. Nuclear Regulatory Commiscion Office of the Controller
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The NRC's Mission:
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To ensure adequate protection for the public becith and safety, the common defense and security, 1.
and the environment In the civilian use of nuclear materials in the United States.
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AVAILABILITY NOTICE Availability of Reference Materials Cited in NRC Publications Most documents cited in NRC publications will be available from one of the following sources:
1.
The NRC Public Document Room 2120 L Street, NW., Lower Level, Washington, DC 20555-0001 2.
The Superintendent of Documents, U.S. Government Printing Office, P. O. Box 37082, Washington, DC 20402-9328 3.
The National Technical Information Service, Springfield, VA 22161-0002 l
Although the listing that follows represents the majority of documents cited in NRC publica-tions, it is not intended to be exhaustive.
Referenced documents available for inspection and copying for a fee from the NRC Public Document Room include NRC correspondence and internal NRC memoranda; NRC bul!stins, circulars, information notices, inspection and investigation notices; licensee event reports;
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vendor reports and correspondence; Commission papers; and applicant and licensee docu-ments and correspondence.
The following documents in the NUREG series are available for purchase from the Govemment Printing Office formal NRC staff and contractor reports, NRC-sponsored conference pro-ceedings, international agreement reports, grantee reports, and NRC booklets and bro-chures. Also available are regulatory guides, NRC regulations in the Code of Federal Regula-tions, and Nuclear Regulatory Commission Issuances.
Documents ava,ilable from the National Technical Information Service include NUREG-series reports and technical reports prepared by other Federal agencies and reports prepared by the Atomic Energy Commission, forerunner agency to the Nuclear Regulatory Commission.
Documents available from public and special technical libraries include all open literature items, such as books, journal articles, and transactions. Federal Register notices. Federal and State legislation, and congressional reports can usually be obtained from these libraries.
Documents such as theses, dissertations, foreign reports and translations, and non-NRC con-ference proceedings are available for purchase from the organization sponsoring the publica-I tion cited.
Single copies of NRC draft reports are available free, to the extent of supply, upon written request to the Office of Administration, Distrib Jtion and Mail Services Section, U.S. Nuclear
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Regulatory Commission, Washington DC 20555-0001.
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j Copies of industry codes and standards used in a substantive maaner in the NRC regulatory process are maintained at the NRC Library, Two White Flint North.11545 Rockville Pike, Rock-ville, MD 20852-2738, for use by the public. Codes and standa.ds are usually copyrighted and may be purchased from the originating organization or, if they are American National Standards, from the American National Standards Institute,1430 Broadway, New York, NY 10018-3308.
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Table of Contents i
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Foreword..............................................................................................................v M e s s a ge Fi ai a i h e C h ai rma n........................................................................ v ii Message From the Chief Finaneial Officer...................................................... ix About the U.S. NRC........
............................1 Organization.
.I Regulatory Responsibility 1
Sources of Funds.......
2 Uses of Funds by Function..
3 Financial Condition of NRC..
.3 P ro g ra m Pe rfo rm a n c e.......................................................................................... 5 Reactor Program.
5 Licensee Safety Performance.
.7 Licensing Actions for Operating Power Reactors.
.8 Inspection Activities.
.9 Nuclear Materials and Nuclear Waste Program.
10 Materials Licensing...
.. I 1 Materials inspections.
13 FY l 995 Audited Finaneial Statement................................................................ 15 Management Controls and Response to Audits.................................................. 63 The NRC's Management Control Program..
. 63 Status of Management Controls and Report on Material Weaknesses and Non-Conformances.
. 64 Bases for Statement of Assurance and Extent of Assessment of Agency Activities...
. 64 Management Decisions and Final Actions on OlG Audit Recommendations.
. 66 Management Decisions Not Implemented Within One Year..
. 69 i
Supplemental Financial and Management Information.
. 73 Review of Advanced Reactor Designs.
73 Transportation Incidents.
73 Remediation and Licensing for Long-Term Care of Uranium Recovery Sites.
. 75 l
1995 ACCot'NTAllll.ITY REPORT iii
Table of Contents (continued)
Site Decommissioning Management Plan............................................................ 76 Hiph-Level Nuclear Waste Regulation.......
......................................76 License A pplication Review Plan........................................................................ 77 DOE Study Plans for High-Level Waste Repository.............................................. 77 Regulat ory R esearch Prog ram................................................................................ 77 G e n e ric S a fe t y i s s u e s....................................................................................... 7 8 NRCRegulations...............................................................................................78 Responsiveness to the Public's Safety Concerns....................................................... 79 Figures Figure 1:
S ou rces o f N RC Fu nd s................................................................................ 2 Figure 2:
U se s o f Fu nd s by Fu nc t ion.................................................................... 3 Figure 3:
U. S. Co m me rci al R eact ors...................................................................... 6 Figure 4:
Performance Indicators.............................
..............................................7 l
s Figure 5:
Age of Licensing Actions......................
....................................................8 i
Figure 6:
Licensing Actions: Median Age of Inventory.....................
....................9 Figure 7:
Direct inspection: Actual vs. Planned...................................................... 10 Figure 8:
Materials Licensing Reviews: Timeliness of Reviews Completed Each Fiscal Year............................................................ I 1 Figure 9:
Materials Licensing Reviews: Backlog.................................................. 12 l
l Figure 10: M at eria l s I n spec t ion s.......................................................................... 13 Figure 11: Ad van ced Reactor R e vie ws................................................................... 74 Figure 12: Mean Time to Close Allegations................................................... 80 Figure 13: NRC Organization Chart.............
........................82 Tables Table 1:
Management Report on Office ofInspector General Audits with Disallowed Costs....
..................................................67 Table 2:
Management Report on Office ofInspector General Audits with Recommendations That Funds Be Put to Better Use.........
......... 68 Table 3:
Transportation Incidents...................
. 73 Table 4:
Remediation and Licensing for Long-Term Care of Uranium Recovery Siies..................
.............................75 Table 5:
SDMP Contaminated Sites....................
...................................76 Table 6:
Amount of Fiscal Year Civil Penalties Collected Versus Fiscal Year Penalty Dollars Assessed...........................................
............81 U.s. NUCl. EAR REGUI.ATURv COMMISsloN
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l Foreword The U.S. Nuclear Regulatory Conunission (NRC) is one of six Federal agencies pa in a pilot project to streamline financial management reporting. The goal of this pilot is to consolidate performance-related reporting into a single accountability report. The project, which is being carried out under the guidance of the Chief Financial Officers Council, was undertaken in accordance with the Government Management Reform Act (GMRA) of 1994. The GMR A permits the streamlining of financial management reports in consultation with the appropriate Congressional Committees through a liaison in the U.S. Office of Management and Budget (OMB). The results of the pilot project will determine the method to be used for reporting financial management information for fiscal year (FY) 1996.
This report consolidates the information previously reported in the following documents:
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the NRC's annual financial statement required by the Chief Financial Officers Act of 1990 the Chairman's annual report to the President and the Congress, required by the Federal Managers' Financial integrity Act of 1982 the Chairman's semiannual report to the Congress on management decisions and final actions on Office of Inspector General audit recommendations, required by the inspec-tor General Act of 1978, as amended This report also includes performance measures, as required by the Chief Financial Officers Act of 1990.
Comments on the content and presentation of this report are welcome, and may be addressed as follows:
Office of the Controller U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 l
1995 ACCocNTAnil.lTY REIORT V
Message From the Chairman
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am pleased to present the U.S. Nuclear Regulatory Commission's accountability report for FY1995. This report represents the NRC's
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cfforts to streamline statutory perfomiance-related reporting, in accor-dance with the Government Management Reform Act.
I have reported to the President and the Congress that the NRC's
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cvaluation of its management control and financial management systems in FY1995 provided reasonable assurance that the NRC achieved the
' objectives of the Federal Managers' Financial Integrity Act. The evalua-tion disclosed no material weaknesses in the NRC's programs or admin-istrative activities and no material non-conformances with government-wide requirements in the NRC's financial management systems.
The NRC has camed its reputation as the foremost nuclear regulatory body in the world, and we continue to work to improve our financial management and management controls to provide accountability and achieve the best possible support for our regulatory responsibilities. Despite our progress, I believe that the NRC still needs to be guided by a strategic vision. That strategic vision will embody an awareness of our mission and its mandatory bases, an ability to respond to a changing environment, including assumption of possible new elements of our mission, and continuing enhancement of effectiveness of our regulatory activities, with a firm health and safety basis. This strategic vision will undergird our regulatory approach, allowing us to develop and maintain an appropriate programmatic focus and to conduct appropriate resource planning, j
including personnel, technology and budget resources.
l In line with the elements of the strategic vision, we have initiated a strategic assessment and rebaselining a'. the NRC. The purpose of this strategic assessment and rebaselining initiative is to analyze where the NRC is today and outline a path to take it where the Commission believes it should be in the future. This initiative is necessary to position us to meet effectively the chal-lenges we face and to guide our activities and decision making in the future. The strategic assessment and rebaselining effort will enable the NRC to have a strategic plan that is the basis for the agency's planning and budgeting.
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Shirley Ann Jackson Chairman U.S. Nuclear Regulatory Commission 1
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Message From the Chief Financial Officer C
y he U.S. Nuclear Regulatory Commission (NRC) issued its first 4
f' s audited financial statement in fiscal year (FY) 1992, and received its first unqualified audit opinion in FY 1994. For FY 1995, I am N
pleased to report that the NRC again received an unqualified audit opinion. This opinion, containing no material weaknesses and a reduc-tion in reportable conditions, reflects the high priority the NRC places on sound financial management and public accountability.
The liRC recently streamlined its management control program in response to the National Performance Review and the Office of Manage-ment and Budget Circular No. A-123," Management Accountability and Control." Our streamlined program reinforces the concepts that management control is an integral part of day-to-day management at all levels of the organization, and that controls should be designed to benefit managers, not encumber them. This report describes the NRC's stream-lined management control program.
We are continuing to improve our financial management systems with the goal of providing accurate, timely and useful information. Doring FY 1995, the NRC implemented an exception-based time and attendance reporting system that provides electronic submission and certification of time and attendance, and it is implementing an integrated payroll and personnel system.
Additionally, the agency implemented a process to improve timeliness in issuing license fee invoices, which accounted for approximately $500 million in revenue during FY 1995.
As we face new challenges presented by our changing environment, 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 materials in the United States. Adherence to sound financial management practices is more critical than ever to ensure that we can carry out our responsibilities. Our goals are both to maintain the standards we have achieved, and to seek improved methods to conduct and account for financial r.nd program performance.
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mes M. Tt or Chief Financial Officer U.S. Nuclear Regulatory Commission 1995 ACCocNTABII.ITY REPORT ix
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l About the U.S. Nuclear Regulatory Commission i
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The Executive Director for Operations has also
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gress to ensure adequate protee-been designated as the NRC's Chief Financial tion for the public health and safety, the common Officer. (See Figure 13 in the Supplemental defense and security, and the environment in the Financial and Management Information section for
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civilian use of nuclear materials in the United the NRC's organization chart.)
j States. Its purposes are defined by the Energy i
Reorganization Act of 1974, as amended, along Regulatory Respons.bility i
l with the Atomic Energy Act of 1954, as amended, which provitte the foundation for regulating the The NRC's scope of responsibility includes I
nation's civilian uses of nuclear materials.
regulating commercial nuclear power reactors; research, test, and training reactors; fuel cycle facilities; medical, academic, and industrial uses Organization of nuclear materials; and the transport Harage.
The NRC is headed by five Commissioners and disposal of nuclear materials and wastes.
appointed by the President and confirmed by the The NRC carries out its mission through a l
Senate for 5-year terms. The President also desig-licensing and regulatory system that includes the nates one of these Commissioners as Chairman, to following activities:
l serve as the principal executive officer and official (continued on page 2; 4
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l The Nuclear Regulatory Commission Headquarters in Rockville, Maryland 4
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1995 ACCot'NTAltil.ITv KlI' ORT
About the U.%. Nuclear Regulatory Comminion (continued) licensing the construction, operation, and The NRC and its licensees share a common decommissioning of nuclear reactors and other responsibility to protect the health and safety of nuclear facilities (such as nuclear fuel cycle the public. Federal regulations and the NRC facilities, uranium enrichment facilities. and regulatory program are important contributors in nonpower test and research reactors) achieving this shared responsibility. NRC licens-licensing the possession, use, processing, ces, h(mever, have the primary responsibility for handling, and exporting of nuclear materials the sate use of nuclear materials.
- licensing the siting, design, construction, operation, and closure of low-level radioac.
Sources of Funds tive waste disposal sites under NRCjurisdic-The NRC has two appropriations, and funds tion and the construction, operation, and for both are available until expended. One appro-closure of geologic repositories for high-level priation is for agency salaries and expenses, and 1
radioactive waste the other is earmarked for the Office of the In-
- licensing the operators of nuclear power and spector General (OlG). The total new NRC nonpower (test and research) reactors budget authority for fiscal year (FY) 1995 was
$523.9' million, including $518.8 million from 1
inspecting licensed facilities and activities the Salaries and Expenses appropriation, and $5.1 conducting research to provide independent million from the OIG appropriation. Additionally, expertise and information for making timely
$80.9 million from prior-year appropriations was regulatory judgments and for anticipating available to expend in FY 1995, and the NRC problems of potential safety significance accepted new reimbursable work to be performed for others totaling $16.8 million. The sum of all developing and implementing rules a
funds available to expend for FY 1995 was and regulations that govern licensed nuclear activities
$621.6 million. (See Figure 1.)
collecting, analyzing, and disseminating a
information about the operational safety of
' Reflects $1.7 million rescinded pursuant to the commercial nuclear power reactors and Emergency Supplemental Disaster Assistance and certain nonreactor activities Rescissions Act of 1995.
Figure 1 Sources of NRC Funds Total Funds Available $621.6M New Budget Authority
$523.9M N
Reimbursable Work
$16.8M N Budget Authority from Prior Years $80.9M
' Total funds available reflects NRC appropriated budget authority and reimbursable work. It excludes transfer appropriations from the General Services Administration (GS A), $.8M, and the Agency for International Development (A.I.D.), $8.9M.
U.s. NUCLEAR RILUI.AToRv Commission 2
i Other than appropriated funds, the NRC has Financial Condition of NRC limited assets. Capitalized personal propeny is limited to typical office furmshings, personal As of September 30,1995, the financial propeny acquired by contractors with NRC funds, condition of the NRC is sound with respect to nuclear reactor simulators, computer hardware, having sufficient funds to meet program needs and sufficient control of these funds to ensure and off-the-shelf and customized computer soft-ware. The NRC has no real property, loan, or loan that NRC obligations do not exceed budget authority. The Statement of Financial Position guarantee programs.
sows a net position (assets minus litbilities) of
$214.7 million. Consistent with the requirements Uses of Funds by Function of the Omnibus Budget Reconciliation Act of As stated above, the total budget authority 1990, the NRC collected approximately 100 available for use by the NRC in FY 1995 was percent of its new budget authority, excluding the
$621.6 milh.on. Of that amount, the NRC m.-
amount appropriated from the Nuclear Waste Fund.
curred obligations of $557.9 million, with 46 Over the past few years, the NRC has made a percent used for salaries and beneGts. An addi-concerted effort to increase the effectiveness and tional 54 percent was used to obtain technical efGeiency of program financing by eliminating assistance for the NRC's principal regulatory unnecessary financial reserves pending contract programs, to conduct confirmatory reactor safety closeout, recovering funds on dormant contracts, research, to cover operating expenses (e.g., build-mitigating the rate of rent increases, exercising ing rentals, transportation, printing, security closer scrutiny of the need for planned projects, services, supplies, office automation, and train-and more closely monitoring obligation and ing), staff travel, and reimbursable work. (See expenditure rates. On the one hand, the positive Figure 2.) The remaining 563.7 million ($52 aspect of these efforts is that they represent million from appropriations and $11.7 million prudent financial management. On the other from reimbursable work) in budget authority that hand, they result in $52 million in unobligated was not obligated in FY 1995 will be available to appropriated funds. This is a higher than normal rund critical needs in FY 1996.
(continued on page s)
Figure 2 Uses of Funds by Function Total Obligations $557.9M' Salaries and Benefits $259.3M C
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- y, lf MR Reirnbursable Work S15.9M N '_
Travel $14.0M Contract Support
$268.7
' Total obligations reflects obligation
- against NRC appropriated budget authority and reimbursable work; It excludes oH.jtions against transfer appropriations from the General Services Administration (GSA),5.005M. and the Agency for international Development (A.I.D.), $ 1.6M.
1995 AccoUNTADII.ITY REI' ORT N
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About the U.S Nuclear Regulatory Commission icontinued) level of unobligated carryover. The Commission in an orderly manner. Specifically, the agency has a goal to reduce unobligated balances at the suggested a $12.7M rescission during end of the fiscal year to acceptable levels. We FY 1994 which the Congress enacted. The believe that good fiscal management and expendi-agency suggested a $20M reduction to its pro-ture of funds on only sound program needs should posed FY 1995 appropriation, which Congress be guiding principles, and we intend to aggres-also enacted. The NRC is using FY 1995 sively pursue any further improvements that are unobligated balances to facilitate the transition needed to ensure that NRC's financial manage-to a lower level of funding in FY 1996, while ment is sound.
still adequately fulfilling its public health and sa ety mission.
Over the last few years, the NRC has taken actions to reduce the level of unobligated balances i
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i U.s. NUClf.AR REGl'I.AToRY CoMMIwloS 4
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I Program Performance This section highlights key aspects of the Reactor Program NRC's programs, including program goals and program perfonnance measures required by the The Reactor Program encompasses all NRC Chief Financial Officers (CFO) Act of 1990. The
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"" "E program perfonnance measures are related to facilities, as required by the Atomic Energy Act of outcomes such as safety effectiveness, outputs such 1954, as amended. The program also encom-as inspection effort, and timeliness of actions.
passes all reactor regulatory research, as required by the Energy Reorganization Act of 1974, as During FY 1996, the NRC will further evalu-amended. In addition, the program encompasses ate its program goals and program perfonnance all other functions associated with reactors, information, in order to strengthen quantitative induding evaluating safety concerns, assessing and qualitative measures of outputs and outcomes operational events and experience, training the for meeting the requirements of the Government NRC technical staff, providing independent and Performance Results Act (GPRA) of 1993.
reviews and legal advice to the Commission The GPRA requires agencies to establish long-concerning safety issues, conducting adjudicatory range outcome goals reflected in a strategic plan, reviews, investigating wrongdoing by reactor to develop program perfonnance plans and licensees, and implementing reactor enforcement program perfonnance measures to support those policies and actions to protect the public health goals, and to report on progress toward those goals.
and safety.
The NRC has an established framework for ko,ainued on page 6>
meeting the requirements of the GPRA.
The NRC is reassessing its mission, operations, and organization. The agency is currently in the first phase of this strate-gic assessment and rebaselining. This process will produce, or redefine, a new set of assumptions, goals, and strategies.
In addition, the results of this reassessment
. ad will establish a basis for the strategic plan E'N l
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request and perfonnance plan due Septem-f j 'y <
ber 1997 to the Office of Management and 13udget (OMB), as required by the GPRA.
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1995 ACCoONTAHil.ITY kl.I' ORT 5 l ' 04
Program Performance (contis wa, Figure 3 U.S. Commercial Reactors WA A NH ME y7 ND VT MN OR l A NY A A MA ID SD W1 A AA h AA M1 WY CT fN NE A IA AA PA AA. gg Ag UT A\\ IN ' OE it C0 AA CA KS A AA VA A M0 KY A AA M NC IN AZ OK AA A SC AA A NM AR A A AA (' MS AL GA AA A TX LA Ag A AA A L l FL v A LicensedtoOperate(110) Note: There are no commercial reactors in Alaska or llawaii. The principal goals of the NRC's reactor As of March 1.1996, i10 commercial program are to: nuclear power reactors were licensed to operate E,nsure that nuclear power plants and other at full power in 32 states. These reactors gener-i licensed facilities are operated safely, and ate approximately 22 percent of the nation,s that licensees are adequately prepared to respond to accidents. The NRC received no new applications for Ensure that nuclear power plants under operating licenses or construction permits, and issued no new construction permits in FY 1995. 1 construction are des.igned and constructed properly, and are ready for safe operation. l
- Ensure that adequate capabilities exist for licensing of evolutionary and advanced l
reactor designs and for reactor license re-newal activities. l U.S. NUCLEAR REGUI.A1 DRY CoMMisSloN 6
Licensee Safety Performance Seven of the NRC-approved indicators of Safe operation of nuclear facilities is the industry safety performance, including automatic responsibility of NRC licensees, but regulatory scrams, significant events, safety system actua-oversight of licensee safety is the responsibility of tions, safety system failures, forced outage rate, the NRC. Consequently, the safety perfonnance equipment-forced outage rate, and collective oflicensees is panially a reflection of the NRC's radiation exposure are shown in Figure 4. Over performance; however, it is not possible to isolate the past 10 years, the general trend of these the causal relationship or a specific set of factors industry performance indicators has shown that directly link NRC perfonnance to licensee improved performance, however, the overall performance. Safety performance indicators reflect trend appears to have leveled offin recent years, the collective results of the efforts of both the NRC even though several of the indicators continue to and the nuclear industry. Certain trends in industry show slight improvement. performance indicate that the NRC is succeeding in its mission to protect public health and safety. (continued on page it; Figure 4 Performance Indicators Equipment Forced Outage Rate Automatic Scrams While Critical Collective Radiation Exposure per 1000 Critical Hours U16llnd300lhdi,,,i 05 h 1991 1992 1993 1994 1995 1991 1992 1993 1994 1995 4 1991 1992 1993 1994 1995 Significant Events Safety System Actuations f 0.3 t2b........... e 35 0 1 j 3 1991 1992 1993 1994 1995 1991 1992 1993 1234 1995 Forced Outage Rate % Safety System Failures 10 4 w-u" kr g i a f, 2 4 ) ^ f y y 1991 1992 1993 1994 1995 1991 1992 1993 1994 1995 1995 ACCOUNTAHILITY REPORT 7
l*rogram l'erformance (continued) Licensing Actions for Operating actions at the end of FY 1994 to 1(XX) under Power Reactors review at the end of FY 1995. Either routine activity or unexpected events at a nuclear facility can result in a need for licensing The NRC has established goals to control the actions by the NRC. During FY 1995, the NRC size and age of the licensing action inventory. completed approximately 2061 licensing actions These goals call for 80 percent of these actions to for operating power reactors. More than 99 be 1 year old or less,95 percent to be 2 years old percent of the actions in inventory are plant-or lessj and all actions to be no more than 3 years specific amendments requested by licensees, and pid. Ngure 5 shows the age oflicensing actions the rest are the result of NRC-imposed require-in the inventory at the end of each year from FY ments. The total licensing action inventory has 1993 through 1995. decreased significantly from 1293 licensing Figure 5 Age of Licensing Actions i 1,000 Goals - FY 1995 ) Age (Years): 0-1 1-2 2-3 >3 800 Goal: >80% <15% <5% 0 Actual: 80% 12 % 6% 2% D 600 2 C ,c 400 200 0' < 1 Year Old 1-2 Years Old 2-3 Years Old > 3 Years Old Age M 1993 [G 1994 [f j 1995 From 1989 to 1995, the percentage of licens-(compared to less than 73 percent at the end of ing actions more than 3 years old has dropped FY 1994) and more than 98 percent were 3 years from 23 percent to less than 2 percent. Improve-old or less. As Figure 6 shows, the median age ment has been made in the other aging catego-of the licensing action inventory also has de-ries as well. At the end of FY 1995,80 percent creased over time. of the licensing actions were 1 year old or less U.s.NL'CI. EAR REGl'l,AloRY CoMMisNtoN 8
Figure 6 Licensing Actions Median Age ofInventory 12 10 8 ja 36 2 4 2 0 1991 1992 1993 1994 1995 Fiscal Year Inspection Activilles cc ective action. The NRC's reactoi inspection Three essential components of the NRC's program encompasses all applicant and licensee reactor inspection program are to determine the activity completed in connection with construct-state of reactor safety, to confirm that operations ing and operating nuclear facilities. Most inspec-comply with the provisions of the license, and to tions are dedicated to operations at the plants ascertain whether other conditions exist with licensed to operate, while a few inspections focus safety implications serious enough to warrant on facilities with construction permits. The NRC assigns at least two ,F Y > resident inspectors to each operating -. ~ reactor site. These resident inspectors concentrate on day-to-day licensee operations, event follow-up, licensee management, and staff performance. Region-based and NRC headquarters inspectors supplement the activities f,Q, carried out by resident inspectors ^ t ere through a variety of program and fa'f.h - technical inspections that afford an indepth look at licensee operations. ,1%t&Os - - - ~ ~*~ Control Room at a Nuclear Reactor puh& whz%d:%.% : A.5. W6 (continued on page 10) 1995 ACCoUNTAHILITY REI' ORT 9 w
Program Performance (continued) In 1995, the overall direct inspection effort Figure 7 shows the use of allocated inspection totaled approximately 312,000 hours for all resources in direct inspection activities by re.,i-plants, exceeding the number of hours planned dent and region-based staff. for inspection by 5 percent at operating reactors. Figure 7 Direct Inspection Actual vs. Planned 350 g @ 300 o 2 250 g I 200 g 5 150 { E 100 50 D g/^ 1991 1992 1993 1994 1995 Fiscal Year lE Actual O Planned l Nuclear Materials and of facilities and sites associated with NRC-NuclearWaste Program licensed activities. The Nuclear Materials and Nuclear Waste The principal goals of the Nuclear Materials Program encompasses all NRC public health and and Nuclear Waste Program are as follows: safety, safeguards, research activities, operational Ensure that current and future uses and data analysis, technical training, adjudicatory transportation of nuclear and radioactive reviews, investigations, enforcement, and inde-materials are safe and have adequate pendent safety and legal advice related to the safeguards. licensing, inspection, and environmental reviews for fuel cycle facilities; the transportation of Ensure that high-level and low-level nuclear nuclear materials; the safe interim storage of waste and uranium mill tailings are safely spent fuel; nuclear materials users; the safe managed and disposed of. management and disposal of low-level and high. Ensure that facilities no longer in operation level radioactive wastes; and uranium recovery are adequately and safely monitored or and related remedial actions. This program also decommissioned. includes safeguards reviews for all licensing Approximately 22,000 licenses have been activities involving the export of special nuclear issued for medical, academic, and industrial uses of material and the integrated agency effort to nuclear materials. About 30 percent of these oversee decontamination and decommissioning materials licenses are administered by the NRC. U.s. NUCLEAR REGULATORY CoMMISsloN 10 l
AledicalApplications Research Applications industrialApplications Some of the Uses of Radioactive hiaterials The remaining licenses are administered by the 29 completions exceeded the NRC's projections by " Agreement States" that, through a formal agree-4 percent. Also, the NRC reduced the number of ment with the NRC, have assumed regulatory pending licensing actions from 1560 at the end of responsibility over byproduct and source materials, FY 1994 to 1445 at the end of FY 1995. Of these and small quantities of special nuclear materials. licensing actions,223 were backlogged at the end The NRC also licenses and inspects a'l com-of FY 1995, reflecting a decrease of approxi-mercial nuclear fuel facilities involved in process-m tely 30 percent in backlogged actions. For ing and fabricating uranium ore into reactor fuel. reviews completed during each of the last 5 years, Eight major facilities were licensed to operate in I-igure 8 shows the average time required to com-eight States at the end of FY 1995. plete new, amendment, and renewal licenses for byproduct materials. The NRC and some Agreement States have (continued on pare 12) the licensing and regulatory responsibility for ensuring the safe management and disposal of low-level radioactive waste. Additionally, the Figure 8 NRC has the licensing and regulatory respon. Materials Licensing Reviews sibility for ensuring the safe management and Timeliness of Reviews Completed Each Fiscal Year disposal of high-level radioactive waste. 200 % c=of = R 180 .m Materials Licensing 9 l6* The NRC's timeliness goal is to complete l 20 ; 80 percent of new applications and amend-5 80 ~ ~ ~ l ~ ment requests for byproduct materials li- [8 l g] g censes within 90 calendar days of their 4 20 _t L i g i r receipt, and to complete the remainder within 1991 1992 1993 1994 1995 180 calendar days of receipt. The goal for 800 - mc.p. a= renewal applications is to complete 80 per- $700 T cent within 180 calendar days, and the re-9 600 mainder within 1 year. Backlogged reviews l{ are those that exceed the timeliness goal. { 300 During FY 1995, the NRC completed l[ about 4200 licensing actions for materials e o ^**8'"' i en es, 880 icens a en en s, and 1050 license renewals.This number of I New Applications & Amendments Renewals l 1995 ACCoONTAHILITY REPORT 11
Program Performance (continued) The 1991 "100-percent fee recovery" rule The materials licensing reviews backlog chart brought about an unexpectedly high number of presents a different perspective on the NRC's requests from licensees to terminate or combine timeliness in processing licensing actions. This licenses in order to reduce their fees. Conse-chart measures the number of actions to be com-quently, this rule resulted in an increase in the pleted at the end of each fiscal year that exceeded average number of days to complete reviews in the timeliness goals expressed above. In addition, FY 1991 through 1995, which in turn led to an this chart shows that the NRC has signincantly accumulation of backlogged licensing work (see reduced the number of backlogged reviews, Figure 9), particularly in FY 1991 and FY 1992. particularly license renewals, in the past 3 years. Figure 9 Materials Licensing Reviews Backlog 400 300 ? ) ) ,,e 200 j! f a i z r l h W 100 l j i ) n L 1 ,i w i-h- 3 lj j-0 1991 1992 1993 1994 1995 Fiscal Year [ New Applications & Amendments O Renewals] l This is consistent with the increases shown in the determine ways to streamline, automate, and i materials licensing reviews timeliness chart avoid duplication of effort in processing license (Figure 8), with each reflecting the completion of requests. As a result, the project is expected to many previously backlogged reviews. (As the old provide cost savings in terms of resources needed inventory is cleared out, tne backlog decreases, but for the NRC materials licensing process, improve the average time to complete reviews increases.) communications with materials licensees, and j generally speed up the materials licensing pro-j In FY 1995, the NRC started the business cess. In January 1996, NRC amended its regula-j process reengineering (BPR) project to improve the tions to implement, on a one-time basis, a materials licensing process. The long term-goal of Hve-year extension of certain byproduct, source, the BPR process is to establish more efficient and and special nuclear materials licenses. The potentially automated processing of materials regulations were amended to make resources license and amendment requests. The project will available to expedite the development, design, U.S. NL' CLEAR REGt'LAloRv Commission 12
i and testing of the new materials licensing process. Materials Inspections However, during the BPR project, the NRC will During FY 1995, the NRC completed ap-continue to review complex backlogged licensing proximately 2l00 inspections of materials facili-cases. These cases are likely to be labor-inten-ties, exceeding the planned number ofinspections sive, and include those with the largest potential by 3 percent (Figure 10). Over the last 5 years, for health and safety concerns. It is anticipated the number of materials licensees has declined; l that the BPR project will maintain or improv'e therefore, fewer materials inspections were radioactive materials safety, while greatly reduc-planned and performed each year, ing the amount of time necessary to review materials licensing actions. l Figure 10 Materials Inspections 3500 3000 j.,,,,,,, S 2500 1 'O 8 j s $ 2000 p-t-- v E b h 1 -- E 1500 i g ggg f. } y = s a I e e l Z g l j 500 O,- ,7 p u i 1991 1992 1993 1994 1995 Fiscal Year Planned Performed l l l l \\ 1995 ACCot NTABil.ITY REPORT 13
FY 1995 Audited Financial Statement Limitations of Principal Statements The principal statements have been prepared to report the financial position and results of opera-tions of the NRC, pursuant to the requirements of the Chief Financial Officers Act of 1990. These statements have been prepared from the books and records of the NRC in accordance with the formats prescribed by the Office of Management and Budget. However, these statements differ from the financial reports used to monitor and control budgetary resources that are prepared from the same books and records. The principal 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 enactment of an appropriation, and that the payment of all liabilities other than for contracts can be abrogated by the sovereign entity. Other limitations are included in the footnotes to the principal statements. The NRC's FY 1995 financial statement was audited by the NRC's Office of Inspector General (OlG). This section contains the results of the OIG audit, including the financial statement, t 1995 AcCoUNTABII.ITY REPORT 15
ja atoog 4 p g UNITED STATES 5 E NUCLEAR REGULATORY COMMISSION %s*,*/ WASHINGTON, DC 20555-0001 March 1,1996 MEMORANDUM TO: Chairman Jackson Commissioner Rogers Commiss'oner Di us 'o FROM: Leo J. N on Acting Inspector General
SUBJECT:
RESULTS OF THE AUDIT OF U.S. NUCLEAR REGULATORY COMMISSION'S FISCAL YEAR 1995 FINANCIAL STATEMENTS Attached is the Office of the Inspector General's audit report of the U.S. Nuclear Regulatory Commission's (NRC) Fiscal Year 1995 financial statements. The report consists of five sections: a synopsis of the various individual audit reports which comprise the overall report; the report on the principal statements; the principal statements; the opinion on management's assertions about the effectiveness of internal controls; structure; and, the report on compliance with laws and regula-tions. Written comments were obtained from the Chief Financial Officer (CFO) and are included as an appendix to our reports. In the report on the NRC's Fiscal Year 1995 Principal Financial Statements, we issued an unquali-fied opinion on the Statement of Financial Position, and the Statements of Operations, Cash Flows, and Budget and Actual Expenses. In the opinion on management's assertions about the effectiveness of internal controls, we identi-fled a condition related to NRC's fee recovery system that existed during Fiscal Year 1995. In addition to NRC's planned corrective actions, we made one recommendation for improvement. This same issue is reported in the Report on Compliance with Laws and Regulations. On February 23,1996, the Chief Financial Officer (CFO) responded to our draft report dated February 15,1996. The CFO noted that corrective action was underway to remedy the deficiencies and agreed with our recommendation for a root cause determination. Ile also stated his apprecia-tion for our support on the Department of Energy audit issue. We appreciate NRC staff's coopera-tion and continued interest in improving financial management within NRC. 1995 ACCOUNTABILITY REPORT I7
SYNOPSIS OF FISCAL YEAR 1995 AUDIT OF NRC'S PRINCIPAL FINANCIAL STATEMENTS The Office of the Inspector General (OlG)is required by the Chief Financial Officers Act to annu-ally audit the Principal Financial Statements of the U.S. Nuclear Regulatory Commission (NRC). OIG audited the principal statements for the fiscal year (FY) ended September 30,1995, including assessing the agency's internal control structure and compliance with applicable laws and regula-tions. The audit was perfonned for the purpose of forming an opinion on the Principal Financial Statements. The infonnation in the Overview of NRC's Financial Statements and the Supplemen-tal Information sections is not a required part of the Principal Financial Statements, but is supple-mentary infonnation required by the Office of Management and Budget Bulletin 94-01. Although we reviewed this infonnation,it was not subjected to the auditing procedures applied in the audit of the Principal Financial Statements, and accordingly, we express no opinion on it. The results of the audit of each major area are summarized as follows: Principal Financial Statements OIG issued an unqualified opinion on NRC's Principal Financial Statements as of September 30,1995. Internal Control Structum l OIG found three reportable conditions. These concerned (1) inadequate internal controls in the fee recovery system to ensure that the licensees are billed for work performed on their behalf; (2) the lack of audit assurance from DOE concerning the DOE's National Laboratories compliance with laws and regulations for the expen-diture of NRC funds, and (3) the need for an integrated payroll system with labor distribution capabilities. Based on corrective actions taken in FY 1995, OIG closed the prior reportable con-l ditions concerning (1) the timeliness of NRC's billing practices, and (2) the need to i formalize NRC's property system. (continued on page 20) 4 1995 ACCoUNTABn.ITY REPORT 19 i
FY I995 Audited Financial Statement (continued) Comoliance with Laws and Regulations OlG found that inadequate internal control resulted in instances where licensees were not billed for specific services perfonned for their benefit. Therefore, the charges for the services were being billed to all reactor licensees under the authority of 10 CFR Part 171, " Annual Fees..", instead of under the authority of 10 CFR Part 170, " Fees... for Regulatory Services....". Based on the corrective actions taken in FY 1995, OIG closed the FY 1994 compli-ance finding concerning billing issues related to NRR's Technical Assistance Pro-gram Support System (TAPPS). l i U.S. NUCl. EAR REGULATORY COMMISSION 20
TABLE OF CONTENTS i INSPECTOR GENERAL'S REPORT ON l THE PRINCIPAL STATEMENTS....... 23 PRINCIPAL STATEMENTS STATEMENT OF FINANCIAL POSITION., 25 STATEMENT OF OPERATIONS AND CllANGES IN NET POSITION...... 27 STATEMENT OF CASIi FLOWS... 28 STATEMENT OF BUDGET AND ACI'UAL EXPENSES......... 30 NOTES TO PRINCIPAL STATEMENTS.............. 31 INSPECTOR GENERAL *S OPINION ON MANAGEMENT'S ASSERTION ABOUTTHE EFFECTIVENESS OF j INTERNAL CONTROLS..... 51 INSPECTOR GENERAL'S REPORT ON COMPLI ANCE WITH LAWS AND REGULATIONS.............. 57 APPENDIX COMMENTS OF THE CHIEF FINANCIAL OFFICER 1995 ACCOUNTAllII.ITY REI' ORT 21
INSPECTOR GENERAllS REPORT ON PRINCIPA L STATEMENTS The Office of the Inspector General (OIG) has audited the accompanying principal statements of financial position of the U.S. Nuclear Regulatory Commission (NRC), as of September 30,1995, and the related principal statements of operations and changes in net position, cash flows, and budget and actual expenses for the fiscal year then ended. NRC management is responsible for preparing these financial statements. Our responsibility is to express an opinion on the financial statements based on our audits. The financial statements of the U.S. Nuclear Regulatory Commis-sion as of September 30,1994, were audited by other auditors, whose report dated March 10,1995, expressed an unqualified opinion on those statements. SCOPE OIG conducted its audits in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and Office of Man-agement and Budget Bulletin 93-06, Audit Requirernentsfor Federal Financial Statements. Those standards 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 attached thereto. An audit also includes assessing the accounting principles used and sig-nificant estimates made by management as well as evaluating the overall statement presentation. The Federal Accounting Standards Advisory Board is currently studying accounting principles. Generally accepted accounting principles for Federal entities will be issued 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 applicable accounting standards contained in agency accounting policy, procedures manuals, and/or related guidance. The summary of significant accounting principles included in the Notes to Principal Statements, Note 1, describes the ac-counting principles used by the U.S. Nuclear Regulatory Commission to prepare the principal statements. MATTER OF EMPHASIS NRC's principal statements include reimbursable expenses of the U.S. Department of Energy's (DOE) National Laboratories. For Fiscal Year 1995, NRC's Statemern of Operations included about $110 million of reimbursable expenses, which represents approximately 20 percent of the NRC's total expenses. Our 1995 audit included testing of these expenses and financing sources for compliance with laws and, regulations within NRC. The work placed with DOE is under the (continued on page 24) 1995 ACCoUNTABil.ITY REPORT 23
FY 1995 Audited Financial Statement (continued) 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 memorandum of the General Accounting Office's Assistant General Counsel, dated March 6,1995, where he opined that "... DOE's inability to as-sure that its contractors' costs INational Laboratories) are legal and proper...does not compel a conclusion that the NRC has failed to comply with laws and regulations." DOE also has the cognizant responsibility to assure audit resolution and should provide the results of its audits to NRC. (See our reports on Management's Assertion About The Effectiveness of Internal Controls and on Compliance with Laws and Regulations). OPINION In our opinion, the principal statements present fairly,in all material respects, the financial posi-tion of the U.S. Nuclear Regulatory Commission on September 30,1995, the results ofits opera-tions and changes in net position, the cash flows, and the status of budget to actual expenses for the fiscal year then ended in conformity with the accounting principles described in Note 1. Our audits were conducted for the purpose of forming an opinion on the principal statements described above. i I U.s. Nt CLEAR REGt:LAToRY Commission 24
STATEMENT OF FINANCIAL POSITION Septemher 30,1995 and 1994 1295 1994 ASSETS Entity Asseti:' Intragovernmental assets: Fund balances with Treasury (Note 2) $258,602,386 _262,192,247 Accounts receivable, net (Note 3) 8,231,231 5,802,642 Advances and prepayments (Note 4) 2,466,180 2,672,160 Governmental assets: Accounts receivable, net (Note 3) 28,310,335 59,136,473 Advances and prepayments (Note 4) 695,961 860,126 Inventory not held for sale 630,517 Property and equipment, net (Note 5) 37.175.412 40.487.377 Total entity assets $335.481.505 371.781.542 ~ Non Entity Assets:, Governmental assets: Accounts receivable, net (Note 3) 692.881 856.102 i Total non-entity assets 692.881 856.102 Total assets $336.174.38(i $372.637,fiM (continued on page 26) The accompanying notes to the principal statements are an integral part of this statement. 1995 ACCoUNTAlttIIIT REPORT 25
FY I995 Amdited Financial Statement (continmed1 STATEMENT OF FINANCIAL POSITION (Continued) September 30,1995 and 1994 1995 1994 LIAHILITIES (Liabilities Covered By Budgetary Resources:- Intragovernmental liabilities: Accounts payable and advances (Note 6) $12,989,462 $ 14,636,020 Other intragovernmental liabilities (Note 8) 41,532,847 64,711,721 Governmental liabilities: Accounts payable (Note 6) 22,515,321 25,513,612 Other governmental liabilities (Note 8) 8,324,101 12,898,358 Accrued payroll and benefits (Note 7) 10.276.907 9.683.599 Total liabilities covered by budgetary resources . 95.638.638 127.443.310 Ijahilities Not Covered By Budgetary Resources: Governmentalliabilities: Other governmental liabilities (Note 9) 25.825.458 25.653.480 Totalliabilities not covered by budgetary resources 25.825.45f! 25.653.480 Totalliabilities 121.464.096 153.096.790 NET POSITION [ Balances (Note 11):. Unexpended appropriations 203,360,336 204,076,440 Invested capital 37,175.412 41,117,894 Future funding requirements (25.825.458) (25.653.4]!0) Total net position _214.710.290 219.540.854 Total liabilities and net position $336.174.386 3 372.637.644 The accompanying notes to the principal statements are an integral part of this statement. U.s.NUCIEAR NEGUIAToRv Co%IMissioN 26
1 1 STATEMENT OF OPERATIONS AND CIIANGES IN NET POSITION for the years ended September 30,1995 and 1994 i l 1995 1994 REVENUES AND FINANCING SOURCES - Appropriated capital used (Note 12) $ 35,558,585 $ 48,228.503 Other revenues and financing sources (Note 13) 492,783,452 502,577,448 Excess current year receipts of fees over billings 23,015,654 4,975,171 Less: Receipts transferred to the Treasury or other agencies (3.518.733) (5.316.616) Total revenues and financing sources 547.838.958 550.464.506 EXPENSES Program Expenses (Note 14) Salaries and expenses 534,023,349 527,572,456 Office of Inspector General 4.557.825 4.673.069 Total program expenses (Note 14) 538.581.174 532.245.525 Depreciation (Note 5) 9,129,575 16,541,573 Interest 13,143 18,458 Other expenses (Note 16) 287.045 1.679 722 ~ Total expenses 548.010.937 550.485.285 Shortage of revenues and financing sources over total expenses (Note 17) $ (171.979) (20.779) . Net position, beginning balance $219,540,854 $222,453,475 Excess (shortage) of revenues and financing sources over expenses (171,979) (20,779) Plus non-operating changes (Note 18) (4.658.585) (2.891.842) Net position, ending balance $ 214.710.290 $219.540.854 i tcontinued on page 28) The accompanying notes to the principal statements are an integral part of this statement. 1995 ACCo0NTAHil.lTv REPORT 27
FY I995 Audited l'inancial Statement (continued) STATEMENT OF CASII FLOWS for the years ended September 30,1995 and 1994 1995 1994 l CASH PRO'VIDED (USED) BY OPERATING ACTIVITIES Cash Provided: Fees for licensing and inspection and other services (Note 12) $501,871,000 $ 499,575,640 Other operating cash provided ___16.852.614 14.998.142 i Total cash provided $518.723.614 _514.573.78' Cash Used: Personnel services and benefits (266,399,073) (260,441,540) Travel and transportation (16,238,339) (17,458,136) Rent, communications and utilities (25,804,325) (22,668,680) Printing and reproduction (2,132,047) (1,921,611) l Other contractual services (224,466,951) (216,426,480) Supplies and materials (11,372,953) (15.431,525) l Insurance claims and indemnities (131,742) (40,416) Grants, subsidies and contributions (1,378,879) (1,110,957) Other operating cash used (5.406.669) (5.940.601) Total cash used (553.330.978) (541.439.946) Net cash provided (used) by l Operating activities (34.607.364) (26.866.164) . CASH PROVIDED (USED) BY INVESTING ACTIVITIES.' Purchase of property and equipment (7.101.108) (19.763.758) Net cash used by investing activities (7.101. IJ()8) (19.763.758) CASH PROVIDED (USED) BY FINANCING ACTIVITIES Appropriations 22,000,000 35,338,847 Add: Transfers of cash from others 8.900.000 9.912.300 Net appropriations 30.900.000 45.251.147 Fee collections not used to offset current year's appropriation 7.218.611 Net cash provided (used) by financing activities 38.118.611 45.251.147 The accompanying notes to the principal statements are an integral part of this statement. U.s. NUCI. EAR REGUIAToRY Co%tMIssioN 28
( l STATEMENT OF CASil FLOWS (Continued) for the years ended September 30,1995 and 1994 199J 1994 Net cash provided (used) by operating, investing and financing activities (3,589,861) (1,378,775) Fund balances with Treasury, beginning 262.192.247 263.571.022 Fund balances with Treasury, ending $258.602.386 $ 262.192.247 ) ' Reconciliation of Shortage of Revenues and Financing': l . Sources OverTotal Expenses: Excess (Shortage) of Revenue and Financing Sources Over Total Expenses $ (171,979) (20,779) i Adjustments to Reconcile Shortage Of Revenues and Financing Sources Over Total Expenses to Net 1 Cash Provided by Operating Activities: 1 Appropriated Capital Used (35,558,585) (48,228,503) Decrease (Increase)in Accounts Receivable (254,047) 76,513 Decrease (Increase) in Other Assets 370.145 (1,394,091) Increase (Decrease)in Accounts Payable (6,227,518) 1,566,781 increase (Decrease)in Other Liabilities (3,980,949) 6,151,142 Depreciation and Amortization 9,129,575 16,541,573 l Other Unfunded Expenses 171,979 20,779 Other Adjustments 1.914.015 (1.579.579) Total adjustments (34.435.385) (26.845.385) l Net Cash Provided (Used) by Operating - Activities ^ S(34.607.364) $(26.866.164) i l Supplemental Schedule of Financing and Investing Activity: Property and Equipment Acquired Under i Capital Lease Obligations S 0 894.856 The accompanying notes to the principal statements are an integral part of this statement. (continued on page 30) 1995 ACCoCNTABII.ITv REPORT 29
S k STATEMENT OF BUDGET AND ACTUAL EXPENSES k [ for the years ended September 30,1995 and 1994 { m l Budget Actual Actual j' b Obligations 1995 1994 5. j Program Name Resources Direct Reimbursements Expenses Expenses d I E Salaries and expenses $625,685,531 $538,923,062 $15,892.958 $543,453,112 $545,812,216 j 5 Office of 3 j inspector General 5.573.272 4.655.34J 24.000 4.557.825 4.673 069 i s-E Totals $631.258.803 $543.578.407 $15.916.958 $548.010.937 $550.485.285 S ' Budget Reconciliation: - Total expenses $548,010,937 $550,485,285 Add: Capital acquisitions 7,101,108 23,723,975 Other expended budget authority (1,914,015) (2,011,258) Less: Expenses not covered by available budgetary resources: Depreciation (9.129,575) (16,541,573) Unfunded annual leave expense (140,435) 66,910 Unfunded Workers' Compensation expense (31.544) (87,689) Accrued expenditures 543,896,476 555,635,650 Less reimbursements (Acct 5200) (10.409.373) (2.660.362) Accrued expenditures, direct $533.487.103 $552.975.288 The accompanying notes to the principal statements are an integral part of this statement.
NOTES TO PRINCIIML STATEMENTS September 30,1995 and 1994 NOTE 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES A. Basis ofPresentation These priacipal 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 statements specified by the Office of Management and Budget (OMB)in OMB Bulletin 9?-01 and NRC accounting policies summarized in this note. These statements are therefore different from the financial reports, also prepared by NRC pursuant to OMB directives, which are used to monitor and control NRC's use of budgetary resources. i B. Reporting Entity / Program Name NRC is an independent agency of the Federal Government created by the Energy Reorganization Act of 1974, as amended. Its purposes are defined by the Energy Reorgani-zation Act of 1974, as amended, and the Atomic Energy Act of 1954, as amended. 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. NRC has two appropriations: i 31X0200 - Salaries and Expenses 31X0300 - Office of Inspector General The 31X0200 appropriation includes approximately $22 million for both Fiscal Year 1995 and 1994, respectively, of funds transferred from the Department of Energy, Nuclear Waste Fund to NRC in accordance with the provisions of PL 103-316 and PL 103-126. Public Law 104-19 rescinded $1.7 million from the Fiscal Year 1995 NRC Salaries and Ex-penses Appropriation. In addition, in Fiscal Years 1995 and 1994,58.9 million and $5.5 million, respectively, of j the appropriation received by the U.S. Agency for International Development was trans-ferred for the Nuclear Safety Assistance Program in Russia and the Ukraine which is under the control of NRC. l (continued on page 32) I 1995 AccoUNTAHILITY REPORT l l 31
i FY 1995 Audited Financial Statement (continued) NOTES TO PRINCIPAL STATEMENTS September 30,1995 and 1994 Additionally, approximately $4.4 million of the appropriation received by the General Ser-vices Adrninistration (GSA), were transferred to NRC for the operatica and repair of cer-tain buildings occupied by NRC for Fiscal Year 1994. The accompanying financial statements of NRC include the accounts of all funds under NRC control. I \\ C. Budgets and Budgetary Accounting l l l For the past 21 years, Congress has adopted no-year appropriations which are available for l obligation by NRC until expended. The Omnibus Budget Reconciliation Act (OBRA) of j 1990 requires NRC to recover approximately 100 percent of its new budget authority, less l 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 revenues collected during the fiscal year. D. Basis ofAccounting Traesactions are recorded on both an accrual accounting basis and on a budgetary basis. Under the accrual method, revenues are recognized when earned and expenses are recog-nized when a liability is incurred, without regard to receipt or payment of cash. Budget- ) ary accounting facilitates compliance with legal constraints and controls over the 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 earned. 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 recog-j nized are reduced by the amount of assessed fees collected during the fiscal year to the extent of new budget authority for the year. Collections which exceed the new budget authority are held to offset subsequent years' appropriations. Appropriations expended for property and equipment are recognized as expenses when the asset is consumed in opera-tions (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 i 1 l U.s. NUCLEAR REGULAToRv COMMISSION 32
NOTES TO PRINCIPAL STATEMENTS September 30,1995 and 1991 accrual basis recognition of appropriations expensed and the budgetary basis recognition of outlays are presented in the Statement of Budget and Actual Expenses. l Miscellaneous receipts collected by.NRC are not available to NRC for obligation or expen-diture. These receipts must be transferred to the U.S. Treasury when collected. E Funds with the Treasury and Cash l NRC cash receipts and disbursements are processed by the U.S. Treasury. The Funds with j the U.S. Treasury and Cash are primarily appropriated funds that are available to pay cur-rent liabilities and to finance authorized purchase commitments. Cash balances held out-side the U.S. Treasury are not material. l G. Accounts Receivable, Net ofAllowance 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 balances and the application of estimated uncollectible percentages to categories of aged receivable balances. l 11. Advances l I NRC makes cash payments to other Federal agencies, employees, grantees, and contractors to provide for future NRC program expenditures. These advance payments are recorded as assets which are reduced when reports of expenditures are received by NRC or when accru-l als of cost estimates are made by NRC. 1 1 1. Property and Equipment The land z.nd buildings in which NRC operates are provided by the GSA, which charges NRC rent that approximates the commercial rental rates for similar properties. Property with a cost of $50,000 or more per unit and a useful life of two years or more are capitalized at cost and depreciated. Other property items are expensed when purchased. Normel repairs and maintenance are charged to expense as incurred. At the beginning of Fiscal Year 1995, NRC increased the dollar value threshold of capital-ized property from $5,000 to $50,000. Items acquired costing less than $50,000 are (continued on page 34) 1995 Accot'NTAlllLITY REPORT 33
I IT 1995 Audited Financial Statement (continued) NOTES TO PRINCil%L STATEAIENTS September 30,1995 and 1994 expensed in the year of purchase. All items of property capitalized in previous years ($5,000 to $49,999.99) will continue to be depreciated over the remaining lives. Property is depreciated using the straight-line method over useful lives which range from 5 to 8 years. I J. Prepaid and Deferred Charges Payments in advance of the receipt of goods and sersices are recorded as prepaid charges at the time of prepayment and are recognized as expenditures / expenses when the related goods and services are received. K. Ilabilities Liabilities represent the amount of monies or other resources that are likely to be paid by NRC as the result of a transaction or event that has already occurred. However, no liability can be paid by NRC absent an appropriation. Liabilities for which an appropriation 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 NRC aris-ing from sources other than contracts can be abrogated by the Government acting in its sovereign capacity. L. Contingencies NRC is a party to various administrative proceedings, legal actions, environmental suits, and claims brought by or against it. Based on the advice oflegal counsel concerning contin-gencies,it is the opinion of NRC management that the ultimate resolution of these proceed-ings, actions, suits, and claims will not materially affect the financial position or results of operations of NRC. M. Annual, Sick, and Other Leave Annual leave is accrued as it is carned 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 appropriations and assessments. Sick leave and other types of nonvested leave are expensed as taken. U.s. NUCl. EAR REGUI.AToRY Colt %fisNIoN 34
NOTES TO PRINCH%L STATEMENTS September 30,1995 and 1994 N. 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. Em-ployees hired prior to that date could elect to join FERS or to remain in the Civil Service Retirement System (CSRS). Approximately 60 percent of NRC employees belong to CSRS and 40 percent belong to FERS. For employees in FERS, NRC withholds.80 percent of base pay earnings in addition to Federal Insurance Contribution Act (FICA) and matches the withholding with a 11.4 percent contribution. The sum is transferred to the Federal Employees Retirement Fund. For employees covered by CSRS, NRC withholds 7.00 per-J cent of their base pay earnings. This withholding is matched by 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 CSRS. For employees covered by FERS, NRC automatically contributes I percent of base pay to their account and matches contributions up to an additional 4 percent. The maximum per-centage that an employee participating in FERS may contribute is 10 percent 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 NRC contributions is transferred to the Federal Retirement Thrift Investment Board. NRC does not report on its financial state.aents FERS and CSRS assets, accumulated plan benefits, or unfunded liabilities, if any, applicable to its employees. Reporting such amounts is the responsibility of the Office of Personnel Management. 0. 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. Government resources invested in NRC's property and equipment and inventory not held for sale. Increases to invested capital are (continued on page 36) 1995 ACCoLNTAllII.ITY REPORT 35
FY 1995 Audited Financial Statement (continued) NOTES TO PRINCH%L STATEMENTS September 30,1995 and 1991 recorded when assets are acquired with direct appropriations, and decreases are re-corded as a result of the depreciation, disposition of capital assets, or consumption of inventory. 3. Future funding requirements represent (a) accumulated annual leave earned but not taken as of the financial statement date and (b) accrued Workers' Compensation. The expense for these accruals is not funded from current appropriations, but rather will be funded from future appropriations and assessments. l P. Department of Energy (DOE) Charges l Financial transactions between the DOE and NRC are fully automated through the U.S. Treasury's On-Line Payment and Collection (OPAC) System. The OPAC System allows ( the DOE to collect amounts due from NRC directly from NRC's account at Treasury for goods and/or services rendered. Project manager verilication of goods and/or services re-ceived is subsequently accomplished through system generated voucher approval system. The vouchers are returned to the Division of Accounting and Finance documenting that the charges have been accepted. Annually, NRC makes approximately $110 million in pay-ments to the DOE in this manner for research conducted by the DOE National Laboratories. l ? Q. Reclassifications Certain amounts for 1994 have been reclassified to conform with the 1995 presentation. j U.S. NUCl. EAR REGUI.AToRY coMMISsloN 36
NOTES TO PRINCIIML STATEMENTS September 30,1995 and 1991 NOTE 2. FUND llALANCES WITII TREASURY Fund balances with Treasury consist of the following amounts as of September 30,1995 and 1994: 1925 1994 Appropriated funds: Obligated $195,094,034 $195,056,128 Unobligated 54.738.792 54.238.253 249,832,826 249,294,381 1 Other fund types 8.769.560 12.897.866 $258.602.386 $262.192.247 U.S. Government cash is handled on an overall consolidated basis by Treasury. " Funds with Trea-sury" represents NRC's right to draw on Treasury for allowable expenditures. All amounts are available to NRC for current use except for $5.6 million related to fees collected which are held to offset subsequent years' appropriations. The obligated and unobligated balances exclude amounts related to unfilled customers orders. NOTE 3. ACCOUNTS RECEIVABLE, NET Accounts receivable, net is composed of the following amounts as of September 30,1995 and 1994: Entity Assets Intragovernmental accounts receivable consists primarily of receivables and reimburse-ments due from other Federal agencies ($8,231,231 and $5,802,642 at September 30,1995 and 1994, respectively). (continued on page 38) 1995 ACCoUNTAHILITY REPORT 37
Fl' 1995 Audited Financial Statement (continued) NOTES TO PRINCIPAL STATEMENTS September 30.1995 and 1994 t l Governmental accounts receivable is comprised of the following amounts as of September 30, 1995 and 1994: 1995 1994 Governmental: Materials and facilities fees - billed $ 6,982,690 $17,689,190 Materials and facilities fees - unbilled 24,388,455 46,535,157 Other 132.035 194.504 Total accounts receivable 31,503,180 64,418,851 Less: Allowaner for uncollectible accounts (3.192.845) (5.282.378) Accounts receivable, net $28.310.335 559.136.473 Governmental accounts receivable represents primarily amounts due for fees assessed for licensing and inspections of nuclear facilities and radioactive materials and other services. In the year collected, the amounts will be i. sed to offset NRC's appropriations. i Non-Entity Assets l l Governmental accounts receivable, net represents miscellaneous amounts due from the l public ($692,881 and $856,102 at September 30,1995 and 1994, respectively), which when l collected, must be transferred to the U.S. 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 percentages to categories of aged receivable balances. l l 1 1 I U.S. NUCl. EAR REGULAToRv Cont %IISsloN l 38 l
NOTES TO PRINCIPAL STATEMENTS September 30,1995 and 1991 NOTE 4. ADVANCES AND PREPAYMENTS Advances and prepayment as of September 30,1995 and 1994, consists primarily of the following: 1225 L924 Entity Assets Intragovernmental: Advances - other Federal agencies $2.466.180 $2.672.160 Governmental: Travel advances 695,961 $ 852,933 Advances - other 7.193 $ 695.961 $ 860.126 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 30,1995 and 1994. NOTE 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net consists of the following as of September 30,1995 and 1994: 1995 1994 Service Acquisition Accumulated Net Book Net Book Years Value Depreciation Value Yalut Fixed Assets Class Equipment 5-8 $28,481,712 $18,523,429 $ 9,958,283 $13,080,567 ADP software 5 44,845,297 36,779,914 8,065,383 11,386,812 Leasehold improvements 5-20 17,288,105 1,768,704 15,519,401 14,405,994 ADP software under development 3.632.345 3.632.345 1.614.004 Total $94.247.459 $57.072.047 $37.175.412 $40.487.377 (continued on page 40) 1995 ACCOUNTABILITY REPORT 39
FY I995 Audited Financial Satement (continmed) NOTES TO PRINCH%L STATEMENTS September 30,1995 and 1991 \\ The straight-line depreciation method is used for all classes of fixed assets. Depreciation expense for Fiscal Years 1995 and 1994 was $9,129,575 and $16,541,573, respectively. 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 to i eight years. As a result of revising the service lives and salvage vidues of its equipment, the NRC recalculated the depreciation on its equipment, resulting in $4.95 million of additional depreciation expense in 1994. Had the NRC not revised the useful lives ofits equipment, the total depreciation expense in 1994 would have been approximately $11.59 million. The re-maining book value of the equipment was depreciated over the remaining service lives of the equipment. The additional depreciation is approximately $1.65 million in Fiscal Year 1995 and will be $1.25 million in Fiscal Year 1996,$.75 million in Fiscal Year 1997 and $.42 million in Fiscal Year 1998. In 1995, NRC increased the capitalization dollar amount on property and equipment from $5,000 to $50,000. All property items previously capitalized ($5,000 to $49,999.99) will continue to be depreciated over the remaining useful lives. The land and buildings occupied by NRC are provided by the GSA. For Fiscal Years 1995 and 1994, the GSA charged NRC $18,580,348 and $18,594,586, respectively, for the use of these facilities based on a rental fee which is to approximate the commercial rates for similar properties. I U.s. NUCLEAR REGULATORY CoNINilssioN 40
NOTES TO PRINCil%L STATEMENTS September 30,1995 and 1994 NOTE 6. ACCOUNTS PAYABLE AND ADVANCES Accounts payable and advances consists of the following as of September 30,1995 and 1994: 1995 1994 Intragovernmental: Accounts payable 1 Department of Energy $ 9.826.949 $ 8,072,650 Other Federal agencies 2.994.531 6.174.148 12.821.480 14.246.798 Advances 167.982 389.222 $ 12.989.462 $ 14.636.020 Governmental: Account payable Vendor payables $20,855,270 $24,100,634 Contract holdbacks 1.660.051 1.412.978 $22.515.321 $25.513.612 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. 1 NOTE 7. ACCRUED PAYROLL AND BENEFITS Accrued payroll and benefits as of September 30,1995 and 1994 consists of: 1995 1994 Accrued personnel services S 8,699,085 $8,200,211 Accrued benefits 1.577.822 1.483.388 $10.276.907 $9.683.599 (continued on page 42) 1995 AccoUNTAllII ITY REh)RT 41
1 FY 1995 Audited Financial Statement (continued) NOTES TO PRINCll%L STATEhiENTS September 30,1995 and 1994 Accrued payroll and benefits represent wages and benefits which have been earned but not paid as of the financial statement date. NOTE 8. OTilER LIABILITITES COVERED BY BUDGETARY RESOURCES Other liabilities as of September 30,1995 and 1994 include: 1995 1994 Governmental: l l Liability for deposit funds $1,550,759 $ 3,151,105 Advances from others 6.773.342 9.747.253 $8.324.101 $12.898.358 The liability for deposit funds consists primarily of liabilities arising from payroll deduc-j tions and tax withholdings. Advances from others consists of funds primarily from foreign govemments for the participation in cooperative research programs. J995 1994 l Intragovernmental: Liability to offset net accounts receivable for fees assessed $35,204,023 $63,855,619 Liability related to fees collected l which will offset subsequent years' appropriations 5,635,943 Liability to offset net miscellaneous accounts receivable 692.881 856.102 1 $41.532.847 $64.711.721 The liability to offset the net accounts receivable for fees assessed represents amounts which, when collected, will be transferred to the U.S. Treasury to offset NRC's appropriations in the year collected. i U.s. NOCLEAR REGULAToRv con 1%11SSloN 42
NOTES TO PRINCIPAL STATEnfENTS September 30,1995 and 1994 The liability related to fees collected which will be used to offset subsequent years' appro-priation represents amounts which will be transferred to the U.S. Treasury to offset subse-quent years' appropriation. The liability to offset net miscellaneous accounts receivable represents amounts which will be reverted to the U.S. Treasury when collected. All Other Liabilities except Advances from others are current. Current liabilities represent amounts which are expected to be paid within the fiscal year following the reporting date. Advances from others may not be liquidated in the fiscal year following the reporting date. NOTE 9. OTIIER LIABILITITES NOT COVERED BY BUDGETARY RESOURCES Unfunded liabilities as of September 30,1995 and 1994 include: 1225 1994 Governmental: Accrued annual leave $24,563,784 $24,423.350 Accrued Workers' Compensation 1.261.674 1.230.130 h5.825.458 $25.653.480 Accrued annual leave represents the amount of annual leave earned by NRC employees but not yet taken. Accrued Workers' Compensation represents Federal Employees Compensa-tion Act (FECA) benefits paid by the Department of Labor on NRC's behalf which had not been billed to or paid by NRC as of September 30,1995 and 1994. 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 (continued on page 44) 1995 ACCOUNTABILITY REPORT 43 j i 1
FY 1995 Audited Financial Statement (continued) NOTES TO PRINCHML STATEMENTS September 30,1995 and 1991 NOTE 10. INTRAGOVERNMENTALACTIVITIES The NRC reporting entity's financial activities interact with and are dependent upon those of the Federal Government as a whole. Other Federal agencies make financial decisions and report cer-tain financial matters on behalf of all Federal agencies. The practice of having Federal agencies record or report only those government-wide financial matters for which they are directly respon-sible 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 performed or reported by other Federal agencies in which NRC is indirectly involved are as follows: NRC funds a portion ofits employee pension benefits under the CSRS and the FERS but does not disclose actuarial data with ru,; cct 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, NRC makes contributions to the TSP on behalf ofits employees. NRC does not have control over the plan's assets. The TSP is administered by the National Finance Center of the Department of Agriculture. Certain legal matters to which NRC may be a named party are administered, and in some cases, litigated by other Federal agencies. Amounts paid under any decision, 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' Compensation claims brought by NRC employees fall under FECA, which is administered by the Em-ployment Standards Administration of the U.S. Department of Labor. The cost of admin-istering, litigating, and settling these legal matters has not been allocated to individual Federal agencies. Interest on borrowings of the U.S. Treasury is not included as a cost to NRC's programs and is not included in the accompanying financial statements. U.s.NUCl. EAR HEGUI.AToRY Costs 11ssloN 44
.-= NOTES TO PRINCII%L STATEMENTS September 30,1995 and 1994 NOTE 11. NET POSITION i The net position consists of the following as of September 30,1995 and 1994: HM 1994 Unexpended appropriations: Unobligated $ 62,857,857 $ 56,926,694 Undelivered orders 140.502.479 147.149.746 203,360.336 204,076,440 Invested capital 37,175,412 41,117,894 Future funding requirements (Note 9) _{25.825.453) (25.653.480) $214.710.290 $219.540.854 Unexpended appropriations include (1) unobligated appropriation balances and (2) undelivered orders, which are amounts which have been obligated but not yet expended. The unabligated appropriations balance does not include $8,911,666 and $7,929,695 in unfilled customer orders - unobligated as of September 30,1995 and 1994, respectively. The undelivered orders balance does not include $8,119,066 and $2,688,440 in unfilled customer orders - obligated as of Septem-ber 30,1995 and 1994, respectively. Invested capital represents the net investment of the U.S. Government appropriations J expended for NRC's capitalized property and equipment. Future funding requirements represent the amount of future funding needed to pay the accrued unfunded expenses as of September 30,1995 and 1994. These accruals are not funded from cur-rent or prior appropriations and assessments, but rather should be funded from future appropria-tions and assessments. Accordingly, future funding requirements have been recognized for these expenses that will be paid from future appropriations (See Note 9). NOTE 12. APPROPRIATED CAPITAL USED Appropriated capital used, a financing source, is recognized to the extent that appropriated funds have been consumed less the amount collected from fees assessed for licensing, inspections, and other services. During Fiscal Years 1995 and 1994, $509.1 million and $499.6 million, respectively, were collected from fees assessed for licensing, inspections and other services. i (continued on page 46) 1995 ACCOUNTABILITY REPORT 45
171995 Audited Financial Statement (contins.ed) NOTES TO PRINCIPAL STATEMENTS l September 30,1995 and 1994 OBRA requires NRC to recover approximately 100 percent of its new budget authority,less the amount appropriated from the Nuclear Waste Fund, by assessing fees. At the end of the fiscal year, appropriations recognized are reduced by the amount of assessed fees collected during the fiscal year to the extent of new budget authority for the year. Collections which exceed the new budget authority are held to offset subsequent years appropriations. For Fiscal Years 1995 and 1994, $501.9 and $499.6 respectively, of collections were used to reduce the fiscal year's appropriations recognized: 1995 1994 Appropriated funds consumed S 537,429,585 $ 547,804,143 Less: Collection from fees assessed (501.871.000) (499.575.640) $ 35.558.585 $ 48.228.503 NOTE 13. OTIIER REVENUES AND FINANCING SOURCES Other revenues and financing sources for September 30,1995 and 1994 were: 1995 199_4 Fees for licensing, inspection and other services $478,855,346 $494,600,470 Other miscellaneous receipts 3,518,733 5,316,616 Appropriation reimbursements 10.409.373 2.660.362 $492.783.452 $502.577.448 U.S. NUCLEAR REGULATORY CoMMISsloN 46 L.
l NOTES TO PRINCil%L STATEMENTS September 30,1995 and 1994 NOTE 14. OPERATING EXPENSES Operating expenses by object class are as follows: 1225 122d Personnel services and benefits $263,691,136 $260,529,990 ) Travel and transportation 16,139,326 17,472,506 Rent, communication and utilities 25,581,602 23,082,990 l Printing and reproduction 2,005,287 1,903,611 Contractual services 216,219,114 214,987,115 Supplies and materials 13.353,246 13,115,150 I Grants, subsidies and contributions 1,456,333 1,110,957 Insurance claims and indemnities 131,477 40,416 Other 3.653 2.790 Total $538.581.174 $532.245.525 NOTE 15. EMPLOYEE RETIREMENT PLANS Total NRC contributions for employee retirement plans for Fiscal Years 1995 and 1994 were as follows: 1225 1994 Civil Service Retirement System (CSRS) $ 9,226,610 $ 9,410,751 Federal Employees' Retirement System (FERS) 9,115,078 9,844,803 Federal Insurance i Contribution Act (FICA) 5,923,317 5,753,528 Thrift Savings Plan (TSP) 3.580.292 3.361.939 $27.845.297 $28.371.021 (continued on page 48) 1995 ACCOUNTABILITY REPORT I 47
{ FY 1995 Audited Financial Statement (continued) NOTES TO PRINCIIML STATEMENTS September 30,1995 and 1991 Data on the actuarial present value of accumulated benefits, assets available for benefits, and unfunded pension liability are maintained by other Federal agencies and are not allocated to indi-vidual departments and agencies. NOTE 16. OTIIER EXPENSES i l Other expenses as of September 30,1995 and 1994 consist of: 1 1995 1994 Loss on disposal of property $281,951 $ 1,679,729 Bad Debt Expense 5.094 $287.045 $1.679.729 NOTE 17. SIIORTAGE OF REVENUES AND FINANCING SOURCES OVER TOTAL EXPENSE The shortage of revenues and financing sources over total expenses represents expenses i not covered by budgetary resources for the years ended September 30,1995 and 1994, and con-l sists of: 1995 1994 l Accrued annual leave $140,435 $(66,910) Accrued Workers' Compensation 31.544 87.689 l $171.979 $ 20.779 l l Expenses not covered by Budgetary Resources are not funded from current appropriations but are to be funded from future appropriations and assessments. U.S. NUCLEAR REGULAToRv Commission 48
NOTES TO PRINCII%L STATEMENTS September 30,1995 and 1994 NOTE 18. NON-OPERATING CIIANGES Non-operating changes for the fiscal years ended September 30,1995 and 1994 consist of the following: 1225 1994 Change in unexpended appropriations $ (716,103) $(8,059,480) Change in invested capital (3.942.482) 5.167.638 $(4.658.585) $(2.891.842) 1995 ACCOUNTABII,ITY REPORT 49
INSPECTOR GENERAL'S OPINION ON MANAGEMENT'S ASSERTION ABOUT TiiE EFFECTIVENESS OF INTERNAL CONTROLS OlG evaluated management's assertion about the effectiveness ofits internal controls designed to (1) safeguard assets against loss from unauthorized acquisition, use or disposition, (2) assure the execution of transactions in accordance with laws governing the use of budget authority and with other laws and regulations that have a direct and material effect on the Principal Statement or that are listed in OMB audit guidance and could have a material effect on the Principal Statements, and (3) properly record, process, and summarize transactions to permit the preparation of reliable fi-nancial statements and to maintain accountability for assets. In planning and performing our audit of the principal financial statements of NRC for the year ended September 30,1995, OIG assessed the agency's internal control structure in order to deter-mine our auditing procedures for the purpose of expressing our opinion on the principal statements and to determine whether the internal control structure meets the objectives stated above. This work included obtaining an understanding of the internal control policies and procedures and as-sessing the level of control risk relevant to all significant cycles, classes of transactions, or account balances. Additionally, OIG performed sufficient tests to provide reasonable assurance that sig-nificant control policies and procedures, as implemented, were effective and working as designed. For the purpose of this report, OlG classified NRC's signif~icant internal control structure cycles in the following categories: a Funds with U.S. Treasury a Payroll u Property a Fee Revenue a Travel e Commercial Payments - Non-Department of Energy a Commercial Payments - Department of Energy a Budget For all the internal control cycles listed above, OIG obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk. OIG considered NRC's Federal Managers' Financial Integrity Act (FMFIA) reports, as well as the Office of the Inspector General's (OIG) reports on financial matters and internal accounting control policies and procedures, in making our risk assessment. (continued on page M) 1995 ACCoUNTAIIII.ITY REPORT 51 ~- _____j
FY 1995 Audited Financial Statement (continued) J OlG noted certain matters involving the internal control structure and its operation that we con-sidered reportable conditions under standards established by the American Institute of Certified 4 Public Accountants and Office of Management and Budget (OMB) Bulletin 93-06. Although not material in relation to the Principal Statements, these reportable conditions involve deficiencies in the internal control structure that,in ourjudgment, could adversely affect the entity's ability to ensure the objectives of internal controls are met. In our opinion, NRC management fairly stated that those controls, in place on September 30,1995, provided reasonable assurance that losses, noncompliance, or misstatements material in relation to i the Principal Statements would be prevented or detected on a timely basis. Management made this assertion based upon criteria established under the Federal Managers' Financial Integrity Act of 1982 and the OMB Circular A-123. Internal Control Systems. Reportable Conditions 1 l The matters listed below involve the design or operation of the internal control structure and warrant d disclosure as reponable conditions in this repon. The first issue listed is new, but is similar to a FY 1994 condition. The remaining reportable conditions are carryovers from FY 1994. i a Fee Recovery System Lacks Internal Controls a Lack of DOE Audit Assurance a Payroll System Must Be Integrated With The General Ledger and Possess Labor Distribution Capabilities' Our consideration of the internal control structure would not necessarily disclose all matters 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. In our opinion, none of the reportable conditions noted are classifiable as material weaknesses. The reportable conditions noted are detailed in the Reportable Conditions and Recommendations section immediately following this report. 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 is a matter of public record. ' This reportable condition combines two issues previously reported separately, those being General Accounting Controls at the General Ledger Level Not Maintained and Accounting System Does Not Provide Object Class and Program Information. U.s. NUCLEAR REGULAToRv Commission 52
REPORTAHLE CONDITIONS AND RECOMMENI)ATIONS CURRENT YEAR
- 1. FEE RECOVERY SYSTEM LACKS INTERNAL CONTROL The internal control review of the license fee and debt collection process disclosed a lack of controls for billing inspection costs (Part 170 fees) to licensees. This issue is similar to the reportable condition involving the Technical Assistance Program Support System in the FY 1994 report on internal control, and represents the need for additional management attention to this area.
10 CFR Part 170 fees consist oflicense 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. NRC's fees for these services are assessed generally for the review of new licenses applicants, amendments to or renewal of licenses, and inspection of licensed activities. During our audit we noted that hours associated with two types of completed inspections were not billed to the licensees that received the services. One type included inspection reports that had been closed and data entered into the Inspection Report Tracking System (IRTS) after the end of the billing cycle. The other type involved inspection reports where the completion date was not entered into the IRTS system. In both cases, fees associated with the completed inspections were not billed. I While we were pursuing billing issues and the reliability of billing data, the Office of the Controller (OC) assessed the scope and magnitude of this issue and developed a five-part cor-rective action plan. The plan, however, generally focuses on screening data after it has been processed and does not appear to address (1) why completion dates were not entered, or (2) why the system did not process reports entered after the close of the billing cycle. To provide complete corrective action, we believe these root causes must be determined and addressed. The Office of the Controller estimates between $4-6 million in unbilled inspections occurred during the FY 1991 - 1995 period, and believes that about $1.6 million is attributable to FY 1995. Until OC completes its review, we have deferred further audit effort on this internal control weakness. (continued on page S4) 1995 AccOUNTAHILITv REPORT 53
F
- 1995 Audited Financialstatement antinued>
Recommendations g We believe that normally it is more efficient and possibly more effective to prevent a problem from occuning, than putting in place actions to address the effects of the problem. Therefore,if OC's planned actions do not address the root cause, we recommend that the Chief Financial Officer should direct OC to:
- l. Expand the plan to identify the root cause for the billing deficiencies, and take additional action as needed.
- 2. LACK OF DOE AUDIT ASSURANCE This reportable condition is a carryover from the FY 1994 audit of NRC's principal statements, and concerns the lack of audit assurance for interagency reimbursable work performed by the DOE national laboratories. Approximately 20 percent of NRC's annual budget is expended for work at these laboratories. Prior to FY 1994, this condition was reported as a scope restriction on NRC's principal statements for FY 1992 and 1993. As a result of actions taken by the NRC and the GAO, the issue was downgraded to a reportable condition for FY 1994. In its FY 1994 report, the independent auditor recommended NRC actions to remedy this issue. During FY 1995 and continuing to date, NRC aggressively pursued a solution to this issue. In particular.
NRC has explored several alternatives, including a revision to its Memorandum of Understand-ing with DOE to provide needed information. Although a satisfactory solution has not yet been achieved, we commend NRC for its continuing efforts to resolve this issue, and we will work with the Agency in this effort. Recommendation None. e U.s. NUCLEAR REGULATORY COMMISSION 54
- 3. PAYROLL SYSTEM MUST HE INTEGRATED WITII THE GENERAL LEDGER AND POSSESS LABOR DISTRIBUTION CAPABILITITES This issue is a carryover from the FY 1994 audit, and combines two issues previously reponed separately, those being General Accounting Contmls at the General Ledger Level Not Main-tainecP and Accounting System Does Not Provide Object Class and Pmgram Information'.
The remaining concerns with these issues relate to the adequacy of NRC's Payroll System. We have, therefore, chosen to report the separate issues as a single payroll related issue. NRC's accounting system does not include all of the necessary general accounting controls to produce timely and accurate financial information needed to prepare complete financial re-pods as required by OMB Bulletin 94-01. The principal weaknesses and issues that remain are: a the compatibility and integration of the NRC general ledger and subsystems used by NRC for payroll. m heavy reliance on manual inputs due to the use ofincompatible subsystems. NRC is in the process of replacing its payroll system with a new subsystem that is integrated into the Federal Financial System (FFS) and will eventually provide labor distribution infor-mation. When the new payroll system is fully implemented, individual payroll transactions will be generated for FFS update within the program receiving the direct benefit of the expen-diture. NRC continues to reconcile the non-compatible payroll subsystem with the FFS gen-eral ledger on a monthly and year end basis. Recommendation None, as NRC is in the process of replacing its payroll system. (continued on page 56) 2This issue previously included payroll, travel and property. The travel issue was closed last year and the property issue was closed this year. 3This issue was panially resolved when NRC installed the Federal Financial System general ledger system. However, to fully resolve the issue, the payroll system must possess labor distribu-tion capabilities. 1995 ACCOUNTABILITY REPORT 55
FY 1995 Audised Financial statement (continued) ( REPORTABLE CONDITIONS CLOSED FROM PREVIOUS YEAR v
- 1. HILLING PRACTICES NEED IMPROVEMENT Based on the corrective actions taken by NRC in FY 1995, we are satisfied billing and collec-tions for 10 CFR Part 170 are now made timely. Therefore, this reponable condition is closed.
As stated in our current year reportable condition, Fee Recovery System Lacks Internal Con-trol, we have new concems about the reliability of the 10 CFR Part 170 data.
- 2. PROPERTY SYTEM SIIOULD HE FORMALIZED As stated in Note 5 to the Principal Statements, NRC increased the capitalization dollar amount on property and equipment from $5,000 to $50,000. All property previously capitalized ($5,000 to $49,999) will continue to be depreciated over the remaining useful lives. NRC estimates that the effect of this change signiGeantly decreases the number ofitems capitalized and depre-ciated. In FY 1995, only 1I capital equipment items were added to the existing inventory.
NRC has also implemented control procedures to ensure that capitalized property is recorded in the general ledger on a monthly basis. Based on the actions taken by NRC in FY 1995, we are satisfied adequate corrective action has been taken. Therefore, this reportable condition is closed. F U.S. NUCLEAR REGULATORY Commission 56
INSPECTOR GENERA 11S REPORT ON COMPLIANCE WITII LAWS AND REGULATIONS The Office of the Inspector General (OIG) has audited the Principal Financial Statements of the U.S. Nuclear Regulatory Commission (NRC), as of and for the year ended September 30,1995, and issued our report thereon dated March 1,1996. 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 consideration of compliance with laws and regulations for the year ended September 30,1995. The financial statements of the U.S. Nuclear Regulatory Commission as of September 30,1994, were audited by other auditors, whose report dated March 10,1995, expressed an unqualified opinion on those statements. OIG conducted its audit in accordance with generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, and Office of Man-agement and Budget Bulletin 93-06, Audit Requirementsfor Federal FinancialStatements. 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 NRC's principal financial statements for the fiscal year ended September 30,1995, includes about $ 110 million of reimbursable expenses incurred by the Department of Energy (DOE), which repre-sents approximately 20 percent of the agency's total expenses. The funds were transferred under the provisions of the Energy Reorganization Act (P.L. 95-91) which are embodied in a Memoran-dum of Understanding (MOU) between NRC and DOE dated February 24,1978. The MOU estab-lishes guidelines for the program planning, implementation, control, funding, and management of NRC funds. The responsibility to design, implement, and evaluate the system of controls to assure compliance with laws and regulations rests with the Department of Energy. OlG's assessment of compliance with laws and regulations which could have a material 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 they 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 funds. Compliance with laws and regulations applicable to NRC is the responsibility of agency manage-ment. 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 (continued on page 58) 1995 ACCoCNTAllli,ITY REPORT 57 _ _ _ j
FY I995 Audited Financial Statement (continued) 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. m Ariti-Deficiency Act (Title 31 U.S.C.), a Nadonal Defense Appropriations Act (PL 101-510), j u Omnibus Budget Reconciliation Act of 1990 m Debt Collection Act of 1982 (PL 97-365), e 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), m Chief Financial Officers' Act (PL 101-576), and a Budget and Accounting Act. j As part of our audit, we reviewed management's reporting ofinternal control and accounting sys-tems as required by the Federal Managers' Financial Integrity Act (FMFIA) and compared the j agency's most recent FMHA reports with the evaluations we conducted of NRC's internal control 1 system. The results of our tests 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 tested, nothing came to our attention that caused us to believe that NRC had not complied, in all material respects, with those provisions. This report is intended solely for the use of management of the U.S. Nuclear Regulatory Commis-sion. This restriction is not intended to limit the distribution of this report, which is a matter of public record. i COMPLIANCE FINDING NRC's lack of effective internal controls over the Silling 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 assess fees to recover the NRC's costs of providing individually identifiable services to specific applicants and licensees. The services provided by the NRC for l which these fees are assessed include the review of new licensee applicants or approvals, amend-ments to or renewal of licenses or approvals, and inspection of licensed activities. I 4 U.S. NUCIE.AR REGUIAToRY Co%tMISsloN 58
The License Fee and Accounts Receivable Branch (LFARB)is responsible for billing and collect-ing Part 170 and 171 fees. LFARB prepares invoices for licensees from data received from the regions, the Office of Nuclear Reactor Regulation (NRR) and the Office of Nuclear Materials Safety and Safeguards (NMSS). 'LFARB relies on regional, NRR and NMSS controls to prepare complete and reliable billings. As stated in our report on NRC's internal control structure, we noted that hours associated with certain classes of completed inspections were not billed to the licensees that received the services. As a result, the Part 170 fees reported to LFARB were incomplete and understated, and the unre-corded fee recoverable costs were inappropriately included in Part 171 reactor annual fees that are allocated to all licensees. For example, any facility fees rSat are not identinable to a specific licensee are considered " generic" and are divided equally among all licensees without regard to the i beneGt gained by each licensee. The Part 171 reactor annual fees represent approximately 86 percent of all Part 171 fees. The Office of the Controller (OC) identined about 30,000 unbilled hours for inspection data en-tered aftcr the end of the billing cycle, and about 26,000 hours that may have been associated with completed inspection reports. These two situations resulted in about 56,000 inspection hours that may have not been billed to the licensees that received the services. OC estimates a total of $4-6 million in unbilled inspections over the Gye year period, and believes that about $1.6 million is attributable to FY 1995. Its work on this issue is continuing and they plan to take corrective actions as stated in our report on NRC's internal control structure. NRC's lack of controls results in a non-compliance with 10 CFR Part 170. Part 170 fees are inappropriately billed and allocated among all reactor licensees instead of being charged to the specine licensee receiving the services. Recommendation None. As stated in our report on Management's Assertion About the Effectiveness of Internal Controls, NRC is aggressively pursuing resolution of this issue. (continued on page 60) 1995 ACCOUNTABILITY REPORT 59
FY 1995 Audited Financial Statement ! continued) CONIPLIANCE FINDING CLOSED FRONI PREVIOUS YEAR The 1994 compliance finding concerned controls to ensure that NRR's Technical Assistance Pro-gram Support System (TAPPS) reported all Part 170 fee recoverable costs to the LFARB. Such controls were determined to be inadequate and resulted in all reactor licensees sharing in fees that should have been charged to specific licensees. This situation was similar to the current year's compliance finding. We reviewed the corrective actions taken to address this deficiency, and are satisfied that the addi-tional controls established should provide an effective remedy. Therefore, this compliance finding is closed. l l l l l U.s. NUCLEAR REGUI.AToRY Commission 60
fpREO p' 'o$ UNITED STATES NUCLEAR REGULATORY COMMISSION e# B WASHINGTON, DC 20555-0001 %,***+*,o February 23,1996 MEMORANDUM TO: Leo J. Norton Acting Inspector General FROM: James M. Taylor Chief Financial f~cer
SUBJECT:
DRAFF REPORTS - REPORT ON PRINCIPAL STATEMENTS, OPINION ON MANAGEMENT'S ASSERTION ABOUTTHE EFFECTIVENESS OF INTERNAL CONTROLS, AND COMPLI-ANCE WITH LAWS AND REGULATIONS - FISCAL YEAR 1995 FINANCIAL STATEMENT AUDIT We appreciate the opportunity to respond to the draft audit of the financial statement and are providing comments to the recommendation. I am pleased that again this year we received an unqualified opinion, with no material weak-nesses. It was also gratifying that the number of reportable conditions were reduced from 6 to 3. I appreciate your continued support of our efforts to resolve the reportable condition concerning the " Lack of DOE Audit Assurance." As you know, the staff has been working to resolve the reportable condition on " Fee Recovery System Lacks Internal Control" since it was first identified in the Deputy CFO's December 20, 1995, reasonable assurance letter. I agree with your recommendation to expand the corrective actions already underway, to include identification of the root cause for the billing deficiencies.
Contact:
John Bird, OC/DAF/ GAB 415-7343 (JEBI) ) ) 1995 ACCOUNTAlllLITY REPORT 61
Management Controls and Response to Audits The NRC's Management asked to submit an annual management control Control Program plan to the Chairman of the Executive Committee. The NRC has streamlined its management Placing responsibility for an annual management e ntrol plan with the senior managers who are control program in response to the National Performance Review and revised Office of Man-directly responsible for management controls will help the agency integrate the requirements of the j agement and Budget (OMB) Circular No. A-123, Federal Managers' Financial Integrity Act (Integ- " Management Accountability and Control," dated rity Act) of 1982 into its day-to-day operations June 21,1995. An Executive Committee for Manacement Controls, chaired by the Executive "".d will reinforce the need to establish the appro-pnate level of management control to achieve the Director for Operations / Chief Financial Officer performance y als mandated by the Government (EDO/CFO), oversees the agency's management Perf rm nee and Results Act (GPRA) of 1993. control program. The Committee members include As part ofits oversight role, the Executive Com-the Deputy Executive Directon;, the Deputy Chief mittee for Management Controls may identify Financial OfGeer/ Controller (DCFO/ Controller), sigmficant areas of concern to be addressed in the Directors of major program and administrative man gement control plans. Although manage-offices, and a Regional Administrator. ment control plans are submitted only once a year, Under this streamlined approach, NRC senior they may be modiGed throughout the year as managers use their own judgement to decide needed to reneet management control concerns which tools to use in identifying and correcting and activities. management control weaknes:es. For example, In FY 1995, plans were submitted by the instead of implementing an agency wide manda-Directors of the Offices of Nuclear Reactor tory risk assessment and management control Regulation, Nuclear Material Safety and Safe-review schedule, managers now evaluate their guards, Nuclear Regulatory Research, Analysis controls using various methods and sources of and Evaluation of Operational Data International information such as their knowledge from day-to-Programs, State Programs, Enforcement, Investi-day operations, program reviews and other man-gations, Administration, Information Resources agement evaluations, and audit reports. Managers Management, Personnel, the Controller, and the are expected to conduct fonnal risk assessments NRC's four regional offices. The NRC's Execu-and management control reviews only when, in n e Committee for Management Controls identi-theirjudgement, additional information is needed fied several priority areas for management control to assess and report on controls. This approach review involving programmatic controls, controls allows senior managers to tailor management over the use of funds, asset management controls, control programs to their operating environments. and data management controls. These reviews Regional administrators and directors of were included in the management control plans. ofDces with the highest risk with respect to programmatic and administrative activities are (continued on pcce u> i i i 1995 AccoUNTAllilJIT REI' ORT 63
Minagement Controls a:d Response to Audits (continued) Office directors and regional administrators Status of Management Controls and are required to submit an annual statement of Report on MaterialWeaknesses and assurance to the Chairman of the Executive Non-Conformances Committee for Management Controls. These annual statements, which describe the basis for The NRC evaluated its management control the level of assurance being reported, are a key nd financial management systems for the fiscal element in developing the Integrity Act report. year ending September 30,1995, as required by The management control plans, combined with the Integrity Act. This evaluation provides rea-the reasonable assurance statements, provide s nable assurance that the objectives of the Act the framework for monitoring and improving were achieved in FY 1995. The NRC has no material weaknesses m, its programs or admmis-the agency's management controls on an ongoing basis. trative activities and no material non-confonn-ances with government-wide standards in its As a result of the NRC's streamlining, the financial management systems. Additionally, the management control paperwork and workload NRC has no areas that have been designated high burden for all offices has been reduced, which is risk by the U.S. General Accounting Office. particularly beneficial for those offices with low levels of risk. Placing greater accountability and The NRC reported no material weaknesses in responsibility for management controls at the FY 1994. Two material weaknesses were re-l office level has also improved the NRC's manage-p rted in 1993, and five material weaknesses j ment control program. were reported in years prior to FY 1993. All of ) these material weaknesses have been corrected. Additionally, in the spirit of streamlining and No material non-conformances in financial reducing unnecessary paperwork, the NRC has systems have ever been reported by the NRC. discontinued annual limited and triennial detailed reviews of its financial management systems. The agency is meeting the requirements of the Bases for Statement of Assurance Integrity Act and OMB Circulars No. A-123 and and Extent of Assessment of A-127, " Financial Management Systems," dated Agency Activities July 23,1993, by relying on, and combining, Individual assurance statements from NRC other reviews of the financial management sys-office directors and regional administrators tems and supplementing these reviews with provided a primary basis for the Chairman's FY additional evaluation as needed to provide an 1995 statement of assurance. These individual I annual assurance statement and develop adequate statements were based on various sources, includ-financial system plans. Under this revised ap-ing the managers' knowledge of day-to-day proach, the DCFO/ Controller determines each operations and existing controls, program reviews year, af ter considering recommendations from and other management evaluations, Office of the system managers and their supervisors, whether Inspector General (OIG) reports, reviews of financial management system reviews should be financial management systems, risk assessments, performed. These recommendations are based on and management control reviews. the OIG's annual audits of the agency's financial statements, other audits and reviews, and the system managers' knowledge from their day-to-day The Reactor Program l operation of the financial management systems. At the end of FY 1995, five management I control reviews were in progress in the Reactor l Program. These included reviews of procedures I l l U.s. NUCLEAR REGl'I.AToRY Co%!%IlssloN 64
l l and processes in the application of inspection progress at the end of FY 1995. Integrated mate-l resources and improvement of the Inspector rials performance evaluation program reviews Followup System. In addition, the reviews were conducted in two of the NRC's four regional i included handling generic safety issues, redenn-offices (Regions III and IV). The objective of ) l ing operator licensing functions, and conducting these reviews was to give NRC managers a more l l licensing action reviews. systematic and integrated approach to evaluating the strengths and weaknesses of the nuclear l Other activities ongoing and completed will materials licensing and inspection programs. directly or mdirectly improve management con-Business process reengineering of the materials I trols. For example, a reevaluation of the basic licensing program is ongoing, and an analysis of missions and organizational structure of the reactor the workflow for the program is being performed program in headquaners and the regions has to determine how the NRC processes an applica-streamlined this program and mereased its effi-tion from receipt to issuance of the license. A l ciency, and further improvements are expected. major goal of this work is to streamline, automate, Commumcation of current inspection program and avoid duplication of effort in processing l issues with inspectors and managers has been materials license requests. enhanced by the mtroduction of an electronic newsletter. Workload management and scheduling practices are undergoing review based on increased The Nuclear Regulatory Research Program emphasis on the development of program plans, In FY 1995, the NRC reviewed the manage-enhancement of task management, and the need to ment controls over exploratory research and long-l address emergent issues early. A comprehensive tenn contracts, as well as DOE National review of procedural office letters is being per-Laboratory projects that have been in existence I formed to achieve consistency by consolidating for more than 5 years. A review of contracting workload procedures into a single document. procedures is ongoing to identify any processes that can be streamlined by eliminating or modify-ThJ Nuclear Materials and Nuclear ing burdensome procedures without an adverse Wxte Program effect on controls. During FY 1995, the NRC completed a Other activities that were completed or in management control review of the newly created progress as of the end of FY 1995 include (1) an Spent Fuel Project OfGee (SFPO). The SFPO annual review and certification of DOE project has developed an action plan identifying major files for completeness and proper maintenance, issues and problems that have occurred in dry (2) an assessment of the peer review process for l cask storage facilities. The plan will be a living internally generated research that resulted in a document, updated quarterly until all of the issues revision of procedures, (3) the updating of proce-are satisfactorily resolved. dures for approving DOE vouchers and closing During FY 1995, the NRC reviewed various out completed or terminated DOE pmjects, and l issues, including the use of standard review plans (4) an ongoing revision of office procedures for i for licensing, the licensing backlog, license contracting and project management. reviewer qualifications, written procedures for inspections, inspector qualifications, training for Administrative Activities supervisors and journeyman staff, contract issues, Management controls in several adm.. tra-inis the status of rulemaking, and regional oversight. h ities were reviewed. These included the Other activities that directly or indirectly NRC's change of station program, NRC's distri-affect management controls were completed or in (continued on page 66) j i995 AcCoONTABn.ITY REPoHT 65 i
Management Controls and Response to Audits (continued) bution of publications, physical security for ciples, standards, and related requirements automated data processing hardware and soft-prescribed by the Comptroller General, except ware, control of funds in the Office of Adminis-for the absence of adequate back-up capability in tration, and use of the BankCard program by three the event of a disaster at the Data Center located NRC offices. Limited assessments were per-in Ilyattsville, Maryland. This non-conform-formed of the 10 CFR Part 170 license fee billing ance is beyond the control of the NRC, and we system as well as of a number of areas where understand that Treasury plans to correct this funds are collected by the agency or its contrac-deficiency by the end of FY 1996. tors. Some of the collection areas assessed were license, inspection and annual fees, Freedom of The OIG perfomis an annual audit of the Information Act requestor fees. criminal history agency's Unancial statement. This audit meludes program fees, information access authorization testing of transactional data m the NRC's finan-program fees, employee witness and jury duty cial management systems and general ledger fees, Combined Federal Campaign contributions, account balances. Additionally, the OIG reviews parking fees collected by the parking garage p licies and procedures relevant to the mternal contractor, and NRC cafeteria receipts. An control structure. In FY 1995, the OIG issued an evaluation of the security posture of the agency's unqualified audit opinion on the NRC's FY 1994 Local Area Network and UNIX environments is financial statement. The OlG identiDed six ongoing. The OlG issued several reports con-reportable conditions that related to the NRC's cerning contracting activities, the NRC's grant internal control structure, some of which were program, the parking management program, carried over from prior years' audits. These document processing, and the local public docu-reportable conditions do not constitute material ment room program. weaknesses or material non-conformances. The Chairman's statement of assurance is FinancialManagement Systems further supporteu by the OlG's audit of the FY 1995 financial statement. As discussed earlier in The NRC has six financial management systems: the Federal Financial System, Payroll this report, the OlG did not identify any material System, Personal Property PC System, License weaknesses or material non-conformances m its 'ee Bill Generator System, Allotment / Financial audit of the FY 1995 financial statement, and Plan System, and Budget Fonnulation System. reportable conditions were reduced from six The General Services Administration reviewed to three. the Allotment / Financial Plan System to evaluate whether the NRC's certification and accreditation process complied with Federal guidelines, and the Management Decisions and OlG reviewed the system as part ofits audit of the Final Actions on OlG Audit NRC's streamlining plan. Recommendations The Federal Financial System (FFS) is a The agency has established and continues to system that the NRC uses through an inter. maintain an excellent record in resolving and agency agreement with the Department of the implementing open audit recommendations Treasury (Treasury). This system is reviewed presented in OlG reports. Section 5(b) of the annually by Treasury's Financial Management Inspector General Act of 1978, as amended, Service (FMS) for its client agencies that utilize requires the Chairman to report on management the system. The results of this year's review decisions and Gnal actions taken on OIG audit provide reasonable assurance that FFS, as oper-recommendations. Table 1 gives the dollar value ated by FMS for NRC, cc nforms to the prin-of disallowed costs determined through a contract U.S. NUCLEAR REGULATORY CoMMISsloN 66
audit conducted by the Defense Contract Audit tractor to obtain additional information. Because Agency (DCAA). " Questioned Costs" are those of the sensitivity of contractual negotiations, costs that are questioned as to whether they are details of these contract audits are not fumished allowable. " Unsupported Costs" represent costs as part of this report. Note that the Department of challenged because of a lack of adequate support-Defense also takes credit in its semiannual report ing data. The agency agreed with all of the audit for cost savings resulting from DCAA audits. recommendations and is working with the con-nostinued on parc 6s> Table 1 Management Report on Office of Inspector General Audits With Disallowed Costs For the Period April 1,1995, through September 30,1995 DISALLOWED COSTS Number of Questioned Unsupported Category audit reports costs costs ($) ($) A. Audit reports with management i decisions on which final action had not been taken at the beginning of this reporting period 1 139,794 0 B. Audit reports on which management decisions were made during this reporting period 0 C. Audit reports on which final action was taken during this reporting period 0 (I) Disallowed costs that were recovered by management through collection, offset, property in lieu of cash, or otherwise 0 (ii) Disallowed costs that were written off by management 0 D. Audit reports on which no final i 139,794* O action had been taken by the end of this reporting period Management agrees with audit recommendations but requires additional supporting information, which has been requested from the contractor, before taking final action. 1995 ACCoUNTAHILITY REIoRT 67
Macogement Controls and Response to Audits (continued) l Table 2 gives the dollar value of funds that Seven reports containing eleven recommenda-audits showed could be put to better use. As tions are more than a year old and are described in of September 30,1995, there were no outstanding the section on the next page titled " Management l audits recommending that funds be put to Decisions Not Implemented Within One Year." better use. Table 2 l Management Report on Office of Inspector General Audits with Recommendations That Funds Be Put to Better Use For the period April 1,1995, through September 30,1995 I Recommendations that funds he put to better use by management l Number of agreed to in a Category audit reports management decision j ($) l A. Audit reports on which final l action had not been taken by the beginning of this reporting l period 0 0 ( B. Audit reports on which manage-l ment decisions were made during ) l this reporting period 0 0 C. Audit reports on which final action was taken during this reporting period 0 0 l l (I) Recommendations that were actually completed 0 0 (ii) Recommendations that management subsequently concluded should not or could not be implemented or completed 0 0 D. Audit reports on which no final action had been taken by the end of this reporting period 0 0 4 U.S. httCLEAP REGl'I.AToRY CoMMisSloN 68 /
= M:nagement Decisions Not because their operations do not have a potential implemented Within One Year to result in a significant safety hazard and (2) whether Part 21 type reporting requirements Management decisions were made before should be repromulgated under the Atomic September 1994 for the seven OlG audit reports Energy Act and then made a matter of compat-discussed in the following paragraphs, but as of ibility for the Agreement States. (Regulations September 30,1995, NRC had not taken final promulgated under the Energy Reorganization action on the. issues m these reports. The OlG did Act, as is Part 21, cannot be made matters of not recommend that fu.nds be put to better use for Agreement State compatibility; this is only any of these reports. possible for regulations promulgated under the Atomic Energy Act). With regard to item (1), ) R2 view of NRC Management of Reporting the NRC needs to consider whether continuing l Requirements Under 10 CFR Part 21, to subject all NRC materials licensees to Part l November 30,1990 21 notification requirements is cost effective or l OlG made five recommendations concerning necessary for adequate protection of the public l NRC's management of reporting requirements health and safety. With regard to item (2) the l under 10 CFR Part 21. NRC implemented four NRC needs to consider the aspect of consistency I of the five recommendations. The finalitem in reponing between NRC and Agreement State involves compliance with 10 CFR Pan 21 by licensees. nonreactor licensees. The NRC has considered several options to Part 21 establishes procedures and require-address this issue and intends to finalize plans ments to ensure that licensees notify the Com-regarding the need to pursue rulemaking by mission of (i) equipment defects which could April 1996. The staff has concluded that the i create a substantial safety hazard, or (ii) fail-NRC resources needed to revise Part 21, in ures to comply with regulatory requirements addition to the Agreement State and licensee relating to substantial safety hazards. The OlG resources needed to implement any changes to recommended that the Commission either Part 21, would outweigh the benefit of reduc-develop a program to implement Part 21 for ing the number of affected NRC materials nonreactor licensees or revise Part 21 to ex-licensees or the potential safety benefit from clude nonreactor licensees from its scope if it is imposing the regulation on Agreement States. not applicable to them. The NRC's Office of The staff, therefore, anticipates that a recom-the General Counsel subsequently determined mendation will be made to terminate the that Part 21 requirements are applicable to rulemaking. NRC nonreactor licensees but not to Agree-ment State licensees. NRC's Policies and Procedures for Deferring NRC reminded all NRC materials licensees of Materials Inspections and Verifying Licensee Assertions, October 26,1992 the applicability of Part 21 reporting require. ments on June 17,1991, in NRC Information In 1992, OIG investigated an allegation that an Notice No. 91-39: Compliance with 10 CFR NRC regional office had conducted an inad. Part 21," Reporting of Defects and Noncompli-equate inspection and mishandled an allegation ance." The NRC also is considering a concerning a materials licensee. Because of that rulemaking to address (1) whether certain investigation, OIG initiated a follow up audit to types of materials licensees can or should be (continued on page 70) exempted from the provisions of Part 21 1995 ACCoONTAHil ITY REPORT 69
Management Controls and Response to Audits (continued) examine programmatic issues related to actions General Ledger Controls, Mart.h 15,1993, and taken by regional offices. OlG concluded that Results of the Audits of the NRC's FYs 92 and NRC's policies and procedures for deferring 93 Financial Statements issued J:ene 29,1993 materials inspections and verifying licensee and Juw 29,1994, respecdvely assertions needed improvement. The report The audit of the NRC's FY 1995 financial made four recommendations. All four recom. statement incorporates the status of the open mendations have been addressed. The final recommendations, qualifications, and non-recommendation was addressed with the ap. conformances identified in the above listed proval and implementatian of updated MD 8.8, audits. See the FY 1995 Audited Financial " Management of Allegations." This manage. Statement. ment directive incorporates the topic of verify-ing licensee assertions. MD 8.8 is expected to Rev,'ow of Funds Management, j be issued by April 1996. September 23,1994 j The OIG reviewed the agency's funds manage-R; view of NRC's Implementation of the ment practices and specifically examined f FMFIA for 1992, December 23,1992 NRC's unobligated budget carryover, advance OlG recommended that NRC develop a quality pr curement planning, allottee financial plans, assurance program to ensure that (1) activities and fund obligation patterns. The audit report specified in the FMFIA are planned and con-disclosed that although NRC's funds manage-ducted continually throughout the year, (2) ment practices generally complied with estab-internal control review reports are consistent in lished policies and procedures, the agency's presentation, and (3) internal control reviews level of carryover and unliquidated obligations are documented with sufficient evidence that had increased. The OlG offered three recom-reflects and captures actual work performed mendations to improve funds management: during the internal control review process. holding allottee more accountable, expanding NRC addressed these recommendations in the use of an existing management information 1992 by implementing a quality assurance system, and improving the advance procure-program and issuing guidance to the staff. ment pmcess. agyncy Budget Execudon R which is provided to the Chief h,gpon (BR The OlG's fourth recommendation was to nancial incorporate the qual.ity control provisions contained in th,s guidance m NRC s manage-Officer (CFO) monthly and to the Commission i ment directive on management controls. quarterly, is also distributed throughout the Issuance of the revised management directiv to financial and program managers. was delayed until the Office of Management The BER has been revised to include a specific and Bodget (OMB) issued OMB Circular No. od for mA of availaNe funding (including A-123. " Management Accountability and io year unliquidated obligations, current-Control," on June 21,1995. The NRC's year unliquidated obligations, and unobligated funds). The BER measures the status of the management directive was rewritten in accor-dance with the revised OMB Circular and agency's six major allowance holders against issued as interim guidance to the NRC staff on this goal. This process enables agency and September 26,1995. The final directive was office managers to monitor the major allowance issued in December 1995. holder's progress towards reaching the agency's goal. In addition, financial management is one U.S. NUCLEAR REGULAToRv con 1%11ssioN 70
1 of the elements in the annual performance with these offices to help thern establish their 1 evaluation for agency allowance holders. fiscal year 1996 baselines using the product. The Office of Information Resources Manage-The Office of Administration (ADM) has ment (IRM) has completed Release i of the revised the format and content requirements for Resources Information Management System office advance procurement plans (APPs) to (RIMS) software developed for the Office of enhance procurement and financial manage-Nuclear Regulatory Research. IRM has also ment planning. On February 27,1995, ADM distributed the software to other interested issued the new procedures with the semiannual offices within the NRC. IRM continues to work call for office APPs. l l l 1995 ACCoUNTAllII,lTY REI4)RT 71
Supplemental Financial and Management Information This section contains additional financial and The performance measure provided a tool to program performance information not previ-assess whether progress-versus-milestones was ously discussed. being maintained. Since the inception of the measure, the staff has completed its action on two R3 view of Advanced f the reviews, two reviews lack only final design certification, one has been withdrawn (CANDU) R^: actor Designs and one has been suspended (SBWR). Given that The NRC has encouraged the nuclear industry only one review (AP600) remains active with to standardize nuclear power reactor designs. significant resource utilization and that overall Figure il on the next page shows the NRC's review resources have diminished considerably, progress, as of September 30,1995,in reviewing the rationale for a performance measure is no each accepted standard plant design application longer valid and the measure will be discontinued and major industry generic requirements docu-in FY 1996. ment. This performance is measured by compar-ing the schedule milestones against the major staff Transportation Incidents output documents, including requests for addi tional information (RAls), draft safety evaluation Approximately 3 million packages containing reports (DSERs), and final safety evaluation radioactive materials are shipped each year, and reports (FSERs). an estimated 200,000 of these are shipped in NRC-certified packaging. Because NRC-certified When this performance measure was first packaging is designed to withstand severe acci-instituted, the NRC had several distinct reviews dents, the likelihood of a release occurring is ongoing that were coordinated within an inte-minimal. This conclusion is supported by Table 3 grated schedule. These reviews consumed a substantial portion of the agency's resources. (continued on page 74; Table 3 Transportation Incidents FY1991 FY1992 FY1993 FY1994 FY1995* Incidents involving NRC-Certified Packaging ** 11 8 5 4 4 l Releases involving NRC-Certified Packaging 0 0 0 0 0
- Information is through March 1995
- This chart contains revised data for FY 1991-1994. During data evaluation. it was determined that data was reported in previous years as of the calendar year. The chart reflects the correction for all fiscal years.
1995 Acrot*NTAnllJrY REPORT 73
Supplemental Financial and Management Infonnation (continued) Figure 11 Advance Reactor Reviews E*'L / l........................................ Comp 6ete Complete i ,,,,,o,,, Approved a FSER issued
- f u f
((l } '- I D -'" / $ to Appicant FSER to ~ - - " ' - - " - - ' ' ' ' - - - - ' " - ' " " ' - ~ - " Commisson Appicant Responds to DSER DSEn to Commission RAls issued to Apphcant M7 /- ati EPRI EPRI ABWR SYS 80+ AP600 SBWR CANDU EVOL. PASS. name..uspenaeo except for testing related issues EPRI EVOL. - Completed the FSER on the Electric Power Research Institute (EPRI) Utility Require-ments Document for evolutionary light-water reactors (LWRs) in December 1993, as scheduled. EPRI PASS. - Completed the FSER on the EPRI Utility Requirements Document for passive LWRs in August 1994. AllWR - Issued a proposed rule to certify the advanced boiling water reactor (ABWR) design in April 1995. SYS 80+ - Issued a proposed rule to certify the System 80+ design in April 1995. AP600 - Issued the DSER for the Westinghouse AP600 design in November 1994. The appli-cant is continuing to respond to open and confirmatory issues identified in the DSER, and to resolve them with the staff. SilWR - In June 1994, General Electric Company requested that the NRC limit the scope of the simplified boiling water reactor (SBWR) design review to focus only on the resolution of testing and analysis issues. The staffis reviewing GE's thermal hydraulic code, TRACG (Transient Reactor Analysis Code) and the revised test and analysis program description that is intended to qualify TRACG for application to the SBWR design. CANDU-In March 1995 AECL Technologies Inc. requested that the NRC discontinue work on its application for design certification for the AECL Canadian Deuterium Reactor Design (CANDU). U.S. Nt CI. EAR REGt!!,ATORv CONINil$sION 74
r which shows that there have been no transporta-Ultimately, a total of 54 uranium recovery tion incidents involving radioactive releases from sites will be licensed for long-term care under NRC-certified packaging in the past 5 years. In general license provisions in 10 CFR 40.27 and fact, only one incident has been identified in the 40.28. The 54 sites include 22 NRC-licensed past 24 years involving a release of a radioactive sites (including the Envirocare Ile.(2) commer-source from NRC-certified packaging. This cial disposal site),9 Agreement State sites, and 23 incident occurred in FY 1988, when a radiogra-sites being remediated under the Uranium Mill phy camera fell from a truck and was stmek and Tailings Radiation Control Act Title I program. dragged by an automobile. These 54 sites either are undergoing remediation, or will begin remediation sometime in the future following completion of operations. It should be R mediation and Licensing for noted that 4 of the 54 sites are currently in an Long-Term Care of Uranium operational or standby mode, therefore they are Recovery Sites not ready for reclamation. To date there have been 4 sites licensed for long-term care, all of The licensing action for long-term care in. which are sites under the DOE Title I program. volves issuing a letter to the DOE accepting its long-term surveillance plan (LTSP) for a particu. The NRC expects that it will take 10-15 years to lar site. For FY 1995, the NRC projected that c mplete remediation and licensing action for the additional sites, with a few sites being completed nine uranium recovery sites would be remediated and licensed for long-term care. Ilowever, the each year. The number of sites that have been re-NRC only received three LTSP submittals for mediated by fiscal year is shown below in Table 4. review. As of the end of FY 1995, one LTSP was accepted, and the other two were under review (continued on page 76) with acceptance expected during FY 1996. Table 4 Remediation and Licensing for Long-Term Care of Uranium Recovery Sites (Total Sites to be Remediated = 54) FY1991 FY1992 FY1993 .FY1994 FY1995. Sites Remediated and Licensed for Long-Term Care 0 0 1 2 1 Note: This chart contains revised data for FY 1991 through FY 1995, based on the revised performance measure including the total number of uranium recovery sites considered for remediation and licensing for long-term care ( i.e., Agreement State, DOE, and NRC sites). The previous performance measure only included 27 NRC licensed sites (Title II). This display more accurately shows the total number of sites within NRC's purview. It should be noted, however, that 4 of the 54 sites are currently in an operational or standby mode, and are therefore not ready for reclamation. 1995 AecoUNTAHII.ITY REPORT J 75
~.--. l Supplemental Financial and Afanagement Information (continued) Site Decommissioning process may be unforeseen when planning to Management Plan release sites from the SDMP list; such impedi-ments make it difficult to establish a timetable for Several hundred NRC materials licenses are terminated each year. Most of these NRC-h-releasing these sites. However, the process and censed operations result in little or no contamina-procedures that the NRC uses in overseeing tion of buildings or soil, and decomm,irsiomng SDMP site decommissioning efforts continue to actions leading to the termination of these h-become more clearly defined. In addition, the censes normally proceed in a routine fash,on. policies and precedents developed to resolve i Non-routine cases may involve sites where SDMP site issues are increasingly being applied buildings, former waste-disposal areas, large p.les to the more routine decommissioning cases. i of tailings from metal extraction operations, groundwater, or soil are contaminated with High-Level Nuclear Waste Regulation uranium, thorium, or other radionuclides. These non-routine cases present varying degrees of The High-Level Nuclear Waste Regulation Program includes all of the NRC's public health radiological hazard, remediation complexity, and and safety licensing, inspection, and environmen-associated cost, td reviews for the safe management and disposal The Site Decommissioning Management Plan of high-level radioactive wastes, as well as re-(SDMP) is used to ensure that generic and case-search to assess the safety of high-level waste by-case issues affecting the timely decommission. management, storage, and disposal. These regula-ing of these more difficult contaminated sites tory activities are mandated by the Nuclear Waste receive the appropriate level of management Policy Act (NWPA) of 1982, the Nuclear Waste attention. There are currently 48 sites on the Policy Amendments Act (NWPAA) of 1987, and SDMP list; 3 sites were planned for remediation, the National Energy Policy Act (NEPA) of 1992. and 3 sites were removed from the list in FY 1995 (as shown in Table 5). The NWPA specifies a detailed approach for long-range high-level waste disposal, with DOE The remediation and removal of sites from the having operational responsibility and the NRC SDMP list have been delayed by policy issues and having regulatory responsibility. This undertak-technical problems related to cleanup. Many ing involves a complex, integrated system of potential impediments in the decommissioning waste handling, transportation, interim and i Table 5 SDMP Contaminated Sites (Total Sites to be Remediated = 48) . FY1991 FY1992 FY1993 _ FY1994 - FY1995. Sites Planned for Remediation 2 2 4 8 3 Sites Remediated 0 1 1 3 3 4 e i U.s. N1' CLEAR REGt'LAToRv CONtMissioN 76
retrievable storage, and ultimate deep geologic DOE Study Plans for High level disposal of high-level waste, requiring the protec. Waste Repository tion of the public health and safety and the envi-In previous years, the NRC measured its ronment over thousands of years. performance based on the number of DOE study plans revi w d, compared to the number planned The NWPAA directs the DOE to characterize for review during a given fiscal year. This perfor-only one candidate site, the Yucca Mountain site in niance measur is n longer appl cable, since the the State of Nevada, and to terminate site-specific pmpo to streamlme its prelicensing activities at all other candidate sites. The NEPA cument news as put oQs mponw to th directs the NRC to revise its regulations (10 CFR DOE's Proposed Program Approach, which was Part 60) within 1 year after the Env.ironmental issued in mid-FY 1994. Specifically, the NRC Protection Agency (EPA) issues new standards. proposed that it would only review and comment on three types of documents, including the License Application Review Plan statutorily required site characterization plan The NRC is currently developing a license progress reports, the annotated outline for the application review plan (LARP), NUREG-1323, license application, and a very limited number of which the NRC staff will use in reviewing the topical reports identified by the DOE. The DOE DOE's license application for a high-level waste determined it would continue to submit study repository, and in performing prelicensing re-plans to inform the NRC of ongoing activities, but views of the DOE site characterization program. the NRC will only formally review the DOE Individual review plans comprise sections within study plans that are important to a review of one the LARP consisting of the compliance determi. of the three primary types of documents or related nation strategy, applicable regulatory require. to a particular site visit. ments, and review procedures and acceptance criteria for the 97 regulatory requirements of 10 Regulatory Research Program CFR Part 60, Disposal of High-Level Radioac-tive Wastes in Geologic Repositories. The primary goal of the NRC's Regulatory Research Program is to ensure that research in FY 1995, the NRC completed 9 (759c') of provides sound technical bases for timely the 12 individual review plans originally intended rulemaking and decisions in support of regulatory for completion during this Oscal year. Of the licensing and inspection activities. As part of this three incomplete individual review plans, one was Regulatory Research Program, the NRC conducts placed on indefinite hold, and the remaining two research to provide independent information and were scheduled for completion in FY 1996 or expertise to support its safety decision making, beyond. The individual review plan placed on and to assess the safety significance of potential indefinite hold was actually completed through technical issues. internal review, but was not released because of potential rulemaking activity that could change the Research is generally planned and initiated in standards for performance assessment. This rule. response to the needs of the regulatory licensing makinc activity is not scheduled for several years. and inspection programs, or is directed in re- ~ sponse to Commission decisions. Research The NRC reallocated resources from the priorities are determined by the overall value, individual review plans to further streamline its importance, and impact that the research findings program. This streamlining will enable the NRC may have in responding to these program needs. to focus on dealing with key technical issues Major research accomplishments in FY 1995 j ~ required to respond to the DOE's Proposed included the following: Program Approach. (continued on page 78) t, 1995 ACcoCNTAhlt.ITv REPORT 77
_ _ _. _ ~ _._ m I Supplemental Financialand Afanagement information (continued} Completed modifications to the Rig of Safety tions from foreign sources. Preliminary Assessment (ROSA) facility and successfully infonnation from these sources suggests that carried out 14 Phase I tests to validate the NRC's fuel damage criteria may not be applicability of NRC codes to the AP600 adequate for such high-burnup fuels. In May design and confirm the predicted perfor-1995, performed an important high-burn up mance of plant safety systems. In all tests, fuel test that exhibited no cladding failure. the passive safety systems functioned as designed, suggesting that the reactor can be rwarded regulatory requirements updates to the Comm,ssion which were previously i successfully cooled under a variety of postu-lated accident conditions. identified during the staff's evaluation of the Y Rm @ Th @g & Completed construction of the full-pressure, dates include (1) fracture toughness rule 1:4-scale SBWR at the Purdue University amendments to 10 CFR 50.61 and Appendix Multidimensional Integral Test Assembly G to Part 50,(2) material surveillance rule (PUMA). This facility will be used to study amendment to Appendix H to Part 50, and J the behavior of the SBWR design under (3) new rule and regulatory guide on the postulated accident and transient conditions, thermal annealing of reactor vessels. l Under the " Marginal-to-Safety" Program,
- Issued a final rule (10 CFR Part 76) to certify l
published revisions to the Appendix J to operation of the gaseous diffusion enrich-10 CFR Part 50 requirements for contain-ment facilities leased from the Department of ment leakage testing. Continued working on Energy (DOE) by U.S. Enrichment Corpora-a process to provide expeditious handling of tion. Covered both the certification process petitions that include comprehensive cost / ' and the standards to be used tojudge accept-benefit analyses and justifications for the able performance for certification, proposed rule change. This will allow licensees wishing to reduce the regulatory burden to effect faster rule changes in return Generic Safetyissues for providing a complete regulatory analysis. Generic safety issues (GSIs) involve safety concerns that may affect the design, construction, Developed and issued for public comment or operation of all, several, or a class of reactors a guidelines for the human engineering evalua-or facilities. Such issues may also have a poten-tion of advanced, computer-based displays tia' for safety improvements and the issuance of and controls (NUREG-0700, Revision 1). new or revised requirements or guidance. During l Developed methods for identifying func-FY 1995, the NRC identified and prioritized two tional and environmental issues related to the GSIs and resolved another. Resolution of the l application of advanced instrumentation and large backlog of GSIs of a few years ago is control (!&C) systems. Issued regulatory essentially completed. guidance on methods for evaluating the effects of electromagnetic and radio fre-NRC Regulations quency interference on digital I&C systems. The NRC establishes the rules that operators Initiated research in the area of high-burnup of nuclear facilities and users of radioactive fuel. Code improvements are being made to materials must follow. These rules are intended to accommodate higher burnups based on data protect persons using radioactive materials, as i now available from foreign sources. Nego-well as the general public, from the potential tiations have also been largely completed to hazards of radioactivity. NRC regulations are obtain test data on high-burnup fuel sub-established or changed, as necessary, on the basis jected to reactivity-initiated accident condi-of recommendations from NRC staff. Members (f.S. NUCLEA R REGUIAToRv Commission 78 l l
l of the public and interested organizations can also public health and safety, and the NRC reviews request changes in regulations. The views of the each allegation to determine its safety signifi-l public, the industry being regulated, and other cance and the effect on health and safety. If the interested parties are usually solicited before the allegation deals with a technical issue and wrong-Commission adopts new rules or changes. In FY doing is not suspected, the agency's goal for 1995, the NRC completed 22 rules. closing the allegation is an average of 6 months from receipt. If the allegation pertains to wrong-Responsiveness to the Public,s doing by an NRC licensee, the agency's goal for closing is an average of 18 months from receipt. Safety Concerns Allegations requiring review outside the NRC All allegations received by the NRC are initially considered to have a potential effect on (continued on page so) l Testing of a Variety of Covers for Low-level Waste Disposul, Maryland Agricultural Experiment Station, Beltsville, Maryland s u m Soilbeam used to measure unsaturated flow properties of soil used in coversfor radioactive waste disposalsites. w ~ I d L N' R.. Q! {. 1 y, M,%e ~~ f p ~., e W ....D s;:. NA"UM G~~T l' i h & O-k m. e.,w { 7++p<,m. ~ m y-.. /g ; 7@ W L 'j j
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~. g_.- ff j?h h f Y ?*$-Y Lysimeter experiments on coverperformance. The cover shown is " bioengineering water management," which is highly effective at sites susceptible to subsidence or underlain by low-permeubility media. 1 1995 AcCoUNTABILITv REPORT 79
i l Supplemental Financial and Management Infonnation (continued) (e.g., by the Department of Justice or Department emphasize the importance of compliance with of Labor) are not subject to these standards. requirements. The three primary enforcement Overall, the NRC's mean time to close allegations sanctions available are notices of violation; civil has improved over the years, primr., because of penalties; and orders to modify, suspend, or m an increased emphasis and focus on case inven-revoke licenses. tory management throughout the agency. Violations are class.fied by severity level, i Figure 12 shows the mean time in months to based on regulatory or safety significance. Sever-close the two types of allegations for which ity levels range from Level :( for the most serious standards have been established.The mean time violations to Level IV for the ieust serious, to close is calculated based on the year the allega-(The Enforcement Policy was revised in June l tion is received. 1995 to eliminate Severity Level V violations.) j Civil penalties are normally assessed for viola-The purpose of the NRC's enforcement tions of Seven.ty Level I to 111. program is to support the agency's overall safety J mission to protect workers, the public, and the The average time to issue escalated enforce-environment by using enforcement sanctions to ment actions (Severity Levels I to 111) continues encourage prompt identification and comprehen-to be a performance measure. For actions that do sive correction of violations, and as a deterrent to not involve an investigation, the measurement Figure 12 Mean time to Close Allegations 24 -l Goal, Cases ~~" " " " " " " '" " " " " "*" "-" " " " *" " '~" " " *" " "* " ) Requiring Investigations 20 l 16 ja p........ E 12 \\ O ( i 2 [....... Goal, Cases Not Requiring Investigations 4 f } 1991 1992 1993 1994 1995 Fiscal Year l No investigation investigation Required l 4 Note: This chart contains revised data for 1991 through 1994. During the FY 1995 evaluation of the data collection system the NRC discovered an error in its computer program w hich had caused a miscalcu-lation in prior years' closure reports; the chart above ref : cts the correction for all years. I l U.S. NUCLEAR REGULAToRv Commission l 80
period begins on the date of the inspection exit Based on the defined measurement period. meeting. For actions that involve an investigation escalated enforcement actions are to be issued but no referral to the Department of Justice within an average of no more than 90 days. This (DOJ), the measurement period begins on the date standard was met for FY 1995, during which the ofissuance of the investigation report. For NRC issued 118 Severity Level I, II, or 111 en-actions that involve an investigation and referral forcement actions in an average of 70.5 days. to the DOJ, the measurement period begins on the Table 6 shows the amount of civil penalties date on which the DOJ informs the NRC that the assessed and the amount collected in FYs 1991 agency may proceed with the actions. For actions through 1995, distributed according to the year in that involve discrimination and Department of which the civil penalty was collected. The Labor (DOL) proceedings, the measurement period amount of each civil penalty assessed reflects the begins when an appropriate decision is reached in amount that tne NRC uhimately decides is appro-the DOL process, or sufficient evidence is obtained priate in each case through its enforcement or from the NRC's processes to support the actions. hearing process. Table 6 i Amount of Fiscal Year Civil Penalties Collected Versus Fiscal Year Penalty Dollars Assessed Fiscal ! Percent
- Year-
. Collected ' Assessed ' Collected - 1991 $2,724,873 $2,724,873 100 1992 $4,630,815' $4,610,815 49.57 1993 $4,180,8752 $4,178,5575 99.94 1994 $3,855,675 $3,885,675 100 1995 $2,289,285 $2,289,284 100 This amount includes $20.000 for two cases that were withdrawn after further consideration following the licensees
- responses.
2 In some cases, the amount imposed has been changed to reflect a settlement. This amount reflects the total amount assessed for a case for w hich an agree-ment was reached to pay in full, but in installments. Only a portion was col-lected in FY 1993,1994, and 1995, but the licensee has committed to full payment. 1995 ACCOUNTABILITY REPORT 81
.eY Figure 13 n j;; U.S. Nuclear Regulatory Commission 3MC C t* The Chairman O N< The Comrnissioners O Od l dy _____7__ 5 mada Advisory Atomic Satefy I "Y Nucler Waste Berd Panel [ Committe on and ticensing W ar6 I I I I i @im d Othce of 0*hce d @" U' WadM Congemnal Public Altairs Commission Office o' N Executive Director h AHairs !e Secretry for Operations C I b - summm i I I I I I mad One tw mis Office et Oniceof the Small Business and Evaluahon of Assistant for Operations Nml CmdW and Crvil Rights Operational Data I I Deputy Executive Director for Deputy Executive Director for Nuclear Materlats Safety. Nuclear 9eactor Regulation. Safeguards and Operations Regional 0perations and Support Research I .I I I I I I l N Once of Omce of O'tice of Office of Inform n State P'ograms Ertfacement invastigatons Administration Resources l l W SafM Managament Office of Nucles Offaof Nuclea' Reactor Regulatory i I I I Regulation Research Dmi Sigervis:an Remon i Region 11 Region 111 Region N - - - - Coordmation PNW1elpNa Atlanta Chicago Dallas
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