ML20137Z278
| ML20137Z278 | |
| Person / Time | |
|---|---|
| Issue date: | 03/06/1997 |
| From: | NRC OFFICE OF THE INSPECTOR GENERAL (OIG) |
| To: | |
| Shared Package | |
| ML20137Z095 | List: |
| References | |
| OIG-96A-19, NUDOCS 9704240062 | |
| Download: ML20137Z278 (38) | |
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OFFICE OF THE INSPECTOR GENERAL I
~U.S. NUCLEAR REGULATORY COMMISSION RESULTS OF THE AUDIT OF
{ U.S. NUCLEAR REGU!ATORY COMMISSION'S FISCAL YEAR 1996 FINANCIAL STATEMENTS
( OlG/96A-19 March 6,1997 AUDIT REPORT RREGy 1
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Results of the Audit of U S. Nuclear Regulatory Commission's Fiscal Year 1996 Finanical Statements TABLE OF CONTENTS I
INSPECTOR GENERAL'S REPORT. .
1 PRINCIPAL STATEMENTS STATEMENT OF FINANCIAL POSmON 7 STATEMENT OF OPERATIONS AND CHANGES IN NET POSITION . 9 STATEMENT OF CASH FLOWS . 10 STATEMENT OF BUDGET AND ACTUAL EXPENSES .
12 NOTES TO PRINCIPAL STATEMENTS 13 APPENDIX COMMENTS OF THE ACTING CHIEF FINANCIAL OFFICER i
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Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Finanical Statements l
INSPECTOR GENERAL'S REPORT I !n our audits of the U.S. Nuclear Regulatory Commission (NRC) for the years ended September 30, 1996 and 1995, as required by the Chief Financial Officers'(CFO) Act of 1990, we found the principal financial statements were reliable in all material respects. Management fairly stated that the intemal control structure in place at September 30,1996 was effective in (1) safeguarding assets from material loss, (2) assuring material compliance with laws and regulations governing the use of budgetary authority and with other relevant laws and regulations, and (3) assuring that there were no material misstatements in the Principal Statements. We found no reportable' noncompliance with laws and regulations for the items tested.
The following sections outline our conclusions and discuss the Overview of the Reporting Entity and the scope of the audit.
OPINION ON PRINCIPAL STATEMENTS The principal statements, including the accompanying notes, present fairiy in all material respects, I in conformity with a comprehensive basis of accounting other than generally accepted accounting principles, as described in Note 1, NRC's:
. assets, liabilities, and net position;
. revenue, financing sources and expenses;
. cash flows; and I . budgetary resources and actual expens2s.
l lNSPECTOR GENERAL'S REPORT ON MANAGEMENT'S ASSERTION ABOUT THE l EFFECTIVENESS OF THE INTERNAL CONTROL STRUCTURE
, The Office of Inspector General (OlG) evaluated management's assertion that the NRC maintained I an effective internal control structure designed to:
safeguard assets against loss from unauthorized acquisition, use or disposition; e
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 Statements or that are listed in the Office of Management and Budget (OMB) audit guidance and could have a material effect on the Principal Statements; and
. properly record, process, and summarize transactions to permit the preparation of reliable financial statements and to maintain accountability for assets.
NRC management fairly stated that internal controls in place on September 30,1996 provided reasonable assurance that losses, noncompliance, or misstatements material in relation to the olG/96A 19 Page1
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l I-Results of the Audit of U S. Nuclear Regulatory Commission's Fiscal Year 1996 Finanical Statements Principal Statements would tw prevented and detected on a timely basis. Management made this I
assertion based upon criteria e rtablished by the Federal Managers' FinancialIntegrity Act of 1982 (FMFIA) and OMB Circular A-123, Management Accountability and Control.
REPORTABLE CONDITIONS AND AUDIT FOLLOW-UP l
OlG noted two matters involving the internal control structure and its operation that are considered 1 reportable conditions under standards established by the American Institute of Certified Public l Accountants and OMB Bulletin 93-06. Although not material in relation to the Principal l Statements, these reportable conditions involve deficiencies in the internal control structure that, l in our judgment, coOW adversely affect the NRC's ability to ensure that it meets the objectives of internal controls. Management cons?dered these conditions in making their assertion on the effectiveness of the internal controls. J CURRENT YEAR l
The matters listed below involve the design or operation of the internal control structure and warrant disclosure as reportable conditions. None of the reportable conditions noted are classifiable as material weaknesses.
Capitalization Procedures for Automatic Data Processing (ADP) Software Need improvement Our audit disclosed a need for improvements to software capitalization procedures. This latest '
finding represents a continuing OlG concern about NRC's financial reporting of property. While '
OlG has raised and the NRC has resolved similar issues over the past few years, we believe the current issue indicates a continuing concern and must be identified as a reportable condition.
The Office of the Controller's (OC) current procedure for accounting for capitalized ADP software was issued on April 26,1996. This procedure provides guidance on how relevant information !
should be captured within the Division of Accounting and Finance (DAF). However, it does not identify specific responsibility for making capitalization decisions or for oversight of those decisions.
OC advised us that they receive software data from NRC offices for review and possible capitalization, and that a contractor has primary responsibility for this function.
The capitalization procedure only vaguely infers that a contractor performs the review function.
One of the procedural steps states, 'The documentation for additions and deletions is independently reviewed by DAF on a monthly basis to ensure accuracy and completeness of the data." To establish adequate accountability, we believe the duties and responsibilities of the specific parties in the process must be stated.
At our initiation, OC asked NRC offices to examine a listing of capitalized software to determine I
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1 Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Finanical Statements accuracy and completeness. The request resulted in several additions and deletions' to the listing.
Most additions were previously reported to OC but were not included as capitalized software.
These additions totaled about one million dollars. Subsequent OlG inquiry disclosed that an OC contractorincorrectly decided against capitalizing these items. When a contractor has significant decision-making responsibilities, it is imperative that OC provide sufficient oversight to ensure that the appropriate decisions are made.
Recommendation To bring greater discipline and accountability to the software capitalization process, we recommend that the Acting CFO:
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Revise the software capitalization procedure to specify the responsible NRC group, position or contractor for making capitalization decisions and oversight.
- 2. Reemphasize the need for adequate oversight of contractor decisions.
Payroll System Must Be Integrated With The General Ledger and Possess Labor Distribution Capabilities This issue is a carryover from the FY 1995 audit. NRC's accounting system does not include all of the necessary general accounting controls to produce timely and accurate financialinformation needed to prepare complete financial reports as required by OMB Bulletin 94-01, Fonn and Content I of Agency Financial Statements. The principal weaknesses and issues that remain are:
the compatibility and integration of the NRC general ledger and subsystems used I by NRC for payroll.
heavy reliance on manualinputs due to the use of incompatible 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 information.
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 expenditure. NRC continues to reconcile the non-compatible payroll subsystem with the FFS generalledger on a monthly and year end basis.
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Deletions were primarily the result of NRC's recent decision to expense rather than capitalize software related to analytical codes and mathematical models.
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Results of tW., Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Finanical Statements Recommendation None, as NRC is in the process of replacing its payroll system.
1 PRIOR YEAR - RESOLVED
- 1. Fee Recovery System Lacks Internal Control Based on actions taken in FY 1996, we are satisfied that OC has addressed the root causes for this problem. Further, OC is about to undertake a comprehensive review of the fee billing process.
The corresponding condition reported in the compliance report for FY 1995 is resolved, as well.
- 2. Lack Of U. S. Department of Energy (DOE) Audit Assurance During FY 1995, NRC took aggressive action to resolve this issue with DOE. NRC concluded its cffort to implement our recommendations without success. While DOE did not believe a revision to the NRC/ DOE Memorandum of Understanding was needed, DOE forwarded reports addressing internal controls and costs incurred at the DOE labs. However, these reports appeared to be of questionable value in assessing the proper use of NRC funds. In the interests of full disclosure, we will continue to report this issue as a Matter of Emphasis in this report.
REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS -
Our tests of compliance with selected provisions of laws and regulations disclosed no instances )
of noncomp!iance that would be reportable under Govemment Auditing Standards or OMB Bulletin l 93-06, Audit Requirements for Federal Financial Statements. However, the objective of our audit l was not to provide an opinion on overall compliance with laws and regulations. Accordingly, we do not, express such an opinion i 1
MATTER OF EMPHASIS NRC's principal statements include reimbursable expenses of the DOE's National Laboratories.
For Fiscal Year 1996 and 1995, NRC's Statements of Operations included about $89 and $110 g million, respectively, of reimbursed expenses, which represent approximately 17% and 20%, a respectively, of total expenses. Our audits included testing of these expenses and financing sources for compliance with laws and regulations within NRC. The work placed with DOE is under 3 the auspices of a Memorandum of Understanding between NRC and DOE. The examination of 5 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 g General Counsel, dated March 6,1995, where he opined that " .. DOE's inability to assure that its 5 contractors' costs [ National Laboratories] are legal and proper...does not compel a conclusion that 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.
OlG/96A-19 Page(
l Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Finanical Statements CONSISTENCY OF OTHER INFORMATION The overview of the NRC, program performance, and other supplemental financial and management information sections contain a wide range of data, some of which is not directly related to the Principal Statements. We do not express an opinion on this information. We have, however, compared this information for consistency with the Principal Statements and discussed the measurement and presentation methods with NRC management. Based on this limited effort, we found no materialinconsistencies with the Principal Statements or nonconformance with OMB guidance. ,
OBJECTIVES, SCOPE AND METHODOLOGY NRC management is responsible for (1) preparing the Principal Statements in conformity with the basis of accounting described in Note 1, (2) establishing, maintaining, and assessing the internal control structure to provide reasonable assurance that the broad control objectives of FMFIA are met, and (3) complying with applicable laws and regulations.
We are responsible for obtaining reasonable assurance about whether (1) the Principal Statements are free of material misstatement and presented fairly, in all material respects, in conformity with the basis of accounting described in Note 1, and (2) management's assertion about the effectiveness of the internal control structure is fairly stated, in all material respects, based upon criteria established by FMFIA and OMB Circular A-123, Management Accountability and Control.
As of the date of our report, NRC management had completed its evaluation of financial controls, but was still evaluating a programmatic control issue. We are also responsible for testing compliance with selected provisions of laws and regulations and for performing limited procedures with respect to certain other information in this annual financial statement.
In order to fulfill these responsibilities, we:
examined, on a test basis, evidence supporting the amounts and disclosures made in the Principal Statements; e
assessed the accounting principles used and significant estimates made by management; e
obtained an understanding of the internal control structure related to safeguarding of assets, compliance with laws and regulations including execution or transactions in accordance with budget authority, financial reporting, and performance measures reported in the annual financial statements; assessed control risk and tested relevant internal controls over safeguarding of assets, compliance, and financial reporting and evaluated management's assertion about the effectiveness of internal controls; e
tested compliance with selected provisions of the following laws and regulations: Anti-OlG/96A 19 Page5
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R_esults of the Audit of U.S. Nuclear Regulatory Commission's Fised Year 1996 Finanical Statements Deficiency Act (Title 31 U.S.C.), National Defense Appropriation Act (PL 101-510), Omnibus Budgetary Reconciliation Act of 1990, Debt Collections Act of 1982 (PL 97-365), Prompt Pay Act (PL 97-177), Civil Service Retirement Act, Civil Service Reform Act (PL 97-454),
Federal Managers' Financial Integrity Act (PL 97-255), CFO's Act (PL.101-576), Budget and Accounting Act;
. reviewed compliance with the process required by FMFIA for evaluating and reporting on internal control and accounting systems; and
. assessed the design of selected performance measure controls and whether they had been placed in operation.
We did not evaluate all internal controls relevant to operating objectives as broadly as defined in FMFIA, such as those controls for preparing statistical reports and those for ensuring efficient and g effective operations. We limited our internal control tests to those necessary to achieve the ll objective described in our opinion on management's assertion about the effectiveness of internal l controls. Because of inherent limitation in any intemal control structure, losses, noncompliance, or l misstatements may nevertheless occur and not be detected. Also, projection of any evaluation of )
the intemal control structure over financial reporting to future periods is subject to the risk that the internal control structure may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
We performed our work in accordance with Government Auditing Standards and OMB Bulletin 93-06, Audit Requirements for Federal Financial Statements.
This report is intended solely for the use of management of the U. S. Nuclear Regulatory Commission. This restriction is not intended to limit the distribution of this report, which is a matter of public record.
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l Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Finanical Statements AGENCY COMMENTS j On February 27,1997, the Acting CFO responded to our draft report and addressed the two l recommendations to improve the procedures for capitalizing ADP software. We requested and received additionalinformation about the Acting CFO's corrective actions on March 3,1997. Based on our review of this information, we are satisfied that the actions taken meet the intent of our I recommendations. We appreciate NRC staffs cooperation and continued interest in improving financial management within NRC.
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l PRINCIPAL STATsMsNTS -
'FOR.;
I FISCAL YEAR 1996:
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4 STATEMENT OF FINANCIAL POSITION September 30,1996 and 1995 Restated 1996 1995 ASSETS Entity Assets:
Intragovernmentalassets:
Fund balances with Treasury (Note 2) $210,748,055 $258,602,386 Accounts receivable, net (Note 3) 5,822,652 8,231,231 Advances and prepayments (Note 4) 4,948,524 2,466,180 Governmentalassets:
Accounts receivable, net (Note 3) 24,079,551 28,310,335 Advances and prepayments (Note 4) 472,592 695,961 Property and equipment, net (Note 5) 38.189.091 37.175.412 Total entity assets 284.260.465 335.481.505 Non-Entity Assets:
Governmentalassets:
Accounts receivable, net (Note 3) 312.470 692.881_
Total non-entity assets 312.470 692.881 Total assets $336.174.386
$284.572.936
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96A-19 PageB The accompanying notes to the principal statements are an integral part of this statement.
I Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements I
l l STATEMENT OF FINANCIAL POSITION (Continued) l September 30,1996 and 1995 Restated LIABILITIES 1996 1995 Liabilities Covered by Budgetary Resources:
Intragovernmentalliabilities:
Accounts payable and advances (Note 6) 511,805,497 S12,989,462 Other intragovernmental liabilities (Note 8) 26,519,644 41,532,847 Governmentalliabilities:
Accounts payable (Note 6) 21,229,287 22,515,321 Other governmental liabilities (Note 8) 7,143,659 8,324,101 '
Accrued payroll and benefits (Note 7) 11.527.847 10.276.907 Total liabilities covered by budgetary resources 78.225.934 95.638.633 Liabilities Not Covered by Budgetary Resources:
Governmental liabilities:
Other governmental liabilities (Note 9) 32.710.987 31.052.458 Totalliabilities not covered by budgetary 32.710.987 31.052.458 resources 110.936.921 126.691.096 Total liabilities NET POSITION Balance (Note 11):
Unexpended appropriations 168,157,910 203,360,336 Invested capital 38,189,091 37,175,412 Future funding requirements (32.710.987) (31.052.458)
Total net position 173.636.014 209.483.290 Total liabilities and net position }284.5724 35 S336.174.383.
96A 19 Page 9 The accompanying notes to the principal statements are an integral part of this statement.
Rrsuits of th3 Audit of U.S. Nuclear RrgulXtory Commission's Fiscal Year 1996 Finincial StitsmInts STATEMENT OF OPERATIONS AND CHANGES IN NET POSITION for the years ended September 30,1996 and 1995 Restated REVENUES AND FINANCING SOURCES i996 1995 Appropriated capital used (Note 12) 5 52,837,295 $ 35,558,585 Other revenues and financing sources (Note 13) 452,184,128 492,783,452 Excess current year receipts of fees over billings 14,633,020 23,015,654 Less: Receipts transferred to the Treasury or other agencies (2.925.845) (3.518.733)
Total revenues and financing sources 516.728.598 547.838.958 EXPENSES Program Expenses (Note 14)
Salaries and expenses 505,810,836 533,794,349 Office ofInspector General 4.013.899 4.557.825 Total program expenses 509,824,735 538,352,174 Depreciation (Note 5) 8,540,608 9,129,575 Interest .
4,683 13,143 Other expenses (Note 16) 17.101 287.045 Total expenses -
518.387.127 547.781.937 Excess or (Shortage) of revenues and financing sources over total expenses (Note 17) $ (1.658.529) $ 57.021 Net position, ending balance $209,483,290 $219,540,854 Prior period adjustment (Note 19) -
(5.456.00.Q)
Net position, beginning balance, as restated 209,483,290 214,084,854 Excess (Shortage) of revenues and financing sources over expenses (1,658,529) 57,021 Plus non-operating changes (Note 18) (34.188.747) (4.658.585)
Net position, ending balance $173.636.014 $209.483.290 96A-19 Page 10 The accompanying notes to the principal statements are an integral part of this statement.
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RIsults of tha Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Fin:ncial Statements STA';EMENT OF CASH FLOWS for the years ended September 30,1996 and 1995 Restated CASH PROVIDED (USED) BY OPERATING 1996 1995 ACTIVITIES Cash Provided:
Fees for licensing and inspection and other $454,049,512 $501,871,000 g services (Note 12) 8.450.358 16.852.614 E Other operating cash provided 462.499.870 518.723.614 Total cash provided Cash Used:
Personnel services and benefits (259,816,269) (266,399,073) g Travel and transportation (16,275,698) (16,238,339) g Rent, communications and utilities (26,342,185) (25,804,325)
Printing and reproduction (1,554,538) (2,132,047)
Other contractual services (193,678,520) (224,466,951)
Supplies and materials (11,162,708) (11,372,953)
Insurance claims and indemnitics (98,271) . (131,742) g Grants, subsidies and contributions (1,527,452) (1,378,879) l Other operating cash used (6.867.038) (5.406.669)
Total cash used (517.322.679) (553.330.978)
Net cash provided (used) by operating activities (54.822.809) (34.607.364)
CASH PROVIDED (USED) BY INVESTING ACTIVITIES Purchase of property and equipment (11.680.069) (7.101.108)
Net cash used by investing activities (11.680.069) (7.101.108)
CASH PROVIDED (USED) BY FINANCING ACTIVITIES Appropriations 18,536,875 22,000,000 Add: Transfers of cash from others 111.672 8.900.000 Net appropriations 18.648.547 30.900.000 Fee collections not used to offset current year's appropriation -
7.218.611 Net cash provided (used) by financing activities 18.648.547 38.118.611 96A-19 Page 11 The accompanying notes to the principal statements "
are an integral part of this statement.
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Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements STATEMENT OF CASH FLOWS (Continued) f- for the years ended September 30,1996 and 1995
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1996 1995 Net cash provided (used) by operating, investing and financing activities (47,854,331) (3,589,861)
Fund balances with Treasury, beginning 258.602.386 262.192.247 f Fund balances with Treasury, ending $210.748.055 $258.602.386 Reconcillation of Shortage of Revenues and Financing
{ Sources Over TotalExpenses Excess or (Shortage) of Revenue and Financing Sources f Over Total Expenses $ (1,658,529) $ 57,021 Adjustments to Reconcile Shortage of Revenues f- and Financing Sources Over Total Expenses to Net Cash Provided by Operating Activities:
[ Appropriated Capital Used (52,837,295). (35,558,585)
Decre se (Increase)in Accounts Receivable (2,823,343) (254,047)
Decrease (Increase)in Other Assets (2,258,975) 370,145
{ increase (Decrease)in Acco.unts Payable (887,331) (6,227,518) increase (Decrease) in Other Liabilities (6,682,254) (3,980,949)
Depreciation and Amortization 8,540,608 9,129,575
{ Other Unfunded Expenses 1,658,529 (57,021)
Other Adjustments 2.125.781 1.914.015 Total adjustments
{ (53.164.280) (34.664.385)
Net Cash Provided(Used) by Operating Activities
{ $(54.8.22.809) $(34.607.364)
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96A.19 r Page 12 The accompanying notes to the principal statements are an integral part of this statement.
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Results of the Audit of U.S. Nucl:ar Regulatory Commission's Fisc'J Yer 1996 Financial Stittm nts STATEMENT OF BUDGET AND ACTUAL EXPENSES for the years ended September 30,1996 and 1995 Budget Actual Restated Actual Obligations 1996 1995 Program Name Resources Direct Reimbursement Expenses Expenses Salaries and expenses $559,321.035 $512,113,674 $7,860,985 $514,373,228 $543,224,112 Office of Inspector General 6.068.881 4.319.768 88.156 4.013.899 4.557.825
$565.389.916 $516.433.442 $7.949.141 $518.387.127 $547.781.937 Budget Reconciliation Total expenses $518,387,127 $547,781,937 Add:
Capital acquisition 11,680,069 7,101,108 Other expended budget authority (2,105,885) (1,914,015)
Less: Expenses not covered by available budgetary resources:
Depreciation (8,540,608) (9,129,575)
Unfunded annual leave expense (795,701) (140,435)
Unfunded Workers' Compensation expense (862.828) 197.456 Accrued expenditures 517,762,174 543,896,476 Less reimbursements (9.842.179) (10.409.373)
Accrued expenditures, direct $507.919.995 $533.487.103 96A-19 Page 13 The accompanying notes to the principal statements are an integral part of this statement.
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Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 NOTE 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of Presentation These principal statements were prepared to report the financial position and results of operations of the U.S. Nuclear Regulatory Commission (NRC) as required t,y the Chief Financial Officers Act of 1990. The principal statements were prepared from the books and records of NRC in accordance with the form and content for entity financial statements sp$cified by the Oi' ice of Management and Budget (OMB)in OMB Bulletin 94-01 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.
B. Reporting Entity / Program Name NRC is an independent agency of the Federal Govemment created by the Energy Reorganiza-tion Act of 1974, as amended. Its purposes are defined by the Energy Reorganization 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 cppropriations:
31X0200 - Safaries and Expenses 31X0300 - Office of Inspector General The 31X0200 appropriation includes approximately $11 million and $22 million for Fiscal Year 1996 and 1995, respectively, of funds transferred from the Department of Energy (DOE),
Nuclear Waste Fund to NRC in accordance with the provisions of Public Law 104-46 and Public Law 103-316. Public Laws 104-134 and 104-19 rescinded $.7 million and $1.7 million from the fiscal year 1996 and 1995 NRC Salaries and Expenses Aopropriation, respective!y.
In addition, in Fiscal Years 1996 and 1995,5.5 million and $8.9 million, respectively, of the appropriation received by the U.S. Agency for International Development was transferred for the Nuclear Safety Assistance Program in Russia and the Ukraine which is under the control of NRC.
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NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 ,
The accompanying financial statements of NRC include the accounts of all funds under NRC control.
C. Budgets and Budgetary Accounting For the past 22 years, Congress has enacted no-year appropriations which are available for obligation by NRC until expended. The Omnibus Budget Reconciliation Act (OBRA) of 1990 requires NRC to recover approximately 100 percent of its new budget authority, less the amount appropriated from Nuclear Waste Fund, by assessing fees. At the end of the fiscal year, NRC's i appropriations arc reduced by the amount of revenues collected during the fiscal year.
D. Basis of Accounting Transactions are recorded on both an accrual accounting basis and on a budgetary basis.
I' Under the accrual method, revenues are recognized when eamed and expenses are recognized ,
when a liability is incurred, without regard to receipt or payment of cash. Budgetary accounting l 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 recognized are reduced by the amount of assessed fees collected during the fiscal year to the extent of new budget authority for tha year. Collections which exceed the new budget authority are held to offset subsequent years' appropriations. The fees collected during 1996 include $8.1 million billed in fiscal year 1996 for services performed in previous years. Appropriations expended for property and equipment are recognized as expenses when the asset is consumed in operations (depreciation). Appropriated Capital Used does not include appropriations used to purchase capital items or expenses incurred but not yet funded by Congress, such as Workers' Compensation benefits and annualleave expenses. The differences between the accrual basis recognition of appropriations expended and the budgetary basis recognition of outlays are presented in the Statement of Budget and Actual Expenses.
96A 19 Page 15
l NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 Miscellaneous receipts collected by NRC are not available to NRC for obligation or expenditure.
I These receipts must be transferred to the U.S. Treasury when collected.
F. Funds with the Treasury and Cash NRC cash receipts and disbursements are processed by the U.S. Treasury. The Funds with the Treasury and Cash are primarily appropriated funds that are available to pay current I liabilities and to finance authorized purchase commitments. Cash balances held outside the U.S. Treasury are not material.
G. Accounts Receivable, Net of Allowance The amounts due for receivables are stated net of an allowance for uncollectible accounts. The estimate of the allowance is based on an analysis of the outstanding balances and the application of estimated uncollectible percentages to categories of aged receivable balances.
l ' H. Advances 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 accruals of cost estimates are made by NRC.
I. PropertyandEquipment I The land and buildings in which NRC operates are provided by the General Sentices Administration (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 usefullife of two years or more are
- capitalized at cost and depreciated. Other property items are expended when purchased.
Normal repairs and maintenance are charged to expense as incurred.
Property is depreciated using the straight-line method over useful lives which range from 5 to 20 years.
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Results of the Audit of U.S. Nuclear Regulatory Cornmission's Fiscal Year 1996 Financial Statements NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 J. Prepaid and Deferred Charges Payments in advance of the receipt of goods and services are recorded as prepaid charges at g the time of prepayment and are recognized as expenditures / expenses when the related goods E and services are received.
K. Liabilities 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 1 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 l as Uabilities not Covered by Budgetary Resources. Also, liabilities of NRC arising 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 I claims brought by or against it. Based on the advice of legal counsel conceming contingencies, ,
it is the opinion of NRC management that the ultimate resolution of these proceedings, actions, I 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 eamed and the accrual is reduced as leave is taken. Each year, g the balance in the accrued annual leave liability account is adjusted to reflect current pay rates. E
. I Sick leave and other types of nonvested leave are expended as taken.
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.
Employees hired prior to that date could elect to join FERS or to remain in the Civil Service Retirement System (CSRS). Approximately 60 percent of NRC employees belong to CSRS and 40 percent belong to FERS. For employees in FERS, NRC withholds 0.8 percent of base pay ;
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96A 19 Page 17
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Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements f
NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995
(
earnings in addition to Federal Insurance Contribution Act 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 percent 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 govemment initiated the Thrift Savings Plan (TSP) which is a retirement savings and inve'stment plan for employees covered by either FERS or CSRS. For employees covered by FERS, NRC automatically contributes one percent of base pay to their account and matches contributions up to an additional four percent. The maximum percentage that an employee participating in FERS may contribute is 10 percent of base pay. Employees covered by CSRS may contribute up to five 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 $9,500. The sum of the employee and NRC contributions is transferred to the Federal Retirement Thrift investment Board.
NRC does not report on its financial statements FERS and CSRS assets, accumulated plan
[ benefits, or unfunded liabilities, if any, applicable to its employees. Reporting such amounts is i the responsibility of the Office of Personnel Management.
O. Net Position NRC's net position comprises the following components:
1.Ur m v eded appropriations include the undelivered orders and unobligated balances of NF L 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. Increases to invested capital are recorded when assets are acquired with direct appropriations, and decreases are recorded as a result of the depreciation, and disposition
( of capital assets.
- 3. Future funding requirements represent (a) accumulated annual leave earned but not taken as of the financial statement date and (b) actual and estimated future payments to be made for Workers Compensation pursuant to Federal Employees Compensation Act (FECA). The expense for these accruals is not funded from current appropriations, but rather will be funded from future appropriations and assessments.
) .....
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l Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements NOTES TO PRINCIPAL SThTEMENTS September 30,1996 ana' 1995 P. Department of Energy Charges Financial transactions between 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 l amounts due from NRC directly from NRC's account at Treasury for goods and/or services ;
rendered. Project manager verification of goods and/or services received is subsequently j accomplished through a system-generated voucher approval system. The vouchers are i returned to the Division of Accounting and Finance documenting that the charges have been accepted. Annually, NRC makes approximately $89 million in payments to DOE in this manner l for research conducted by the DOE National Laboratories.
Q. Reclassifications l
Certain amounts for 1995 have been reclassified to conform with the 1996 presentation.
NOTE 2. FUND BALANCES WITH TREASURY l Fund balances with Treasury consist of the following amounts as of September 30,1996 and 1995: )
1996 1995 )
Appropriated funds.
Obligated $180,045,631 $195,094,034 Unobligated 28.682.412 54.738.792 !
208,728,043 249,832,826 Other fund types 2.020.012 8.769.560 I
$210.748.055 $258.602.386 ;
1 U.S. Government cash is handled on an overall consolidated basis by Treasury. " Funds with Treasury" represent NRC's right to draw on Treasury for allowable expenditures. All amounts are available to NRC for current use except for $5.6 million in fiscal year 1995 which related to fees collected which are held to offset subsequent years' appropriations. The obligated and unobligated balances exclude amounts related to unfilled customer orders.
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I' 96A-19 Page 19
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Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 NOTE 3. ACCOUNTS RECEIVABLE, NET Accounts receivable, net is composed of the following amounts as of September 30,1996, and 1995:
Entity Assets intragovernmental accounts receivable consists primarily of receivables and reimbursements l due from other Federal agencies which were $5,822,652 and $8,231,231 at September 30,1996, and 1995, respectively.
Governmental accounts receivable is comprised of the following amounts as of September 30, 1996 and 1995:
Governmental: 1996 1995 Materials and facilities fees - billed $ 3,532,779 $ 6,982,690 Materials and facilities - unbilled 22,667,134 24,388,455 Other 103.295 132.035 Total accounts receivable 26,303,208 31,503,180 Less: Allowance for uncollectible accounts (2.223.657) (3.192.845) f Accounts receivable, net $24.079.551 $28.310.335
( 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 used to offset NRC's appropriations.
Non Entity Assets Governmental accounts receivable, net, represents miscellaneous amounts due from the public
$312,470 and $692,881 at September 30,1996, and 1995, respectively, which when 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.
96A 19 Page 20
1 I
Results of the Audit of U S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 NOTE 4. ADVANCES AND PREPAYMENTS Advances and prepayments as of September 30,1996, and 1995, consist primarily of the following:
1996 1995 Entity Assets:
Intragovernmental:
Advances - other Federal agencies $4.948.524 S2.466 110 Governmental:
Travel advances S 472.592 5 695.961 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 30,1996 and 1995.
NOTE 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net, consists of the following as of September 30,1996, and 1995:
1996 1995 Ser- Acquisition Accumulated Net Book Net Book )
Fixed Asset Class vice Value Depreciation Value Value l Years Equipment S 29,015,324 $20,933,828 $ 8,081,496 $ 9,958,283 4 5-8 ADP software 45,798,876 40,883,323 4,915,553 8,065,383 5
ADP software ,
I under develop-ment 9,002,437 - 9,002,437 3,632,345 l 1
Leasehold improve- I 17,230,286 2,604,692 14,625,594 15,519,401 ments 5-20 Leasehold improve-ments in progress 1.564.011 - 1.564.011 -
l Total 5102.610.934 564.421.843 $38.189.091 S37.175.412 !
I 96A-19 Page 21
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Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements f
NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995
[. The straight-line depreciation method is used for all classes of fixed assets. Depreciation expense for fiscal years 1996 and 1995 was $8,540,608 and $9,129,575 respectively.
f in fiscal year 1995, NRC increased the capitaliz'ation dollar amo'unt 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 1996 and 1995, the GSA charged NRC $18,446,487 and $18,580,348, respectively, for the use of these facilities based on a rental fee which is to approximate the commercial rates for similar properties.
NOTE 6. ACCOUNTS PAYABLE AND ADVANCES b
. Accounts payable and advances consist of the following as of September 30,1996 and 1995:
[. 1996 1995 t intragovernmental:
r Accounts payable i Department of Energy $ 9,368,752 $ 9,826,949 Other Federal agencies 2.282 932 2.994.531 f 11.651.684 12:821.480 Advances 153.813 167.982
( -
$11.805.497 $12.989.462 Governmental:
Accounts payable Vendors payable $19,743,864 $20,855,270
(. Contract holdbacks 1.485.423 1.660.051
$21.229.287 $22.515.321 The vendors payable are all current. Current payables represent amounts which are expected to be paid within the fiscal year following the reporting date.
r 96A.19 Page 22
Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statenants l
NOTES TO PRINCIPAL STATEMENTS l September 30,1996 and 1995 l
NOTE 7. ACCRUED PAYROLL AND BENEFITS l
Accrued payroll and benefits as of September 30,1996 and 1995 consists of:
1996 1995 Accrued personnel services S 9,824,164 S 8,699,085 Accrued benefits 1.703.683 1.577.822 511.527.847 $10.276.907 j Accrued payroll and benefits represent wages and benefits which have been earned but not paid as of the financial statement date.
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NOTE 8. OTHER LIABILITIES COVERED BY BUDGETARY RESOURCES Other liabilities as of September 30,1996 and 1995 include:
1996 1995 Accrued personnel services $1,554,395 51,550,759 Accrued benefits 5.589.264 6.773.342
. $7.143.659 }8.324.101 The liability for deposit funds consists primarily of liabilities arising from payroll deductions and tax I
withholdings. Advances from others consists of funds primarily from foreign governments for the participation in cooperative research programs.
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96A 19 Page 23
Resu ts of the Audit of U S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements
(
NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 1996 1995 Intragovernmental:
Liability to offset net accounts receivable for fees assessed $26,206,946 S35,204,023 Liability related to fees collected which will offset subsequent years' appropriations -
5,635,943 Liability to offset net miscellaneous accounts receivable 312.6 @ 692.881 526.519.644 541.532.847 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 I year collected.
The liability related to fees collected which will be used to offset subsequent years' appropriation represents amounts which will be transferred to the U.S. Treasury to offset subsequent 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 hquidated in the fiscal year following the reporting date.
I 96A 19 Page 24
Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1993 Financial Statements NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 NOTE 9. OTHER LIABILITIES NOT COVERED BY BUDGETARY RESOURCES Unfunded liabilities as of September 30,1996 and 1995 include:
Restated ,
1996 1995 Governmental:
l Accrued annual leave $25,359,485 $24,563,784 '
Accrued Workers' Compensation Benefits Paid 1,476,502 1,261,674 Estimated Future Benefits 5.875.000 5.227.000 I
$32.710.987 $31.052.458 Accrued annualleave represents the amount of annualleave eamed by NRC employees but not yet taken. Accrued Workers' Compensation includes: (1) FECA benefits paid by the Department of Labor (DOL) on NRC's behalf which had not been billed to or paid by NRC as of September 30,1996 and 1995 and (2) an actuarial estimate for future disability benefits. The 1996 future workers' compensation estimate was generated by DOL from an application of actuarial procedures developed to estimate the liability for FECA which includes the expected liabihty for death, disability, medical and miscellaneous costs for approved compensation cases.
The liability is determined using the paid losses extrapolation method ca'.culated over the next 23-year period. This method utilizes historical benefit payment pattems related to a specific incurred period to predict the ultimate payments related to that period. These annual benefit payments were discounted to present value. The interest rates utilized for discounting ranged between 6.21 percent for year one to 5.10 percent for years six and beyond.
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).
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96A 19 Page 25
Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 NOTE 10. INTRAGOVERNMENTAL ACTIVITIES The NRC reporting entity's financial activities interact with and are dependent upon those of the I Federal govemment as a whole. Other Federal agencies make financial decisions and report certain financial matters on behalf of all Federal agencies. The practice of having Federal agencies record or report only those govemment-wide financial matters for which they are I directly responsible is consistent with generally accepted accounting principles for Federal agencies which seek to identify financial matters of the department or agency that has been granted budget authority and resources to manage them. Activities which are performed or I reported by other Federal agencies in which NRC is indirectly involved are as follows:
. NRC funds a portion of its employee pension benefits under the CSRS and the FERS but does not disclose actuarial data with respect to accumulated plan benefits, plan assets, I 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 of its 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 namad party are administered, and in some cases, litigated by other Federal agencies. Amounts paid under any decision, settlement, I or award pertaining thereto are generally funded through the Treasury.
in most cases, claims (including personal injury claims) are administered and resolved by I the Department of Justice and any amounts necessary for resolution are obtained fr.om 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 Employment Standards Administration of the U.S. Department of Labor. The cost of administering, litigating, and settling these legal matters has not been allocated to individual Federal agencies.
I
. 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.
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I Results of the Audit of U.S. Nuclear Regulatory Commissien's Fiscal Year 1996 Financial Statements NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 NOTE 11. NET POSITION I
The net position consists of the following as of September 30,1996 and 1995:
Restated 1996 1995 Unexpended appropriations:
Unobligated S 34,765,076 $ 62,857,857 Undelivered orders 133.392.834 140.502.479 168,157,910 203,360,336 invested capital 38,189,091 37,175,412 Future funding requirements (Note 9) (32.710.987) (31.052.458) 1173.636.014 $209.483.290 Unexpended appropriations include (1) unobligated appropriation balances and (2) undelivered orders, which are amounts which have been obligated but not yet expended. The unobligated a appropriations balance does not include 56,262,153 and $8,911,666 in unfilled customer orders - E unobligated as of September 30,1996 and 1995, respectively. The undelivered orders balance does not include $6,082,665 and 58,119,066 in unfilled customer orders - obligated as of September 30,1996 and 1995, respectively.
Invested capital represents the net investment of the U.S. Government appropriations 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 30,1996 and 1995. These accruals are not funded from current or prior appropriations and assessments, but rather should be funded from future appropriations and assessments. Accordingly, future funding requirements have been recognized for these expenses that will be paid from future appropriations (see Note 9).
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l 96A.19 Page 27
Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements NOTES TO PRINCIPAL STATEMENTS l September 30,1996 and 1995 NOTE 12. APPROPRIATED CAPITAL USED Appropriated Capital Used, a financing source, is recognized to the extent that appropriated I funds have been consumed less the amount collected from fees assessed for licensing, inspections, and other services. During fiscal years 1996 and 1995, S454.0 million and $501.9 million, respectively, were collected from fees assessed for licensing, inspections and other services. 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 I 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' appropriatior.s.
For fiscal years 1996 and 1995, $454.0 million and 5501.9 million, respectively, of collections were used to reduce the fiscal year's appropriations recognized:
1996 1995 Appropriated funds consumed $506,886,420 5537,429,585 l Less: Collection from fees assessed (454.049.125) (5011871.000)
S 52.837.295 5 35.558.585 The appropriated capital used for fiscal years 1996 and 1995 includes $34,188,747 and
$4,658,585 respectively, of available funds from prior years (see Note 18).
NOTE 13. OTHER REVENUES AND FINANCING SOURCES ,
Other revenues and financing sources for September 30,1996 and 1995 were:
1936 1995 Fees for licensing, inspection and other sen/ ices $439,416,105 5478,855,346 Other miscellaneous receipts 2,925,844 3,518,733 Appropriation reimbursements 9.842.179 10.409.373
{
S452.184.128 S492.783.452
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96A 19 Page 28
Il Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements i
l NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 NOTE 14. OPERATING EXPENSES Operating expenses by object class are as follows:
Restated 1996 1995 Personnel services and benefits $263,043,067 $263,462,136 Travel and transportation 16,174,764 16,139,326 Rent, communication, and utilities 25.240,443 25,581,602 '
Printing and reproduction 1,579,151 2,005,287 Contractual services 189,329,595 216,219,114 gl' Supplies and materials 12,868,778 13,353,246 5 Grants, subsidies, and contributions 1.486,946 1,456,333 Insurance claims and indemnities 101,896 131,477 Other 95 3.653
$509 824 735 5538.352.174 I
NOTE 15. EMPLOYEE RETIREMENT PLANS l Total NRC contributions for employee retirement plans for fiscal years 1996 and 1995 were as follows:
1996 1995 Civil Services Retirement g System (CSIRS) $ 9,022,093 $ 9,226,610 g Federal Employees' Retirement System (FERS) 9,476,956 9,115,078 Federal Insurance Contribution Act (FICA) 6,078,868 5,923,317 Thrift Savings Plan (TSP) 3.754.354 3.580.292 128 3_3_2_,2_71 527.845.297 I I
I 96A 19 Page 29
Results of the Audit of U.S. Nucir:r Regulatory Commission's Fiscal Year 1996 Financial Statements NOTES TO PRINCIPAL STATEMENTS 4
September 30,1996 and 1995 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 individual departments and agencies.
NOTE 16. OTHER EXPENSES Other expenses as of September 30,1996 and 1995 consist of:
.1996 1995 Loss on disposal of proper 1y $41,403 $281,951 Bad debt expense (24.302) 5.094
$ 17.101 $287.045 NOTE 17. EXCESS OR (SHORTAGE) OF REVENUES AND FINANCING SOURCES OVER TOTAL EXPENSES The excess or (shortage) of revenues and financing sources over total expenses represents expenses not covered by budgetary resources for the years ended September 30,1996 and 1995, and consists of:
{
Restated 1996 _ _12 L Accrued annualleave $ (795,701) $(140,435)
Accrued Workers' Compensation 197.456 (862.826)
$(1.658.529) $ 57.021 Expenses not covered by budgetary resources are not funded from current appropriations but are to be funded from future appropriations and assessments.
{
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96A-19 Page 30
I Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements I
NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 NOTE 18. NON-OPERATING CHANGES Non-cperating changes for the fiscal years ended September 30,1996 and 1995, consist of the following:
1996 1995 Changed in unexpended appropriations $(35,202,426) $ (716,103)
Change in invested capital 1.013.679 (3.942.482)
$(34.188.747) $(4.658.585)
NOTE 19. PRIOR PERIOD ADJUSTMENT Beginning in 1996, DOL, the agency which administers the FECA program, began reporting I
NRC's estimated actuarial liability for future Workers' Compensation benefits. The estimated liability as of October 1,1994, was $5.5 million. The impact of this adjustment on the Statement of Operations and Changes in Net Position was to decrease Fiscal Year 1995 beginning riet position by $5.5 million. The effect on program expenses was nominal.
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I 96A-19 Page 31
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APPENDIX ,
f ^ COMMENTS OF.THE:
ACTING dHIEF FINANCIAL OFFICER' f
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p ea 'cg g *2 UNITED STATES y
j NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-0001
\...../ February 27. 1997 MEMORANDUM TO: Thomas J. Barchi Assistant inspector General for Audits FROM: Ronald M. Scroggins ,
Acting Chief Financi
SUBJECT:
RESULTS OF THE AUDIT OF U.S. NUCLEAR REGULATORY COMMISSION'S FISCAL YEAR 1996 FINANCIAL STATEMENTS We have reviewed the draft audit report of the U.S. Nuclear Regulatory Commission's fiscal year 1996 financial statements. We appreciate your assistance with the Department of Energy
- in our effort to obtain audit assurance and your recognition that we have accomplished all that I is possible to satisfy this issue.
The reportable condition " Capitalization Procedure for Automated Data Processing (ADP)
Software Need improvement" contains two recommendations. Our comments are:
Recommendation 1: Revise the software capitalization procedure to specify the responsible f NRC group, position, or contractor for makir.g capitalization decisions and oversight.
I Response: The current Division of Accounting and Finance (DAF) capitalization procedures are written to apply to whomever is assigned the task of reviewing ADP software purchases to determine the applicability of f capitalization. When this assignment is made, the person designated is advised of the agency policy and proceoural requirements. While a contractor may be assigned certain duties associated with capitalization,
{' it is not appropriate to assign a contractor the responsibility of making agency capitalization oecisions as the ultimate responsibility for software espitalization rests with the Office of the Controller. Therefore, we
{ believe the current procedures are adequate to define the process required to identify capitalized software. However, ADP software capitalization by its very nature often requires subjective judgements to be made when determining capitalization (i.e., identifying the difference between enhancements and maintenance) therefore, our emphasis in correcting this condition has been placed on your second recommendation.
Recommendation 2: Reemphscize the need for adequate oversight, of contractor decisions.
j.
I Response: Upon discovery of this oversight OC reemphasized with its intemal project management staff the need for adequate oversight of all CONTACT: John Bird, OC/DAF/ GAB 415-7343 (JEB1)
i
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- T. Barchi 2 contractor produced work products. Software capitalization will continue to be maintained as a matter of management emphasis for future financial statements.
The carryover reportable condition " Payroll System Must Be Integrated With The General Ledger and Possess Labor Distribution Capabilities" did not contain any recommendation as it was recognized that we are continuing our implementation of a new payroll system. We would like to point out that we are currently in the process of developing a plan for an agency-wide integrated financial management system. It is anticipated that consideration of a labor cost distribution system will be part of that plan. This process and the related priorities will influence the time frame for the institution of a labor cost distribution system.
We appreciate the opportunity to respond to the draft audit report.
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