ML20141A909
| ML20141A909 | |
| Person / Time | |
|---|---|
| Issue date: | 06/13/1997 |
| From: | Shirley Ann Jackson, The Chairman NRC COMMISSION (OCM) |
| To: | Burton D, Domenici P, Gingrich N, Gore A, Inhofe J, Mcdade J, Schaefer D, Thompson F HOUSE OF REP., HOUSE OF REP., APPROPRIATIONS, HOUSE OF REP., SPEAKER OF THE HOUSE, SENATE, APPROPRIATIONS, SENATE, ENVIRONMENT & PUBLIC WORKS, SENATE, GOVERNMENTAL AFFAIRS, SENATE, PRESIDENT OF THE SENATE |
| References | |
| NUDOCS 9706230204 | |
| Download: ML20141A909 (8) | |
Text
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- % UNITED STATES
\ NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-0001 l
5 !
June 13, 1997
%...../
j CHAMMAN The Honorable Albert Gore, Jr.
President of the United States Senate Washington, D.C. 20510 ,
Dear Mr. President:
Enclosed is a copy of the Nuclear Regulatory Commission's (NRC) Fiscal Year
. 1996 Accountability Report. This is the second year that the NRC has participated in a pilot project to consolidate performance-related reporting j
into a single accountability report.
The pilot project, which is being carried out under the guidance of the Chief l Financial Officers (CF0) Council, was undertaken in accordance with the '
- Government Management Reform Act (GMRA) of 1994. The GMRA permits the streamlining of financial management reports in consultation with the appropriate Congressional Committees, and the Office of Management and Budget
]
(0MB) is the contact with these Committees for this project.
Included in the report are the FY 1996 audited financial statement required by the Chief Financial Officers Act of 1990, the annual report to the President and the Congress required by the Federal Managers' Financial Integrity Act of 1982, and the report to Congress on management decisions and final actions on the Office of the Inspector General's audit recommendations required by the Inspector General Act of 1978, as amended.
As the Accountability Report still is in its pilot phase, the CFO Council has ,
requested that we solicit comments for future improvements. If your staff l desires to comment on the report, an evaluation form has been enclosed for use !
in providing feedback to the CFO Council.
Sincerely, Shirley Ann Jackson . l l 7}
Enclosures:
As stated 230000 bM M"> I!llylilllll?llifil111111 9706230204 970613 ;
PDR COMMS NRCC CORRESPONDENCE PDR I
jo# % UNITED STATES
, p Jg NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20656-0001 5 I June 13, 1997 t
g.....,/
CHAIRMAN The Honorable Newt Gingrich Speaker of United States House of Representatives Washington, D.C. 20515
Dear Mr. Speaker:
Enclosed is a copy of the Nuclear Regulatory Commission's (NRC) Fiscal Year 1996 Accountability Report. This is the second year that the NRC has participated in a pilot project to consolidate performance-related reporting into a single accountability report.
The pilot project, which is being carried out under the guidance of the Chief Financial Officers (CF0) Council, was undertaken in accordance with the Government Management Reform Act (GMRA) of 1994. The GMRA permits the streamlining of financial management reports in consultation with the apprspriate Congressional Committees, and the Office of Management and Budget (OMB) is the contact with these Committees for this project.
Included in the report are the FY 1996 audited financial statement required by the Chief Financial Officers Act of 1990, the annual report to the President and the Congress required by the Federal Managers' Financial Integrity Act of 1982, and the report to Congress on management decisions and final actions on the Office of the Inspector General's audit recommendations required by the Inspector General Act of 1978, as amended.
As the Accountability Report still is in its pilot phase, the CF0 Council has requested that we solicit comments for future improvements. If your staff desires to comment on the report, an evaluation form has been enclosed for use in providing feedback to the CF0 Council.
Sincerely, JLLr ny-Shirley Ann Jackson
Enclosures:
As stated
_. . . _ . _ _ ._ . _ _ . . - _ . . _ ~ . . . _ _ _ _. __
- ' 4 f # UNITED STATES
' g & NUCLEAR REGULATORY COMMISSION
" WASHINGTON, D.C. 20556-0001 i r. j June 13, 1997
%, . . . . . / .
CHAIRMAN i
l 1
1 The Honorable Pete V. Dcmenici, Chairman Subcommittee on Energy and Water Development Committee on Appropriations United States Senate Washington, D.C. 20510
Dear Mr. Chairman:
Enclosed is a copy of the Nuclear Regulatory Commission's (NRC) Fiscal Year I 1996 Accountability Report. This is the second year that the NRC has participated in a pilot project to consolidate performance-related reporting into a single accountability report.
The pilot project, which is being carried out under the guidance of the Chief Financia.1 Officers (CF0) Council, was undertaken in accordance with the Government Management Reform Act (GMRA) of 1994. The GMRA permits the .
l streamlining of financial management reports in consultation with the I appropriate Congressional Committees, and the Office of Management and Budget (0MB) is the contact with these Committees for this project.
Included in the report are the FY 1996 audited financial statenent required by the Chief Financial Officers Act of 1990, the annual report to the President and the Congress required by the Federal Managers' Financial Integrity Act of 1982, and the report to Congress on management decisions and final actions on the Office of the Inspector General's audit recommendations required by the Inspector General Act. of 1978, as amended.
As the Accountability Report still is in its pilot phase, the CF0 Council has requested that we solicit comments for future improvements. If your staff desires to comment on the report, an evaluation form has been enclosed for use in providing feedback to the CF0 Council.
Sincerely, I
Enclosures:
As stated cc: Senator Harry Reid i
% UNITED STATES
. [#
E 8d S
NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20555-4001
- E 8 June 13, 1997
\ ..... f CHAIRMAN The Ponorable Joseph M. McDade, Chairman l Subcommittee on Energy and Water Development Committee on Appropriations (
Vnited States House of Representatives i Washington, D.C. 20515 l
Dear Mr. Chairman:
)
Enclosed is a copy of the Nuclear Regulatory Commission's (NRC) Fiscal Year i 1996 Accountability Report. This is the second year that the NRC has l participated in a pilot project to consolidate performance-related reporting l into a single accountability report. l The pilot project, which is being carried out under the guidance of the Chief ,
Financial Officers (CF0) Council, was undertaken in accordance with the l Government Management Reform Act (GMRA) of 1994. The GMRA permits the streamlining of financial management reports in consultation with the appropriate Congressional Committees, and the Office of Management and Budget (OMB) is the contact with these Committees for this project. I 1
Included in the report are the FY 1996 audited financial statement required by the Chief Financial Officers Act of 1990, the annual report to the President i and the Congress required by the Federal Managers' Financial Integrity Act of l 1982, and the report to Congress on management decisions and final actions on I the Office of the Inspector General's audit recommendations required by the ,
Inspector General Act of 1978, as amended. l As the Accountability Report still is in its pilot phase, the CF0 Council has requested that we solicit comments for future improvements. If your staff l desires to comment on the report, an evaluation form has been enclosed for use !
in providing feedback to the CF0 Council.
Sincerely, Shirley Ann Jackson l
Enclosures:
As stated cc: Representative Vic Fazio i
^
% UNITED STATES 0 1 NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20665-0001 e
June 13, 1997 k . . . . . p#
CHAIRMAN e
The Honorable Dan Schaefer, Chairman Subcommittee on Energy and Power j Committee on Commerce
- United States House of Representatives i Washington, D.C. 20515
Dear Mr. Chairman:
Enclosed is a copy of the Nuclear Regulatory Commission's (NRC) Fiscal Year
. 1996 Accountability Report. This is the second year.that the NRC has participated in a pilot project to consolidate performance-related reporting into a single accountability report.
j The pilot project, which is being carried out under the guidance of the Chief Financial Officers (CF0) Council, was undertaken in accordance with the Government Management Reform Act (GMRA) of 1994. The GMRA permits the streamlining of financial management reports in consultation with the appropriate Congressional Committees, and the Office of Management and Budget (0MB) is the contact with these Committees for this project. !
Included in .the report are the FY 1996 audited financial statement required by the Chief Financial Officers Act of 1990, the annual report to the President l and the Congress required by the Federal Managers' Financial Integrity Act of- ,
1982, and the report to Congress on management decisions and final actions on !
the Office of the Inspector General's audit recommendations required by the Inspector General Act of 1978, as amended.
As the Accountability Report still is in its pilot phase, the CF0 Council has requested that we solicit comments for future improvements. If your staff desires to comment on the report, an evaluation form has been enclosed for use in providing feedback to the CF0 Council.
Sincerely, Shirley Ann Jackson
Enclosures:
As stated cc: Representative Ralph Hall
. - -. - . .- .. - .- - - . ~ _ . . _ . . .- . , - _ - -
j / #% # UNITED STATES p g NUCLEAR REGULATORY COMMISSION WASHINGTON, D.C. 20666-0001 g
June 13, 1997
%, . . . . . /
CH MRMAN I
l The Honorable James M. Inhofe, Chairman Subcommittee on Clean Air, Wetlands, Private Property and Nuclear Safety Committee on Environment and Public Works United States Senate l
Washington, D.C. 20510 l
Dear Mr. Chairman:
l Enclosed is a copy of the Nuclear Regulatory Commission's (NRC) Fiscal Year 1996 Accountability Report. This is the second year that the NRC has participated in a pilot project to consolidate performance-related reporting into a single accountability report.
The pilot project, which is being carried out under the guidance of the Chief Financial Officers (CF0) Council, was uadertaken in accordance with the Government Management Reform Act (GMRA) of 1994. The GMRA permits the streamlining of financial management reports in consultation with the appropriate Congressional Committees, and the Office of Management and Budget (OMB) is the contact with these Committees for this project.
Included in the report are the FY 1996 audited financial statement required by the Chief Financial Officers Act of 1990, the annual report to the President-l and the Congress required by the Federal Managers' Financial Integrity Act of 1982, and the report to Congress on management decisions and final actions on the Office of the Inspector General's audit recommendations required by the Inspector General Act of 1978, as amended.
As the Accountability Report still is in its pilot phase, the CFO Council has requested that we solicit comments for future improvements. If your staff desires to comment on the report, an evaluation form has been enclosed for use in providing feedback to the CF0 Council.
l Sincerely, Shirley Ann Jackson
Enclosures:
As stated cc: Senator Bob Graham l
f#% UNITED STATES NUCLEAR REGULATORY COMMISSION p WASHINGTON, D.C. 205t&0001
.,,,,+ June 13, 1997 i
l The Honorable Dan Burton, Chairman Committee on Government Reform and Oversight ,
United States House of Representatives )
Washington, D.C. 20515
Dear Mr. Chairman:
Enclosed is a copy of the Nuclear Regulatory Commission's (NRC) Fiscal Year 1996 Accountability Report. This is the second year that the NRC has participated in a pilot project to consolidate performance-related reporting into a single accountability report. ,
I The pilot project, which is being carried out under the guidance of the Chief )
Financial Officers (CFO) Council, was undertaken in accordance with the Government Management Reform Act (GMRA) of 1994. The GMRA permits the streamlining of financial management reports in consultation with the appropriate Congressional Committees, and the Office of Management and Budget (OMB) is the contact with these Committees for this project.
Included in the report are the FY 1996 audited financial statement required by the Chief Financial Officers Act of 1990, the annual report to the President and the Congress required by the Federal Managers' Financial Integrity Act of 1982, and the report to Congress on management decisions and final actions on the Office of the Inspector General's audit recommendations required by the Inspector General Act of 1978, as amended, i
As the Accountability Report still is in its pilot phase, the CF0 Council has requested that we solicit comments for future improvements. If your staff desires to comment on the report, an evaluation form has been enclosed for use in providing feedback to the CF0 Council.
Sincerely, Shirley Ann Jackson
Enclosures:
As stated cc: Representative Henry Waxman l
f
- % UNITED STATES S1 NUCLEAR REGULATORY COMMISSION l .
p WASHINGTON, D.C. 20566-4001 e
8 June 13, 1997 k ..... f CHAMMAN l
l l
The Honorable Fred Thompson, Chairman Committee on Governmental Affairs United States Senate ,
Washington, D.C. 20510 i
Dear Mr. Chairman:
Enclosed is a copy of the Nuclear Regulatory Commission's (NRC) Fiscal Year
- 1996 Accountability Report. This is the second year that the NRC has
! participated in a pilot project to consolidate performance-related reporting into a single accountability report.
l The pilot project, which is being carried out under the guidance of the Chief
! Financial Officers (CFO) Council, was undertaken in accordance with the Government Management Reform Act (GMRA) of 1994. The GMRA permits the streamlining of financial management reports in consultation with the appropriate Congressional Committees, and the Office of Management and Budget (OMB) is the contact with these Committees for this project.
Included in the report are the FY 1996 audited financial statement required by the Chief Financial Officers Act of 1990, the annual report to the President and the Congress required by the Federal Managers' Financial Integrity Act of 1982, and the report to Congress on management decisions and final actions on the Office of the Inspector General's audit recommendations req ired by the l Inspector General Act of 1978, as amended. j I As the Accountability Report still is in its pilot phase, the CF0 Council has requested that we solicit comments for future improvements. If your staff desires to comment on the report, an evaluation form has been enclosed for use in providing feedback to the CF0 Council.
Sincerely, l
Enclosures:
As stated I
cc: Senator John Glenn i
l
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Availability Notice p.
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 20402-932S
- 3. The National Technical Information Service, Springfield, VA 22161-0002 Although the listing that follows represents the majority of documents cited in NRC publications. 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 bulletins, circulars, information notices, inspection and investigation notices; licensee event reports: vendor reports and correspondence; Conunission papers; and applicant and licensee documents and correspondence.
The following documents in the NUREG series are available for purchase from the Government Printing Office: formal NRC staff and contractor reports, NRC-sponsored conference proceedings, international agreement reports, grantee reports, awl NRC booklets and brochures. Also available are regulatory guides, NRC regulations in the Code of n derat Regulations, and Nuclear Regulatory Commission issuances.
Documents available from the National Technical Information Service include NUREG-series reports and technical reports prepared by other Federal agencies and repons prepared by the Atomic Ene 3y Com-mission, 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 con-gressional reports can usually be obtained from these libraries.
Documents such as theses, dissertations. foreign reports and translations, and non-NRC conference proceedings are asailable for purchase from the organization sponsoring the publication cited.
Single copies of NRC draft reports are available free, to the extent of supply, upon written request to the Office of Administration Distribution and Mail Services Section, U.S. Nuclear Regulatory Commission, ,-
Washington DC 20555-0001.
Copies of industry codes and standards used in a substantive manner in the NRC regulatory process are maintained at the NRC Library, Two White Flint North, i1545 Rockville Pike, Rockville, MD 20852-2738, -
for use by the public. Codes and standards are usually copyrighted and may be purchased from the originat-ing organization or, if they are American National Standards, from the American National Standards Insti-tute,1430 Broada ay, New York, NY 10018-3308.
NUREG - 1542 Vol. 2 c
- isca Year 996 '
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NRC Principles of Good Financial Management
" hose who handle public resources have a special responsibility to safeguard the resources entrusted to i them and to use them properly. Poor financial management by NRC can undermine the confidence that we are effectively accomplishing our health and safety mission. NRC managers must ensure that public funds are used for authorized purposes only and that they are used economically, efficiently, and within established limits. Toward these ends, the NRC uses the following Principles of Good Financial Manage-ment, P1,ANNING. 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.
CONTR()l . 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 .md produce valuable information for the planning process.
COMMUNICATION. Good financial management requires good 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- l plish its mission. Ongoing projects should be evaluated to ensure results justify continued funding. Appro- l priate precautions ensure that waste is avoided. To ensure maximum utility of available resources, funds
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should be obligated as early as practicable during the fiscal year, and excess funds should be deobligated as ;.
soon as practical after project completion.
EVAI.UATION. Good financial managenient requires periodic evaluation of performance against meaningful financial and program performance measures. Such performance assessment should evaluate ,
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 recognized when they achieve superior performance. 3 1
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Table of Contents
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. . . ,.. .. a. .. ; , ?., . .. ;u- v. . , c . x ,. ;, . .. g -
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t Foreword....................................................................................... ....................v l
Th e N R C 's M i s s i o n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i M es sag e Fro m t h e Ch ai rm a n . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
l l
Message From the Chief Financial Officer ..................... ............ ...... ....... ......... ix M a n a ge me n t S u m m a ry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
About the U.S. Nuclear Regulatory Commission. ... . . . . . . . . . . . . . . 1 Organization ... . .. . .. . . . . . . .
. . . . . . . .. ... .. . . . . . . . .. . . . 1 l
Regulatory Responsibility .. . . . . . . '
Sources of Funds .. . . ... . .. . . . . . .. . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . .2 Uses of Funds by Function . . .. .. ... .. . .. . . . . . .. . . . . . . . . . .... 2 Financial Condition of NRC . . .. ..... . . . . . . . . . . . . .. . . .4 i
! Prog ra m Pe rform a n c e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
l Reactor Program .. . . . . . . . . . . .... . ... . . . . .. . . . . .. . . .. .5 Licensee Safety Performance . ... .. . . . . . . . . ...... .. . ... . . . . . . . ... 7 Licensing Actions for Operating Power Reactors . .. . . . . . . . ... .. .. 8 Inspection Activities . . . . . . .. . . .. . .. . .. .. . . . . . . . 10 Nuclear Materials and Nuclear Waste Program... .. . ........ .. ..... . .. . . . . 12 Materials Licensing ... . .. . . . . . . . . . ... ..... .. . . . . . . . . . . . . . . . . . . 14 Materials inspections .. . . . . . . . . . . ... . .. .... . . . . . . .. ... . . . . . . 16 Site Decommissioning Management Plan.. . . . . . . . . . . . ... . .. . 16 High-Level Nuclear Waste Regulation . . . . . . . . . . . . . .. . . . . . . .. .. . 17 Regulatory Research Program .... . .. ... .. . . . . . . . . . . . . . . . . . . . . . . . . . ... ... 18 Generic Safety Issues. . .. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . .. 20 i
NRC Regulations ... ... . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 20 Responsiveness to the Public's Safety Concerns.. . . . .. . . . . . . . . . . . . ... .. 21 M a n ag e m e n t A eco u n t ab i l i ty . . . . . . . . . . .. . . . . . . . . ... . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 23 The NRC's Management Control Program . . ... .... . . . . . . .. . . . . . . .. . 23 Status of Management Controls and Report on Material Weaknesses
- and Non-Conformances .. .... . . .. . . . . . .... . . . . . . .. . . . . . . . . . . 23 Financial Management Systems .. .. ........ . . . . . ... .. .. . . . . .. 23 19% M TOL T I Altll.f i Y RI l'OR I
- . -, - - .-.- - = . . - - . _ ._ . - ..
Ibble of Contents (continued)
. 24 Management Decisions and Final Actions on OlG Audit Recommendations. . . . . . .
Management Decisions Not Implemented Within One Year. . . . . . . . . . . 26
..... .. . .28 Debt Collection . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . .
. . . . . . . . . . . . . .. . . . . . . . . .. 28 Prompt Payment . . . . . . . . . . . . . . . . . . .
Civil Penalties ... .. . . . . . . . .. .. .. .. .. . . . . . . . .. . . 29 FY l 996 Audited Financial Statement ................................. ............................ .... 31 Appendix..............................................................................................-...............75 Figtsres 3
Figure l: Sources of NRC Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uses of Funds by Function . ... 3 Figure 2: .. . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Con mercial Reactors .. ...... . . . . . . . . . . . . . .....6 Figure 3: . . . .
Figure 4: Performanw Indicators. .. . . . . . . . . . . . . . . . . . . .. 7 Figure 5: Licensing Action Completions . . . . . . . . . . . . . . . ............8 Figure 6: Licensing Actions inventory .. . . . . . .... . . . . . . . . . . . . . . . . . . ...9 Figure 7: Age of Licensing Actions . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Figure 8: Licensing Actions--Median Age ofInventory .. . . ... . . . . . . . . . . 10
! Figure 9: Direct Region Onsite inspection Hours Per Unit . . . . . . . . . . . . . ... . . . . . I 1 Figure 10: Direct inspection Hours. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 11: Materials Licensing Action Completions .. . . . . . . . . . . . . . . . . . 14 Figure 12: Materials Licensing Reviews: Timeliness of Reviews Completed Each Fiscal Year ... ..... . ... ... .. . . . . . . . 15 Figure 13: Materials Licensing Reviews: Backlog . . . . . . . . . . . . . . . . . 15 Figure 14: Materials Inspection Completions .... . . . . .. . . . . . . . . . . . . . . .. . .. 16 Figure 15: Mean Time to Close Allegations . . . ... . . . . . . ... .............22 Figure 16: Delinquent Debt. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... ..... 28 Figure 17: Prompt Payment . .. . .... . ..... . ... . . . . . . . . . . . . . . . 29 Figure 18: NRC Organization Chart September 30,1996. . . ... . . . . . . . . . .76 Figure 19: NRC Organization Chart January 5.1997. .. . . . . . .. . .. .. 77 Tables t
l Table 1: SDMP Contaminated Sites . . . . . . . . . . . . . . . . . . . . . . . ... .. 17 Table 2: Management Report on Office ofInspector General Audits with Disallowed Costs . . . . . . . . . .. . . . . . . . . . . . . . . . .. 24 Table 3: Management Report on Office ofInspector General Audits with Recommendations That Funds Be Put to Better Use . . . . . . . . . . . . . . . 25 Table 4: Amount of Fiscal Year Civil Penalties Collected Versus Fiscal Year Penalty Dollars Assessed . . ... . . . . . . . . . . . . . .. . . . . . . . . . 29 j t!.N. NtTI.i3R RIUt'IEIORv CO\l\n%% ION 1
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Foreword
~
Tin a pilot project, along with several other Federal age ment 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 Manage-) '
ment Reform Act (GMRA) of 1994. The GMRA permits the streamlining of financial manage-ment reports in consultation with the appropriate congressional committees through a liaison in the U.S. Office of Management and Budget (OMB).
This report consolidates the information previously reported in the following documents:
NRC's annual financial statement, required by the Chief Financial Officers Act of 1990 l
= Chairman's annual report to the President and the Congress, required by the Federal Managers' Financial Integrity Act of 1982 Chairman's semiannual report to the Congress on management decisions and final actions on Office of Inspector General audit recommendations, required by the Inspector General Act of 1978, as amended This report also contains 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 Chief Financial Officer Mail Stop T-9 F6 U.S. Nuclear Regulatory Commission Washington, DC 20555-0001 IVW. \C( ~(H N i \llli Ili 1d l'OH 1
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Message From the Chairman am pleased to present the U.S. Nuclear Regulatory Commission's 4
. accountability report for Fiscal Year (FY) 1996. This is the second
,i year that the NRC has produced an accountability report in an effort to i- ] streamline statutory performance-related reporting in accordance with the Government Management Reform Act of 1994.
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f 1 The NRC evaluated its management control and financial manage-ment systems for FY 1996, as required by the Federal Managers' Finan-cial Integrity Act of 1982. The results of this evaluation provided a
reasonable assurance that the NRC achieved the objectives of the Act.
The evaluation disclosed no material weaknesses in the NRC's programs or administrative activities and no material non-conformances with governmentwide require-ments in the NRC's financial management systems.
For the past 12 years, the overall U.S. nuclear power reactor industry's safety performance has shown continuing improvement as measured by the use of performance indicators. There are some plants, however, that have exhibited adverse performance that warrants increased attention.
To strengthen our ability to perform our mission of protecting public health and safety, the Commission realigned our top management structure, after carefully examining the current organi-zational structure and the insights gained from the various self-assessment efforts that the NRC has conducted over the past year. The new organization became effective on January 5,1997.
In September 1995, I initiated a strategic assessment and rebaselining of the agency to analyze where the NRC currently stands and outline a path to take it where the Commission believes it should be in the future. This initiative was 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 assess-ment and rebaselining effort will enable the NRC to develop a strategic plan that is the basis for the i agency's budgeting and performance plan. We sought the views and comments of our stakeholders as part of the decision making process before making final decisions on the agency's key strategic issues. A strategic plan and performance plan, which will meet the requirements of the Govern- ;
ment Performance and Results Act of 1993, will be issued in FY 1997.
We continue to work to improve our financial management and management controls to 1 I
achieve the best possible support for our regulatory responsibilities. The issuance of this second annual report confirms our commitment to provide accountability for the agency's programs and financial management.
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Shirley Ann Jackson Chairman U.S. Nuclear Regulatory Commission
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1 Message From the Chief Financial Officer 1
j ] T he U.S. Nuclear Regulatory Commission issued its first audited
'3 5 financial statement in fiscal year (FY) 1992 and received unquali-
{ fled audit opinions in FYs 1994 and 1995. For FY 1996, I am pleased to j report that the NRC again received an unqualified audit opinion. This i opinion, finding no material weaknesses and a reduction in reportable conditions, reflects the continuing high priority the NRC places on sound financial management and public accountability.
We are continuing to enhance financial management at the NRC.
We implemented a new strategy for debt collection. We have reduced delinquent debt each year since FY 1993, and as of the end of FY 1996, delinquent debt was less than 1 percent of total receivables. On-time payments for amounts subject to the Prompt Payment Act have increased and the amount of interest penalties in-curred have decreased. We continue to work toward significantly reducing the amount of imprest funds through the use of third-party drafts, travelers checks, and automatic teller machine and BankCards. We have maintained a high percentage of emMoyees who are paid by direct deposit / electronic funds transfer. More emphasis has been placed on electronic payments to vendors with the passage of the Debt Collection Improvement Act of 1996, which has resulted in an increase in the percentage of dollar value of vendor payments made by electronic funds transfer.
We also are continuing to seek improvements in our financial management systems. We are in the process of implementing an integrated payroll and personnel system and property account-ability system. We are developing an agency-wide financial management system that will integrate financial planning data with financial management performance data. An overarching goal of the new agency-wide financial management system will be to eliminate the need for multiple financial tracking systems in the agency.
Adherence to sound financial management practices is more critical than ever to accomplish our mission and to meet new challenges presented by our changing environment. Our goals are to maintain the standards we have achieved, and to seek improved methods to carry out and account for our financial management responsibilities.
l WW f Ronald M. Scroggins Acting Chief Financial Officer U.S. Nuclear Regulatory Commission (W6 \( ( (H N! \itti il Y Hl.lHR l
Management Summary
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Program Performance Reactor Program
- Licensee Safety Performance On the basis of NRC-approved indicators of industry safety performance, operating experi-ence in recent years shows that, overall, the performance at reactors has been improving; how-ever, the NRC continues to identify individual plants with marginal perfor mance and significant operational problems.
- Licensing Actions The NRC issued one operating license in FY 1996. 6t the end of FY 1996,110 commercial nuclear power reactors were licensed to operate in 32 States. The NRC received no new applica-tions for operating licenses or construction permits, and issued no new construction permits in FY 1996.
In FY 1996, the NRC exceeded the goal for licensing actions less than 2 years old (96 percent versus goal of 95 percent); 77 percent of the licensing actions were 1 year old or less (compared to a goal of 80 percent) and more than 98 percent were 3 years old or less (compared to a goal i of 100 percent). Some licensing actions are not being processed as quickly because resources are being used to actively address the recently identified design and licensing basis problems that are discussed below and because the NRC's program for amending licenses to convert to standard technical specifications has increased the number and complexity of licensing actions being submitted.
- Inspections In FY 1996, the overall direct inspection efTort totaled approximately 283,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> for all plants in operation versus the planned 295,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br />. A primary contributor to the 4-percent variance from hours planned was the conduct of large reactor team inspections, which resulted in fewer direct inspection hours.
Insights gained from recent design and licensing basis problems at Millstone Unit 1, Haddam Neck, and Maine Yankee nuclear power plants have indicated that the nuclear industry's level of voluntary compliance may have decreased following the Commission policy decision to accept a voluntary program in 1992. Subsequent NRC followup activity was not oriented toward identifying design and licensing basis deficiencies. We believe that appropriate
- corrective actions are now in place. In an effort to determine the extent of the problem, the NRC l has requested information from all nuclear power plants. The evaluation of the results of the i l
licensee responses will aid NRC's assessment of the extent and magnitude of the problem and i
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the need for additional generic followup actions. Based on the evaluation of NRC inspection results, industry submittals, and utility corrective action programs, the agency's current effort will be adjusted accordingly.
l Nuclear Materials and Nuclear Waste Program ;
- Licensing Actions 1
During FY 1996, the NRC completed the review of approximately 4,350 cpplications for new licenses, '
license amendments, and license renewals (sealed source and device designs are excluded). The number of licensing actions completed for materials users exceeded the NRC's projections by 12 percent. Also, the ;
NRC reduced the number of pending licensing actions from 1,445 at the end of FY 1995 to 852 at the end 1 of FY 1996. Of these pending licensing actions,275 reviews at the end of FY 1996 did not meet the NRC's I timeliness goals. l 1
- Materials Inspections !
During FY 1996, the NRC completed approximately 2,200 inspections of materials facilities, exceeding the planned number of inspections by approximately 15 percent.
- Site Decommissioning Management Plan i l
There are currently 45 sites on the Site Decommissioning Management Plan list; 3 sites were planned i for remediation, and 3 sites were removed from the list in FY 1996. l High-Level Nuclear Waste Regulation !
In FY 1996, the NRC refocused its repository program on resolving ten Key Technical issues (KTIs) most important to repository performance. Activities were reprioritized and organizations restructured to support issue resolution and improve integration of technical work. Other work important to licensing was deferred. Agreement was reached with the Department of Energy (DOE) on the potential significance to repository performance of eight of the ten KTis.
l Regulatory Research Program i During FY 1996, the NRC completed 14 rules and resolved three generic safety issues involving (1) automatic emergency core cooling system switchover to recirculation,(2) embrittlement of reactor pressure vessel supports, and (3) monitoring of fatigue transient limits for reactor coolant systems.
Responsiveness to the Public's Safety Concerns In FY 1996, the NRC met its goals to close allegations pertaining to technical issues where wrongdoing is not suspected in an average of 6 months from receipt and allegations pertaining to wrongdoing by an NRC licensee in an average of 18 months from receipt.
l t A NIT'lJ.\R RtEl't. AlORY CO\l%f1% ION
Management Accountability Management Controls The NRC's annual evaluation of management controls and financial management systems disclosed no material weaknesses in NRC programs or administrative activities and no material non-conformances with governmentwide requirements in the NRC's financial management systems.
Audits At the end of FY 1996, the NRC had four audits with outstanding actions in excess of 1 year old.
FY 1996 Audited Financial Statement ;
For the third successive year the NRC received an unqualified audit opinion on its financial statement.
Three reportable conditions were carried over from FY 1995. Two of these were removed in FY 1996, leaving one carryover reportable condition, which pertains to the need for a payroll system that is integrated with the general ledger and that possesses labor distribution capabilities. The Office of Inspector General (OIG) noted one new reportable condition in FY 1996, involving the need to improve procedures for capitalizing automated data processing software.
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US. NUCl.EMI RLGl'LATORY COT 15tisslON l
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l About the U.S. Nuclear Regulatory Commission e
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f*"%, he U.S. Nuclear Regulatory man, to serve as the principal executive oflicer e< % Commission (NRC)is an and official spokesman for the Commission. In i j . S j independent regulatory agency FY 1996, the Executive Director for Operations o,.
- of the Federal Government that (EDO), as the chief operating and administrative
%, # was created by the U.S. Con- officer of the NRC, carried out the policies and gress to regulate the Nation's decisions made by the Commission. The EDO civilian use of byproduct, source, and special had also been designated as the NRC's Chief nuclear materials to ensure adequate protection of Financial Officer (CFO). In order to strengthen the public health and safety, to promote the com- the agency's ability to perform its mission of mon defense and security, and to protect the envi- protecting public health and safety, the Commis-ronment. I.s purposes are defined by the Energy sion realigned the NRC's top management in a Reorganization Act of 1974, as amended, along reorganization that became effective on January 5, with the Atomic Energy Act of 1954, as amended, 1997. In the new organization, the CFO became a which provide the foundation for regulating the separate position reporting to the Chairman along l Nation's civilian uses of nuclear materials. with the EDO and the Chief Information Officer (CIO). An Executive Council was established comprised of the EDO, CFO, and CIO. Respon-Organ.izat. ion sibilities under the EDO also were realigned The NRC is headed by five Commissioners under three Deputy EDOs - (1) the Deputy Ex- l appointed by the President and confirmed by the ecutive Director for Regulatory Effectiveness, Senate for 5-year terms. The President also designates one of these Commissioners as Chair- rcmainued <m pace h yy yx -
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Conuninioncrr Kenneth C. Rogers.
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Almut the l'.K Nuclear Regulatory Cumminion (cmrtinuedl Program Oversight, Investigations and Enforce- The NRC and its licensees share a common ment,(2) the Deputy Executive Director for responsibility to protect the health and safety of Regulatory Programs, and (3) the Deputy Execu. the public. The NRC regulatory program is an tive Director for Management Services. Charts important contributor in achieving this shared l showing the organization in effect in FY 1996 and responsibility. NRC licensees, however, have the primary responsibility for the safe use of the realigned organization effective January 5, nuclear materials.
1997, are in the appendix.
Regulatory Responsibility S urces of Funds The NRC has two appropriations, and funds The NRC's scope of responsibility entails regu-lating civilian nuclear reactors; fuel cycle facilities; fg both are available until expended. One appro-pri tion is for agency salaries and expenses, and medical, academic, and industrial uses of nuclear the other is earmarked for the Office of the In-materials; and the transport, storage, and disposal spector General (OlG). The NRC's total new of nuclear materials and wastes. The NRC carries budget authority (excluding allocation account out its mission through a licensing and regulatory transfers from others) for fiscal year (FY) 1996 system comprising the following activities: ,
was $472.6 million: meluding $467.6 m,lhon i a licensing the design, construction, operation, from the Salaries and Expenses appropriation, and )
and decommissioning of nuclear reactors and $5.0 million from the OlG appropriation. Addi- l l
other nuclear facilities (such as nuclear fuel tionally, available to expend in FY 1996 were cycle facilities, uranium enrichment facilities, $67.5 million from prior year appropriations, $9.2 <
and test and research reactors) million from prior year reimbursable work, $2.7 l
- licensing the possession, use, processing, million from prior year direct transfer funds, and handling, and exporting of nuclear materials new reimbursable work to be performed for others totaling $5.2 million. The sum of all funds
- licensing the siting, design, construction, available to expend for FY 1996 was $557.2 operation, and closure of low-level radioac- million. (See Figure 1.)
tive waste disposal sites under NRC jurisdic- l tion and the construction, operation, and Other than appropriated funds, the NRC has !
closure of geologic repositories for high-level limited assets. Capitalized personal property is radioactive waste limited to typical office furnishings, personal pmpeny aalu red by contractors with NRC funds,
= licensing the operators of civilian nuclear nuclear reactor simulators, computer hardware, reactors and off-the-shelf and customized computer l
= inspecting licensed facilities and activities software. The NRC has no real property, loan, or !
I an gu rantee pmgrams. I
- conducting research to gain independent expertise and information for making timely regulatory judgments and for anticipating Uses of Funds by Function !
problems of potential safety significance As stated above, the total budget authority .
I developing and implementing rules and reg- available (excluding allocation account transfers ulations that govern licensed nuclear activities from others) for use by the NRC in FY 1996 was
- collecting, analyzing, and disseminating $557.2 million. Of that amount, the NRC in-information about the operational safety of curred obligations of $520.3 million, with ap-commercial nuclear power reactors and proximately 50 percent used for salaries and certain nonreactor activities benefits. An additional 50 percent was used to 11,htt alar klLi i AIORv ( o\t\ll%Io\
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Figure I Sources of NRC Funds !
l Total Funds Available $557.2M1 New Budget Authority
$472.6M Reimbursable Work
$17.1M i Budget Authority from Prior Years $67.5M
' Total funds available reflects NRC appropriated budget authority and reimbursable work. It excludes transfer appropriations from the General Services Administration (GSA), $.4M, and the Agency for International Deselopment (A.I.D.), $7.8M.
obtain technical assistance for the NRC's princi- ($29.6 million from appropriations, $6.3 million pal regulatory programs, to conduct confirmatory from reimbursable work, and $1 million from safety research, to cover operating expenses direct transfer funds) in budget authority that was i (e.g., building rentals, transportation, printing, not obligated in FY 1996 will be available to fund security services, supplies, office automation, and critical needs in FY 1997.
training), staff travel, and reimbursable work.
I (See Figure 2.) The remaining $36.9 million (continued on page .o Figure 2 Uses of Funds by Function Total Obligations $520.3M' Salaries and Benefits $259.0M Reimbursable Wo Travel $14.3M ( ,
Contract Support
$239.0M i
i Total obligations reflects obligations against NRC appropriated budget authority and reimbursable work. It excludes obligations against transfer appropriations from the General Services Administration (GSA), $.lM and the Agency for Intemational
- Development ( A.I.D.), $4.0M.
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1996 ACCot'NTAHILIIY RI PORT
Almut the l'.\, Nuckar Regulatory Comminion (continued)
Over the past few years, the NRC has made a Financial Condition of NRC C "Certed effort to increase the effectiveness and As of September 30,1996, the financial efhc.iency of program financing by elumnatmg condition of the NRC is sound with respect to unnecessary financial reserves pending contract having sufficient funds to meet program needs ci se ut, mcoming funs on domant contmets, and sufficient control of these funds to ensure that exercising closer scrutiny of, the need for planned NRC obligations do not exceed budget authority, projects, and more closely monitoring obligation The Statement ofI mancial Position shows a net and expenditure rates. This prudent financial position (assets minus liabilities) of $173.6 management initiative has resulted in a 42 percent million. Consistent with the requirements of the decrease in unobligated appropriated funds in FY Omnibus Budget Reconciliation Act of 1990, the 1996, compared to FY 1995. The NRC will NRC collected approximately 100 percent of its continue its efforts to closely monitor its financial new budget authority, excluding the amount condition and planning policies to further reduce appropriated from the Nuclear Waste Fund. its unobligated balance in future years.
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l I X M Cl.l.\R RI Gt IJiORY CON 1\llwlON l
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} his section highlights key aspects of the Reactor Program j NRC's programs, including program goals The Reactor Program encompasses all NRC
- and program performance measures. The pro-efforts to ensure that civilian reactor facilities are gram performance measures are related to such operated in a manner that gives reasonable assur-outcomes as safety effectiveness, such outputs as ance of adequate protection of public health and inspection effort, and timeliness of actions.
safety as required by the Atomic Energy Act of Consistent with the requirements of the 1954, as amended. The program also encom-i Government Performance and Results Act of passes all reactor regulatory research, as required
! 1993, the NRC is in the process of developing a by the Energy Reorganization Act of 1974, as
! strategic plan which will be submitted to the amended. In addition, the program encompasses
! Office of Management and Budget (OMB) and all other functions associated with reactors, Congress by the end of FY 1997. That plan will including evaluating safety concerns, assessing define the overall agency goals and objectives operational events and experience, training the which will form the basis for more specific NRC technical staff, perfonning independent performance goals and associated performance reviews and giving legal advice to the Commission measures that will be included in the agency's concerning safety issues, conducting adjudicatory j Annual Performance Plan for FY 1999. That
! performance plan will also be submitted to I OMB in September 1997, and subsequently to < continued on puue 6s Congress. In future years, ,. ., ,
the NRC's accountability ,
reports will reflect the same
- performance goals and j measures as are found in the l applicable performance plans i for those years. '
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I*rogram Performance (continued) l t
Figure 3 U.S. Commercial Reactors
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Note: There are no commercial reactors in Alaska or Hawaii reviews, investigating wrongdoing by reactor construction are designed and constructed licensees, and implementing reactor enforcement properly and are ready for safe operation.
policies and actions. The Reactor Program also . .
- Ensure that adequate capabilities exist for encompasses all regulatory efforts for improving licensing of evolutionary and advanced the licensing process for the next generation of reactor designs and for reactor license re-standardized nuclear power reactors by minimiz-ing the uncertainty in the regulatory process. newal activities.
At the end of FY 1996, a total of 110 commer-The principal goals of the NRC's Reactor Program for FY 1996, as stated in the agency's cial nuclear power reactors were licensed to FY 1996 budget, were to: operate in 32 States. These reactors generate approximately 22 percent of the Nation's electric-Ensure that nuclear power plants and other ity. (See Figure 3.)
licensed facilities are operated safely, and that licensees are adequately prepared to The NRC received no new applications for respond to accidents. operating licenses or construction permits, and issued no new construction permits in FY 1996.
Ensure that nuclear power plants under .
The NRC issued one operating license in FY 1996.
l'.S. NITI I. \R REGI I ATORY CO\1\it%10N
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- Licensee Safety Performance Safety perfonnance indicators reflect the collective The safety of civilian nuclear reactors is the results of the efforts of the NRC and the nuclear
. responsibility of NRC licensees. The regulatory industry. The overall trends in industry perfor-
! oversight of licensee safety is the responsibility of mance indicate that the NRC is succeeding in its the NRC. The safety performance of licensees is mission of protecting public health and safety.
i panially a reflection of NRC perfonnance; how-
, Seven NRC-approved indicators ofindustry ever, it is not possible to isolate the causal relation- safety performance are shown in Figure 4.
ship or a specific set of factors that directly links NRC's perfonnance to licensee perfonnance. (connuued on page sj I
Figure 4 Performance Indicators for Operating Nuclear Power Reactors ,
Annual Industry Averages, 1992-1996*
Equipment Forced Outage Rate 1 Automatic Scrams While Critical Collective Radiation Exposure , per 1000 Critical Hours )
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- Calendar year values are shown for 1992 through 1995. Fiscal year values are used beginning in 1996. Data for October 1,1995, through December 31,1995, are included in both calendar year 1995 and fiscal year 1996 values. i 1996 ACrotNI Afill.I'l Y IU.I'OR'l
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Program Perfurntance (continuedi
! l Although operating experience in recent years NRC is taking corrective action, as necessary, and l shows that, overall, the performance at reactors is assessing whether there are generic implica- ,
l l has been improving, the NRC continues to iden- tions that could result in changes to the regulatory l tify individual plants with marginal perfonnance process. For those reasons, some licensing actions and significant operational problems, are not being processed quickly. Second, the NRC's program for amending licenses to convert to j Licensing Act/ons for Operating standard technical specifications has increased the '
Power Reactors number and complexity of licensing actions being 1 Either routine activity, technical advances, or submitted. I tmexpected events at a nuclear facility can result The NRC has established goals to control the in a need for NRC to take licensing action. Dur- .
size and age of the licensing action inventory. I ing FY 1996, the NRC completed 1,418 licensing The goals call for 80 percent of these actions to be !
actions for operating power reactors (Figure 5).
1 year old or less,95 percent to be 2 years old or )
More than 99 percent of the actions in inven. less, and all actions to be no more than 3 years tory are plant-specific amendments requested by old. Figure 7 shows the age and percentage of licensees, and the rest result from NRC-imposed licensing actions in the inventory at the end of regt.irements. The total licensing action inventory earn year from FY 1994 through 1996.
has ii.creawd from 1,000 licensing actions at the end of FY 1995 to 1,101 under review at the end From 1989 to 1996, the percentage of licens-
, ing actions more than 3 years old has dropped of FY 1996 (Figure 6). In FY 1996, the inventory from 23 percent to less than 2 percent. The NRC increased because of two primary factors. First, exceeded the goal for licensing actions less than the NRC is actively addressing the recently
. 2 years old (96 percent versus goal of 95 percent).
identified problem of some inconsistencies m the compliance of the design basis and operating procedures at some nuclear power plants. The k""'i""ed '"' F"K' M Figure 5 Licensing Action Completions 2,500 2,000 - -- - - - - - - - - -- ---- - - - - - - - - - - - - - - - - - - - -
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Figure 6 Licensing Actions inventory 1,600 1,400 ------ ---- --- -- -- ------....------- ---- ----- ----- --- --- --- . -- ---- -
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- FY 1994 and 1995 data for planned licensing actions inventory are not available.
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Figure 7 i
Age of I icensing Actions 4 100 j ,
Goals FY1996 Age (Years): 0-1 12 23 >3 80 -- - --
c ---- ----- ------- ------- w ,,, o Actual. 77*'. 19% 2% 2%
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l'rogram Performance (continued)
{ Figure 8 j I.icensing Actions
! Median Age ofIm entory ,
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! 0 1992 1993 1994 1995 1996 Fiscal Year i
. At the end of FY 1996,77 percent of the licensing Inspection Activities actions were 1 year old or less (cornpared to a Three essential components of the NRC's goal of 80 percent) and more than 98 percent reactor inspection program are to determine the were 3 years old or less (compared to a goal of state of reactor safety, to confirm that operations
, 100 percent). As Figure 8 shows, the decreasing comply with the provisions of the license, and to trend of the median age of the licensing action ascertain whether other conditions exist with inventory did not continue in FY 1996 because of safety implications serious enough to warrant the factors mentioned previously. corrective action. The NRC's reactor inspection program is designed to ensure, through selective examinations, s
that the licensee identifies and i
. resolves safety issues before they
[ affect safe plant operations. The NRC inspection program is audit e oriented to verify that relevant
/ activities are being properly con-s ducted and that equipment is being
, p.. properly maintained to ensure safe 9 6 operations. The inspection pro-
.] y gram comprises three major 3.f s_ ' "
q $s .
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program elements: core inspections, plant- team inspections, which resulted in fewer direct specific regional initiative inspections, and ge- inspection hours. Figure 10 shows the use of neric issues inspections. allocated inspection resources in direct inspection activities, which are performed by resident and The NRC assigns at least two resident .mspec-region-based staff.
tors to each operat.ing reactor site. These res. i dent inspectors concentrate on day-to-day licensee A management weakness was identified as a operations, event followup, licensee management, result of events at Millstone Unit 1, Haddam Neck, and staff performance. NRC-region based and and Maine Yankee nuclear power plants. Insights headquarters inspectors supplement the activities gained from the NRC s review of design and carried out by resident inspectors through a licensing basis problems at these plants have variety of program and technicalinspections that indicated that the level of industry voluntary afford an indepth look at licensee operations. compliance may have decreased following the Commission policy decision to accept an industry H.istorically, NRC staf.f spends an annual .
vduntary program m 1992. Subsequent NRC l average of approximately 2,700 to 2,800 hours0.00926 days <br />0.222 hours <br />0.00132 weeks <br />3.044e-4 months <br /> .in .
followup activity was not oriented toward identit.y-direct onsite mspect. ion activities at each reactor ing design and licensing bas.
is defic.iencies. The (Figure 9). Th.is overall average .is used to plan . NRC does not believe that th. .is issue resulted from resource allocations for each reactor and is ad- a material weakness .m management controls. In Justed according to licensee performance. reaching th.is conclus. ion, several factors were In 1996, the overall direct inspection effort considered, including the significance of the totaled approximately 283,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br /> for all plants weakness, the effect on fulfillment of the mission in operation veisus the planned 295,000 hours0 days <br />0 hours <br />0 weeks <br />0 months <br />. A of the agency or an agency component, the level of primary contributor to the 4-percent variance from
' rnnuinuar on page 12; hours planned was the conduct of large reactor Figure 9 Direct Region Onsite Inspection Ilours Per Unit 3000
~ - - - - - - - - - - - - - -
2750 --u -- ~~
- - ~ ~ - - - - - ~ ~ - -
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- ---- - - ~ ~ -
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1994 1995 1996 Fiscal Year l Planned 5 Actual l IW6 ToroiN1 \Bii e iY REPORI
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! Figure 10 Direct Inspection Hours
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5 0-1992 1993 1994 1995 1996 Fiscal Year lO Planned M Actual l risk resulting from weaknesses in controls, the will aid NRC's assessment of the extent and magni-effect on needed services provided to the public, tude of the problem and the need for additional ;
whether the deficiency exists in a major program, generic followup actions. Given the actions taken and the views of the Inspector General.
and ongoing, we believe that appropriate corrective While this is a management issue in a major actions are now in place. Based on the evaluation ;
program that could have some effect on the f NRC inspection results, industry submittals, and l mission of the agency and services provided to utility corrective action programs, the current effort i the public, the extent of the problem is unclear at will be adjusted accordingly.
this time. The Inspector General (IG) has de-ferred to management's judgment on whether or not this issue constitutes a material weakness Nuclear Materials and Nuclear since his staff has not performed sufficient evalu. Waste Program ation to reach an opinion.
The Nuclear Materials and Nuclear Waste !
The agency has taken action to significantly Program encompasses all NRC health and safety, augment resources and to provide a process to dea safeguards, research activities, operational data with the problems identified in this area. A Special analysis, technical training, adjudicatory reviews, Projects Office was set up to focus on Millstone investigations, enforcement, and independent safety specific problems and recommend any additional and legal advice related to the licensing, inspection, lessons learned to be incorporated into the reactor and environmental reviews for fuel cycle facilities; oversight program. In an effort to determine the the transportation of nuclear materials; the safe extent of the design basis problem, the agency sent interim storage of spent fuel; nuclear materials users; letters requesting information regarding design and the safe management and disposal of low-level and licensing basis programs from all nuclear power high-level radioactive wastes; and uranium recovery plants. The evaluation of the licensee responses and related remedial actions. This program also U.N. NUCllAR Ritt I.AlORv Co\t\llNstoN
i
\ includes safeguards reviews for all licensing of nuclear materies. About 30 percent of these i activities involving the export of special nuclear materials licenses are administered by the NRC.
j material and the integrated agency effort to oversee The remainine licenses are administered by the
! decommissioning of facilities and sites associated 29 Agreement State , that, through a formal agree-with NRC licwed activities. ment with the NRC, have assumed regulatory
)
i The principal goals of the Nuclear Materials responsibility over byproduct and source materials, j and Nuclear Waste Program for FY 1996 as stated and small quantities of special nuclear materials.
l in the agency's FY 1996 budget were to: The NRC also licenses and inspects all com-rnercial nuclear fuel facilities involved in process-
- Ensure that current and future uses and trans-il ing and fabricating uranium ore into reactor fuel.
< portation of nuclear and radioactive materials .
I Nine major facilities were licensed to operate m are safe and have adequate safeguards, eight States at the end of FY 1996.
I
- Ensure that high-level and low-levei nuclear The NRC and some Agreement States have waste and uranium mill tailings are safely the licensing and regulatory responsibility for j managed and disposed of, ensuring the safe management and disposal of' i
- Ensure that facilities no longer in operation low-level radioactive waste. Additionally, the are adequately and safely monitored or de_ NRC has the licensing and regulatory respon-
! commissioned. sibility for ensuring the safe management and j disposal of high-level radioactive waste.
l Approximately 21,500 licenses have been j issued for medical, academic, and industrial uses '"""i"""' "" F"A'< M i
j Some of the Uses of Itadioactive Materials t
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Prograrn (*cifuranance (continued)
Materiais Licensin9 The NRC's timeliness goal is to complete 80 The NRC licenses and inspects approximately percent of new applications and amendment 6,400 specific licenses for use of nuclear and requests for byproduct materials licenses within other radioactive material. These uses include 90 calendar days of their receipt, and to complete medical diagnosis and therapy, medical and the remainder within 180 calendar days of re-biological research, academic training and re- ceipt. The goal for renewal applications is to l search, industrial gauging and nondestructive complete 80 percent within 180 calendar days, testing, production of radiopharmaceuticals, and and the remainder within 1 year. Backlogged fabrication of such commercial products as smoke reviews are those that exceed the timeliness goal.
detectors and other sealed sources and devices.
The NRC reduced the number of pending Detailed health and safety reviews and inspections licensing actions from 1,445 at the end of FY 1995 of licensee procedures and facilities provide to 852 at the end of FY 1996. Of these pending reasonable assurance of safe operations and the licensing actions,275 backlogged resiews at the development of safe products. The NRC com end of FY 1996 did not meet the NRC's timeli-pleted the review of approximately 4,350 apphea-ness goals. For reviews completed during each of tions for new licenses, license amendments, and the last 5 years, Figure 12 shows the average time license renewals, meluding approximately 290 required to complete new, amendment, and re-new licenses,3,040 license amendments, and newal licenses for byproduct materials.
1,010 license renewals (sealed source and device designs are excluded). This number of comple. The materials licensing reviews backlog tions exceeded the NRC's projections by 12 (Figure 13) presents a different perspective on the percent. (Figure 11). y,,,,j,,,,g g,, ,,yyy f g Figure 11 NIaterials I.icensing Action Completions Wxcludes Scaled Source and 1)evice Designs) 6000 5500 - - - - - - - - - - - -- ~ ~ ~ ~ - - -- ---- ---- ----- -- - - --- - - - --
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"~g 2000 l 1500 - - - - -- - -- - - -- -----
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0-1994 1995 1996 FiscalYear QPlanned -IN _ Actual
- - _ . -j .
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1:.s. NtTI.I.AR tu Gt 1 .\1ORYCostiltoloN- __._
r l Figure 12 Materials Licensing Iteviews Timeliness ofIteviews Completed Each Fiscal Year gj m 180 mcomsmens.
Q 160 --- - - - -- -- -- - - - - -
o 140 -
6 120 - '-- '- -- ' "- -
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1992 1993 1994 1995 1996 900
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1992 1993 1994 1995 1996 Average No. of Days to Complete New Applications, Amendments and Renewals
- l. New Applications & Amendments E Renewals l Figure 13 Materials Licensing Resiens llacklog 400 m 300 -"""-"
il:
o
'5:
o 200 -~" -~~"" """"" " - " " " " " " " " " " " " " " - " "
C
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0-1992 1993 1994 1995 1996
! Fiscal Year i
!- l ~- New Applications & Amendments Renewals l i
1996 A('COUNTAllit ITY Rt: PORT l
e i
Program Perfbrmance (continued) ,
NRC's timeliness in processing licensing actions. Site Decommission /ng Management Plan This chart measures the number of actions to be completed at the end of each fiscal year that ex- Several hundred NRC materials licenses are ceeded the timcliness goals expressed above. In terminated each year. Most of these NRC-addition, this chait shows that the NRC has signifi- licensed operations result in little or no cantly reduced the number of backlogged reviews, contamination of buildings or soil, and decom- '
particularly license renewals, in the past 4 years. missioning actions leading to the termination of these licenses normally proceed in a routine Materials Inspections fashion. Non-routine cases may involve sites at which buildings, fomier waste-disposal areas, During FY 1996, the NRC completed ap-large piles of tailings from metal extraction proximately 2,200 inspections of materials facili-operations, groundwater, on soil are contaminated ties, exceeding the planned number of inspections with uranium, thorium, or other radionuclides.
by approximately 15 percent (Figure 14). Since These non-routine cases present varying degrees FY 1992, the number of materials licenses has of radiological hazard, remediation complexity, declined approximately 13 percent; therefore, and associated cost.
fewer materials inspections were planned each year. The number ofinspections conducted has The Site Decommissioning Management been about level over the past 3 to 4 years. Plan (SDMP) is used to ensure that generic and Figure 14 Materials Inspection Completions 3000 2500 --
m 2000 -- -- -- --- - - - - -
8 3m& 1500 E 1000 -- -- --
i -- - --
500 --
0 -
1992 1993 1994 1995 1996 Fiscal Year
((5nngJ3ctgad nu unauion comussios j
. .-. -- - . .- . - -= - _- -
case-by-case issues affecting the timely Act directs the DOE to characterize only one decommissioning of these more difficult contami- candidate site, the Yucca Mountain site in the nated sites receive the appropriate level of man- State of Nevada. The National Energy Policy Act agement attention. There are currently 45 sites on directs the NRC to revise its regulations (10 CFR the SDMP list; 3 sites were planned for Part 60) within 1 year after the Environmental remediation, and 3 sites were removed from the Protection Agency (EPA) issues new standards.
list in FY 1996 (as shown in Table 1).
In FY 1996, the NRC refocused its repository H/gh-Leve/ Nuclear Waste Regulation pmgram after a thorough evaluation of important Program external events. including budget reductions.
DOE's revised program, and the National Acad-The High-Level Nuclear Waste Regulation emy f Sciences, rec mmendations for Yucca Program includes all of the NRC's public health and saf.ety licensing, inspection, and environmen- Mountam standards. The program was refocused i tal reviews for the safe management and disposal 1 ing ten Key Technical Issues (KTis) of high-level radioactive wastes, as well as re-
- 8t imp rtant to repository performance. Ac-search to assess the safety of high-level waste uvities were repentized and organizations management, storage, and disposal. The NRC's restructured to support issue resolution and high-level v/aste regulatory activities are man- improve integr tion of techmcal work. Other dated by the Nuclear Waste Policy Act of 1982, w rk important to licensing was deferred.
i the Nuclear Waste Policy Amendments Act of An initial step in the refocused program was 1987, and the National Energy Policy Act of to discuss the ten KTis and the issue resolution l 1992. The Nuclear Waste Policy Act specifies a process with DOE and other parties. As a result, detailed approach for long-range high-level waste agreement was achieved with DOE on the poten-disposal, with DOE having operational responsi- tial significance to repository performance of bility and the NRC having regulatory responsibil- eight of the ten KTis. Overall, for most of the ity. This undertaking involves a complex, KTIs, work in FY 1996 concentrated on estab-integrated system of waste handling, transporta- lishing a sound technical basis for issues to be tion, interim and retrievable storage, and ulti- resolved during FY 1997 - 1998. FY 1996 mately deep geologic disposal of high-level activities also included field and laboratory waste, requiring the protection of public health I and safety and the environment over thousands
! of years. The Nuclear Waste Policy Amendments (='hmed mi rou m Table 1 SDMP Contaminated Sites (Total Sites To lie Remediated = 45)
FY 1992 = FY 1993 FY 1994 FY 1995 FY 1996 Total Sites To Be N/A 45 47 48 45 Remediated Sites Planned for Remediation 2 4 8 3 3 Sites Remediated 1 1 3 3 3 19% TM 'OL N 1 titilIl v RI.l*( pH I
I'rogram l'ajunnance (ccmtinuedI \
investigations and the development of models or guides pertaining to Commission policy or techni-computer codes to represent subsystems or cal requirements.
processes of the repository. Both new and Research is generally planned and initiated in l existing models were used to conduct sensitivity /
response to the needs of regulatory licensing and l importance analyses of various subsystems. The .
results of these analyses will help further focus nyctjon programs or is directed in response to
. Commission decisions. Research pnonties are NRC's issue resolution efforts on those factors .
determmed by the overall value, importance, and shown to have dominant effect on repository impact that the research findings may have in subsystems or processes and will provide further responding to these program needs. The follow-value when linked with the total system perfor-ing were NRC,s major research accomplishments mance code.
in FY 1996:
While the resolution of many KTis is depen-Supported nuclear power plant pipe fracture dent on additional work, some important
. research since 1981. The work has included progress was made m FY 1996. Interactions *"
between NRC and DOE were successful in
. "#".* E*E *"".'
- sigmficant additional international funding, achievmg informal agreements that will be
, which were performed to solve engineering documented in future issue resolution status safety issues associated with the potential ,
reports. Another NRC and DOE interaction 1
. failure of cracked piping. The program has identified differences between NRC and DOE .
. produced a s.ignificant body of experimental I total system performance assessments, their root and analytical results that has been used to causes, and potential future resolution actions.
justify changes in NRC's regulations related A branch techmcal position was completed !
to pipe failure and in the ASME Code Sec-giving an acceptable methodology for the use of tion XI concerned with evaluating cracks expert elicitation. Interactions were conducted found during periodic inservice inspections with EPA that contributed to the development of of reactor piping. An independent review of reasonable and implementable standards for th this program has supported the staff's assess- l Yucca Mountain site. Additionally, NRC devel-ment that this program has met its objectives.
oped and installed a Licensing Support System Thus, the results of the research are being l Test Bed on an NRC Internet computer server compiled and documented in the form of a site that provides access to a wide variety of regulatory guide addressing leak-before- ,
NRC's techmcal documents, !
break evaluations, and the research area is being closed.
Regulatory Research Program . Completed tests on certain gate valve designs The primary goal of the NRC's Regulatory to determine their susceptibility to pressure Research Program is to ensure that research locking and thermal binding. These undesir-provides sound technical bases for timely able circumstances may occur when operat-rulemaking and decisions in support of regulatory ing conditions cause an increase in the licensing and inspection activities. As part of this internal pressure, and the shrinkage of the Regulatory Research Program, the NRC conducts valve body during cooldown causes interfer-research to provide independent expertise and ence between valve internals. The pressure information necessary for making timely regula- increase and the shrinkage create additional tory judgements, to anticipate problems of poten- forces on the internals and require higher tial safety significance for which new or expanded than expected extraction forces to open the knowledge can assist the NRC in pursuing its valves. The research results show that these mission, and to develop regulations and regulatory it.s. Mrs.1{ AR R1 Gt I AloRY Co%I\ilssioN
valves are susceptible to pressure locking; break loss-of-coolant accidents and opera-however, the valves show little tendency for tional transients in current generation nuclear thermal binding at the conditions tested. The reactor designs. The passive safety features findings from this research work are being of the AP600 call for extended operation used by the regulatory staff for evaluating during an event at low-pressure conditions, licensee responses to Generic Letter 95-07, thereby requiring an extension of both
" Pressure Locking and Thermal 13inding of RELAP5's capabilities and its assessment Safety-Related Power-Operated Gate Valves." base. To this end, a 4-year program of code development, support experiments, and
- Completed a compilation of techm. cal .m-assessment was undertaken to extend the sights based on the results of 75 individual code,s operating envelope to cover the plant examinations (IPEs). These m. sights
. AP600 range of conditions.
focused on such items as important accident sequences in different pressurized-water = Issued NUREG-0700, Revision 1, guidance reactor (PWR) and boiling-water reactor for the evaluation of control stations in (BWR) design types, important human nuclear power plants. Use of this guidance performance issues, and comparisons of IPE will help minimize the opportunity for results with goals established for the station human error caused by poorly designed blackout rule. These insights have been displays and controls. This updated guid-published for public review and comment as ance was needed because of the introduction l
NUREG-1560 and are being reviewed to of computer-based systems.
i identify potential safety issues not obvious -
Completed development of s.ix draft regula-from the study of individual plants.
tory guides on software quahty. These l Followup activities will focus on the need for guides build upon mdustry standards, where safety improvements at individual plants.
practical, and give guidance to the industry
- Completed an integrated, conceptual frame- on methods acceptable to the NRC to ensure work for incorporating human errors of quality in new digital instrumentation and commission into probabilistic risk analyses control systems.
(PRAs). This framework was published as .
=
Completed a s.igmficant portion of its evalua-NUREG/CR-6265. When fully tested, use of tion of direct containment heating (DCH), a this framework will permit the incorporation ,
severe accident issue that is important to of a more complete spectrum of potential human error events in PRAs, which, in turn, cady conjainment failure m PWRs. Resolu-tion of this issue mvolved a substantial can be used to support the agency's risk-informed regulatory improvemei$t programs. amount of testing and analyses. The results of the Office of Nuclear Regulatory Research
- Completed the required modifications. (RES) evaluation, published in NUREG/CR-validation, and adequacy demonstration of 6338, concluded that for 41 Westinghouse the RELAP5 thermal-hydraulic system large, dry and subatmospheric containment analysis code. This accomplishment is reactors, DCH poses no tangible threat to particularly significant since it allows the containment integlity. The resolution of this NRC to perform audit calculations to support issue for a substantiai number of plants the certification of the Westinghouse AP600 eliminates this matter from further analysis.
passive reactor design. RELAP5 is a large Additional work is under way to resolve this and complex software tool developed and issue for the remaining PWR plants.
used by the NRC for the analysis of small-u nnunues on vuxc lin 19% M 11H NI tidi ! r*, RI IM }RI
Program l'erJhrenance umuirwcd>
Generic Safety Issues Although DOE has not published the ADP Generic safety issues involve safety concerns results, the NRC's independent assessment of that may affect the design, construction, or opera- the demonstration results appears to confirm tion of all, several, or a class of reactors or facili- the engineering feasibility of thennal anneal-ties. The resolution of such issues may involve ing for U.S. reactor designs. The regulation, safety improvements or the issuance of new or regulatory guide, and annealing demonstra-revised requirements or guidance. During FY tion serve as the regulatory and technical 1996, the NRC resolved three of these issues bases to support licensee plans to anneal dealing with (I) automatic emergency core cool- RPVs as a basis for extending the useful life ing system switchover to recirculation, (2) of these components.
embrittlement of reactor pressure vessel supports, and (3) monitoring of fatigue transient limits for Inued a fintil rule incorporating by reference reactor coolant systems. ASME Sectmn XI. Subsections IWE and IWL, into 10 CFR 50.55a. Subsection IWE .
NRC Regulations e ntains mjuirements for inspecting metal containments and liners of concrete contain-The NRC establishes the rules that operators ments: Subsection IWL contains require-of nuclear facilities and users of radioactive ments for inspecting concrete containments materials must follow. Tiyese rules are intended I and post-tensioning systems. The rate of protect persons using radioactive matenals, as occurrence of corrosion and degradation of well as the general public, from the potential containment structures has been increasing hazards of radioactivity. NRC regulations are at operating nuclear power plants. The final established or changed, as necessary, on the basis rule will ensure that the critical areas of of recommendations from NRC staff. Members containments are routinely inspected to of the public and interested organizations can also request changes in regulations.The views of the detect and take corrective action on defects that could compromise a containment's public, the industry being regulated, and other structural integrity.
interested parties are usually solicited before the Commission adopts new rules or changes. In FY
- Issued a final rule amending the criteria for 1996, the NRC completed 14 rules; 5 major rules seismic and geologic siting and earthquake are described below: engineering. A new section (100.23) has been added to the existing body of regulations Issued a new annealing rule,10 CFR 50.66, in 10 CFR Part 100. The revised regulation and a new Regulatory Guide 1.162," Format now explicitly recognizes that there are and Content of Report for Thermal Anneal- inherent uncertainties in establishing seismic ing of Reactor Pressure Vessels." These and geologic design parameters and allows provide the basis for perfonning a thermal for the option of using a probabilistic seismic anneal of an embrittled reactor pressure hazard methodology capable of propagating vessel (RPV) to restore the strength and uncertainties as a means to address these toughness to nearly their original condition. uncertainties. Public commenters supported Thermal annealing is the only process that the revised regulation, specifically the re-can reverse the deleterious effects of neutron moval of prescriptive guidanc.e from the e embrittlement on RPV steel. The NRC staff regulation and the relocation in regulatory has closely observed the activity of the guides or in standard review plans. Earth-DOE's Annealing Demonstration Project quake engineering criteria not associated with (ADP), which performed an engineering the selection of the site or establishment of a feasibility demonstration of the annealing safe-shutdown-earthquake (SSE) ground of a canceled U.S. nuclear power plant. motion are now located in 10 CFR Part 50 in l'.s. SLTil \it 1(I Gt lllold (~O\l\ll%H W
1 I
i i
j a new Appendix S. The final rule is a first ees on a case-by-case basis. As adopted, the l step in decoupling siting from plant design provisions permit licensees greater Hexibility j and updating other site criteria. This rule is in making financial decisions in decommis-applicable to future plants and early site sioning and reduce the regulatory burden. By i permits filed under 10 CFR Part 52. eliminating the requirement for submittal of a 1
- preliminary decommissioning plan to NRC Issued a final rule on the environmental
< and the need to wait for NRC approval before el.fects of. license renewal for nuclear power undertaking any decommissioning activities, plants (10 CFR Part 51). This final rule .
. , substantial cost savings for licensees and the j amends the Comm.ission s regulations to NRC could be realized.
3 establish new requirements for environmen-I tal review of applications for renewal of
!' nuclear power plant operating licenses. The Responsiveness to the Public's rule defines the number and scope of envi- Safety Concerns ronmental issues that need to be addressed All allegations received by the NRC are as part of a license renewal apph,eation. In nitially considered to have a potential effect on addition, the rule codihes NRC positions on health and safety, and the NRC reviews each other environmental issues so that they need . . ..
aHegadon tdeternune m saf.ety signiGcance and not be addressed on a site-specific basis By adopting these provisions, the regulatory the effect on health and safety. If the allegation I burden will be reduced because the rule will deals with a techmeal issue and wrongdoing is not provide a net saving to industry and the suspected, the agency's goal for closing the NRC. In addition, the rule is expected to allegati n is an average of 6 months from receipt.
contribute to regulatory stability in the If the allegation pertains to wrongdoing by an license renewal process. NRC licensee, the agency's goal for closing is an average of 18 months from receipt. Allegations Issued a final rule on decommissioning of nuclear power reactors (10 CFR Part 50). go,afuya onpyy, m This final rule amends the Commission's regulations .
s 3 f, ~ m on the decommissioning -
. N YA f ,[y%
procedures that lead to the -
termination of an operat- i- .*.
g ing license for a nuclear ' .
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amendments also clarify -
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codify practices that have ;gi .
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I'rogram l'erfortnance (continued) requiring res iew outside the NRC (e.g., by the continued to be less than 18 months, primarily Department of Ju,tice or Department of Labor) because of an increased emphasis and narrowed are not subject to these standards. The NRC's focus on management of case inventory through-mean time to close allegations pertaining to a out the agency.
technical issue (and wrongdoing is not suspected) has g.'neral'ly continued to be less than 6 months. Figure 15 shows the mean time in months to The NRC's mean time to close allegations per- close the two types of allegations for which tainirg to wrongdoing by an NRC licensee has standards have been established.
Figure 15 Mean Time to Close Allegations
- 20 Goal. Cases Requiring 3g ... ....... ............ .. ......... ...... ..... ..... ...... ..... ......
Investigations 12 - ------- ---------------- -- ---- -------- - --- - ----
E E
O 8 ------- - -- ----- ------- ---- ---- ---- --- ---
2 Goal. Cases Not Requinng 4 -- - --- --- -- --- ---
Investigations 0-1992 1993 1994 1995 1996 Fiscal Year l C No investigation L ,
Investigation Required l
- This chart reflects revised data for FYs 1992 to 1995. Mean time is reflected in the fiscal year in w hich an allegation is closed.
i l'.S. NI Cl I AR Hl.Gl'lJIoRv CONI \ll% ion
Management Accountability namenamammermuunni - . n , .
.s - . o .. :. . ..- .x- x~... .-- . . . -
The NRC's Management the Federal Managers' Financial Integrity Act Control Program were achieved in FY 1996. The NRC has no material weaknesses in its programs or adminis-An Executive Committee for Management trative activities and no material non-conformances Controls oversees the agency's management with govemment-wide standards in its financial control program, in FY 1996, the Committee management systems.
was chaired by the Executive Director for Opera-tions, and Committee members were the Deputy The NRC reported no material weaknesses in Executive Directors, the Deputy Chief Financial FYs 1994,1995, and 1996. Two material weak-Officer / Controller (DCFO/ Controller), directors nesses were reported in 1993, and five material of major program and administrative offices, and weaknesses were reported in the years before FY a regional administrator. 1993. All of these material weaknesses have oeen corrected. No material non-confonnances in finan-Individual assurance statements from NRC cial systems have ever been reported by the NRC.
office directors and regional administrators served as a primary basis for the Chairman's FY 1996 Financial Management Systems statement of assurance on management controls.
The NRC has s.ix financial management These m. dividual statements were based on vari-systems: the Federal Financial System, Payroll ous sources, including the managers, knowledge System, Personal Property PC System, License of day-to-day operations and existing controls. .
Fee Bill Generator System, Allotment Fm.ancial program reviews and other management evalua- .
Plan System, and Budget Formulation System.
tions, Ot. hee of the Inspector General (OlG) The Chairman,s statement of assurance with reports, reviews of financial management systems,
. respect to the agency,s financial management nsk assessments, and management control reviews. .
systems is supported by management evaluations Each year, regional administrators and direc- and General Accounting Office and OIG reviews.
tors of offices with the highest risk with respect to Additionally, the OlG performs an annual audit of programmatic and administrative activities submit the agency's financial statement. This audit an annual management control plan to the Chair- includes testing of transactional data in the NRC's man of the Executive Committee for Management financial management systems and general ledger Controls. These plans, combined with the indi- account balances. The OlG also reviews policies vidual assurance statements, provide the frame- and procedures relevant to the internal control work for monitoring and improving the agency's structure. The OIG issued an unqualified audit management controls on an ongoing basis. opinion on the NRC's FY 1996 linancial state-ment. The OlG identified two reportable condi-Status of Management Controls and Report on tions that related to the NRC's internal control Material Weaknesses and Non-Conformances structure, one of which was carried over from The NRC evaluated its management control prior years' audits. These reportable conditions and financial management systems for the fiscal do not constitute material weaknesses or material year ending September 30,1996. This evaluation non-conformances.
provides reasonable assurance that the objectives of (rmain=d <m van m 19% \M 'olYI \ltillIi R1 l'OR I
____________________._________~_._.__m _ _ _ _ - - _ _ _ _ - - . .
Manayment AccountaMity (continucd) i i
The Federal Financial System (FFS) is a application at the designated backup site during '
system that the NRC uses through an interagency FY 1997. This non-conformance is beyond the agreement with the Department of the Treasury control of NRC and we understand FMS plans to (Treasury). This system is reviewed annually by eliminate the deficiency by the end of FY 1997.
Treasury's Financial Management Service (FMS) for its client agencies that utilize the system. The results of this year's annual review provided Management Decisions and -
reasonable assurance that FFS, as operated by Final Actions on OlG Audit I l FMS for NRC, conforms to the principles, stan. Recommendations i
dards, and related requirements prescribed by the The agency has established and continues to Comptroller General, except for the inability to maintain an excellent record in resolving and J demonstrate data recovery and backup capability implementing open audit recommendations of FFS in the event of a disaster, which was noted presented in OlG reports. Section 5(b) of the as a material non-conformance. Additional disk Inspector General Act of 1978, as amended, storage has been installed at the designated requires the Chairman to report on management backup site with limited testing of the funds decisions and final actions taken on OlG audit control application. FMS plans to test the FFS recommendations. Table 2 gives the dollar value Table 2 Management Report on OITice ofInspector General Audits With Disallowed Costs For the Period October 1,1995 - September 30.1996
, Number of - Questioned - Unsupported -
Category Audit Reports - Costs , Costs
!($) .($)
A. Audit reports with management decisions O' $0 $0 on which final action had not been taken
, at the beginning of this reporting period l
B. Audit reports on which management 12 $280,621 $0 decisions were made during this l reporting period i
C. Audit reports on which final action 2 $ 27,702 $0 was taken during this reporting period (i) Disallowed costs that were 2 $ 27,702 $0 recovered by management through ]
collection, offset, property in lieu of cash, or otherwise 1 (ii) Disallowed costs that were written 0 $0 $0 i off by management D. Audit reports on which no final 10 $252,919 $0 i action had been taken by the end l of this reporting period i
' Adjustment made as a result ofidentification of a mathematical error in an audit report listed as having no final action at the end of f
the last reporting period resulted in no questioned costs for that contract; and therefore no actions are carried over to this report.
L',S. M CI.1:AR HILL'l Al oRY CostsHNNioN
of disallowed costs determined through contract Table 3 gives the dollar value of funds that audits conducted by the Defense Contract Audit audits showed could be put to better use. As of Agencys (DCAA). " Questioned Costs" are those September 30.1996, there were no outstanding costs that are questioned as to whether they are audits recommending that funds be put to better allowable. " Unsupported Costs" represent costs use. Four reports containing five recommenda-challenged because of a lack of adequate support- tions are more than a year old and are described in ing data. Because of the sensitivity of contractual the section on the next page titled " Management negotiations, details of these contract audits are Decisions Not implemented Within One Year" l not furnished as part of this report. Note that the
)
Department of Defense also reports the cost !
savings resulting from DCAA audits. (cu,ainuca ou cauc 26) i l Table 3 Management Report on Office ofInspector General Audits with Recommendations That Funds lie Put to lletter Use For the Period October 1,1995, through September 30,1996 Recommendations that funds be put to better use by management agreed:
- Number of . to in a management L Category s Audit Reports decision'.
i($)
! A. Audit reports on which final 0 $0 action had not been taken by the beginning of this reporting period l B. Audit reports on which manage- 0 $0 l ment decisions were made
! during this reporting period i
C. Audit reports on which final 1 $214,598 action was taken during this reporting period i (i) Recommendations that were 1 $214,598 actually completed (ii) Recommendations that manage- 0 $0 ment subsequently concluded should not or could not be implemented or completed l D. Audit reports on which no final 0 $0 '
! action had been taken by the end j of this reporting period ,
19% MTol'NTWil,ITY RI:l' ORT
~ .- - - ~ - . . _ _ . .- - _ _ - . _ . ~~ . . . - - .- - . .
.11anagement Accountability (continued)
Management Decisions Not Implemented The EDO has provided an action plan to the Within One Year Commission to address outstanding LSS issues.
Management decisions were made before Based on the Commission's response to this plan, September 1995 for the OIG audit reports dis- the LSS senior management team will submit a cussed in the following paragraphs, but as of Gnal report to the Commission.
September 30,1996, NRC had not taken final action on some of the issues in the reports. The inspector Training Program: Improved OlG did not recommend that funds be put to Coordination and Communication Needed, better use for any of these repods. August 4,1995 In order to establish effective coordination, NRC Needs To Provide Strong Direction for the communication and accountability among NRC Licensing Support System, March 17,1995 offices and management regarding inspector ,
The Nuclear Waste Policy Act of 1982 re- training needs, requirements, and oversight, the quires that NRC approve or disapprove the con- OlG recommended that the EDO evaluate the struction of a high-level nuclear waste repository merits of an integrated schedule or other measure within 3 to 4 years of receiving a DOE construc- to provide NRC offices with early notice of tion license application. To meet this deadline, upcoming inspector training requirements. The NRC enacted a rule requiring the development of NRC has determined that the current system an electronic information management system to does not meet the needs of the agency and that reduce the time needed for discovery during the the system needs to be totally redesigned. The license hearing process. The rule requires that new system is scheduled for implementation by DOE design and develop the system and that December 1998.
NRC operate and maintain it.
Review of NRC Management of Reporting The O!G reported that the program had stalled Requirements Under 10 CFR Part 21, for the past 5 years for several reasons. Many of November 30,1990 the delays were attributed to an inadequate system OlG made five recommendations concerning definition and agreement on the roles and respon- NRC's management of reporting requirements sibilities of DOE and NRC. As a result, the OIG under 10 CFR Part 21. NRC implemented four of !
recommended that NRC obtain a formal commit- the five recommendations. The final item in-ment from DOE in the form of an Interagency volved compliance with 10 CFR Part 21 by Agreement or Memorandum of Understanding nonreactor licensees.
(MOU) on key aspects of the Licensing Support System (LSS). Part 21 establishes procedures and rrquire-ments to ensure that licensees notify the Com-In response to the OIG report, the EDO mission of(1) equipment defects which could appointed a senior management team to reevalu- create a substantial safety hazard and (2) failures to ate the purpose of and need for the LSS, and to comply with regulatory requirements relating to address the issues affecting the LSS program. substantial safety hazards. The OIG recommended Due to Congressional budget action related to that the Commission either develop a program to DOE's high-level nuclear waste program, there implement Part 21 for nonreactor licensees or '
was no resumption of any LSS activities and all revise Part 21 to exclude nonreactor licensees from of DOE's LSS-related activities have been its scope if the program is not applicable to them.
delayed, including the finalization of an MOU The NRC's Office oithe General Counsel subse-with DOE. quently determined (nat Part 21 requirements are applicsble to NRC nonreactor licensees but not to Agreeme:J 5 tate liNnsees.
I!.S.M CIE tR HIT.l'I.XIORv Cott\lI% ION
l On June 17,1991, NRC reminded all of its NRC's Policies and Procedures for Deferring l NRC materials licensees of the applicability of Materials Inspections and Verifying I.icensee Awntions, October 26,1992 l Part 21 reporting requirements (NRC Information
! Notice No. 91-39: Compliance With 10 CFR Part In 1992 OIG investigated an allegation that j 21," Reporting of Defects and Noncompliance"), an NRC regional office had conducted an inad- 1 The NRC also considered a rulemaking to address equate inspection and mishandled an allegation j (1) whether certain types of materials licensees concerning a materials licensee. Because of that l i
can or should be exempted from the provisions of investigation, OIG initiated a follow-up audit to !
Part 21 because their operations have no potential examine programmatic issues related to actions l to result in a significant safety hazard and (2) taken by regional offices. OlG concluded that '
f' whether Part 21 type reporting requirements NRC's policies and procedures for deferring
- should be repromulgated under the Atomic En. materials inspections and verifying licensee 4
ergy Act and then made a matter of compatibility assertions needed improvement. The report made j for the Agreement States. (Regulations promul. four recommendations. All four recom-l gated under the Energy Reorganization Act, as is mendations have been addressed. The final
! Part 21, cannot be made matters of Agreement recommendation was addressed with the approval
- State compatibility; this is only possible for and implementation of the updated management
! regulations promulgated under the Atomic Energy directive on " Management of Allegations."
l Act). With regard to item I, the NRC needed to This management directive, which was issued on 1
consider whether continuing to subject all NRC May 1,1996, incorporates the topic of verifying materials licensees to Part 21 notification require. licensee assertions.
l
- ments is cost effective or necessary for adequate
- protection of public health and safety. With General I. edger Controls, March 15,1993 i regard to item 2. NRC needed to consider the See the OIG audit of the FY 1996 Financial j aspect of consistency in reporting between NRC Stmement (page 41) for the status of the outstand-l and Agreement State licensees. ing recommendation that the payroll system must NRC considered several options to address this nyap th general Wgn and ponew labor distnbution capabihu,es.
issue and concluded that the NRC resources l needed to revise Part 21,in addition to the Agree- Ruienf Funds Management, ment State and licensee resources needed to imple- September 23,1994 ment any changes to Part 21, would outweigh the ,
'" ** E*"*Y
- I"" *"""E" benefit of reducing the number of affected NRC
. ment practices and specifically examined NRC s matenals licensees or the potential safety beneht
. unobligated budget carryos er, advance procure-from imposing the regulation on Agreement States.
. ment planning, allottee financ.ial plans, and fund in a March 1996 Comm.ission Paper, the EDO obligation patterns. The audit report disclosed that mformed the Commissioners of the NRC staff,s
. although NRC. sfunds management practices intent not to proceed w.it h rulemaking on 10 CFR generally complied with established poh. .cies and Part 21 regarding reporting requirements for procedures, the agency,s level of carryover and ~
materials licensees. In a staff requirements memo-unliquidated obligations had increased. The OIG randum of April 12,1996, the Secretary of the
. offered three recommendations to improve funds Comm. .ission informed the EDO that the Comm.is-management. Action on one recommendation, to sion did not object to the NRC staff..s plans. The hold allottees more accountable, remains out-OIG has concurred with the agency's dec. .ision and standing, and the other two recommendations, closed its recommendat. ion.
expanding the use of an existing management
'cominued em page 2!n 19% \(Tot N I %Illi.II) id- M mi
1 Management Accnuntability icontinued) information system and improving the advance Debt Collection procurement process, have been completed.
As shown in Figure 16, the NRC has reduced The agency's Budget Execution Report (BER), its delinquent debt since FY 1993. The agency which is provided to agency managers monthly and has accomplished a steady decline in delinquent to the Commission quarterly, focuses on the finan. debt through a concerted debt management l cial performance of the agency as a whole as well strategy. The strategy includes activities such as j as on the individual allowance holders. The BER license suspensions; referral to the Department contains performance parameters such as commit- of Treasury's Debt Management Services ment, obligation, and expenditure rates, months of through a cross-servicing arrangement; credit available funding, and the amounts and trends in reporting; and referral to the Department of ;
unliquidated obligations. This information is Justice for enforced collection. I issued throughout the year to monitor financial performance and as input in annua, perfomiance l appraisals. A drat.t management d.u ective, which
. Prompt Payment provides guidance on good financi d management. On-time payments for amounts subject to the establishes performance measures for successful Prompt Payment Act have increased as shown in financial management, and describes methods to be Figure 17. The amount ofinterest penalties used for managing financial resources within the incurred have decreased from $19,000 in FY 1993 agency, was issued for comment to agency allow. to approximately $4,500 in FY 1996, ance holders in December 1996; the directive will l be issued in IT 1997.
l l
Figure 16 Delinquent Debt 25 20 -- -- ------ -------- -- - - -- ------- ------- - - ------------ - --- ----- !
E 15 ~- --- --- - - - - - - --- --- - - ---- - -- --
.9
=
v> 10 -- - - - - - " - - - - - - -- - --- - - -- --
5 "- "--" - - - - - " - - - - - - - - - -
0 FY 1992 FY 1993 FY 1994 FY 1995 FY 1996 Fiscal Year 1 1
l 1
1.%. NL Cl. EAR Rf Gl I.VIoRY ('o\1411%H)N
I Figure 17 Prompt Payment 100 l C
$ 80 ----- - ------- ---- ---~~~ --- - - - - - - -
E a.' ----
3 60 - - - - - - ~ ~ ~ - - - -~~-- - - - -
o e 40 -- -- -- ---- -- ---- - - -- ---- -- --- ---
cn 2C
@ 2Q ....... ...... .. .......... ....... .. ........
2 O
Q.
O FY 1993 FY 1994 FY 1995 FY 1996 Fiscal Year Civil Penalties amount of civil penalties assessed and the amount e llected in FYs 1992 through 1996, distributed The NRC imposes enforcement sanctions to ,
accordmg to the year in which the civil penalty encourage prompt identif'ication and comprehen- ,
was c llected. The amount of each civil penalty sive correction of violations and as a deterrent to assessed reflects the amount that the NRC ulti-emphasize the importance of compliance with mately decides is appropriale in each case through requirements. One enforcement sanction is the ts enforcement or hearing process.
imposition of a civil penalty. Table 4 shows the Table 4 Fiscal Year Civil Penalties Collected Verstis Fiscal Year Penalty Dollars Assessed 1
-. Fiscal Percent
. Year : Assessed ? Collected . Collected 1992 $4,630,815' $4,610,815 99.57 1993 $4,180,8752 $4,178,557) 99.94 1994 $3,867,675 $3,867,675 100 1995 $2,289,285 $2,289,285 100 1996 $3,106,000 $3,014,0004 97.04 I
8 'Ihis 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.
2 This amount reflects the total amount assessed for a case for which an agreement was reached to pay in full, but in installments. ;
The licensee has since made full payment.
- This amount reflects payments that have been made in two cases where installment payments are being made.
19% ACCotNI Ailli.lTY Hl'I' ORT
FY 1996 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 1996 financial statement was audited by the NRC's Office of Inspector General (OIG). This section contains the results of the OIG audit, including the financial statement.
I IPM AC( Ol NITitil rl) RI l'ORI
L RESULTS OFTilE AUDIT OF U.S. NUCLEA R llEG ULATORY CONIN11SSION'S )
FISCAL YEAR 1996 FINANCIAL STATENIENTS <
OIG/96A-19 NIarcli 6,1997 '
l
'i i
1996 ACCOt NI Alttil1 Y Hl_POR T
potog g g UNITED STATES s i NUCLEAR REGULATORY COMMISSION 0
4 WASHINGTON, DC 20555-0001 March 6,1996 .
MEMORANDUM TO: Chairman Jackson Commissioner Rogers Commissioner Dieus Commissioner McGaf0gan Commissioner Diaz FROM: Hubert T. Bell Inspector General
SUBJECT:
RESULTS OF TIIE AUDIT OF U.S. NUCLEAR REGULATORY COMMISSION'S FISCAL YEAR 1996 FINANCIAL STATEMENTS Attached is the Office of the inspector General's (OIG) audit report of the U.S. Nuclear Regulatory Commission's (NRC) Fiscal Year 1996 financial statements. The Chief Financial Officers (CFO)
Act requires OIG to annually audit the Principal Financial Statements of the NRC. The audit was performed to form an opinion on the Principal Financial Statements. The report contains the (1) prin-cipal statements, (2) our opinions on the principal statements and management's assertions about the effectiveness of internal controls, and (3) our report on NRC's compliance with laws and regu-lations. Written comments were obtained from the Acting CFO and are included as an appendix to our report.
Audit Results On NRC's Fiscal Year 1996 Principal Financial Statements, we issued an unqualified opinion on the Statement of Financial Position, and the Statements of Operations, Cash Flows, and Budget and Actual Expenses. '
In our opinion on management's assertions about the effectiveness ofinternal controls, we identi-fled one new reportable condition and one carried over from prior fiscal years. The new condition ;
concems NRC's procedures for identifying capitalized software. The prior-year condition con- l cems NRC's lack of a system for reporting labor costs by program. Based on corrective actions taken in FY 1996, we closed two reportable conditions identified in our FY 1995 report. Those conditions related to (1) internal controls for NRC's fee recovery system, and (2) lack of Depart-ment of Energy (DOE) audit assurance for NRC funds spent at DOE labs. We have, however, retained the DOE issue as a Matter ofEmphasis in our report.
(t ontinued <>n pa;;c Mn 199t> U TOl VI\ltli,IIT RI:N)Rf
-__m....,av._.__
.i I
Audu ofIT 1996 Financial heatement (continued) l l.
[l Our report on NRC's compliance with laws and regulations states that with respect to the items L. tested, NRC was in compliance. Based on actions taken in FY 1996, we closed the comphance 1 finding related to NRC's fee recovery system. l l
L Under the Federal Manager's Financial Integrity Act, NRC must annually evaluate its internal !
controls processes, As of the date of our report, NRC management had completed its evaluation of l financial controls, but was still evaluating a programmatic control issue. l
- On February 27,1997, the Acting CFO responded to our draft report dated February 19,1997.
We appreciate NRC staff's cooperation and continued interest in improving financial management i within NRC.
- Attachments: As stated l
l i
l I
L.S. N1iCl.E AH RI'GLI ATORY CO%1%11SNION
j
, i i
1- ,
i f
i j TAliLE OF CONTENTS j
) .
a I NS PECTOR GENERA 11S R EPORT .... ... ... ..... .... . ... .... ....... .. . .... ............ ....... ........ .... 39 i '!
PRINCIPAL STATEMENTS '!
i STATEMENT OF FIN ANCI AL POSITION .. ... .. .... .. ............ ......... . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
- STATEMENT OF OPERATIONS AND CHANGES IN NET POSITION ................ .................. ...... 49 STATEMENT OF CASH FLOWS ............... .............. .. . ........................................... 50 ;
STATEMENT OF B UDGET AND AcrUAL EXPENSES ........... .......... ................... ................ 52 NOTES TO PRINCIPAL STATEMENTS ... . . ......... ........ ... ...................................... 53 APPENDIX COMMENTS OF THE ACTING CHIEF FINANCIAL OFFICER t
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19% AC('Ot 'NTAltll.IlY Hl.P(IR'l
INSPECTOR GENER AI15 REPORT in our audits of the U.S. Nuclear Regulatory Commission (NRC) for the years ended Septem-ber 30,1996 and 1995, as required by the Chief Financial Officers'(CFO) Act of1990, we found the principal financial statements were reliable in all material respects. Management fairly stated that the internal 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 noncompli-ance 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 fairly in all material respects, 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; g a
revenue, financing sources and expenses; s
= cash flows; and a
budgetary resources and actual expenses.
INSPECTOR GENERAL'S REPORT ON MANAGEMENT'S ASSERTION ABOUT THE EFFECTIVENESS OF THE INTERNAL CONTROL STRUCTURE The Office of Inspector General (OlG) evaluated management's assertion that the NRC maintained an effective internal control structure designed to:
a safeguard assets against loss from unauthorized acquisition, use or disposition;
=
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 tcontinued on page 40) 1V% A( (~OL YI \lui.lli RI POR I
Amlit of F1 IV961inancial Statement u ontinued)
Principal Statements would be prevented and detected on a timely basis. Management made this assertion based upon criteria established by the Federal Afanagers'FinancialIntegrity Act of1982 (FAfFIA) and OAfB Circular A-123, Afanagement Accountability and Control.
REPORTABLE CONDITIONS AND AUDITFOLLOW-UP OlG noted two matters involving the intemal control structure and its operation that are considered l 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 State-ments, these reportable conditions involve deficiencies in the internal control structure that, in our judgment, could adversely affect the NRC's ability to ensure that it meets the objectives ofinternal controls. Management considered these conditions in making their assertion on the effectiveness of the internal controls.
Ct unisi YrAn I The matters listed below involve the design or operation of the internal control structure and war-rant disclosure as reportable conditions. None of the reportable conditions noted are classifiable as material weaknesses.
i Capitalization Procedures for Autrmatic 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 deci-sions. OC adrised 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 indepen-dently 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. I l
I L:.s. NtTI L An nLGt I.AToRv (' oil \llwlON
l At our initiation, OC asked NRC offices to examine a listing of capitalized software to determine
- accuracy and completeness. The request resulted in several additions and deletionsi to the listing.
I 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 contractor incorrectly decided against capitalizing these items. When a contractor has significant l decision-making responsibilities,it is imperative that OC provide sufficient oversight to ensure that j the appropriate decisions are made.
l Recommendation To bring greater discipline and accountability to the software capitalization process, we recom-mend that the Acting CFO:
- 1. Revise the software capitalization procedure to specify the responsible NRC group, posi-tion or contractor for making capitalization decisions and oversight.
- 2. Reemphasize the need for adequate oversight of contractor decisions.
l'ay roll System Must lie Integrated With The General I. edger and l'ossess 1. abor 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 financial information needed to prepare complete financial reports as required by OMB Bulletin 94-01, Form and Con-tent ofAgency Financial Statements. 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.
=
heavy reliance on manual inputs 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 gener-ated 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 general ledger on a monthly and year end basis.
Deletions were primarily the result of NRC's recent decision to expense rather than capitalize software related to analytical codes and mathematical models.
Iconnnved on page Jh 19% \ Call N I \l111.111 RI N)RI
Audit of FY 1996 Financial Statement (continued) p Recornmendation l
None, as NRC is in the process of replacing its payroll system.
1 Piuon Yran - Rrsoixrn l i
- 1. Fee Recovery System Lacks Internal Control !
l 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.
l
- 2. Lack Of U. S. Department of Energy (DOE) Audit Assurance l During FY 1995, NRC took aggressive action to resolve this issue with DOE. NRC concluded its I effort 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 1 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 ofEmphasis in this report. I REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS Our tests of compliance with selected provisions of laws and regulations disclosed no instances of noncompliance that would be reportable under Government Auditing Standards or OMB Bulletin 93-06, Audit Requirementsfor Federal Financial Statements. However, the objective of our audit was not to provide an opinion on overall compliance with laws and regulations. Accordingly, we do not express such an opinion.
I 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 million, respectively, of reimbursed expenses, which represent approximately 17'7c and 20r/c, re-spectively, of total expenses. Our audits included testing of these expenses and financing sources for compliance with laws and regulations within NRC. The woric placed with DOE is under the auspices of a Memorandum of Understanding between NRC and DOE. The examination of 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 Assis-tant General Counsel, dated March 6,1995, where he opined that " .. DOE's inability to assure that its contractors' costs [ National Laboratories] are legal and proper...does not compel a conclusion that NRC has failed to comply with laws and regulations." DOE also has the cognizant responsi- i bility to assure audit resolution and should provide the results of its audits to NRC. I 1
l U.s. St:CI.E \ R lu WI A I oRY Co\t\11%Io%
~l CONSISTENCY OF OTHER INFORMATION The overview of the NRC, program performance, and other supplemental financial and manage-ment 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, 4
compared this information for consistency with the Principal Statements and discussed the mea-surement and presentation methods with NRC management. Based on this limited effort, we found no material inconsistencies 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 I, (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 I, and (2) management's assertion about the effectiveness of the internal control structure is fairly stated, in all material respects, based upon criteria estab-lished by FMFIA and OMB Circular A-123, Management Accmmtability(md Contivt 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 responsi-bilities, we:
- examined, on a test basis, evidence supporting the amounts and disclosures made in the Principal Statements; a assessed the accounting principles used and significant estimates made by management;
- obtained an understanding of the internal control structure related to safeguarding of assets, compliance with laws and regulations including execution of 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, com-pliance, and financial reporting and evaluated management's assertion about the effective-ness of internal controls;
= tested compliance with selected provisions of the following laws and regulations:
Anti-Deficiency Act (Title 31 U.S.C.), National Defense Appropriation Act (PL 101-510),
(continued un pa;;c JD ,
I'PM M T '01 N l \ Hil.11) RI.N IRT
.tudit of FY I996 Financial Staternent (continued)
Omnibus Budgetary Reconciliation Act of 1990, Debt Collection Act of 1982 (PL 97-365), l 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; 1
reviewed compliance with the process required by FMFIA for evaluating and reporting on I internal control and accounting systems; and assessed the design of selected performance measure controls and whether they had been placed in operation. l We did not evaluate all internal controls relevant to operating objectives as broadly as defined in FMFI A, such as those controls for preparing statistical reports and those for ensuring efficient and effective operations. We limited our internal control tests to those necessary to achieve the objec-tive described in our opinion on management's assertion about the effectiveness of internal con-trols. Because of inherent limitation in any internal control structure, losses, noncompliance, or misstatements may nevertheless occur and not be detected. Also, projection of any evaluation of ,
the internal 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 i 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 Requirementsfor Federal Financial Statements.
This report is intended solely for the use of management of the U. S. Nuclear Regulatory Commis- l sion. This restriction is not intended to limit the distribution of this report, which is a matter of l public record.
l AGENCY COMMENTS On February 27,1997, the Acting CFO responded to our draft report and addressed the two recom-mendations to improve the procedures for capitalizing ADP software. We requested and received l
additional information about the Acting CFO's corrective actions on March 3,1997. Based on our I review of this information, we are satisfied that the actions taken meet the intent of our recommen-dations. We appreciate NRC staff's cooperation and continued interest in improving financial management within NRC.
L'.N. NI CI l.AR kl GI 1 VioR) Co\l\llN%loN
j'
. i.
PRINCII%L STATEhlENTS FOR FISCAL YEAR 1996 A
t-s-
19W. ALTot'NTAllli.Il Y lti l'Olt I'
STATEMENT OF FINANCIAL POSITION September 30,1996 and 1995 ASSETS Restated 1996 1995 Entity Assets: ,
i Intragovernmentalassets:
Fund balances with Treasury (Note 2) $210,748,055 $258,602,386 l Accounts receivable, net (Note 3) 5,822,652 8,231,231 ;
Advances and prepayments (Note 4) 4,948,524 2,466,180 Governmentalassets: i V
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
'lintal entity assets 284.260.465 335.481.505 1
- Non-Entity Assets: !
)
I Governmentalassets:
l 1
, Accounts receivable, net (Note 3) 312.470 692.881 1 4
'lintal non entity assets 312.470 692.881 Total assets $284.572,9_M $316d7L18S !
l 1
I
.I !
l
-1 frontinued ort page .JM The accompanying notes to the principal statements ;
are an integral part of this statement.
1996 ACCOl'N I Allli.I'iY RI IURI
. .-. - . _ _. _._ . .. -.- -.. _ ~.-- - .. .- ~__ . . - - -. _ . . - ____. .. . - _ _ _ _
Audit nfIT 199611nancial Statement (continued)
STATEMENT OF FINANCIAL POSITION (Continued)
September 30,1996 and 1995 LIABILITIES Restated 1996 _1995 I Liabilities Covered by Hudgetary Resources:
Intragovernmentalliabilities:
Accounts payable and advances (Note 6) $11,805,497 $ 12,989,462 !
Other intragovernmental liabilities (Note 8) 26,519,644 41,532,847 Governmentalliabilities:
Accounts payable (Note 6) 21,229,287 22,515,321 I 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 78.225.934 95.638.638 resources .
l I
Liabilities Not Covered by Budgetary Resources:
Governmentalliabilities:
Other governmental liabilities (Note 9) 32.710.987 31.052.458 Totalliabilities not covered by _32.710.987 31.052.458 budgetary resources Totalliabilities 110.936.921 126.691.096 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 l
Total liabilities and net position $2E512,9JJ $336.174.386 The accompanying notes to the principal statements are an integral part of this statement.
U.A NL Cl.I' tR REGl'ISIORv CO\l%Il% ION
STATEMENT OF OPERATIONS AND CHANGES IN NET POSITION for the years ended September 30,1996 and 1995 Restated 1996 199_5 REVENUES AND FINANCING SOURCES Appropriated capital used (Note 12) $ 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 l
Office ofInspector General 4.013.899 4.557.825 l
Total program expenses 509,824,735 538,352,174 l
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 J47.781.937 Excess or (Shortage) of revenues and financing sources over total expenses (Note 17) $_L1,658,529) $ 51,021 Net position, ending balance $209,483,290 $219,540,854 Prior period adjustment (Note 19) -
(5.456.000)
Net position, beginning bahnee, as restated 209,483,290 214,084,854 Excess (Shcrtage) of revenues and financitig 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 $2Md83,290_
(continued on page 50)
The accompanying notes to the principal statements are an integral part of this statement.
l IW6 M TOl'N I \llit.IlY R1 PORI L
Audit of F1' 1996 Financial Statement icontinueda STATEMENT OF CASH FLOWS for the years ended September 30,1996 and 1995 l
Restated 1996 9 l 3993 CASH PROVIDED (USED) HY OPERATING ACTIVITIES Cash Provided:
Fees for licensing and inspection and other services (Note 12) $454,049,512 $501.871,000 '
Other operating cash provided 8.450.358 16.852.614 Total cash provided 462.499.870 518.723.614 Cash Used:
Personnel services and benefits (259.816,269) (266,399,073)
Travel and transportation (16,275,698) (16,238,339)
Rent, conununications and utilities (26,342,185) (25,804,325) .
Printing and reproduction (1,554,538) (2,132,047)
(193,678,520) (224 466,951)
)
Other contractual services Supplies and materials (11,162.708) (11,372,953) 1 Insurance claims and indemnities (98,271) (131,742)
Grants, subsidies and contributions (1,527,452) (1,378,879)
Other operating cash used (6.867.038) (5.406.669)
Total cash used (517.322.679) (553.330.978) l Net cash provided (used) by operating activities (54.822.809) (34.607.364)
CASH PROVIDED (USED) HY INVESTING ACTIVITIES 1
Purchase of property and equipment (l1.680.069) (7.101.108)
Net cash used by investing activities (l1.680.069) (7.101.108)
CASH PROVIDED (USED) BY FINANCING ACTIVITIES Appropriations 18,536,875 22,000,000 Add: Transfers of cash from others i11.672 8.900.000 Net appropriations 18.648.547 30.900.000 j Fee collections not used to offset current year's 7.218.611 appropriation -
Net cash provided (used) by financing activities 18.648.547 38.118.611 The accompanying notes to the principal statements are an integral part of this statement.
l'.N. MTinR HIEt IAIORv CO%INilsslON
. . . - . . . . . - - - - - . . . - _ . - . - - - - - = _ _ _ _ - _ _ - - .. -
l STATEMENT OF CASH FLOWS (Continued) for the years ended September 30,1996 and 1995 Restated 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 Fund balances with Treasury, ending $210.748.055 1218,602J(i Reconciliation ofShortage ofRevenues and ;
Financing Sources Over TotalExpenses ;
i Excess or (Shortage) of Revenue and Financing ,
1 Sources Over Total Expenses 5 (l.658,529) $ 57,021
. Adjustments to Reconcile Shortage of Revenues l and Financing Sources Over Total Expenses to Net Cash Provided by Operating Activities: '
Appropriated Capital Used (52,837,295) (35,558,585) '
Decrease (Increase)in Accounts Receivable (2,823,343) (254,047)
Decrease (Increase) in Other Assets (2,258.975) 370,145 '
Increase (Decrease) in Accounts 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) f4.664.385)
Net Cash Provided (Used) by Operating Actirities $(54.822.809) $(34.607.364) l i
i (continued on page 52)
The accompanying notes to the principal statements are an integral part of this statement.
19% A( Col'N I \lill.1I Y RI l'OR I
U E
> S h STATIGIENT OF ilUDGET AND ACTUAL EXPENSES k 5 for the years ended September 30,1996 and 1995 d 5 3 y Budget Actual Restated Actual j' d Obligations 1996 1995 3 E E
$ Program Name Resources Direct Reimbursement Expenses Expenses [
~
r s 6 Salaries and expenses $559,321,035 5512,113,674 $7,860,985 $514,373,228 $543,224,112 i
}
OITice of Inspector General 6.068.881 4.319.768 88.156 4.013.899
{
4.557.825 i-S565.389.916 5516.433.442 $7.949.141 $518.387.127 $547.781.937
[
1 Rudget 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
- The accompanying notes to the principal statements
- are an irngral part of this statement.
i
NOTES TO PRINCH% L S'litTEMENTS Septernher 30,1996 and 1995 NOTE 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES A. Basis ofPresentation These principal statements were prepared to report the financial position and results of operations of the U.S. Nuclear Regulatory Commission (NRC) as required by the Chief Financial Officers Act of 1990. The principal statements were prepared from the books and records of NRC in accordance with the form and content for entity financial statements specified by the Office 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 Government created by the Energy Reorgani-zation 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 appropriations:
31X0200 - Salaries and Expenses
+
31 XO300 - Office of Inspector General The 31X0200 appropriation includes $11 million and $22 million for Fiscal Years 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 Appropriation, respectively.
In addition, in Fiscal Years 1996 and 1995, $.5 million and .58.9 million, respectively, of the appropriation received by the U.S. Agency for International Development was transferred 4 for the Nuclear Safety Assistance Program in Russia and the Ukraine which is under the I control of NRC.
ICollll'IllitTl till j'ilgt $h
l
,\udit of F) 1996 IinancialStatement (continued)
NOTES TO PRINCHML ST tTE31ENTS 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 appropriations are reduced by the amount of revenues collected during the fiscal year.
D. Basis ofAccounting Transactions 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 w hen 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 the 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 annual leave expenses. The differences between the accrual basis recognition of appropriations ex-pended and the budgetary basis recognition of outlays are presented in the Statement of Budget and Actual Expenses, l!.N. M ('t.13R RIEL idlORY Coit%Il% ION I
~!
NOTES TO PRINCIPAL STATEMENTS September 30,1996 and 1995 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.
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 n liabilities and to finance authorized purchase commitments. Cash balances held outside the U.S. Treasury are not material.
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.
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 accru-als of cost estimates are made by NRC.
I. Property and Equipment The land and buildings in which NRC operates are provided by the General Services Ad-ministration (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.
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.
Icontinued on page %
19964 0 OL TI AHn,lT)
s Audit of FY I996 l'inancial Statement (continued) i 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 the time of prepayment and are recognized as expenditures / expenses when the related goods and services are received.
K. Liabilities ;
a 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 9 can be paid by NRC absent an appropriation. Liabilities for which an appropriation has not i been enacted and for which there is no certainty that an appropriation . vill be enacted are classified as Liabilities 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.
e l I
L Contingencies s
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 earned and the accrual is reduced as leave is taken. Each year, the balance in the accrued annual leave liability account is adjusted to refleet current pay rates.
-'h Sick leave and other types of nonvested leave are expensed as taken.
N. Retirement Plans NRC en ployees 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 tojoin 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 earnings in addition to Federal Insurance Contribution Act and matches the with-U.S.M CIEAR HILUI.AloRv Co\l%IlssioN
NOTES TO PRINCH%L STA7ESIEN1'S September 30,1996 and 1995 holding 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.
t 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 one percent of base pay to their account and matches contributions up to an additional four percent. The maxi-
[
mum 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 the responsibility of the Office of Personnel Management.
O. 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 g 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 paysaents to be made for Workers Compensation pursuant to Federal Employees Compensation Act (FECA). The expense for these accruals is not funded from current appropria-tions, but rather will be funded from future appropriations and assessments.
(wntinued page 58) 19% \CCol'NTsull.rIT HFPoRT
Atulit of F1 1996 Iinancial Staternent (continned)
NOTES TO PRINCHM L STATEA1ENTS September 3(1, J 996 and 1995 P. Department of Energy (DOE) 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 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 re-ceived is subsequently accomplished through a system-generated voucher approval system.
The vouchers are returned to the Division of Accounting and Finance documenting that the charges have been accepted. Annually, NRC makes approximately $89 million in payments to DOE in this manner for research conducted by the DOE National Laboratories. ,
)
1 Q. Reclassificatwns l
Certain amounts for 1995 have been reclassified to conform with the 1996 presentation.
NOTE 2. FUND llAl,ANCES WITII 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 1210.748.055 E8 602.386 U.S. Government cash is handled on an overall consolidated basis by Treasury. " Funds with Trea-sury" represent NRC's right to draw on Treasury for allowable expenditures. All amounts are available to NRC foi 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 i balances exclude amounts related to unfilled customer orders.
l l
L'.S. NL Cl.l:\R RILL'l AloRY ('oT1%Il% ION
NOTES TO PRINClittL STitTEMENTS September 30,1996 and 1995 NOTE 3. ACCOUNTS RECElVAlli,E, 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 reimburse-ments due from other Federal agencies which were $5,822,652 and $8,231,231 at Septem-ber 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 5 3,532,779 $ 6,982,690 Materials and facilities - unbilled 22,667,134 24,388,455 Other 103.295 132.035 l Total accounts receivable 26,303,208 31,503,180 Less: Allowance for uncollectible accounts (2.223.657) (3.192.845)
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.
(contin ued on page 6fl}
1996 M Tol N I \llli iI Y Ri l'oR !
,tudit of FY 1996 Financial Statement (continued 1 NOTES l'O PRINCIPit L SlitTEMENTS September 30, I996 and I995 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:
i Advances - other Federal agencies $4.948.524 $2.466.180 Governmental:
Travel advances $ 472.522 $ 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 Service Acquisition Accumu!; e ' Net ik>ok Net Book Fixed Asset Class Years Value Depreciar..,n Value Value Equipment 5-8 $ 29,015,324 $20,933,828 $ 8,081,496 $ 9,958,283 ADP software 5 45,798,876 40,883,323 4,915.553 8,065,383 ADP software under development 9,002,437 - 9,002,437 3.632,345 Leasehold improve- 5-20 17,230,286 2,604,692 14,625,594 15,519,401 ments Leasehold improve- 1.564.011 -
1.564.011 -
ments in progress
$102.610.934 $64.421.843 $38.189.09 I $37.I 75.412 Total l'.s. NtTl.lMR REGt'IATOR) CO\l\ll% ION
N()TES TO PRINCIPA L SIA TE31ENTS 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, in fiscal year 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 1996 and 1995, the GSA charged NRC $18,446,487 and $18,580,348, respectively, for the use of these fa-cilities based on a rental fee which is to approximate the commercial rates for similar properties.
NOTE 6. ACCOUNTS PAYAllLE AND ADVANCES Accounts payable and advances consist of the following as of September 30,1996 and 1995:
1996 1995 Intragovernmental:
Accounts payable Department of Energy $ 9,368,752 $ 9,826,949 Other Federal agencies 2.282.932 2.994.53I i1,651,684 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 1.660.05i
$21.229.287 522.515.321 The vendors payable are all current. Current payables represent amounts which are expected to be paid within the fiscal year following the reporting date.
(continued on page 6h 19% \( ( 01 N J \lill IIT RI l'oRI
n_. -
l Audit ofIT 1996 Financial Statanent Icantinurds j
NOTES TO PRINCIPAL ST\lEllENTS September 30,1996 and 1995 NOTE 7. ACCRUED l'AYROLL AND llENEFITS Accrued payroll and benefits as of September 30,1996 and 1995 consists of:
1996 1995 Accrued personnel services $ 9,824,164 $ 8,699,085 Accrued benefits 1.703.683 1.577.822
$11.527.847 $ 10.276.907 Accrued payroll and benefits represent wages and benefits which have been earned but not paid as of the financial statement date.
NOTE 8. OTilER LIAlllLITIES COVERED IlY llUDGETARY RESOURCES Other liabilities as of September 30,1996 and 1995 include:
1996 1995 Governmental:
Liability for deposit funds $ 1,554,395 $ 1,550,759 Advances from others 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 withholdings. Advances from others consists of funds primarily from foreign governments for
! the participation in cooperative research programs.
l
, nu ia on.uon romussios l
NOTES TO PRINCll%L ST4TEMENTS September 30, I996 cmd I995 1996 J995 Intragovernmental:
Liability to offset net accounts receivable for fees assessed $26,206,946 $35,204,023 Liability related te fees collected which will offset subsequent years' appropriations - 5,635,943 Liability to offset net miscellaneous accounts receivable 312.698 692.881
$26.519.644 $41.532.847 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 year collected.
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 i 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. 1 1
(continued on page M) wn, Anut vi muin luroR1
i Audit ofIT 1996 financial Statement (continucJ>
NOTES TO PRLVCllM L S7A TE.11ENIS Sertember.H),1996 and 1995 NOTE 9. OTiiER LIAlllLITIES NOT COVERED llY llUDGETARY RESOURCES Unfunded liabilities as of September 30,1996 and 1995 include:
Restated 1996 1995 Governmental:
Accrued annualleave $25,359,485 $24,563,784 Accrued Workers' Compensation:
Benefits Paid 1,476,502 1,261,674 Estimated Future Benefits 5.875.000 5.227.000 532.710.987 $31.052 453 Accrued annual leave represents the amount of annual leave earned by NRC employees but not yet taken. Accrued Workers' Compensation includes: (1) Federal Employees Compensation Act (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 liability for death, disability, medical and miscellaneous costs for approved compensation cases. The liability is determined using the paid losses extrapolation method calcu-lated over the next 23-year period. This method utilizes historical benefit payment patterns 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).
U.S. M ClJ.AR RIEL l AloRY CO\1\tlwloN
NOTES TO PRINCil%L STATEAIENTS September 30,1996 and 1995 NOTE 10. INTRAGOVERN.\lENTAL ACTIVITIES 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 of 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 respect to accumulated plan benefits, plan assets, or the unfunded pension liability relative to its employees. Reporting of these amounts is the responsibility of the Office of Personnel Management.
In addition, NRC makes contributions to the TSP on behalf of its employees. NRC does not have control over the plan's assets. The TSPis 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.
4 continued on page 66) 19W \CCOI NI \ltil.!! Y IRPORI I
l _ _ _ _ _ _ _
) Audit ofIT 1996 Financial Statement (continued)
. -i .-
. l^ NOTES TO PRINCil%L SlitTIDIENTS September 30,1996 and 1995
- NOTE 11. NET POSITION The net position consists of the following as of September 30,1996 and 1995
1996 Restated
- j. 1995 Unexpended appropriations:
Unoblicated $ 34,763,076 $ 62,857,857 i Undelivered orders 133.392.834 140.502.479 168,157,910 203,360,336 invested capital 38,189,091 37,175,412 l
Future funding requirements (Note 9) (32.710.987) (31.052.458)
$173.636.014 $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 appropriations balance does not include $6,262,153 and $8,911,666 in unfilled customer orders -
unobligated as of September 30,1996 and 1995, respectively. The undelivered orders balance does not include $6,082,665 and $8,119,066 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 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).
t!.S.Nt cl.fA
- R RIXWI,ATORv CO\l%IlssiON
NOTES TO l'RINCIP tL STt TE3fENTS September 30,1996 and 1995 NOTI.12. APPROl'RI ATED cal' ITAL 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 1996 and 1995, $454.0 million and $509.1 million, respec-tively, were collected from fees assessed for licensing, inspections and other services. OBRA requires NRC to recover approximately 100 percent ofits new budget authority,less the amount appropriated from the Nuclear Waste Fund, by assessing fees. At the end of the fiscal year, appro-priations recognized are reduced by the amount of assessed fees collected dming 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 1996 and 1995, $454.0 million and $501.9 million, respectively, of collections were used to reduce the fiscal year's appropriations recognized:
1996 1995 Appropriated funds consumed $506,886,420 $537,429,585 Less: Collection from fees assessed (454.049.125) (501.871.000)
$ 52.837.295 $ 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. OTilER REVENUES AND FINANCING SOURCES Other revenues and financing sources for September 30,1996 and 1995 were:
1996 1995 Fees for licensing, inspection and other services $439,416,105 $478,855,346 Other miscellaneous receipts 2,925,844 3.518,733 Appropriation reimbursements 9.842.179 10.409.373
$452. I 84. I 28 $492.783.452 (continued on page 68)
IPm TM 01 N 1 \lill.1I v Id.I'OR I
Audit ofIT 1996 l'inancial Statement teontinued)
NOTES TO PRINCil%L 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 25,521,602 Printing and reproduction 1,579,151 2,005,287 Contractual services 189,329,595 216,219,114 Supplies and materials 12,868,778 13,353,246 Grants, subsidies, and contributions 1,486,946 1,456,333 Insurance claims nnd indemnities 101,896 131,477 Other 95 3.653
$509.824.735 $538.352.174 NOTE 15. ENIPI,0YEE RETIRENIENT PLANS Total NRC contributions for employee retirement plans for fiscal years 1996 and 1995 were as follows:
1996 1995 Civil Services Retirement System (CSRS) $ 9,022,093 $ 9,226,610 q 1
Federal Employees' Retirement System (FERS) 9,476,956 9,115,078 Federal Insurance Contribution Act (FICA) 6,078,868 5,a23,317 Thrift Savings Plan (TSP) 3.754.354 _.1 180.292
$28.332.271 $27.845.297 l'.N. NIYllAi' Ri Gt'ISIOld CO\t%11%lON
i NOTES TO PRINCHML STATE 31ENTS September 30,1996 and 1995 Data on the actuarial present value of accumulated benefits, assets available for benefits, and un-funded pension liability are maintained by other Federal agencies and are not allocated to indi-vidual departments and agencies.
NOTE 16. OTilER EXPENSES Other expenses as of September 30,1996 and 1995 consist of:
1996 1995 Loss on disposal of property $41,403 $281,951 Bad debt expense (24.302) 5.094
$ 17.101 1287.045 NOTE 17. EXCESS OR (SIIORTAGE) OF REVENUES AND FINANCING SOURCES OVER TOTAL EXPENSES The excess or (shortage) of revenues and financing sources over total expenses represents ex-penses not covered by budgetary resources for the years ended September 30,1996 and 1995, and consists of:
Restated 1996 1995 Accrued annual leave $ (795,701) $(140,435)
Accrued Workers' Compensation (862.828) 197.456 1
$L1 6_ 3 12_9) $ 57.021 Exynses not covered by budgetary resources are not funded from current appropriations but are to be funded from future appropriations and assessments.
(continued on page 7(h 14% A(101 N I tilli Ii y RI:I'ORI
Audit of FY 1996 Financial Statement (continuels NOTES TO l'RINCllM L STATEMENTS September 30,1996 and 1995 NOTE 18. NON-OPERATING CIIANGES Non-operating changes for the fiscal years ended September 30,1996 and 1995, consist of the following:
1996 19_95 Change in unexpended appropriations $(35,202,426) $ (716,103)
Change in invested capital J.013.679 (3.942.482)
$(34. I 88.747) $(4.658.585)
NOTE 19. PRIOR PERIOl) AI),IUSTMENT Beginning in 1996, DOL, the agency which administers the Federal Employees' Compensation Act (FECA) program, began reporting NRC's estimated actuarial liability for future Workers' Com-pensation 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 net position by $5.5 million. The effect on program expenses was nominal.
I'.S. NITI.L tR Rf Gl (AlORY CO\1\ll% ION I
API'ENDIX COMMENTS OF TIIE CIIIEF FINANCIAL OFFICER I
6
Audit of IT 1996 l'inancial Statement (continued) e no og y *g UNITED STATES i i NUCLEAR REGULATORY COMMISSION WASHINGTON, DC 20555-0001 February 27,1996 MEMORANDUM TO: Thomas J. Barchi Assistant Inspector General for Audits
/
FROM: Ronald M. Scroggins p, Acting Chief Financial Officer o
SUBJECT:
RESULTS OF THE AUDIT OF U.S. NUCLEAR REGULATORY COMMISSION'S FISCAL YEAR 199'6 FINANCIAL STATEMENTS We have reviewed the draft audit report of the U.S. Nuclear Regulatory Commission's fiscal year 1996 financial stitements. 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 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 respon-sible NRC group, position, or contractor for making capitalization
! decisions and oversight.
L Response: The current Division of Accounting and Finance (DAF) capitalization L procedures are written to apply to whomever is assigned the task of reviewing ADP software purchases to detemiine the applicability of capitalization. When this assignment is made, the person designated is advised of the agency policy and procedural requirements. While a contractor may be assigned certain duties associated with capitaliza-tion, it is not appropriate to assign a contractor the responsibility of making agency capitalization decisions as the ultimate responsibility for software capitalization rests with the Office of the Controller.
Therefore, we believe the current procedures are adequate to define the piocess requiicd to identify capitalized software. However, ADP software capitalization by its very nature often requires sub-jective judgements ,o be made when determining capitalization L'X Sl'CITAR REGI 1.AIORY CO\l\ll%10N
(i.e., identifying the difference between enhancements and mainte-nance) therefore, our emphasis in correcting this condition has been placed on your second reconunendation.
Reconunendation 2: Reemphasize the need for adequate oversight of contractor decisions.
Response: Upon discovery of this oversight OC reemphasized with its internal project management staff the need for adequate oversight of all con-tractor produced work products. Software capitalization will continue to be maintained as a matter of management emphasis for future finan-cial 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 recog-nized 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 institu-tion of a labor cost distribution system.
We appreciate the opportunity to respond to the draft audit report.
CONTACT: John Bird, OC/DAF/ GAB 415-7343 (JEB1) l l
i tw, Arrot Ni uuulY 10 l'oR r
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