ML20127M011
| ML20127M011 | |
| Person / Time | |
|---|---|
| Issue date: | 12/30/1992 |
| From: | Rogers K NRC COMMISSION (OCM) |
| To: | PRESIDENT OF U.S. & EXECUTIVE OFFICES |
| References | |
| NUDOCS 9301280080 | |
| Download: ML20127M011 (20) | |
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1 NUCLEAR REGULATORY COMMISSION o,
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WASHINGTON. O C. 2TIA g ' u.-
y cA AN The President The White House Washington, D.C.
20500
Dear Mr. President:
As required by the Federal Managers' Financial Integrity Act of 1982 (FMFIA),
the Nuclear Regulatory Commission evaluated its management controls and financial management systems for the fiscal year ending September 30, 1992.
The Commission believes this evaluation provides reasonable assurance that the NRC, as a whole, complies with both Sections 2 and 4 of the FMFIA.
The 11RC's evaluation of management controls was performed in accordance with Office of Management and Budget (OMB) " Guidelines for the Evaluation and Improvement of and Reporting on Internal Control Systems in the Federal Government," dated December 1982, as required by OMB Circular A-123, " Internal Control Systems."
The NRC performed 16 management control reviews in FY 1992.
Licensing and inspection programs reviewed included regulatory improvements, evaluation of licensee performance and maintenance, project management, and the Technical Training Center.
Research programs reviewed included reactor vessel and piping integrity, human reliability, and nuclear materials.
Administrative and other support areas reviewed included the licensing support system, the Advisory Committee on Nuclear Waste, computer security, travel, accounts receivable, and accounts payable.
The FY 1992 evaluation disclosed four material weaknesses.
The weaknesses identified this year are in the management of Department of Energy (DOE) laboratory agreements, approval of payments to DOE under these agreements, the general ledger, and computer security.
Weaknesses associated with the management of DOE laboratory agreements and the general ledger were identified as significant problem areas in our FY 1991 FMFIA report.
We reexamined these areas as part of our FY 1992 evaluation and determined that they should be reported as material weaknesses in this year's report.
The f our material weaknesses, when considered together, are not sufficiently serious to prevent overall assurance that the NRC is in compliance with the FMFIA.
As shown in Enclosures C and E,
significant progress has been made to effect improvements in the management of DOE laboratory agreements and to correct the weaknesses in the process for approving payments to DOE.
On 200132 9301200000 921230 i
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October 1, 1992, the NRC's primary accounting system was replaced with the Federal Financial System through a
cross-servicing arrangement with the U.S.
Department of Treasury.
This new accounting system will play a majer role in alleviating the management control deficiencies in the general ledger, and actions are underway to resolve the weaknesses in computer security.
The NRC has one primary system and two administrative systems that I
meet the OMB criteria for financial management systems.
In FY 1992, the NRC performed limited reviews of all these systems.
These reviews reflected weaknesses in the NRC's financial management systems that need to be corrected.
With the exception of deficiencies in the general ledger, these weaknesses are not i
material.
The NRC identified no material nonconformances during i
these reviews, but noted problems that will be substantially alleviated with the completion of planned improvements that are under way.
Enclosure E includes a report on the progress we have made to correct deficiencies in our financial management systems and the actions that are needed to resolve the remaining weaknesses.
Our FY 1991 evaluation of the NRC's financial management systems identified weaknesses in license fee billing, debt collection, and invoice payment practices.
We reexamined those areas in our FY 1992 evaluation of management controls and limited reviews of financial management systems to determine the effect that the identified weaknesses have on the NRC's overall compliance with Section 4 of the FMFIA.
We determined that, in view of the corrective actions that have been taken, these weaknesses do not constitute material nonconformances and do not affect the NRC's overall compliance with Section 4 of the FMFIA.
A discussion of the actions taken to correct the financial management weaknesses reported in the FY 1991 FMFIA report is included in Enclosure E.
In FY 1992, the NRC strengthened its management control process.
Wo increased our emphasis on the identification and classification of management control weaknesses.
Our Internal Control Committee took a mere active role this year in evaluating senior managers' reasonable assurance determinations on management controls and in reviewing the management control reviews the staff conducted.
The Committee developed examples of matsrial weaknesses for managers to use in making their reasonable assurance determinations.
To emphasize the importance of timely and effective action to correct management control weaknesses, the NRC instituted a validation process to verify that managers' corrective actions resolve the weaknesses identified.
We also are including the correction of material weaknesses as a performance measure in the NRC's annual financial statement.
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-3 The results of our continuing evaluation are provided in the enclosures.
Respectfully, Kenneth C.
Rogers Acting Chairman
Enclosures:
A.
Statistical Summary of Performance B.
Progress Report on High Risk Areas Schedule of Corrective C.
Section 2,
Material Weaknesses Actions D.
Section 4, Material lionconformances - Schedule of Corrective Actions E.
Actions Taken to Correct Weaknesses in the 11RC's Financial Systems l
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SUBJECT:
NUCLEAR REGULATORY COMMISSION'S 1992 FEDERAL MANAGERS' FINANCIAL INTEGRITY ACT REPORT IDENTICAL LETTERS SENT TO:
Honorable Thomas S.
Foley Speaker of the House of Representatives Washington, D.C.
20515 Honorable J.
Danforth Quayle President of the Senate Washington, D.C.
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ENCLOSURE A STATISTICAL
SUMMARY
OF PERFORMANCE Section 2, Internal Control Number of Material Weaknesses For that year, For that year, Number reported for number that have number still t
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the first time been corrected pending Prior Years 1
1 0
1990 Report 0
0 0
1991 Report 0
0 0
1992. Report 4
0 4
Section 4, Financial Management Systems Number of Material NonConformances For that year, For that year, Number reported for number that have number still the first time been corrected pending Prior Years 0
0 0
1990 Report 0
0 0
1991 Report 0
0 0
.1992 Report 0
0 0
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ENCLOSURE C l
SECTION 2, MATERIAL WEAKNESS - SCHEDULE OF CORRECTIVE ACTIONS l
Summary / Table of Contents Target date Current L
for correction target Year first in 1991 FMFIA date for
' Title reported Report correction Page Controls for Management of 1992 N/A September 1993 2
i Department of Energy National j
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. Laboratory Agreements Process for Approving 1992 N/A December 1992 4
Payments to the Department of Energy Laboratories I
Controls in NRC's General 1992 N/A September 1993 6
Ledger Compliance of Computer Security 1992 N/A September 1995 8
Program with OMB Circular A-130
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t 4 Title and Description of Material Weakness
" Controls for Management of Department of Energy (DOE) National Laboratory Agreements" During a 1991 review of the NRC's agreements with DOE laboratories, the NRC's Office of Administration staff identified contract management practices in the NRC program of fices that required improvement to adequately protect the NRC's business interests. The NRC s project files did not reflect adequate analysis of proposed contractor costs or effective project monitoring.
The reviewers found that the agency needs to institute better control over these projects to ensure that required goods and services are
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obtained at reasonable prices.
Deficiencies identified during the review were attributed to the lack of an agency-wide standard for contract management.
Pace of Corrective Action Year Identified:
1991 (The weakness was identified and reported in the 1991 FMFIA report, but was not determined to be a material weakness until 1992.)
Original Targeted Correction Date:
October 1992 Correction Date in Last Year's Report:
N/A Current Correction Date:
September 1993 Reason for Change in Dates:
The scope of changes and required implementation were more extensive than envisioned.
Responsible Program Manager Patricia Norry, Director office of Administration Source of Discovery NRC's Office.of'~ Administration management review of Department of Energy laboratory agreements dated September 6, 1991 l
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, Appropriation / Account No.
31XO200 Maior Milestones Original Revised Actual Plan Plan Date (a)
Completed Actions / Events (b)
Planned Actions / Events (Less than 12 months)
N/A 12/03/92*
Issue interim agency-wide standards for contract management for DOE laboratory agreements for guidance and comment 10/01/92 09/30/93 Issue final agency-wide standards for contract management of DOE laboratory agreements (c)
Planned Actions / Events (More than 12 months)
N/A before the issuance of this FY 1992 EMFIA Report
- Completed in FY 1993 i
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_4 Title and Description of Material Weakness Laboratories"
" Process for Approving Payments to the Department of Energy (DOE)
A significant number and amount of On-Line Payment and Collection System (OP An internal quality control process is needed to ensure that Research since about 1986.
offices to assure the DOE vouchers are reviewed and approved by the NRC's program reasonableness of the Department of Treasury's OPAC billings.
Pace of Corrective Action Year Identified:
1992 Original Targeted Correction Date:
September 1992 Correction Date in Last Year's Report:
N/A Current Correction Date:
December 1992 Reason for Change in Dates:
Additional time required to complete review of prior years Responsible Program Managers Eric Beckjord, Director, Office of Research Ronald M. Scroggins, Deputy Chief Financial Officer / Controller Source of Discovery OIG Audit Report OIG/92A-08,
" Improvements Needed in NRC's Process for Approving 1992 Payments to the Department of Energy," dated August 31, 5
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Appropriation / Account No.
r 31X0200 Maior Milestones Original Revised Actual Plan Plan Date
'(a)
Completed Actions / Events Review and approve DOE vouchers on a 09/09/92 09/30/92 timely basis (b)
Planned Actions / Events (Less than 12 months)
Issue guidance to the Office of Research 07/08/92 30/05/92*
in the form of office letters to supplement existing agency regulations and clearly identify the responsibilities of project managers Institute procedures in the Offices of Research 09/09/92 11/04/92*
and the Controller for ensuring that DOE l
vouchers are promptly reviewed, approved, and returned to the Division of Accounting Issue interim agency-wide standards for N/A 12/03/92*
contract management for DOE-laboratory agreements for guidance and comment r
Complete review of prior years' vouchers 09/09/92 12/31/92 l
t (c)
Planned Actions / Events (More than 12 months) i N/A
- Completed in FY 1993 before the issuance of this rr 1992 FMFIA Report I
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T_itle and Description of Material Weakness
" Controls in NRC's General Ledger" The OIG discussed internal control deficiencies in its reports on the general ledger issued in November and December of 1992.
In classifying the general ledger as a material weakness, the OIG noted that these deficiencies include NRC's failure to the failure to obtain approval reconcile the general ledger with subsidiary ledgers, from the originating branch before making adjustments to the general ledger, and incompatible financial systems.
Pace of Corrective Action Year Identified:
1992 Original Targeted Correction Date:
September 1993 Correction Date in Last Year's Report:
N/A Current Correction Date:
N/A Reason for Change in Dates:
N/A R_esponsible Program Manacer Ronald M. Scroggir.s, Deputy Chief Financial Officer / Controller Source of Discoverl 1992, ard draf t OIG
" Report on General 1, edger Controls," dated November 27, Audit Report, " Review of NRC's Implementation of the Federal Managers' Financial OIG Report, 1992 Integrity Act for 1992," dated December 7, Appropriation / Account No.
31XO200 i
r 7-Maior Milestones Original Revised Actual Plan Plan Date (a)
Completed Actions / Events (b)
Planned Actions / Events (Less than 12 months) 03/31/93 Review OIG reports on the general ledger
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and develop action plan to address the reports' findings and recommendations associated with the material weakness 09/30/93 Review controls in the new accounting system implemented on October 1, 1992, to ensure that deficiencies identified in the old system have been resolved (c)
Planned Actions / Events (More than 12 months)
E
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' Title and Description of Material Weaknesja
" Compliance of Computer Security Program with OMB Circular A-130" i
The !!RC's computer security program has not met all the requirements of Office of Management and Dudget (OMB) Circular fio. A-130,
" Management of Federal Information Resources."
Pace of Corrective Action Year Identified:
1992 Original Targeted Correction Date:
September 1995 Correction Date in Last Year's Report:
fi/A Current Correction Date:
fi/A Reason for Change in Dates:
fi/A Responsible Program Manacer Gerald F. Cranford, Director Office of Information Resources Management Source of Discovery Draft OIG Audit Report, OIG/92A-18, "Significant Weaknesses Hamper NRC's Computer Security Program," dated October 13, 1992 Appropriation / Account No.
31XO200 i
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, Maior Milestones Original Revised Actual Plan Plan Date a
t (a)
Completed Actions / Events N/A (b)
Planned Actions / Events (Less than 12 months)
Develop detailed action plan to correct 01/31/93 weaknesses Develop standard procedures that include 02/28/93 security' requirements in the system lifecycle development' process l-f Develop methodology for certification and 02/28/93 accreditation process Modify in-house software development guidance 04/15/93 to reflect security requirements i
Issue contract to begin certification and 08/31/93 j
accreditation, (c)
Planned Actions / Events (More than 12 months)
Certification and accreditation of first 04/30/94 major system Certification and accreditation of second 01/31/95 major system
. Certification and accreditation of third 09/30/95 major system b
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ENCLOSURE D SECTION 4, NATERIAL NONCONFORMANCE - SCHEDULE OF CORRECTIVE ACTIONS Not Applicable 1
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ENCLOSURE E ACTIONS TAKEN TO CORRECT WEAKNEDBES IN THE NRC's FINANCIAL DYSTEMS Intecrated Financial Manacement In(9EDation Byph
)
In Fiscal Year (FY) 1992, the NRC's primary accounting system was i
the Integrated Financial Management Information System (IFMIS).
On October 1, 1992, IFMIS was replaced with the Federal Financial System (FFS) which is provided through an interagency agreement with the Department of the Treasury.
IFMIS had three components:
l budget execution, general ledger, and travel.
The NRC identified weaknesses in two of these components, general ledger and travel.
l General Ledaer l
In the FY 1991 limited A-127 review of the general ledger, l
the NRC identified nonconformance with the financial system functional standards in the following areas:
lack of adequate interface between subsystems and the core financial j
accounting system, recording and reconciliation of cash, i
reconciliation of plant and equipment, and timely meeting of user reporting needs.
IFMIS's replacement, the FFS, meets the core financial system functional standards.
IFMIS lacked an automated interface between subsystems and the core financial system.
In order to mitigate system weaknesses, control processes were implemented to ensure data quality and the reconciliation of cash and other general ledger accounts.
We believe our efforts to strengthen controls and our extensive oversight provides reasonable assurance that the objectives of the accounting system were accomplished.
Procedural changes were made in FY 1992 requiring the daily entry of summary cash receipt transactions after reconciling them to confirmed deposit tickets.
The cash accounts have been reconciled for FY 1992.
Owing to the lack of system audit trails and subsystem integration, the cash reconciliation was difficult and labor intensive.
The property and equipment accounts were identified in an FY 1987 management control review and in the FY 1991 limited A-127 review as not reconciled to the records maintained by the Division of Contracts and Property Management (DCPM).
The property and equipment accounts have been adjusted to balance to the most recent detailed inventory report from i
DCPM's property system.
A procedure is being reviewed for i
implementation to ensure the future integrity of recorded and reported balances.
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-n 4 Efforts are continuing to issue timely reports to users.
The NRC has determined, under the current operating procedures, that providing system information to users by the ninth work day after the end of the month is acceptable.
IFMIS did not fully support the accounts payable function.
During a review of NRC's invoice payment practices, the Inspector General found that the NRC did not consistently apply the Prompt Payment Act requirements.
The payment process under IFMIS was manual.
A number of procedural improvements were made to address processing deficiencies and inconsistent application-of Prompt Payment Act requirements.
During FY 1992, an improved data collection process was implemented to monitor compliance with the Prompt Payment Act and to promote efficient invoice processing.
The changes previously discussed, the addition of an improved data collection process, and temporary summer personnel increased the timeliness of payments and reduced penalty payments.
Iravel The Federal Managers' Financial Integrity Act (FMFIA) report for FY 1991 identified as weaknesses the timeliness of reports, system reliability, system integration, usefulness of reports, input correction, and file maintenance.
Additional resources allowing increased quality controls have improved the accuracy of the data in the system.
System inefficiencies have been corrected with implementation of FFS in FY 1993.
The overall results of the limited A-127 review for FY 1992 reveal that while the information in the travel system is accurate, extensive reconciliations are required to ensure that summary data are posted to the general lodger properly.
Usefulness of the travel data is limited by the lack of ad hoc reporting.
While the travel and general ledger interface is very high risk and inefficiencies have been identified in the travel accounting system, management oversight provides reasonable assurance that the system contains accurate information and complies with the criteria for reasonable assurance.
Implementation of FFS precludes the need for further corrective actions in the travel system.
Payroll Dvstem The FY 1991 FMFIA report identified improvements needed to the payroll system in the areas of payroll and personnel system interface, manual accounting and reporting, and the document review and validation process.
A limited A-127 review of the payroll management system completed in October 1992 indicates that the payroll and personnel system interface is being
-3 accomplished through the use of a report that matches certain data elements in the payroll and personnel systems.
These " match report" adjustments are now being reviewed quarterly or more frequently which provides reasonable assurance that differences between the two systems are identified promptly.
In addition, the NRC will be entering into a cross-servicing agreement for an integrated payroll and personnel system that will be implemented in 1995.
This system will eliminate the need to compare data in two independent systems.
Personal computer applications have been developed to accomplish the accounting and reporting requirements for the FFS.
Other applications will be developed to reduce the amount of manual tracking, reccrding, and reconciliation currently being performed.
The document review and validation process is an ongoing effort that continues to be monitored as part of the routine payroll The need to institute additional controls to avoid process.
errors is constantly being reviewed as new processes and requirements are implemented.
A decision has been made to obtain cross-servicing for an integrated payroll and personnel system, and this should resolve any remaining concerns.
Although the interface with the IFMIS general ledger has a high risk, cash reconciliations and a Division of Accounting (DAF) contractor reconciliation to the general ledger help ensure reasonable assurance.
Accounts Receivable System The FY 1991 FMFIA report identified NRC's practice of manual bookkeeping and collection of delinquent accounts as not being adequate to comply fully with the Debt Collection Act and OMB Circular A-129, " Managing Federal Credit Programs."
Specifically, the report noted that NRC had not automated its system for collecting debts and did not routinely compute and apply interest, penalties, and other administrative charges to its delinquent debts.
In FY 1991, NRC automated its accounts receivable system for collecting annual materials fees.
In FY 1992, the fee billing systems for fuel cycle licensing actions and completed materials inspections were added to the automated accounts receivable system.
In FY 1993, the remaining billing systems will be directly connected to FFS and will use the debt collection functions within FFS.
The FY 1991 FMFIA report discussed deficiencies in license fee billing (10 CFR Part 170) that involve program office delays in accumulating and editing data.
For the first half of FY 1992 the NRC billed fees at least quarterly for all activities except I
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_4 power reactor and large fuel cycle facility licensing actions.
On April 17, 1992, a final rule was published in the Federal Engister amending 10 CFR Part 170 to change the billing from semiannual to quarterly so that all power reactor and fuel cycle facility licensing actions and completed inspections are now billed within three months after the costs are incurred.
More frequent billing for licensing actions and completed inspections will be explored when further improvements to automated systems are implemented.
Completed inspections for small materials users are billed more frequently than quarterly.
Also, additional supervisory review and quality assurance checks have been instituted that will improv3 the accuracy of the data that serve as the basis for the fee billing.
The FY 1991 FMFIA report also discussed the ' Inspector General's recommendation that the NRC ensure that its licence fee billing system is completed in a timely manner.
The NRC's license fee billing system now supports and automates the fee billing process through accumulation of hours and charges, invoice calculation and preparation, collection and overdue processing, and interface with agency financial management software.
We have a continuing commitment to keep the license fee billing system current and to enhance it to further streamline the billing process.
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