ML20211C875

Review of NRC Management Directive 6.1

ML20211C875
Person / Time
Issue date:	09/05/1997
From:	NRC OFFICE OF THE INSPECTOR GENERAL (OIG)
To:
Shared Package
ML20211C879	List: ML20211C875 ML20211K588
References
OIG-97A-20, NUDOCS 9709260338
Download: ML20211C875 (10)

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REVIEW OF NRC'S MANAGEMENT DIRECTIVE 6.1 OlG/97A 20 September 5,1997

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4 I OFFICE OF THE INSPECTOR GENERAL September 5,1997 MEMORANDUM FOR: L Joseph Callan '

Executive Director for Operations Jesse L. Funches Chief Financial Officer Anthony J. Galante Chief Information Officer FROM:

MEm k. Sd Thomas J. Barchi I Assistant inspector General for Audits SUBJEC^

REVIEW OF NRC'S MANAGEMENT DIRECTIVE 6.1 Attached is the Office of the Inspector General's audit report entitled,

• Review of NRC's Management Directive 6.1."

l On August 29,1997, the Executive Director for Operations responded to our draft report. He agreed with our recomrnendations and stated corrective actions will be complete by March 2,1998.

Please contact me on 415-5915 if we can assist you further in this matter.

Attachment:

As stated

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cc: L. Callan, EDO J. Blaha, AO/OEDO P. Norry, DEDM/OEDO H. Thompson, DEDR/OEDO E. Jordan, DEDO /OEDO A. Galante. CIO J. Funches, CFO J. Cordes, Acting OCAA D. Rathbun, OCA K. Cyr, OGC C. Stoiber, OIP W. Beecher, OPA l

J. Hoyle, SECY E. Halman, ADM T. Martin, AEOD A. Levin, Acting IRM G. Caputo, 01 P. Bird, HR I. Little, SBCR R. Bangart, OSP C. Paperiello, NMSS S. Collins, NRR A. Thadnai, RES T. Taylor, ACMUI P. Pomeroy, ACNW R. Seale, ACRS P. Cotter, Jr., ASLBP H. Miller, RI L. Reyes, Rll g

A. Beach, Rlll E

J. Dyer, Acting Regional Administrator, RIV OPA RI OPA Ril OPA Rill OPA-RIV OPA-RIV FO I

u Review of NRC's Management Directive 6J

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REPORT SYNOPSIS 2

Office of Management and Budget Circular A 50," Audit Follow up," requires each agency to establish systems to assure the prompt and proper resolution and implementation of audit recommendations. These systems shall provide for a complete record of actions taken on all recommendations.

In light of NRC's recent organizational changes and establishment of an Executive Council, we reviewed the adequacy of the agency's current directivs for responding to Office cf the inspector General (OlG) audit reports and for reaching resolution on recommendations.

While the agency maintains a centralized tracking system, we found that Management Directive 6.1/ Handbook needs to be updated to reflect organizational changes made by the Commission that became effective in January 1997.

E Specifically, OlG recommended that NRC clarify who is responsible for:

3 (1) reviewing and responding to OlG draft audit reports and (2) resolving disagreements on audit recommendations that arise between the OlG and agency officials.

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olG/97A 20 Pagei l

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Review of NRC's Management Onective 6.1 r

L TABLE OF CONTENTS b

REPORT SYNOPSIS . . ..

i INTRODUCTION . . .

1 h DACKGROUND .. . .. . . , 1 FINDINGS .... .. . . ..

. . ., 2 CONCLUSION . .. ..

... . . .. 3 RECOMMENDATlON , . . . . . . . . . . .. . 3

} AGENCY COMMENTS . . . .. . .... . . . . . 3

( APPENDICES I Objectives, Scope, And Methodology ll Agency Comments ill Major Contributors To This Report IV Glossary: Office of the Inspector General Products

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l Review of NRC's Management Directive 6 i INTRODUCTION Audit follow up is an integral part of good management and is a shared responsibility of agency management officials and auditors. Corrective action by management on agreed upon findings and recommendations is essential to improving the effectiveness and efficiency of agency operations.

In light of NRC's recent organizational changes, we reviewed the agency's directive for responding to Office of the inspector General (OlG) audit reports and for reaching resolution on recommendations to determine if the directive needed revision.

BACKGROUND Office of Management and Budget (OMB) Circular A 50, " Audit Follow up." requires each agency to establish systems to assure the prompt and proper resolution a1d implementation of audit recommendations. These systems shall provide for a complete record of actions taken on all recommendations.

OMB Circular A 50 also requires that agency heads designate a top management official to oversee audit follow-up, including resolution and corrective action. The agency's audit follow up official (AFO) has the responsibility for ensuring that systems of audit follow up, resolution, and corrective action are documented and in place.

NRC's Management Directive 6.1/ Handbook,

• Resolution and Follow-up of Audit Recommendations," outlines specific responsibilities for senior management personnel and requires the documentation of inanagement actions and decisions related to follow-up activity. Tne current Directive designates the Executive Director for Operations (EDO) to serve as tha AFO. To achieve the purpose of both the OMB Circular and Management Directive 6.1/ Handbook, NRC's AFO uses a centralized tracking system called the Work Item Tracking System.

In January 1997, the NRC Chairman realigned the EDO's responsibility and established a three-person Executive Council. The Executive Councilis made up of the Executive Director for Operations, the Chief Information Officer (ClO), and the Chief Financial Officer. All three report directly to the Chairman.

olG/97A-20 Page i

Review of NRC's Meagement Directive 6.1 l

FINDINGS We found that the agency's guidance for handling and resolving OlG audit recommendations is outdated and needs to be revised to reflect the current organizational structure and establishment of an Executive Council.

Management Directive 6.1/ Handbook provides internal guidance to NRC personnel for implementing OMB Circular A-50. Moreover, existing guidance assigns the EDO as the AFO. As such, the EDO is currently responsible for resolving disagreements between the Deputy Executive Directors for Operations (DEDOs) and the Inspector l General regarding internal audit findings and recommendations. Additionally, DEDOs are responsible for reviewing and responding to draft internal audit reports l for their respective areas of responsibility. However, the EDO and DEDO's authority was documented in 1993 -- prior to the agency's January 1997 major j organizational realignment.

We believe NRC's Management Directive 6.1/ Handbook needs to be revised to Il reflect this organizational change. Specifically, organizational responsibilities and delegations of authority need to be clarified to establish who is responsible for:

(1) reviewing and responding to OlO draft audit reports and (2) resolving disagreements on audit recommendations that arise between OlG and agency officials. I E

in our discussions with the Secretary of the Executive Council, he agreed Management Directive 6.1/ Handbook needs revision to reflect current responsibilities for reviewing OlG dran reports and resolving disagreements on recommendations. He also advised us that OlG draft reports should continue to be sent to the deputy official primarily responsible for the program under audit as required by current guidance. He added, however, because a deputy position for information management (ClO organization) does not cunently exist, draft reports in this area should be sent directly to the CIO for review and response. Further, the NRC Chairman should resolve disagreements on audit recommendations that arise between OlG and the ClO.

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Review of NRC's Management Directive 61 I CONCLUSION Management Directive 6.1/ Handbook needs to be revised to reflect current organizational changes that took effect January 5,1997. Specifically, organizational responsibilities and delegations of authority need to be clarified to establish who is responsibile for: (1) reviewing and responding to OlG draft audit reports and (2) resolving disagreements on audit recommendations that arise between OlG and I agency officials.

l RECOMMENDATION The EDO should revise Management Directive 6.1/ Handbook to identify the NRC officials responsible for;

1. Reviewing and responding to OlG draft audit reports.

2. Resolving disagreements on audit recommendations that arise between OlG and agency officials.

I AGENCY COMMENTS On August 29,1997, the Executive Director for Operations ' responded to our draft report. He agreed with our recommendations and stated corrective actions will be complete by March 2,1998.

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Appendix l

_ Review of NRC's Management Directive 6.1 OBJECTIVES, SCOP 5, AND METHODOLOGY

{ The objective of the Office of the inspector General's review, in light of NRC's recent organizat;o,'al changes, was to review the adequacy of the agency's current directive for responding to audit reports and for reaching resolution on

{ recommendations.

To accomplish this objective, we reviewed NRC's policies and procedures regarding

[ audit follow-up and the authorities and responsibilities delegated to NRC managers.

We interviewed the Secretary of the Executive Council as well as other persons assigned follow-up responsibility on behalf of the audit follow-up official. We did not

( test the completeness or accuracy of the agency's centralized tracking system for audit recommendations.

Our review was performed at NRC Headquarters during the period July through August 1997 in accordance. with generally accepted Government auditing standards.

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Review of NRC's fAanagement Directive 61 p >*

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UNITED STATES j, ,ej NUCLEAR REGULATORY COMMISSION p W A$HINGT ON, D C. P05MH)o01

% e' . . . . ,p# August 29, 1997

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[ MEMORANDUM TO: Thomas J. Barchi Assistant inspector General for Audits

[ FROM: L. Joseph Callan.

Executive Director or Operations

SUBJECT:

[ DRAFT REPORT NEEDS UPDATING NRC'S MANAGEMENT DIRECTIVE 6.1

[ This is in response to your August 21, 1997 memorandum transmitting the subject draft report. With respect to your specific recommendations. I submit the following:

,- Pecommendations 1 and 2:

The EDO should revise Management Directive 6.1/ Handbook to identify the NRC

[ officials responsible for:

1. Reviewing and responding to OlG draft audit reports.

[ 2. Resolving disagreements on audit recommendations that arise between OlG and agency officials.

Response

We agree that Management Directive 6.1/ Handbook needs to be revised and

( updated to reflect the findings in your report.

March 2, 1998. This will be completed by

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Appendix lll Review of NRC's Management Directive 6.,

L MAJOR CONTRIBUTORS TO THIS REPORT

[ Anthony C. Lipuma Team Leader Michael A. Cumniins b Senior Auditor

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I Appendix IV Review of HRC's Management Directive 6.1 u

GLOSSARY: OFFICE OF THE INSPECTOR GENERAL PRODUCTS INVESTIGATIVE

1. INVESTIGATIVE REPORT- WHITE COVER l

An investigative Report documents pertinent facts of a case and describes available evidence relevant to allegations against individuals, including at pects of an allegation not substantiated.

Investigative reports do not recommend disciplinary action against individual employees.

Investigative reports are sensitive documents and contain information subject to the Privacy Act restrictions. Reports are given to officials and managers who have a need to know in order to properly determine whether adtr.inistrative action is warranted. The agency is expected to advise the OlG within 90 days of receiving the investigative report as to what disciplinary or other action has been taken in response to investigative report fincings.

2. EVENTINQUIRY- GREEN COVER The Event inquiry is an investigative product that documents the examination of events or agency actions that do not focus specifically on individual misconduct. These reports identify institutional weaknesses that led to or allowed a problem to occur. The agency is requested to advise the I OlG of managerial initiatives taken in response to issues identified in these reports but tracking its recommendations is not required.

3.

l MANAGEMENT IMPLICA TIONS REPORT (MIR) - MEMORANDUM MIRs provide a " ROOT CAUSE" analysis sufficient for managers to facilitate correction of problems and to avoid similar issues in the future. Agency tracking of recommendations is not required.

AuotT l S. AUDITREPORT- BLUE COVER An Audit Report is the documentation of the review, recommendations, and findirigs resulting from I an objective assessment of a program, function, or activity. Audits follow a defined procedure that allows for agency review and comment on draft audit reports. The audit results are also reported in the OlG's "Semlannual Report" to the Congress. Tracking of audit report recommendations and agency response is required.

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SPECIAL EVALUA TION REPORT - BURGUNDY COVER A Special Evaluation Report documents the results of short term, limited assessments. It provides an initial, quick response to a question or issue, and data to de'.cnnine whether an in-depth independent audit should be planned. Agency tracking of recommendations is not required.

REGULATORY 6.

REGULATORY COMMENTARY- BROWN COVER Regulatory Commentary is the review of existing and proposed legislation, regulations, and policies so as to assist the agency in preventing and detecting fraud, waste, and abuse in programs and operations. Commentaries cite the IG Act as authority for the review, state the specific law, regulation or policy examined, pertinent background information considered and identifies OlG concerns, observations, and objections. Significant observations regarding action or inaction by the agency are reported in the OlG Semiannual Report to Congress. Each repcrt indicates whether a response is required.

olG/97A 20 Page1 of1

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