ML20216G339
| ML20216G339 | |
| Person / Time | |
|---|---|
| Issue date: | 03/31/1998 |
| From: | Connelly S NRC OFFICE OF THE CONTROLLER |
| To: | |
| References | |
| NUREG-1542, NUREG-1542-V03, NUREG-1542-V3, NUDOCS 9804200258 | |
| Download: ML20216G339 (92) | |
Text
..
1 U.S. Nuclear Regulatory Commission
,,q p
n r- --
s
- }
~q
?g
, 'l gps,~
r;pg,<
~
m 3
s t-jp. -
T n 3 ;7 q, 4
c
-.g-
~
r;r}.;m1 3
a i
3
\\ pjt gj;g
- f 3fhjl q
- L V
M\\
j (g i [
. u4a4 s a es y N-a.
L' ep+;s$/,
parN* Een g'
f4
$wer iqisca ear 997 p
r a
a
,,g
- ,g a ;,
sw 5
.J (iij (J % w/
pP af cq h
AJ
.9' 4,
/
) if' (
.s m
h$f,5
- 's s!)
~,
ws 6
f.
t
.7 4
t F
3.l.
)
e 4
s.
l d.
{
I. '.
i
.C "
[
' {'
j e
jh.
r?'
g,
!l.
- y y
3 g
~
- i i
k
\\ J/
- },
q>
t g
)
V b
,3 y;
(
V>I
?M r h.
E.
v
(.'
I/.
f,,
)
~ k + <-
- f. -
[ ';,
,'N.
t t :.
v'
{
9804200258 980331 PDR NUREG 1542 R PDR
Availability Notice i
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. Gosernment Printing Office P. O. Ilox 37082, Washington, DC 20402-932S
- 3. The National Technical Information Service, Springfield, VA 22161-0002 Although the listing that follow s represents the majority of documents cited in NRC publications,it is not intended to be exhaustis e.
Referenced documents asailable 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; Commission 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. and NRC booklets and brochures. Also available are regulatory guides, NRC regulations in the Code of Federal 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 reports prepared by the Atomic Energy Com-mission, forerunner agency to the Nuclear Regulatory Conunission.
Documents asailable 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 organi/ation 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 the Chief information Officer, Publishing Services Ilranch, U.S. Nuclear Regulatory Commiwinn.
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. Rocksille, MD 20S52-2738, 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 llroadway, New York NY 100lS-330S.
i l
U.S. Nuclear Regulatory Commission a
J x
n_ m g
gg iscaiYear:997
'~
5:
'l
.,i a
.o j n
,fs REcts n
d so
,[w
> + -
.y o$
x'l.
.C s
l
~il[
h:'
r c
h%pf ;.
+
' 9.u
- h uppy; g
- -,
y
., dw-p a
,c4 G & e.
,.c
- n.w.,'x
.,,Gy' pg [ 4
- y aa a. ; en..
hk&_f
[
"V f
v, l
. <?.,?
{
$uj pp ;,- f
, ? Q'$yp N g{f W,
+
ym m:
g
.n y
[
j 4yLA.
a s ry
&j h.
4}k y
fijy y.
pa([. <[.j;#
jk -sw w g
l s J,/
n
.n ag, e
a.
.w QhbC.j"N '
O g$
k$
wgqNf,$D 1
h0
' *%8pf %64Mady'
'is g gjgly 9804200258 980331 PDR NUREG 1542 R PDR
Availability Notice Availability of Reference Materials Cited in NRC Publications Most documents cited in NRC publications will be available from one of the following sources:
1.The NRC Public Document Room 2120 L Street, NW., Lower Level, Washington, DC 205554XX)1 2.The Superintendent of Documents, U.S. Government Printing Office, P. O. Box 37082. Washington.
DC 20402-9328 3.The National Technical Information Service Springfield, VA 22161-0002 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; Commission 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, and NRC booklets and brochures. Also available are regulatory guides, NRC regulations in the Code of Federal 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 reports prepared by the Atomic Energy Com-mission, forerunner agency to the Nuclear Regulatory Commission.
Documents available from public and special technical libraries include all open hterature items, such as books,joumal 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 available 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 the ChiefInformation Officer, Publishing Services Branch, U.S. Nuclear Regulatory Commission.
Washington, DC 205554)001.
Copies ofindustry codes and standards used in a substantive manner in the NRC regulatory process are maintained at the NRC Library, Two White Flint North, i 1545 Rocksille 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 Broadway, New York, NY 10018-3308.
NUREG - 1542 Vol. 3 Fisca Year 1997 U.S. Nuclear Regulatory Commission Office of the Chief Anancial Officer 3
fa a%y
,'l, fa s'
g,
,y
, v":
+
i,
<g o
.k
- s e
m 3
1 L
y n
5h i
Au,+
y y
a i
,3 ;
- p 7..
4
,.l-lC
)
w33-o m
e 1
' ?#$
i t
i s
J n t,'"E E"JI"O.Z,'L72?<muc e ISBN 016 049490 7 l
1
NRC Principles of Good Financial Management t
hose who handle public resources have a special responsibility to safeguard the resources entrusted to Tthem and to use them properly. Poor financial management by NRC can undermine the 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.
Pl.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.
CONTROL. Good financial management requires good financial control. Appropriate effective cost controls throughout the financial management process ensure adequate accounting of funds expended, prevent over-obligation of funds and inappropriate expenditures, identify early instances where funds should be reallocated, and produce valuable information for the planning process.
CONINIUNICATION. 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-plish its mission. Ongoing projects should be evaluated to ensure resultsjustify continued funding. Appro-priate precautions ensure that waste is avoided. To ensure maximum utility of available resources, funds should be obligated as early as practicable during the fiscal year, and excess funds should be deobligated as soon as practical after project completion.
l EVAL.UATION. Good financial management 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-4 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.
L'.s. NtTI.lAR RI Al't.XIoRY CO\\lMi%loN
I 1
i Table of Contents t
i 1
i l
l Foreword..................................................................................................................v Th e N R C ' s M i s s i o n.............................................................................
l M e s sage Fro m the Ch ai rman.................................................................
...................vii Message From the Chief Financial Officer..............................................................ix M a n age m e n t S u m m a ry........................................................................................
l About the U.S. Nuclear Regulatory Commission..................................................... I organ i zat i o n.........................................................
............................................I R eg u l at ory R e spo n sibi li ty.................................................................................. 2 I
l Sources of Funds...
.....................................................................2 l
U ses of Fu n ds by Fu n et i o n.................................................................................... 2 Fi n a n c i al Con d i tio n o f N R C............................................................................. 4 Progra m Pe rform a n ce............................................................................................. 5 S trategic Arenas............................................
........................................................5 M an age m e nt Con t rol s............................................................................................... 6 N u clear Reac t or S a fe t y........................................................................................... 6 N u cl ear M at e ri al s S afe ty......................................................................................... 8 N ucl ear Wast e S a fe ty............................................................................................. I 1 Common Defense and Security and International Involvement....................................... 12 l
Protecting the Environment..........................................................................13 j
Public Confidenee...
....................................................................................16 Ex cel l e n ce..............................................................................................I6 4
1 1
l M an age me n t A ccou n tabili t y................................................................................... I 9 1
The NRC's Management Control Program......................................................... 19 i
Status of Management Controls and Report on Material Weaknesses i
a n d Non -Co n form a nce s...........................................................................19 Financial M anagement Syst ems.......,............................................................. 19 (wntinued ms page ir) 1997 ACCOUNTAllilIIY Id. PORT
lable erf Cerntenh twntinued) hianngement Decisions and Final Actions on OlG Audit Recommendations.
.20 hianagement Decisions Not Implemented Within One Year.
. 22 Debt Collection.
. 24 24 Prompt Payment.
Civil Penalties.
.26 FY l 997 Audited Financial Statement............................................................ 27 Appendix A NRC Organization Chart.
. 74 B Abnormal Occurrence Criteria and Guidelines for Other Events of Interest.
. 75 Figures 1
Sources of NRC Funds.
3 2 Uses of Funds by Function.
3' 3
U.S. Commercial Reactors..
.7 4 Delinquent Debt.
. 25 5 Prompt Payment..
. 25 Tables 1 Significant Radiation Exposures Due to Loss or Use of Source, Byproduct, and Special Nuclear hiaterials.
9 2 Number of Losses of Licensed Material Reported to the Congress Annually.
.....9 3 Number of hiisadministration Events Which Cause Significant Radiation Exposures..
10 4 Number of Offsite Releases From Operating Facilities of Radioactive hiaterial That Exceed 10 CFR Part 20 Limits..
. 14 5 hianagement Report on Office of the Inspector General Audits with Disallowed Costs.
.20 6 hianagement Report en Office of the Inspector General Audits with Recommendations That Funds lle Put to Better Use.
. 21 7 Amount of Fiscal Year Civil Penalties Collected Versus Fiscal Year Penalty Dollars Assessed.
. 26 l
l f
i.s. st ci.iaR itect txioni cosisiiwins l
[
Foreword 4
l his is the third year that the U.S. Nuclear Regulatory Commission (NRC) has participated in a pilot project, along with several other Federal agencies, to streamline financial manage-ment reporting. The goal of this pilot is to consolidate perfonnance-related reporting into a single accountability report. The project, which is being carried out under the guidance of the l
Chief Financial Officers Council, was undertaken in accordance with the Government Manage-j ment Refonn Act of 1994 (GMRA). 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:
1
- NRC's annual financial statement, required by the Chief Financial Officers Act of 1990 l
(CFO Act)
I
- Chairman's annual report to the President and the Congress, required by the Federal l
Managers' Financial Integrity Act of 1982 (FMFIA)
Chainnan's semiannual report to the Congress on management decisions and final actions l
on Office of the inspector General audit recommendations, required by the Inspector j
General Act of 1978, as amended l
This report also contains performance goals and measures, as required by the CFO Act and the Government Perfonnance and Results Act of 1993 (GPRA), and the Chairman's statement I
l on the compliance of the agency's financial management systems with the Federal Financial l
Management Improvement Act of 1996 (FFMIA),
i Comments on the content and presentation of this report are welcome and may be sent to:
Office of the Chief Financial Officer Mail Stop O-17 F3 j
U.S. Nuclear Regulatory Commission Washingtra, DC 20555-0001 or l
Internet: sie2@nre. gov l
L l
l 1997 ACCOLNIAltll.lTY kl.l' ORT J
)
1 n y~
_C r,
h 3 6% (( *a p
i pg [d" p4at d e %, <%as fr p
(> s >q, gt, N
%[Q y.# p<F 4" Q
Sh h.e$
ep 5
,; v k8, NI
(
);p y
e y
g (t,
W#
y,..
1;$
l,rf g b
'I m
9y 'd'V,,he;
%g[g: ~
.n,;A f,
Gy
't.
o
+-
w%wl'he NRC's M.
e%,!
T issionu a)c m'
r r
e
%:k ;.. ~
\\
i, =, *@%y )
i f.s.. ;;D Q. s
? %:n q ww..a ;.;.
p-y
,a,p-a;,.,,. f,t,y- /,
>n cf yy
.a
.r, e
s w
w udn -
q4 rmgp ta..
NRCYeguldtes th(e= Nation's civilian use of
..c 3 e
du.
e swp
~
u-t vuo x.
m uw-e%:
byproduct, source, and~specsal nuclear: mate vrials to:i sensure adequate proI$csion ofiilikpukidh0$llN NNdjafe&$ prllNi$tNthe c"smmon bt. fens $aka Neurity) bNd io p'rbtect the Ehvirbnmesth ede tre)wn.J,91 g p p g gyn
,e;,..
m dww,Q,..mn> @n sI;b t %r hiv
- ?
uJ is
':,N (s%f Q m(,%,l Ql
- qs
\\_
,p
%Qk d4 8
e e i
bj
,. f%
f 99 p
m e[,
n%
f.;u feg.
s a
e V,. l2
s *
- x
('
g j
N; f) af f., [ y,/k f, ^2
.g g
y ::r wy - y e p
- " g
,,1 g,g
Message From the Chairman P
'i l am pleased to present the U.S. Nuclear Regulatory Commission (NRC)
~
~
I accountability report for Fiscal Year (FY) 1997. This is the third year g that the NRC has produced an accountability report in an effort to stream-p
[,
j line statutory perfonnance related reporting in accordance with the Q Govenunent Management Refonn Act of 1994.
i l~
j" in FY 1997, we achieved our perfonnance goals for protecting public health and safety. We are continuing to strengthen the NRC by maintain-ing our primary focus on safety while benefiting those we regulate y
through the development of better requirements, guidance, and a more L
efficient regulatory process. We are implementing strategies to make both our nuclear reactor safety and nuclear materials safety.egulations more risk-informed and, where appropriate, perfonnance-based. The NRC goal in improving the way it conducts its business is to ensure that the agency is both effective and efficient in implementing its mission.
In reaching this goal, a key factor was the strategic assessment and rebaselining initiative that we initiated two years ago. This broad-scope internal effort was designed to evaluate the current status of major NRC programs, and to outline a clear path for future progress, in addition, this initiative supported NRC implementation of the Govermnent Perfonnance and Results Act of 1993 and other Congressional and Administration initiatives that are demanding greater account-ability for results from Federal agencies. Some recent results of this work include the NRC FY 1997-2002 Strategic Plan. FY 1999 Perfonnance Plan, the regulatory excellence initiative, and our program-level operating plans.
The NRC evaluated its management control and financial management systems for FY 1997 as required by the Federal Managers' Financial Integrity Act of 1982. The results of this evalua-tion provided reasonable assurance that the NRC achieved the objectives of the Act. The evalua-tion identified no material weaknesses in NRC programs or administrative activities and no material non-confonnances with government-wide requirements in NRC financial management systems. The NRC also evaluated its financial management systems for compliance with appli-cable Federal requirements and accounting standards as required by the Federal Financial Man-agement Improvement Act of 1996. This evaluation disclosed that overall the NRC's major financial management systems were in compliance with the Act except for business continuity plans which were found to be in substantial noncompliance. The audit report on the agency's financial statement, provided at the end of this report, contains a discussion of this issue and the corrective action that the NRC is taking.
The NRC continues to improve its business practices by using sound fiscal management to accomplish the agency's critical mission. The issuance of this third annual report, which in-cludes the results of our FY 1997 performance, confirms our commitment to provide account-ability for agency programs and financial management.
4s Shirley Ann Jackson Chairman U.S. Nucicar Regulatory Conunission 1997 ACCotNi tBilllT MlWR1
I Message From the Chief Financial Officer i
)
"F"*""""
am pleased to report that the NRC has again received an unqualified d
audit opinion on its financial statement. The NRC issued its first l
j audited financial statement in Fiscal Year (FY) 1992 and received an j unqualified audit opinion for each of the four fiscal years since FY 1994.
M
...M i
At the Chainnan's request, and in coordination with the NRC's Execu-
- Ii) tive Council, we are concurrently pursuing two significant effons to improve agency processes for planning, budgeting. financial and resource management, and performance management. The first effort employs an integrated process for planning, budgeting, and perfonnance management for the FY 2000 budget cycle that will enable the agency to meet the l
demands of the new results-driven Federal environment. The four major interrelated components j
of the new process are (I) setting strategic direction,(2) detennining resources and planned accom-plishments, (3) measuring and monitoring perfonnance, and (4) assessing perfonnance.
A second effort provides for an integrated agencywide financial and resource management system that will suppon the first effort. This system will serve as the agency's single authoritative source for financial and resource infonnation to cany out program and fiduciary responsibilities and to integrate financial planning data with financial perfonnance data. The integrated agency I
financial and resource management system will support the following functions: core accounting, budget fonnulation, travel management, property control, funds control, cost accounting, debt management / fee billing labor-cost distribution, payroll / personnel, and procurement.
l We also continue to improve financial management in other ways. Over the past few years, the NRC haa increased the effectiveness and efficiency of program financing by more closely monitor-ing unused contract balances, project planning, and obligation and expenditure rates. The NRC's delinquent debt has steadily declined since FY 1993 through concerted debt management. Timely l
payment of amounts subject to the Prompt Payment Act has increased and the amount ofinterest penalties has decreased. We have significantly reduced the number and size ofimprest funds. We i
have consistently paid a high percentage of our employees by electronic funds transfer, and are I
increasing the amount of vendor payments made by electronic funds transfer.
Our ongoing improvements are imponant in effectively and efficiently accomplishing our l
mission and meeting new challenges presented by our changing environment. Our goals are to maintain the standards we have achieved and to continue seeking improved methods to carry out our fiscal responsibilities.
Jesse L. Funches Chief Financial Officer U.S. Nuclear Regulatory Commission IW7 W( 01Xi \\Hil IM Hi POWI
1 Management Summary Program Performance in this report we are making the transition to reporting against outcome measures that have been developed in response to the GPRA-required FY 1999 Performance Plan. The following reDects our performance relative to these outcome goals.
Nuclear Reactor Safety The general goal is to prevent radiation-related deaths or illnesses due to civilian nuclear reactors. In FY 1997, the NRC met the associated performance goals of (1) zero civilian nuclear reactor accidents,(2) zero deaths due to radiation or radioactivity releases from civilian nuclear reactors, and (3) zero significant radiation exposures due to civilian nuclear reactors.
With respect to the NRC's fourth performance goal in this strategic arena, " maintain a low frequency of events that could lead to a severe accident," the NRC is unaware of any events of this type occurring in FY 1997. liowever, Gnal analyses of all events in this category during FY 1997 will not be completed until approximately 1 year after the end of the fiscal year.
Nuclear Materials Safety The general goal is to prevent radiation-related deaths or illnesses due to civilian use of source, byproduct, and special nuclear materials. In FY 1997, the NRC met the associated performance goals of(1) zero radiation-related deaths due to civilian use of source, byproduct, and special nuclear materials (2) no increase in the number of significant radiation exposures due to loss or use of source, byproduct, and special nuclear materials, (3) no increase in the number of losses oflicensed material as reported to the Congress annually, (4) no accidental criticality involving licensed material, and (5) no increase in the number of misadministation events which cause significant radiation exposures.
Nuclear Waste Safety The general goal is to ensure treatment, storage, and disposal of wastes produced by civilian use of nuclear material in ways that do not adversely affect this or future generations.
In FY 1997, the NRC met the associated performance goals of (1) no significant accidental releases of radioactive material from storage and transportation of high-level waste (including spent fuel) or low-level waste and (2) no offsite release of radioactivity beyond regulatory limits from low-level waste disposal sites. The NRC's target for the FY 1999 performance goal to establish the regulatory framework for high-level waste disposal, consistent with current national policy, is to issue a final rule within 1 year after promulgation of the standard (estimated publication July 1,1999). Milestones for this initiative will be developed during FY 1998.
(continued on page xii) 1997 MrotXI thilII Y lo.I'Otrl
Alanugement hummary trontintu db Common Defense and Security and InternationalInvolvement The general goal is to prevent the loss or theft of special nuclear materials regulated by the NRC and to support U.S. national interests in the safe use of nuclear materials and in non-proliferation of these materials. In FY 1997, the NRC met the associated performance goals of(1) zero loss or theft of special nuclear materials regulated by the NRC,(2) no substan-tiated cases of attempted theft or diversion of formula quantities of strategic special nuclear material, and (3) no substantiated breakdown of physical security or material control (i.e.,
access control, containment, or accountability systems) that signincantly weakened the protec-tion against theft or diversion of formula quantities of strategic special nuclear material. Data will be reported in the NRC's FY 1999 Accountability Report for the goal to strengthen interna-I tional nuclear safety and safeguards by participating in international safety and safeguards exchange activities, by providing assistance through international agreements, and by support-ing U.S. non-proliferation interests.
l l
Protecting the Environment j
The general goal is to protect the environment in connection with civilian use of source, byproduct, and special nuclear materials through the implementation of the Atomic Energy Act l
and the National Environmental Policy Act (NEPA). In FY 1997, the NRC met the associated performance goals of (I) zero offsite releases from operating facilities of radioactive material l
that have the potential to cause adverse impact on the environment and (2) no increase in the number of offsite releases from operating facilities of radioactive material tnat exceed 10 CFR i
l Part 20 limits. Data for the performance goal," environmental impacts have been identified through the NEPA process before regulatory action is taken," will be reviewed in FY 1998 and reported for FY 1999. Data for the performance goal,"no sites will be released until satisfacto-rily remediated in accordance with NRC release criteria," will be reviewed in FY 1998 and will be reported for FY 1998.
1 l
l Public Confidence The general goal is to provide the public, those we regulate, and other stakeholders in the l
national and international community with clear and accurate information about, and a meaning-ful role in, NRC's regulatory program so that there will be respect for and con 6dence in that l
program. Data will be reported for FY 1998 for the associated performance goal to implement the agency's plan to improve how it informs and involves tb public, those we regulate, and i
other stakeholders in NRC's regulatory program.
ExceIIence The general goal is to carry out the NRC regulatory program efficiently and effectively.
Performance will be reported for FY 1998 for the associated goals to (1) implement the agency's plan for regulatory excellence and (2) evaluate and implement needed improvements for five major NRC processes by July 1,1999.
L'.s.NL C11 Alt HI Gt 1.viold CosistlNNION
Management Accountability l
Management Controls The NRC's annual evaluation of management controls and financial systems identified no material weaknesses in NRC programs or administrative activities and no material non-conform-ances with governmentwide requirements in the NRC's financial systems.
l l
The NRC's evaluation of its financial management systems for compliance with applicable l
Federal requirements and accounting standards disclosed that overall NRC's major financial l
management systems were in compliance, except for business continuity plans which were found
{
to be in substantial non-compliance.
i l
Audits At the end of FY 1997, the NRC had six audits with outstanding actions over 1 year old. The status of these actions are discussed on page 22 in the section titled " Management Decisions Not Implemented Within One Year."
FY 1997 Audited Financial Statement t
For the fourth successive year the NRC received an unqualified audit opinion on its financial l
statement. Two reportable conditions carried over from FY 1996 were resolved in FY 1997. These l
reportable conditions involved the need for a payroll system that is integrated with the general l
l ledger and possesses labor distribution capabilities and the need to improve procedures for capital-izing automated data processing software. The auditors found two new reponable conditions:
(I) the NRC's business continuity practices for its major financial management systems do not substantially comply with the requirements of the Federal Financial Management Improvement Act of 1996 and (2) there needs to be a segregation of duties of certain employees who have access to the agency's accounting system or additional compensating controls.
l I
About the U.S. Nuclear Regulatory Commission 4
y[eus,h By he U.S. Nuclear Regulatory Chairman serves as the principal executive officer Commission (NRC) is an and official spokesman for the Commission.
{
M1 j independent regulatory agency of
& fore FY 1997, the Executive Director for e the Federal Government that was e,
g.....e created by the U.S. Congress to Operations (EDO), as the chief operating and 5
p adm..mistrative otricer of the NRC, carried out the regulate the Nation.s civilian use of byproduct, source, and special nuclear materi-poh..cies and dec..isions made by the Comm.ission.
als to ensure adequate protection of the public The EDO had also been designated as the NRC's health and safety. to promote the common defense Chief Financial Officer (CFO). In order to and security, and to protect the environment. Its strengthen the agency,s ability to perform its mission of protecting public health and safety, purposes are defined by the Energy Reorgam.za-the Comm.ission reah.gned the NRC top managers s
tion Act of 1974, as amended, along with the Atomic E.nergy Act of.1954, as amended, which m a reorgamzation that became effective on provide the foundation for regulating the Nation s January 5,1997. In the new organization, the civih.an uses of. nuclear materials.
CFO became a separate position reporting to the Chairman along with the EDO and the Chief Information Officer (ClO). An Executive Council Organization was established composed of the EDO, CFO, and CIO. Responsibilities under the EDO were re-The NRC is headed by a Chairman and four aligned under three Deputy EDOs: (1) the Deputy Commissioners appointed by the President and confirmed by the Senate for 5-year terms. The (conunued on pau h n y7 w ww mm m m y ~"""~"""*""* W " ~ T t
g 3
n L
L.
. o same esse asse seus sens assu z 'J x
P 1
esen
<~
'n gggg i
, i:
mL eama The Nuclear Regulatory n999 c.,,,,,niuisn mas uar<-
a 5558
,35 5555 in Roch ville,.tlaryland SOH emme 9335 gggg 55 3
1 iW7 ACCOL 'sI 111111I Y III I'UIII
About the U.L Nuclear Regulatory Comminion icontinueds Executive Director for Regulatory Effectiveness, Sources of Funds (2) the Deputy Executive Director for Regulatory The NRC has two appropriations, and funds Programs, and (3) the Deputy Executive Director f r both are available until expended. One for Management Services. A chart showing the appr priation is for agency salaries and ex-realigned organization that became effective the other is earmarked for the Office penws, an January 5,1997,is in Appendix A.
of the inspector General (OIG). The NRC's total new budget authority (excluding allocation Rcgulatory Responsibility account transfers from others) for FY 1997 was $476.8 million, including $471.8 million The NRC regulates civil.ian nuclear reactors; for the Salaries and Expenses appropriation, and fuel cycle facihties; medical, academic, and
$5 million for the OIG appropriation. Addi-industrial uses of nuclear matenals; and the tionally, available to obligate in FY 1997 were transport, storage, and disposal of nuclear maten-
$39.6 million from prior-year appropriations, als and wastes. The NRC carries out its mission
$6.4 million from prior-vear reimbursable work, through a licensing and regulatory system com-
$1.2 million from prior-year transfer of funds prising the followmg activities:
from other Federal agencies, and new reimburs-
. licensing the design, construction, operation, able work to be performed for others totaling and decommissioning of nuclear reactors and
$4.8 million. The sum of all funds available to other nuclear facilities (such as nuclear fuel obligate (excluding transfers) for FY 1997 was cycle facilities, uranium enrichment facili-
$528.8 million. (See Figure 1.)
ties, and test and research reactors)
. licensing the possession, use, processing, Uses of Funds by Function handling, and exporting of nuclear materials As previously stated, the total budgetary
. licensing the sitmg, design, construction, resources available (excluding allocation account operation, and closure of low-level radioac-transfers from others) for use by the NRC in tive waste disposal sites under NRC FY 1997 was $528.8 million. Of that amount, the jurisdiction and the construction, operation, NRC incurred obligations of $503.1 million, with and closure of geologic repositories for approximately 53 percent used for salaries and high-level radioactive waste benefits. An additional 47 percent was used to
. licensing the operators of civilian nuclear obtain technical assistance for the NRC's princi-reactors pal regulatory programs, to conduct confirmatory s fety research, to cover operating expenses,(e.g.,
. inspecting licensed facilities and activities building rentals, tr nsportation, prmting, secunty
. conducting research to gain independent services, supplies, office automation, and train-expertise and information for making ing), staff trave!, and reimbursable work. (See timely regulatory judgments and for Figure 2.) The remaining $25.7 million ($21.0 anticipating problems of potential safety million from appropriations, $4.3 million from signdicance reimbursable work, and $.4 million frcm direct
. developing and implementing rules and transfer funds) in budget authority that was not regulations that govern licensed nuclear obligated in FY 1997 will be available to fund activities critical needs in FY 1998.
. collecting, analyzing, and disseminating information about the operational safety of commercial nuclear power reactors and certain nonreactor activities (continued on rare o U.s. nit 11AR RIEi'i.A10RY Co\\i\\i!% ion
Figure i Sources of NRC Funds l
l Total Funds Available $528.SM' i
New Budget Authority
$476.8M Reimbursable Work and Direct Transfers
$12.4M l
Budget Authonty from j
Prior Years $39.6M l
t
' Total funds available renects NRC appropriated budget authority and reimbursable l
work. It excludes transfer appropriations from the General Services Administration (GS A). 5.3M. and the Agency for International Development ( AID). $6.6M.
l l
l Figure 2 Uses of Funds by Function i
j Total Obligations $503.1M' I
Salaries and Benefits $266.1M 1
l Reir..bursable Work and Direct Transfers
$7.6M N
l Travel $13.8M x-
/
~~.___-'f Contract Support
$215.6M i
i
' Total obligations include NRC appropriated budeet authority and reimbursable work. It excludes obligations against transfer appropriations from the General Services Administration (GSA). $.3M. and the Ager.cy for International Development ( AID). $3.0M.
1997 A(TOl'NTAllt!.lTY Hl;l' ORT
About the l!.S. Nuclear Regulatory Commission (continued) h Financial Condition of NRC Over the past few years, the NRC has made a concerted effort to increase the effectiveness and As of September 30,1997, the financial efficiency of program financing by eliminating condition of the NRC is sound with respect to unnecessary financial reserves pending contract having sufficient funds to meet program needs closcout, recovering funds on dormant contracts, and sufficient control of these funds to ensure exercising closer scrutiny of the need for that NRC obligations do nat exceed budget planned projects, and more closely monitoring authcrity. The Statement of Financial Position obligation and expenditure rates. This prudent shows a net position (assets minus liabilities) of financial management initiative has resulted in a
$128.4 million. Consistent with the requirements 26 percent decrease in unobligated appropriated of the Omnibus Budget Reconciliation Act funds in FY 1997 compared to FY 1996 and the of 1990, the NRC collected 99.4 percent of its reaching of the desired level for unobligated new bcdget authority, excluding the amounts appropriated funds. The NRC will continue its appcopiiated from the Nuclear Waste Fund and efforts to closely monitor its financial condition for certain activities being performed in support and planning policies to ensure its unobligated of the Department of Energy, and other offset-balance does not increase to undesirable levels in ting receipts.
future years.
I'.s. M'CLI:AR RILL'IAloRv Co\\l%IlsSloN
.. -a
Program Performance This section highlights key aspects of the Strategic Arenas NRC's programs, including program goals and program performance measures. Consistent The NRC,s strategic and performance plans with the requirements of GPRA the NRC has are organized into strategic arenas. Th.is section is developed a strategic plan, which was submitted rganized into the same seven strategic arenas:
to OMB and the Congress in September 1997.
- Nuc/carReactorSafety The strategic plan defines the overall agency
"##"" # "I###
goals and objectives which form the basis for more specific performance goals and associated
- Nuclear Waste Safety perfonnance measures that are included in the agency's annual Performance Plan for FY 1999.
- Comnu>n Defense and Security and /nterna-
'"'""I I" *I'#""'"'
The performance plan also was submitted to OMB in September 1997 and subsequently to the Pmtecting the Envirrnunent a
Congress. For this transitioning period, the performance goals contained within this section
- Public Confidence reflect the same perfonnance goals and measures
. &ccl/ence reflected in the FY 1999 Performance Plan. The NRC has detennined that it will report on these goals for FY 1997 in an effon to support the agency's strategic and perfonnance plans and to (c<mtinued on page 6; develop 2 years of baseline data before the mandated FY 1999 T y
" T TM W"" " yU"" T P"~"" ~""))
reporting requirement.
- g While the structure for perfor-mance reporting is transitioning to E
b the structure contained in NRC's strategic and perfonnance plans; these plans are in an evolutionary
,. j Y~
- 'ML development phase. In order to g*.
^
y\\
maintain consistency in financial p+
reporting and to provide compara-tive financial data, the stnicture for g*q#
.~
the FY 1997 financial statement
~-
reflects the current budget l~._
structure. Over the next 2 years, the financial reporting structure i.;
[
~
l will transition to the structure contained in the strategic and performance plans.
Limerick I and Limerick 2 Nuclear Power Reactors 1997 ACCoEVI AllII IrY RI.i*oRI
l*rogrant 1*erformance (continuedt For each strategic arena that follows we state protection of public health and safety. These the general goal from the strategic plan, provide activities include reactor licensing, inspection, a brief introduction to the arena, and delineate performance assessment, identification and the performance goals for measuring results resolution of safety issues, reactor regulatory toward meeting our general goals. In reviewing research, regulation development, independent the following performance goals, one must be assessment of reactor operational events and aware that the safe and secure use of nuclear experience, investigations of alleged wrongdoing materials for civilian purposes is the responsibil-by licensees, applicants, contractors, or vendors, ity of NRC licensees and Agreement State and imposition of enforcement sanctions for licensees, and the regulatory oversight of licens.
violations of NRC requirements, ces is the responsibility of NRC and the Agree-ment States. Thus, to achieve these goals Performance goal: Zero civilian nuclear requires the collective efforts of the NRC, the reactor accidents Agreement States, and licensees.
As used in this context, a " nuclear reactor accident"is as defined in the NRC Severe Acci-Management Controls d""' """'Y. Statement (50 FR 32138, August 8, 1995), that is, those accidents in which substantial The NRC identified no material management damage is done to the reactor core, whether or not control weaknesses in any of the strategic arenas serious offsite consequences result. The perfor-in FY 1997.
mance indicator is the number of severe reactor accidents annually. The FY 1999 target is zero.
Nuclear Reactor Safety Performance General Goal: Present radiation related Zero civil.ian nuclear reactor accidents were deaths or illnesses due to cisilian nuclear identified in FY 1997.
reactors A major part of the NRC's mission is to Performance goal: Maintain low frequency of ensure that its licensees design, construct, operate, events which could lead to a severe accident and decommission civilian reactor facilities safely. The Atomic Energy Act of 1954, as The performance indicator is the annual amended, and the Energy Reorganization Act number of events from the population of plants of 1974, as amended, provide the foundation that could result in a 1/l,000 (10 3) or greater for regulating the nation's commercial nuclear probability of occurrence of a severe accident.
power industry. NRC regulates the 104 commer-The FY 1999 target is for no more than one such event to occur in the United States.
cial nuclear power reactors which are licensed to operate and another 18 that are undergoing Performance decommissioning'.
At this time, the NRC is unaware of any Reactor safety encompasses all NRC activities events in FY 1997 that had a 1/1000 (10 3) or to ensure that civilian nuclear reactor facilities are greater probability ofleading to a severe accident.
operated m a manner that provides adequate However, final analyses of all events in this period will not be completed until approximately 1 year after the end of the fiscal year. The analy-
' These figures reDect the submittal of certifications from Haddam Neck, Big Rock Point. Maine Yankee, Zion 1, ses use probabilistic risk assessments to provide and Zion 2 nuclear power plants for permanent cessation estimates of operating event significance in terms of operations and removal of feel from the reactor vessel.
and exclude Browns Ferry Unit I which has no fuel of the potential for core damage (i.e., a severe loaded and requires Commission approval to restart.
accident). The analyses of these events include l'.s. St'CI f:AR RICI'I AIORv Co%Istt% ION
1 Figure 3 U.S. Commercial Reactors N
VT MA ni T
A w11 DE MD A A A LicensedtoOperate(104)
Note: There are no commercial reactors in Alaska or Hawaii review by the licensees and the NRC staff and an Performance Goal: Zero significant radiation independert review by an NRC contractor. The exposures due to civilian nuclear reactors performance data, therefore, for FY 1997 will be As used in this context, "significant radiation reported in a future Accountability Report. For exposures" are those exposures that meet the the previous fiscal year, FY 1996, there was one NRC criteria for reporting abnormal occurrences such event. This event occurred at the Catawba to the Congress:(See Appendix B, Item 1.A).
Unit 2 nuclear power plant on February 6,1996, This goal encompasses both workers and the and had a probability of 2.1/1000 (2.1 x 10 3) of general population. The performance indicator is leading to a severe accident. The event consisted the number of significant radiation exposures of a loss of offsite power with one of two emer-annually. The FY 1999 target is zero.
gency diesel generators unavailable.
Performance Performance Goal: Zero deaths due t There were zero significant radiation expo-radiation or radioactivity releases from surec due to civilian nuclear reactors identified in civilian nuclear reactors py 39y This measure addresses actual deaths that were due to acute radiation exposure. The perfor-mance indicator is the number of deaths annually.
The FY 1999 target is zero.
2 The NRC is required by Section 208 of the Energy Reorganization Act of 1974 to report abnormal occur-Performance rences to the Congress. The report. titled " Report to Congress on Abnormal Occurrences"(NUREG4)090)is Zero deaths due to radiation or radioactivity submitted to the Congress annually. In the context of the Act, an abnormal occurrence is an unscheduled meident releases from c..l.ivi ian nuclear reactors were or event that the Commission determines to be signifi-identified in FY 1997, cant from the standpoint of public health or safety.
1997 WCOt XI Allll iIi lo_ PORT
Prograrn Pcrformance (continued)
Nuclear Materials Safety tiK.? i General Goal: Present radiation-related 91
[
h3t deaths or illnesses due to civilian use of source,
('
i byproduct and special nuclear materials
{
~
)
The nuclear materials program encompasses
[ *.
gew -
over 20,(XX) specific and more than 100,0(X)
'l% Ng general licenses that are regulated by the NRC y
3 and the existing 30 Agreement States). These f.zkg },
g[
y materials range from very low-risk smoke detec-tors to relatively high-risk irradiators. The 7l j g
~ * -
Atomic Energy Act of 1954, as amended, and the A" Q / # -
fj;k ? ? 1 Energy Reorganization Act of 1974, as amended, fg. {
provide the foundation for regulating the nation's 7p;c; civilian uses of nuclear materials.
)
)
Nuclear materials safety encompasses NRC y$ $,,
activities to ensure that all NRC-regulated aspects id t 1 '
of nuclear fuel cycle facilities and nuclear materials
/ M 'L
'"" { ~
activities are handled in a manner that provides y%y
'~
E
adequate protection of public health and safety.
i.
' Ei g/
These activities include licensing, inspection, and
)
4rE g
T^
related regulatory activities for fuel cycle facilities and nuclear materials users, transportation of M6 "/ f
." h nuclear materials, and uranium recovery.
NRC Inspector inspecting a niume Control lank Iaire Performance Goal: Zero radiation-related deaths due to civilian use of source, Performance Goal: No increase in the byproduct, and special nuclear materials number of significant radiation exposures Th.ns goal pertains to non-reactor uses of due to loss or use of source, byproduct, and nuclear materials. The measure addresses actual special nuclear materials deaths that were due to acute radiation exposure.
The performance m. dicator is the number of The performance. dicator is the number of in radiation-related deaths per year. The FY 1999 medical m. P"".res kxcluWng the caud h isadnum,strations) at or above the level target is zero, for reporting abnormal occurrences to the Con-gress (See Appendix B, item I.A). The FY 1999 Performance target is that the 5-year average (FY 1995-1999)
Zero radiation deaths due to civilian use of w 11 not exceed two per year.
source, byproduct, and special nuclear materials were identified in FY 1997.
Performance The NRC 5-year average for FY 1996 was 0.6 per year. The Agreement States 5-year aver-age was 1.0 per year. For FY 1997, the NRC An Agreement State is a State that has signed an 5-year average decreased to 0.4 per year and the I
agreement with the NRC allowing the State to regulate Agreement States 5-year average increased to the use of radioactive material, other than use in reactor facilities, within the State.
1.4 per year (see Table 1).
U.S. Nt Cl F.A R RILL 1 AloRv CosistissioN
Table 1 l
Significant Radiation Exposures Due to Loss or Use of Source.
Ilyproduct, and Special Nuclear Alaterials YEAR NRC AGREEMENT STATES 1993 0
2 1994 0
2 1995 1
1 1996 0
0 1997 1
2 TOTAL 2
7 5-YEAR AVERAGE
.4 1.4 Performance Goal: No increase in the number of losses of licensed material as was 1.4 per year. In FY 1997, the NRC reported to Congress annually 5-year average remained at 0.2 per year and the Agreement States 5-year average decreased to The performance indicator is the 5-year 1.0 per year (see Table 2).
average number oflosses oflicensed material reported to the Congress annually (See Appendix Performance Goal: No accidental criticality B, item I.C.1). The FY 1999 target is that the involving licensed material 5-year average (FY 1995-1999) will not exceed The performance indicator is the number of two per year.
occurrences of accidental criticality annually Performance (See Appendb H ltem 1.D.1). The FY 1999 target is zero.
The NRC 5-year average for FY 1996 was 0.2 per year. The Agreement States 5-year average reontinued on page lo; Table 2 Number of Losses of Licensed Material Reported to the Congress Annually YEAR NRC AGREEMENT STATES 1993 1
2 1994 0
1 1995 0
0 1996 0
2 1997 0
0 TOTAL 1
5 5-YEAR AVERAGE 0.2 1.0 1997 ACCo(Xialill.il) RI. PORI
l'rograin l'erforinance < continued)
.~ r
(.4 '-
gly[
4.
4
~. :..
ft
,r_
~[
.\\ledicall*rocedure Dirig
_.ll Radioactive.1laterial y
l$
. ~ ~ -
ama ss ai "f r
rI Performance Appendix B, Jtem I.A). The FY 1999 target is Zero incidents of accidental criticality involv.
that the 5-year average (FY 1995-1999) will not ing licensed material were identified in FY 1997.
exceed six per year.
Performance Performance Goal: No increase in the number of misadministration events which The NRC 5-year average for FY l996 was cause significant radiation exposures.
3.2 per year. The Agreement States 5-year The performance indicator is the number average was 2.2 per year. In FY 1997, the NRC of misadministration events that cause radiation 5-year average decreased to 2.4 per year and the exposures at or above the level for reporting Agreement States 5-year average decreased to abnormal occurrences to the Congress (See 1.4 per year (See Table 3).
Table 3 Number of Misadministration Events Which Cause Significant Radiation Exposures YEAR NRC AGREEMENT STATES 1993 3
3 1994 4
2 1995 3
0 1996 1
0 1997 1
2 TOTAL 12 7
5-YEAR AVERAGE 2.4 1.4 l'.s. NiflF AR HI G1 I.VioRv Co\\l\\115NioN
Table 1 Significant Radiation Exposures Due to Loss or Use of Source, Ilyproduct, and Special Nuclear Materials YEAR NRC.
AGREEMENT STATES l
1993 0
2 1994 0
2 1995 1
1 1996 0
0 1997 1
2 TOTAL 2
7 l
l 5-YEAR AVERAGE
.4 1.4 Performance Goal: No increase in the was 1.4 per year. In FY 1997, the NRC number of losses of licensed material as 5-year average remained at 0.2 per year and the repcried to Congress annually Agreement States 5-year average decreased to The performance indicator is the 5-year 1.0 per year (see Table 2).
average number of losses of licensed material reported to the Congress annually (See Appendix Performance Goal: No accidentalcritIcality I
B, item I.C.1). The FY 1999 target is that the involving licensed material 5-year average (FY 1995-1999) will not exceed The performance indicator is the number of two per year.
occurrences of accidental criticality annually (See Appendix B, item 1.D.1). The FY 1999 Performance target is zero.
The NRC 5-vcar average for FY 1996 was 0.2 per year. Tne Agreement Staies 5-year average (connuurd on page ni)
Table 2 Number of Losses of Licensed Staterial Reported to the Congress Annually YEAR NRC AGREEMENT STATES 1993 1
2 1994 0
1 1995 0
0 1996 0
2 1997 0
0 t
TOTAL 1
5 1
5-YEAR AVERAGE 0.2 1.0 1997 A(Tot:NTtillt.ITY RI:10RI'
l Program Perforenance (continued >
_ _ mmn-
',9,5 p;
A.'
1-yn y
4 4
v.,
i
,i
-r s;
w f
3fedicall'rocedure ning l *.
j
, )j Radioactive Staterial s
%q)
~
]
Performance Appendix B, item I.A). The FY 1999 target is Zero incidents of accidental criticality involv-that the 5-year average (FY 1995-1999) will not ing licensed material were identified in FY 1997.
exceed six per year.
Performance Goal: No increase in the Performance number of misadministration events which The NRC 5-year average for FY l996 was
\\
cause significant radiation exposures.
3.2 per year. The Agreement States 5-year The performance indicator is the number average was 2.2 per year. In FY 1997, the NRC of misadministration events that cause radiation 5-year average decreased to 2.4 per year and the exposures at or above the level for reporting Agreement States 5-year average decreased to abnormal occurrences to the Congress (See 1.4 per year (See Table 3).
Table 3 Number of Misadminist ation Events Which Cause Significant Radiation Exposures YEAR NRC AGREEMENT STATES 1993 3
3 1994 4
2 1995 3
0 1996 1
0 1997 1
2 TOTAL 12 7
5-YEAR AVERAGE 2.4 1.4 I
1:.N. $1 ( l.l A R RI G1 I AloR) ( o\\tslissioN
Nuclear Waste Safety The Low-Level Radioactive Waste Policy Act General Goal: Ensure treatment, storage, and
".f 1980, amended in 1985, made States respon-disposal of wastes produced by cisilian use of.
sible for prcaiding f or the disposal of commercial nuclear material in uavs that do not adverselv 1 w-level waste generated withm their borders.
aneet this or future generations The Act encouraged States to enter into compacts that would allo,v several States to dispose of Nuclear waste is a byproduct of the use of waste at a regional disposal facility. Most of the radioactive materials. liigh-level radioactive States have entered into compacts, and several waste results primarily from the fuel used by States are proceeding with plans to construct and reactors to produce energy. Low-level radioactive operate as many as 12 new disposal facilities.
waste results from reactor operations, medical, However, to date, no new disposal facilities have academic, industrial, and other commercial uses, been opened.
and generally contains relatively limited uncen-trations of radioactivity.
Performance Goal: No significant accidental The NRC's high-level waste regulatory releases of radyactive (natorial frotn storage and transportation of high-level waste activities are mandated by the Nuclear Waste (including spent fuel) or low-level waste Policy Act of 1982, the Nuclear Waste Pohey Amendments Act of 1987, and the Energy Policy The performance indicator is the number of Act of 1992, The Nuclear Waste Policy Act accidental releases of radioactive material that
~
specifies a detailed approach for the long-range meet the NRC criteria for reporting abnormal undertaking of high-level waste disposal, with the occurrences to the Congress. (See Appendix B.
Department of Energy (DOE) having operational items I.B.1 and I.B.2). The FY 1999 target is zero.
responsibility and the NRC having regulatory responsibility. The Nuclear Waste Policy Amend-ments Act directs DOE to characterize only one candidate site, the Yucca Mountain site in the (continued on page 12; State of Nevada. Likewise, NRC's activities are focused on Yucca Mountain.
bb k
M-@-$I b
=
+}
, A d, '"'
...n, l
l.
$L
~
3 l
f 'h W
g
@MlM@M,$
yt MR 4
k,.
y#,
4 4
G 9?'
{
y T
l'roposed High-Isrcl Waste DisposalSite at tucca Alountain,
~
Neruda
'=_ _ _
~
=
1997 M Cot'NI Al011Iv Hl.l*oRI
Program Perfarinance (continuedt Performance Perform ance Zero releases of radioactive material from The NRC will develop milestones for this storage and transportation of high-level waste or initiative dur ng FY 1998.
Iow-level waste were identified in FY 1997.
Performanc ? Goal: No offsite release of Performance Goal: Establish the regulatory radioactiviti beyond regulatory limits from framework for high-level waste disposal, low-level w asie disposalsites consistent with current nationalpolicy, as This goal includes sites regulated by the required by law after the legislatively-Agreement States but excludes sites under the required standardis issued Environmen;al Protection Agency (EPA) l The performance indicator is conforming Superfund aathority. The performance indicator 10 CFR Part 60 to the legislatively required is the number of offsite releases per year in excess environmental standard. The FY 1999 target of 10 CFR 20.1301 public dose limits. The is to issue a final rule within 1 year after promul-FY 1999 target is zero.
gation of the standard (estimated publication July 1,1999).
Performance Zero offsite releases of radioactivity beyond regulatory limits from low-level waste disposal
)
sites were identified in FY 1997.
Common Defense and Security and International involvement General Gon.1: Present the loss or theft of special nuclear materials regulated by the NRC, and support U.S. national interests in the safe use of nuclear materials and in non-proliferation 1
The NRC performs international activities, some of which support the agency's domestic mission and many of which support broader U.S.
!"h national interests. These activities include inter-a NY q%
national policy and priority formulation, export-7 import licensing for nuclear materials and
$['
y equipment, treaty implementation, international information exchange activities, and international safety and safeguards assistance. Our domestic safeguards responsibility involves the control of and accounting for nuclear materials, the protec-4 tion of nuclear materials to prevent theft or diversion, and contingency plans for responding g
Nes: e:.:
to threatening situations. The primary foundation Y,.D. M. %y%kQp j$
for these activities includes the Atomic Energy k c N. u/ j h, h dp N p M M/NM Act of 1954, as amended, the Energy Reorganiza-J ip e
tion Act of 1974, as amended, the Nuclear Non-NRC Inspector Ming soil sainples at sewage Proliferation Act of 1978, Executive orders, and Treatinent Facility treaties and conventions.
L'.N. Ml l.l:AR Ritt I.AloRY Co41\\11s% ion
Performance Goal: Zero loss or theft of weakened the protection against theft or diversion special nuclear materials regulated by of fonnula quantities of strategic special nuclear the NRC material was identified in FY 1997.
This goal was written within the context of the safeguards program, which is to prevent theft Performance Goal: Strengthen international or diversion of formula quantities of strategic nuclear safety and safeguards by special nuclear material. The perfonnance Par #cipa#ng in interna #ona[ safety and indicator is the number of losses or thefts annu-safeguards exchange activities, by providing ally that meet the NRC en.tena for reporting assistance through international agreements, abnormal occurrences to the Congress (See and by supporting U.S. non-proliferation interests Appendix B, item 1.C.1). The FY 1999 target is zero thefts or losses.
Performance Performance Data is not available for FY 1997. The NRC l
plans to report on performance for th.is goal.m Zero incidents of loss or theft of special future years.
nuclear materials regulated by the NRC were identified in FY 1997.
Protecting the Environrnent Performance Goal: No substantiated case General Goal: Protect the envinmment in j
of attempted theft or diversion of formula connection with civilian use of source, j
quantitles of strategic special nuclear matenal hyproduct, and special nuclear materials I
t t
1 through the implementation of the Atomic l
The performance indicator is the numt er of Energy Act and the National Environmental l
substantiated cases of attempted thefts or diver-Policy Act I
j sions annually (See Appendix B, item I.C.2).
The FY 1999 target is zero.
The NRC recognizes a continuing obh.gation r
to conduct its civd. ian licensing and related regu-Performance lat y functions in a manner that is both respon-sive to environmental concerns and consistent No substantiated cases of attempted theft or with the Commission's responsibility as an diversion of formula quantities of strategic special independent regulatory agency for protecting the nuclear material were identified in FY 1997.
radiological health and safety of the public. The Atomic Energy Act of 1954, as amended, the Performance Goal: No substantiated breakdown of physical security or maten. l National Environmental Policy Act (NEPA), and a
control (i.e., access control, containment, or
"'h"*I" "*'"'"E' "'"",P " ".0'.'h'.
accountability systems) that significantly uututory authority for the NRC s activitses m weakened the protection against theft or pr tecting the environment.
j diversion of formula quantities of strategic Protection of the environment from potential j
special nuclear material hazards associated with the civilian use of source.
The perfonnance indicator is the number of byproduct, and special nuclear materials involves j
annual substantiated breakdowns of physical actions to mitigate environmental impacts during security or material control (See Appendix B, licensed activities. Before authorizing licensed Item I.C.4). The FY 1999 target is zero.
activities, the.NRC ensures that potential environ-mental impacts of such activities are assessed Performance consistent with the requirements of NEPA as No substantiated breakdown of physical implemented by applicable NRC regulations.
security or material control that significantly (connuued un page is>
iv97 AcCotNI AHn.Irv REPoRI 1
l
Prograrn l'erforenance (continued)
Under NRC regulations, decommissioning in.
Performance volves safely removing a facility from service and Zero offsite releases from operating facilities reducing residual radioactivity to a level that (including facilities in a decommissioning status) pennits the property to be released for unre-were identified in FY 1997.
stricted use. This action is taken by a licensee before termination of the license. In some cases.
Performance Goal: No increase in the nonlicensed facilities may also be required to number of offsite releases from operating reduce or stabilize contamination before sites are facilities of radioactive material that exceed released.
10 CFR Part 20 limits The performance indicator is the number Performance Goal: Zero offsite releases of offsite releases per year in excess of 10 CFR from operating facilities of radioactive Part 20 limits. The FY 1999 target is that the material that have the potential to cause 5-year average (FY 1995-1999) will not exceed adverse impact on the environment three releases.
The performance indicator is the number of offsite releases annually that meet the NRC Performance criteria for reporting abnormal occurrences to the The NRC 5-year average for FY 1996 was Congress (See Appendix B, item 1.B.1). The zero. The Agreement States 5-year average was l
FY 1999 target is zero-0.6 per year. These 5-year averages remain unchanged for FY 1997 (See Table 4).
Table 4 Number of Offsite Releases From Operating Facilities of Radioactive Material That Exceed 10 CFR Part 20 Limits YEAR NRC AGREEMENT STATES '
I993 0
0 1994 0
1 1995 0
2 1996 0
0 1997 0
0 TOTAL 0
3
- 5. YEAR AVERAGE O
0.6 U.S.M CllAR HILT'IAlokv CONI \\11% ion
1 Performance Goal: Environmentalimpacts Performance Goal: No sites willbe released have been identified through the National until satisfactorily remediated in accordance Environmental Policy Act (NEPA) process with NRC release criteria before regulatory action is taken The performance indicator is the number of The performance indicator is the number of sites ideatified each year that were previously environmental impacts identified by external released as having met NRC release criteria, but sources each year and substantiated that were not that have subsequently been determined to have identified as part of the NRC's NEPA process.
not met the applicable release criteria. The The FY 1999 target is zero.
py 1999 target is zero.
Performance Performance Data for this performance goal will be Data for this performance goal will be reviewed in FY 1998 and will be reported for reviewed in FY 1998 and will be reported for FY 1999.
FY 1998.
(continued on page il>)
nemediation Stages of the Babcock and ttilcox Site in Apollo, l'ennsylvania h$
. Ll Ql A k d L Q.-.;;;h.QQ -
T
'4 1
~; "-
.~
gpumumump
.. ?
Y
- u. -
..M, g e:
3, a 3
Y 3
app;
.. g..
- - v
~
.(_ 4 i,
. ;. '..;}!
- m.. -
Os pn g
4 %
p q ;} $, &
.~
g.
.h
~
nurinx cmediation a
nctore ucmediation
+
- l p
r d.
Q L<n After armediation 1997 5C('01 N IiBil !Ii Ill l'ORI
Public Confidence
\\
_ \\_
~
General Goal: Provide the public, those ne y
\\
\\_
regulate, and other stakeholders m the q
s
+
m n
national and international community, with y
clear and accurate information about, and a meaningful role in NRC's regulatory program
'p;
.;.~. r so that there will be respect for and j
confidence in that program 4-l a r.
Building and maintaining public trust is critical g@
to carrying out our mission and achieving our p
y J,#
vision. To be an elTective steward for nuclear h
~d safety, our actions must be such that the public,
,Q those we regulate, and other stakeholders in the
@V national and international community have respect for and confidence in the NRC. Realizing the importance of this issue, the NRC addressed it as part ofits Strategic Assessment and Rebaselining:
8g
~ ~
Direction Setting Issue (DSI) 14 - Public Commu-s nication initiatives, in its final decision on DSI 14
- Mf.E/d g the Commission noted that the NRC should give a h
_g a[#
ff high priority to early identification of public
-A/
1 concerns and methods for public interaction in
,m making regulatory decisions that are likely to Chairman Jachon R. viewing a Nuclear Power Reactor generate substantial pubh..c mterest or concern.
control Room Performance Goal: Implement the agency's plan to improve how it informs and involves Excellence the public, those we regulate, and other General Goal: Carry out the NRC regulatory stakeholders in NRC's regulatory program program elliciently and effectively The NRC Executive Council has established a coordinating group that is developing a plan to Striving for regulatory excellence in all NRC functi ns is both desirable and necessary to implement the Commission's final decision on DSI 14. That plan will include perfonnance goals maintain an effective and efficient regulatory fra ework in today's changing environment.
and measures to assess the effectiveness of the The NRC can improve its internal performance program, consideration of the experience of the private sector and other public agencies, and by; ensuring that its people and processes function consideration of the comments received on DSI 14.
wnh a goal of excellence.
The plan is scheduled to be given to the Commis-As used in this context, excellence includes sion by February 27,1998. The performance both regulatory effectiveness and efficiency, and indicators for this goal are the milestones in the applies to all NRC functions. Regulatory effec-plan. The FY 1999 targets are the milestones that tiveness denotes a regulatory framework for are due to be completed in FY 1999.
ensuring public health and safety that is clear, coherent, logical, consistent, reliable, and techni-Performance cally sound. Efficiency connotes a regulatory Performance for this goal will be reported in framework which is cost effective for both the future Accountability Reports.
NRC and its licensees. As stated in the NRC's l'.s. Nt ( l. EAR RlLt I AloRY Co\\l%11% ion
Principles of Good Regulation, the American Performance Goal: Evaluate andimplement taxpayer, the rate-paying consumer, and licensees needed improvements for five major NRC are all entitled to the best possible management processesd by July 1,1999 and administration of regulatory activities. Where The perfonnance indicator for this goal is the several effective alternatives are available, the completion of evaluations for and the implemen-option that minimizes the use of resources should tation ofimprovements for major NRC processes.
be adopted.
The FY 1999 target is to complete evaluations of, and implement improvements for, five such Performance Goal: Implement the agency's processes by July 1, l999.
plan for regulatory exceIIence The EDO has the lead responsibility for Performance developing a plan for enhancing excellence Performance for this goal will be reported in throughout the agency. The plan is scheduled to the NRC FY 1998 Accountability Report.5 be given to the Commission by March 31,1998.
The performance indicators for this goal are the milestones in the plan. The FY 1999 targets are The NRC plan for regulatory excellence is being devel-oped and willinclude specific milestones and schedules the milestones that are due to be completed in for process evaluations. The perfonnance plan will be py j999, updated to be consistent with that plan.
5 The NRC's regulatory excellence activities to enhance Performance NRC effectiveness and efliciency include: evaluating the reactor ingetion program to determme if it achieves its Performance for this goal will be reported in intended goals ia an efficient and effective manner; the NRC FY 1998 Accountability RePart-evaluating the program for licensing support and regula-tory oversight of operatmg reactors to determine if it achieves its intended goals in an efficient and effective manner; evaluating the enhancement of safety decision making through use of PRA insights; improving informa-tion systems supporting financial management; and improving information systems supporting document and records management.
iW7 ACCotTI\\ltil.Il Y HI l'oRI
Management Accountability The NRC's Management ture, but these reportable conditions do not consti-
'"'* * '*'i1**"k"**S** ' * ' ri I " "~' "~
Control Program formances. (See the OlG audit of the FY 1997 Individual assurance statements from NRC Financial Statement, page 36.)
ofHee directors and regional administrators served as a primary basis for the Chairman's FY 1997 The NRC reported no material weaknesses statement of assurance on management controls.
in FYs 1994,1995, and 1996. Two material These individual statements were based on we knesses were reported in 1993, and five various sources, including the managers' knowl-aterial weaknesses were reported in the years edge of day-to-day operations and existing before FY 1993. All of these material weaknesses controls, management reviews of these controls, have been corrected. No material non-conform-program reviews and other management evalua-ances in financial systems have ever been re-tions, OIG reports, and reviews of financial p rted by the NRC.
management systems.
FinancialManagement Systems Eace year, regional administrators and direc-The NRC evaluated its Enancial management tors of o76ces with the highest risk with respect t systems for compliance with applicable Federal programn;atic and admmistrative activities submit requirements and accounting standards as re-an annual management control plan to the Chair-quired by the Federal Financial Management man of the NRC's Executive Committee for Improvement Act of 1996 (FFMIA). This evalua-Management Controls. These plans, combined tion disclosed that, except for business continuity with the individual assurance statements dis-plans for major financial management systems, cussed above, provide the framework for monitor-NRC was in compliance with the Act. One of the ing and improving the agency's management reportable conditions identified by the auditors controls on an ongoing basis.
also disclosed this weakness.
Status of Management Controls and Report on The NRC has six financial systems: the Material Weaknesses and Non-Confonnances Federal Financial System, Payroll System, Per-The NRC evaluated its management control sonal Property PC System License Fee Bill l
and financial management systems for the fiscal Generator System, Allotment Financial Plan year ending September 30,1997. This evaluation System, and a Budget Formulation System.
provides reasonable assurance that the objectives The Chairman's statement of assurance with j
of the Federal Managers' Financial Integrity Act respect to the agency's financial systems is sup-of 1982 (FMFIA) were achieved in FY 1997. The poned by management evaluations. Addition-NRC identified no material weaknesses in its ally, the OIG performs an annual audit of the programs or administrative activities and no agency's principal statements. The OIG issued material non-conformances with governmentwide an unqualified audit opinion on the NRC's FY standards in its financial management systems.
1997 financial statement.
The auditors identified two reportable conditions that related to the NRC's internal control struc-(condnued on parc 2(n I
1997 ACCOUNI Alm.ITv RITORT
Manager:ent Act vuntability (continued)
The Federal Financial System (FFS) is a until FY 1998 because of higher priorities imposed system that the NRC uses through an interagency on the data center by FMS. Testing in FY 1998 is agreement with the Department of the Treasury contingent on the data center successfully complet-(Treasury). This system is reviewed annually ing the other high priority tasks.
by Treasury's Financial Management Service (FMS) for its client agencies that utilize the system.
The results of this year's annual review provided Mancgement Decisions and reasonable assurance that FFS, as operated by Final Actions on OlG Audit FMS for NRC, is efficient and effective, contains Recommendations necessary controls, and is capable of full confonn-ance with the principles, standards, and related The agency has established and continues to requirements pr : scribed by the Comptroller Gen-maintain an excellent record in resolving and eral, except for the inability to demonstrate data implementing open audit recommendations recovery and backup capability of FFS in the event presented in OlG reports. Section 5(b) of the of a disaster, which was noted as a material non-Inspector General Act of 1978, as amended, conformance. The necessary disk storage capacity requires the Chairman to report on management was acquired to perform a simulated disaster decisions and final actions taken on OlG audit recovery data test, but testing has been delayed recommendations. Table 5 gives the dollar value Table 5 Management Report on Ollice of the Inspector General Audits with Disallowed Costs For the Period October 1,1996 - September 30,1997 Number of Questioned Unsupported Category Audit Reports Costs Costs
($)
($)
A. Audit reports with management decisions 10
$252,919
$0 on which final action had not been taken at the beginning of this reporting period P Audit reports on which management 3
$ 64,056
$0 decisions were made during this reporting period C. Audit reports on which final action 12
$303,656 S0 was taken during this reporting period (i) Disallowed costs that were 12
$252,919'
$0 recovered by management through collection, offset, property in lieu of cash, or otherwise (ii) Disallowed costs that were written 0
0
$0 off by management D. Audit reports on which no final 1
$ 13.319
$0 action had been taken by the end of this reporting period
' Questioned costs in the amount of 550.737 previously reported under two audits were subsequently determined to be allowable costs.
1:.S. SI elTAR RWl'IAIoRv co\\l\\ll%loN
of disallowed costs determined through contract Table 6 gives the dollar value of funds that audits conducted by the Defense Contract Audit audits showed could be put to better use. As of Agency (DCAA). " Questioned Costs" are those September 30,1997, no outstanding audits costs that are questioned as to whether they are recommended that funds be put to better use.
allowable. " Unsupported Costs" represent costs Six reports containing seven recommendations challenged because of a lack of adequate support-are more than a year old and are described in the ing data. Because of the sensitivity of contractual next section titled " Management Decisions Not negoticions, details of these contract audits are Implemented Within One Year" not furnished as part of this report. Note that the Department of Defense also reports the cost savings resulting from DCAA audits.
(continued on pure 26)
Table 6 Management Report on Ollice of the Inspector General Audits with Recommendations That Funds lie Put to lletter Use For the Period October 1,1996, through September 30,1997 Recommendations that funds be put to better -
- use by management agreed
. Number of to in a~ management '
Category Audit Reports '
decision
($)
A. Audit reports on which final 0
S 0
l action had not been taken by the l
beginning of this reporting period l
B. Audit reports on which manage-3
$41,133 ment decisions were made during this reporting period C. Audit reports on which final 3
$41,133 action was taken during this reporting period (i) Recommendations that were 3
$41,133 actually completed l
(ii) Recommendations that manage-0 0
ment subsequently concluded should not or could not be implemented or completed D. Audit repoits on u hich no final 0
0 action had been taken by the end of this reportirg period 1997 MToLNTAltli.llY ltl.I'oltT
Managernent Accountability icontinued)
Management Decisions Not Implemented fied the main uses of technology in the agency. As Within One Year of September 30,1997, one recommendation, to Management decisions were made before develop an agencywMe policy statement and September 1996 for the OIG audit reports dis-administrative procedures, remained open. In cussed in the following paragraphs, but as of November 1997,an g:ncywide policy statement September 30,1997. NRC had not takea finai was issued to all NRC employees on video telecon-action on some of the issues in the reports. The ferencing availability. Actions on all recommenda-OlG did not recommend that funds be put to tions are now complete.
better use for any of these reports.
NRC's Decommiss.mning Fm.ancial Assurance
. improvement Needed in Agency Oversight of Requirements for Federal Licensees may not be I
Information Resources Management Activities, Sufficient, April 3,1996 September 24,1996 The OIG report recommended that the staff The OlG recommended that the agency reevaluate the basis for allowing Federal licensees f
develop a process to improve NRC's oversight of who operate nuclear power reactors to use a information resources management activities, statement ofintent for decommissioning financial The Information Technology Management Re-assurance. As a result of the OlG report, the
{
form Act of 1996 (ITMRA) required each Fed-Commission directed the staff to include some eral agency head to design and implement a questions on decommissioning funding assurance Capital Planning and Investment Control (CPIC) for a Federal Government licensee in the Advance process for evaluating information technology Notice for Proposed Rulemaking (ANPR) for (IT) projects. The NRC is developing a compre-
" Financial Assurance Requirements for Decom-hensive approach to comply with ITMRA's missioning Nuclear Power Reactors"(April 8, requirements. During the FY 1999 budget cycle, 1996,61 FR 15427). The ANPR was published in three major proposed IT projects were reviewed, response to the potential deregulation of the using a prototype CPIC process. The CPIC power generating industry. After the Comment process has been finalized based on lessons period for the ANPR expired, a proposed rule was learned and will be forwarded to the Commission published on September 10,1997,(62 FR 47588).
for information. This recommendation will be In the proposed rule, the NRC staff provided a closed with this action.
new definition of" Federal licensee" in response to the OIG report. A final ru!c on this topic is due Review of Videoconferencing Capabilities and to the Commission on March 15,1998.
Utilization, May 21,1996 The OIG recommended that the NRC consider NRC Needs To Provide Strong Direction for the Licensing Support System, March 17,1995 shifting from an office-level to an agencywide approach for implementing videoconferencing, that The Nuclear Waste Policy Act of 1982 re-it develop an agencywide policy statement and quires that NRC approve or disapprove the con-administrative procedures to address the details for struction of a high-level nuclear waste repository acquiring and providing video-conferencing within 3 to 4 years of receiving a DOE construc-services, and that it determine other potential uses tion license application. To meet this deadline, the NRC may make of video-conferencing technol-NRC enacted a rule requiring the development of ogy. In May 1997, the CIO completed a require-an electronic information management system to ments analysis for video teleconferencing use in reduce the time needed for discovery during the the agency along with a cost-benefit analysis that license hearing process. The rule requires that provided the most advantageous implementation of DOE design and develop the system and that the technology. The requirements analysis identi-NRC operate and maintain it.
L'.s. M'C11AR RF.Gl:1.AToRv Co\\t%IINSloN
.c
-a
,~
f;ry n
.; gg v.
a e,
g,t
, pj
. e
. $ i gjR".b
~4
. <v y.
4 34 r
mm<pM p(. 2[
- :.y
?
$"I:l'E',':lNa'!,'? ~""
1*.)
_,>z
~
W,, f?
' 'G 9^L' I'
L...
,p u,
2.
~
ui The OlG reported that the program had intended to allow application of technology stalled for the past 5 years for several reasons.
advances that have occurred since the original hiany of the delays were attributed to an inad-rule was adopted in 1989. The proposed rule equate system definition and agreement on the achieves the original goal of facilitating the roles and responsibilities of DOE and NRC. As Conunission's ability to comply with the schedule a result, the OlG recommended that NRC obtain for decision on the construction authorization for a formal commitment from DOE in the form of the repository contained in Section 114(d) of the an Interagency Agreement or hiemorandum of Nuclear Waste Policy Act. Additionally, the Understanding (h10U) on key aspects of the proposed rule provides for a thorough technical Licensing Support System (LSS).
review of the license application and equitable access to information for the parties to the hear-In response to the OlG report, the EDO ing. The comment period for the proposed rule appointed a senior management team to reevalu-closes on January 27,1998. The proposed rule ate the purpose of and need f,or the LSS, and to will restructure the LSS and alleviate the fiscal address the issues affecting the LSS program. As pressures working against significant progress by a result of congressional budget action related to DOE. As a result,it would not be necessary for DOE's high-level nuclear waste program, LSS the NRC to establish an N10U with DOE.
activities were not resumed and all of DOE s LSS-related activities have been delayed, includ-Resiew of NRC's Implementation of Inspection ing the finalization of an h10U with DOE.
Stanual Chapter 1245 Training Requirements, Novemher 4,1994 A proposed rule that would amend the The OlG recommended that the EDO ensure Conum.ssion s Rules of Practice f.or the licensing proceeding on the disposal of high-level radioac-that the agency's new training tracking system tive waste at a geologic repository was published meets management needs f or producing reliable informati n for verseeing and tracking inspector in the Federal Register on Noven$ber 13,1997, (62 FR 60789). The proposed amendments are rcoutuurdon gauc 2a 1997 \\(rol VI \\ltil.f i Y ltLPolt I
Management Accountability termtinued) training. In a second audit titled " Inspector Train-1996, and the other two recommendations, ex-ing Program: Improved Coordination and Com-panding the use of an existing management munication Needed," dated August 4,1995, the information system and improving the advance OlG recommended that the EDO evaluate the procurement process, have been completed.
merits of an integrated schedule or other measure The agency's Budget Execution Report to provide NRC offices with early notice of up-(BER), which is provided to agency managers coming inspector training requirements. This monthly and to the Commission quanerly, focuses recommendation has been closed and the corree-on the financ. l performance of the agency as a ia tive action has been incorporated into the corree-whole as well as on the individual allowance tive action agreed to in the OlG's November 4 holders. The BER contains performance param-1994, review ofimplementation of trammg.
eters such as commitment, obligation, and expen-requirements. The NRC has determmed that its diture rates, months of available funding, and the current system does not meet the needs of the amounts and trends in unl.igmdated obligations.
agency and that the system needs to be totally Th.. formation is issued throughout the year to is in redesigned. Because of budget constraints, the m nitor Gnancial performance and as. input m new system will not be operational until FY 2002.
In the meantime, training requirements are
""""".1 performance appraisals. A management pective, which provides guidance on good tracked manually with reliance on the direct 1inancial management, establishes performance involvement of individuals and their supervisors.
measures for successful fm' ancial management, General Ledger Controls, March 15,1993 and describes methods to be used for managing fin ncial resources within the agency, was issued The OlG recommended that the NRC's payroll system be integrated with the general in September 1997. Action on this outstanding ledger and possess labor distribution capabilities.
recommendation is now completed.
This recommendation is closed. The NRC devel-oped a year-end methodology using cost center Debt COlleClion data to present program costs by budgetary program. Additionally, the guidance provided by As shown in Figure 4 the NRC has reduced FFMI A no longer requires integration of fm' ancial its delinquent debt since FY 1993. The agency systems. See the OlG audit of the FY 1997 has accomplished a steady decline in delinquent Financial Statement page 40.
debt through a concerted debt management strategy. The strategy includes activities such as Review of Funds Management, license suspensions, referral to the Department of September 23,1994 the Treasury's Debt Management Services The OlG reviewed the agency's funds through a cross-servicing arrangement, credit management practices and specifically examined reporting, and referral to the Department of NRC's unobligated budget carryover, advance Justice for enforced collection.
I procurement planning, allottee financial plans, and fund obligation patterns. The audit report disclosed that although NRC's funds management Prompt Payment i
practices generally complied with established The percentage of on-time payments subject policies and procedures, the agency's level of to the Prompt Payment Act has increased as carryover and unliquidated obligations had in-shown in Figure 5. The amount ofinterest creased. The OlG offered three recommendations penalties incurred has decreased from $19,000 to improve funds management. Action on one of in FY 1993 to under $3,500 in FY 1997.
these recommendations, to hold allottees more accountable, was outstanding as of September 30,
< continued yn puue m U.s. Nt ci I AR REGi'I.NIoRv Co%I\\iissioN
Figure 4 Delinquent Debt 25 20
- - - - - - - - - - - - - - - - - - ~ ~ - - - - - - - - - - - - - ~ ~ ~ - - - - - - - - - - - - - - - - - - - - - -
1 j$
.9 i
E2 10
- - ----- -- ------ --- --- ~ ~ ----
g 5
--~~
---~ ~~
- ~ ~ - ~ ~ ~ ~ ~ - ~ ~ ~ - - - ~ ~ ~ - - - -
0 FY 1993 FY 1994 FY 1995 FY 1996 FY 1997 Fiscal Year Figure 5 Prompt Payment 100
$CGg 80
~ ~---
~~--
x 5
11.
-m 60
~
_O 40
-~~-
~~
ecn$
CG gg n.~.
~-n
. ~..
~~~
~~
20
- CL 0
FY 1993 FY 1994 FY 1995 FY 1996 FY 1997 Fiscal Year IW7 AC001NITittlJIT ki.lURI
I Civil Penalties amount of civil penalties assessed and the amount collected in FY 1993-1997, distrit>uted according
,The NRC imposes enforcement sanctions t to the year in which the civil penalty was col-encourage prompt identification and comprehen-lected. The amount of each civil penalty assessed sive correction of violations and as a deterrent t reflects the amount that the NRC ultimately emphasize the importance of compliance with decides is appropriate in each case through its requirements. One enforcement sanction is the enforcement or hearing process.
imposition of a c..l penalty. Table 7 shows the ivi Table 7 Fiscal Year Civil Penalties Collected Versus Fiscal Year Penalty Dollars Assessed' Fiscal Percent Year
! Assessed :
Collected ~-
Collected 1993
$4,180,8752
$4,178,5573 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 1997
$6,343,550
$5,957.736 93.92 There is not a direct correlation between the amounts assessed and collected in a particular fiscal year because civil penalties may be assessed in one fiscal year and collected in another for a variety of reasons, such as an assessment made in the last month of the fiscal year w hich is not due for 30 days, or until the next fiscal year.
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 w here installment payments are being made.
l l
U.s. Nt'C1. EAR HIL1'I.NioRY Co\\f stissloN
FY 1997 Audited Financial Statement Limitations of Principal Staternents F
The principal statements have been prepared to report the Gnancial position and results of opere-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 OMB. 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 enact-ment 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 1997 financial statement was audited by R. Navarro and Associates under con-tract to the NRC's Office of Inspector General. This section contains the results of the audit, the financial statements, and footnotes.
l l
i l
l l
l 1997 ACCotXI \\lill.IIT RI PORI
s i.
j.
i.
INDEPENDENT AUDITORS' REPORT AND PRINCIPAL STATEMENTS FOR TIIE YEARS ENDED SEPTEMBER 30,1997 AND 1996 OIG/97A-17 February 13,1998
';j s
i' I
f>
1997 ACCOUNT 41tII.lTY RI'IUkr i
=.
nou y
UNITED STATES
{
E NUCLEAR REGULATORY COMMISSION 1
[
WASHINGTON, DC 20555-0001 g%******$
February 13,1998 MEMORANDUM TO: Chairman Jackson
_e kkJ r -
W FROM:
Hubert T. Bell Inspector General
SUBJECT:
RESULTS OF THE AUDIT OF U.S. NUCLEAR REGULATORY COMMISSION'S FISCAL YEAR 1997 FINANCIAL STATEMENTS Attached is the independent auditors' report on the U.S. Nuclear Regulatory Commission's (NRC) Fiscal Year 1997 linancial statements. The Chief Financial Officers (CFO) Act requires the Office of the Inspector General (OIG) to annually audit NRC's Principal Financial State-ments. The report contains (1) the principal statements and the auditors' opinion on those statements, (2) the auditors' opinion on management's assertion about the effectiveness of internal controls, and (3) a report on NRC's compliance with laws and regulations. Written comments were obtained from the CFO and are included as an appendix to the independent auditors' report.
Audit Results i
The independent auditor issued an unqualified opinion on the Statonent of Financial Position, j
the Statements of Operations and Changes in Net Position, Cash Flows, and Budgetary Re-sources and Actual Expenses.
In the opinion on management's assertion about the effectiveness of internal controls, the auditor identified two new reportable conditions and closed two prior-year reportable conditions. The new conditions concern (1) business continuity (recovery) plans for financial systems, and (2) segregation of duties for certain accounting functions. The two reportable conditions closed i
concern (1) software capitalization procedures, and (2) payroll system integration and labor cost distribution.
a The report on NRC's compliance with laws and regulations disclosed that the reportable condi-tion relating to business continuity plans is considered a substantial noncompliance with the Federal Financial Improvement Act of 1996. Tests of compliance with selected provisions of other laws and regulations disclosed no other instances of noncompliance.
(continued on page 32) 1997 MTolXI 4 Hil.1I Y Rl;l'(Hft
Audit of Ft' 1996 Financial Statement (continued)
The CFO's response to the issue relating to business continuity plans stated, "The three systems l
mentioned in the audit report are all scheduled for replacement within the next one to two yer.rs....The OCFO [ Office of the Chief Financial OfTicer] and the OCIO [ Office of the Chief l
Information Officer] will determine the cost effectiveness of developing continuity / contingency plans for the systems that are to be retired or replaced." Because this is a significant issue, we wish to reiterate and clarify our position.
The Office of Management and Budget Circular A-130 clearly requires agencies to plan for reasonable continuity of support should normal operations be disrupted. Although NRC plans to replace or retire several financial information systems, the agency should not allow its business operations to continue to be at risk. We fully understand that a strategy for cost containment is essential to any agency decision. However, unless a system replacement or retirement is immi-nent ('e.g., the current payroll system), all systems must have some type of continuity / contin-gency recovery mechanism.
We did not review NRC performance data this year because NRC is in a transition period for reporting this data. Further, over the five previous fiscal years, OIG has reviewed the systems and verified data from which performance information was derived. With one exception, OlG found the prior performance data to be accurate. NRC took corrective action on that one exception. In the future, we plan to review performance data reported in NRC's annual per-formance plan.
We appreciate NRC staff's cooperation and continued interest in improving financial manage-ment within NRC.
Attachment:
As stated i
4 l'.S. NL Cl.I'.AR RIEL I AloRY Co\\l\\ll$SION
t:
If i
G nv Tr:
CONTENTS i.r.
L f-hi
[u IN DEPEN DENT AU DITORS' R EPO RT.................................................................... 35
[
3a I,
E PRINCIPAL STATEMENTS Yr T".
Statement of Financial Posi tion........................................................................... 4 7
[
t..
Statement of Operations and Changes in Net Position..................................................... 49 y1 S t at em e n t of Cash Fl o w s....................................................................................... 5 0 f
e Statement of Budgetary Resources and Actual Expenses......................................... 52
[
Not es to Pri ncipal S tate ments........................................................................... 5 3 rp; 7
APPENDIX y
Comments of the Chief Financial Officer........................................................ 69 L
a 4
e.bp w.
- y. -
L^
V.
i' D
Q..
n.-
s,,
j:s y..
nf'iw ;-
f.1 p
4
?.
Y
,b Y
?
1997 ACCOt'NTAHil.ITY RI:I' ORT S.
u
R. Navarro & Associates, Inc.
Chairman Shirley A. Jackson l
U.S. NUCLEAR REGULATORY COMMISSION Washington, DC L
INDEPENDENT AUDITORS' REPORT t
We audited the U.S. Nuclear Regulatory Commission's (NRC) principal statements at Septem-ber 30,1997 and for the year then ended, as required by the Chieffinancial 0]icers (CFO) Act of1990. We found that the principal statements present fairly in all material respects. We believe that our audit provides a reasonable basis for our opinion. The principal statements of the NRC at September 30,1996 and for the year then ended, were audited by other auditors whose report dated March 6,1997, expressed an unqualified opinion on those statements.
Management stated that the internal control structure in place at September 30,1997, was effec-tive 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 regula-tions, and (3) assuring that there were no material misstatements in the Principal Statements. We noted two reportable conditions in the current year. One reportable condition relating to business continuity plans is classified as a substantial noncompliance with the Federal Financial Manage-ment Im/mn cment Act (FFMIA), as well.
>l The following section outlines our conclusions and discusses the Overview of the Reporting Entity and the scope of the audit.
REPORT ON PRINCIPAL STATEMENTS l
- 1 The Principal Statements, including the accompanying notes, present fairly in all material re-spects, in conformity with a comprehensive basis of accounting other than generally accepted
,j accounting principles, as described in Note 1 to the principal statements, NRC's:
assets, liabilities, and net position; i
revenue, financing sources and expenses; cash flows; and
(
budgetary resources and actual expenses.
t REPORT ON MANAGEMENT ASSERTION ABOUT THE EFFECTIVENESS OF THE I
INTERNAL CONTROL STRUCTURE We evaluated management's assertion that the NRC maintained an effective internal control structure designed to:
(continued on page.%)
[
1997 ACCOl'NTAllll.ITY RI:10RT
m-Audit of IT IVY 6 Financial Statement (continued)
R. Navarro & Associates, Inc.
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 laws and regulations that have a direct and material effect on the Prineipal Statements or that are listed in the OJ] ice of Afanagement and Budget (OAfB)
Bulletin 93-06, as amended, that 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 30,1997, provided reasonable assurance that losses, noncompliance, or misstatements, material in relation to the 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 OAIB Circular A-123, Afanagement Accountability and Conuvl.
6 REPORTABLE CONDITIONS AND AUDIT FOLLOW-UP i
We noted two matters involving the internal control structure and its operation that are consid-ered reportable conditions under the standards established by the American Institute of Certified Public Accountants and OMB Bulletin 93-06, as amended. Although not material in relation to i
the Principal Statements, these reportable conditions, involve deficiencies in the internal control structure that, in ourjudgment, could adversely affect the NRC's ability to ensure that it meets the objectives of internal controls. Management considered these conditions in making their assertion on the effectiveness of the internal controls.
Ct unist hu The matters listed below involve the design or operation of the internal control structure and warrant disclosure as reportable conditions. None are classifiable as material weaknesses.
A.
Business Continuity Plans f
(
Our assessment of the NRC's management control program included a review of the agency's
[
business continuity practices for major financial management systems. The agency's major business systems include (1) the core general ledger - Federal Financial System (FFS) serviced i
by the U.S. Treasury Financial Management Service (FMS); (2) accounts receivable - billing for license fees; and (3) the payroll system. These systems are critical to recording, summarizing and preparing financial information. We noted that these agency systems either did not have established test plans, did not have a documented recovery plan, or did not have a plan that reflected the actual operations of the system.
t?.s. St Cl.l AR kl Gl'I AloRv Co%l\\ll% ION
R. Navarro & Associates, Inc.
l OMB Circular A-130. Management of FederalInformation Resources. requires agencies to plan for reasonable continuity of support should normal operations be disrupted in an emergency and l
assigns responsibility to the Department of Commerce for developing guidance and standards for infonnation processing systems.
i Guidance provided by the Department of Commerce states (that agencies]"... ensure IT [Infor-mation Technology] systems shall develop and maintain, in an up-to-date state, contingency and l
disaster recovery plans which will provide reasonable assurance that critical data processing can l
be continued, or resumed quickly, if normal operations are interrupted. The plan for large sys-
)
tems supporting essential... agency functions shall be fully documented and operationally tested at least annually..."
The individual circumstances for the lack of recovery plans are described.
General Ledger - Federal Financial System Prior to fiscal year (FY) 1997, FFS did not have back-up recovery capabilities, as reported by Treasury-FMS in the annual FMFIA reports. During FY 1997, the FMS reported that additional disk storage capacity was installed at the designated FFS back-up site in Austin, Texas. How-l ever, due to a lack of available budget resources, the recovery plan will not be tested and vali-i dated until sometime in FY 1998. Consequently, the condition was reported in the FMS FY 1997 FMFI A report as: " Unable to demonstrate the ability to perform data recovery and back-up capabilities of the FFS application in the event of a disaster."
Recovery Plans for Fee Systems In September and December 1996, the Office of Information Resources Management certified the major fee systems based on reviews performed by a contractor. The work included: (1) creat-ing security plans: (2) developing and executing test plans; and (3) preparing certification docu-ments.
The results of the reviews indicated that adequate security provisions were in place. However, the contractor indicated that NRC had not developed a contingency or business resumption plan for any of the major fee systems. As of the end of our field work no plans have been developed in response to the conditions reported.
Recovery Plans for Payroll System There is no current recovery plan for the payroll system. A previously existing recovery plan was not updated when the payroll Automatic Data Processing (ADP) operations were transferred from the agency's prior location about four years ago. Currently, the payroll functions are planned to move to a new payroll / personnel system in April 1998, therefore, actions planned for developing a recovery plan will focus on the new system.
l (continued on page 38) 1997 ACCol%TAHil.IIV HI PORT
3 mq Audit of F Y 1996 Financial Statement (continued)
]
R. Navarro & Associates, Inc.
?!
Recommendation a4 d
The CFO should establish, for systems within the agency's control, initiatives for designing h
recovery plans for all financial management systems. In providing such guidance, the CFO
(
should assess the priority of each system. Furthermore, the CFO should assure that policies i
are issued ensuring that the design or development of any new financial management systems,
' and the related security and maintenance programs of such systems include the development 1
j of a plan which is documented and tested. We recognize that NRC, as a user of the FFS, does 1
not have the leverage to compel FMS to comply with a sound disaster recovery program.
Q Therefore, no recommendation is offered other than continued monitoring of this condition i
through the user group.
d CFO's Comments
^
d
" Agency financial systems are currently undergoing major changes. The three systems men-w B
tioned in the audit repon are all scheduled for replacement within the next one to two years.
3 The Federal Financial System (FFS) and the accounts receivable / license fee billing system j
will be replaced by the new agency-wide resource management system STARFIRE. The Payroll System will be replaced by the Payroll / Personnel (PAY /PERS) System. The OCFO q
[ Office of Chief Financial Officer) and the OCIO [ Office of Chief Information Officer] will
]
determine the cost effectiveness of developing continuity / contingency plans for the systems 1
that are to be retired or replaced. The OCFO and OCIO will then jointly prepare a plan by i
June 1,1998 to develop the required continuity / contingency plans for continuing financial systems. These plans will be developed in accordance with OMB Circular A-130, Manage-
]
ment of Federal Information Resources, and NRC System Development and Life Cycle Man-Lj agement (SDLCM) Methodology."
A Auditors' Position u
3 OMB Circular A-130 clearly requires agencies to plan for reasonable continuity of support j
should normal operations be disrupted. Although NRC plans to replace or retire several finan-j cial information systems, the agency should not allow its business operations to continue to be at j
risk. We fully understand that NRC has a variety ofinitiatives in place and that a strategy for j
cost containment is essential to any agency decision. The remediation plan that the CFO and the W;
Chief Information Officer (CIO) will develop and deliver to the Office of the Inspector General (OlG) by June 1,1998, must focus on managing the NRC's existing business continuity risks i
and provide detailed steps and timetables that will be used as a framework to minimize such j
risks. Unless a system replacement or retirement is imminent (e.g. the current payroll system) b all systems must have continuity / contingency plans. We further believe that the framework 7
developed under the remediation plan should provide a basis for developing continuity / contin-4 gency plans for any planned financial systems.
!dq m
@N N
I!.S. N1'CI. EAR HluGl'I.NIoRv CoslMissioN 4?a
=
i R. Navarro & Associates, Inc.
5 B.
Segregation of Duties - FFS NRC uses the FFS as its primary accounting system.The Division of Accounting and Finance (DAF), OCFO is responsible for maintaining FFS, including controlling access. FFS access is controlled by hierarchical access profiles that range from inquiry only access to the " system administrator" profile that permits unrestricted system access and updating security tables.
At September 30,1997, there were 92 active FFS users with varying access levels depending on their functions. At that time, eight DAF employees held a " lead accountant" access profile which ranks just below the " system administrator" profile. The " lead accountant" profile allows hold-i ers to enter transactions and change any existing transaction or table except for the security L
tables. At least three of these employees are also responsible for reconciling FFS output to source documents or to output from other systems including the payroll system.
Thus, the employees holding " lead accountant" profiles and preparing reconciliations are per-forming incompatible functions from an internal control perspective because they are in a posi.
tion to both commit errors and irregularities and to conceal them in the course of discharging their normal duties.
The General Accounting Office's (GAO) Standardsfor Internal Contmis in the Federal Govern-ment state "... key duties and responsibilities in authorizing, processing, recording, and reviewing transactions should be separated among individuals."
Recommendation The CFO should reduce the number of persons holding the ' lead accountant' access profile and/
g or implement additional compensating controls. The compensating controls could include requir-
~
ing supervisory review and certification of reconciliations and their resulting journal vouchers.
CFO's Comments "The OCFO will examine those persons holding the " lead accountant" access profile and deter-mine whether it is appropriate to make any changes to access profiles. In addition, the OCFO will institute compensating controls consisting of review and certification of reconciliations and their resulting journal vouchers by the Financial Team Leader."
7 Auditors' Position
}
i The actions described by the CFO should strengthen the design of controls over segregation of
.l duties. The CFO should advise the OlG when the controls have been redesigned, in order that during a subsequent audit, controls can be tested to verify implementation of the corrective action.
1 (continued ms page Rh Yi 1997 ACCot'NTAlut.IIY RITORT a
7
' Audit of FY 1996 linancial Statement (continued) l R. Navarro & Associates, Inc.
(
prior YEAR CAPITAEl7.ATloN FRoCl:DURES IoR ADP SomvARE NEEn IwRovEw.NT The FY 1996 audit disclosed a need for improvements to software capitalization procedures.
f This finding represented a continuing OlG concern about NRC's financial reporting of property.
While OlG raised and the NRC has resolved similar issues over the past few years, it was be-lieved that the issue indicated a continuing concern and must be identified as a reportable condi-tion.
- j in the current year, NRC addressed the practice used for properly identifying and classifying software acquisitions in a memorandum dated August 19,1997. The procedures outlined in the memorandum provide adequate resolution, therefore, this issue is closed.
d PAYRou. SYSTEM MusT BE INTEGRATED WITH THE GENERAE LEDGER AND Possess LAnoR DisTRmU-Tion CAPANUTir.S.
in the FY 1995 audit, OIG reported that NRC's accounting system did 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, Fonn and Content ofAgency Financial Statements. The principal weaknesses and issues that remained were:
the compatibility and integration of the NRC general ledger and subsystems used by NRC for payroll did not provide labor cost distribution capabilities.
heavy reliance on manual inputs due to the use of incompatible subsystems.
~'
N During the current year, NRC developed a year-end methodology using cost center data to
[
present program costs by budgetary program. Furthermore, the guidance provided by FFMIA no l.g longer requires integration of financial systems. Both these actions, presentation of costs by program and the FFMIA, enable us to close this condition.
L REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS Our tests of compliance with selected provisions of laws and regulations disclosed no instances of noncompliance, except the reportable condition relating to business continuity plans which is considered a substantial noncompliance with FFMIA, that would be reportable under Govern-ment Auditing Standards or OMB Bulletin 93-06, Audit Requirementsfor Federal Financial A
Statements, as amended. Ilowever, 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.
A l'
l LLs. MTI. EAR REGI !.ATORv CohlMissioN O
c R. Navarro & Associates, Inc.
MATTER OF EMPHASIS NRC's principal statements include reimbursable expenses of the U.S. Department of Energy (DOE) National Laboratories. For FY 1997 and 1996, NRC's Statement of Operations included approximately $79 and $89 million, respectively, of reimbursed expenses, which represent approximately 14% and 17%, respectively, of total expenses. Our audit included testing these expenses and financing sources for compliance with laws and regulations within NRC. The t-work placed with DOE is under the auspices of a Memorandum of Understanding between NRC 3
and DOE. The examination of DOE National Laboratories for compliance with laws and regula-tions is DOE's responsibility. This responsibility was further clarified by a memorandum of the GAO's Assistant General Counsel, dated March 6,1995, where he opined that "... DOE's inabil-ity to assure that its contractors' costs [ National Laboratories] are legal and proper...does not compel a conclusion thet NRC has failed to comply with laws and regulations." DOE also has the cognizant responsibilitf to assure audit resolution and should provide the results ofits audits F
to NRC.
CONSISTENCY OF OTHER INFORMATION The overview of the NRC, program performance output measures, and other supplemental L
financial and management information sections contain a wide range of data, some of which is not directly related to the Principal Statements. We do not express an opinion on this informa-tion. We have, however, compared this information for consistency with the Principal State-ments and discussed the measurement and presentation methods with NRC management. Based on this limited effort, we found no material inconsistencies with the Principal Statements or noncompliance with OMB guidance.
l 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 to the principal statements,(2) establishing, main-taining, 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 regula-tions including the requirements referred to in FFMIA.
We are responsible for expressing an opinion on 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 to the principal statements, and (2) for obtaining reasonable assurance whether management's assertion about the effectiveness of the internal control struc-ture is fairly stated, in all material respects, based upon criteria established by FMFIA and OMB Circular A-123, Management Accountability and Control. As of the date of our repon, NRC management had completed its evaluation of financial controls.
(continued on page 4h 1997 Acrot Yl AlHl.I rY Hl:l'oRI
Audit of FY 1996 Financial Statement (continued)
R. Navarro & Associates, Inc.
1 We are also responsible for testing compliance with selected provisions of laws and regulations and for performing limited procedures with respect to certain other information in this annual financial statement. In order to fulfill these responsibilities, we:
cxamined, on a test basis, evidence supporting the amounts and disclosures made in the Principal Statements; assessed the accounting principles used and significant estimates made by management; evaluated the overall presentation of the principal statements;
=
obtained an understanding of the internal control structure related to safeguarding of a
assets, compliance with laws and regulations including execution of transactions in accordance with budget authority and financial reporting, in the principal statements; assessed control risk and tested relevant internal controls over safeguarding of assets, compliance, and financial reporting and evaluated management's assertion about the effectiveness of internal control:
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),
Omnibus Budgetary Reconciliation Act of 1990 (PL 101-508), Debt Collection Act of 1982 (PL 9 165), Prompt Pay Act (PL 97-177), Civil Service Retirement Act of 1930, 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, Federal Financial Man-agement Improvement Act (PL 104-208); and.
reviewed compliance and reported in accordance with FFMIA w hether the agency's financial management systems substantially comply with the Federal financial manage-ment system requirements, applicable accounting standards and the U.S. Standard Gen-eral Ledger at the transaction level.
We did not evaluate all internal controls relevant to operating objectives as broadly as defined in FMFIA, such as those controls for preparing statistical reports and those for ensuring efficient and effective operations. We limited our internal control tests to those necessary to achieve ibe objectives described in our opinion on management's assertion about the effectiveness of mer-nal controls. Because of inherent limitations in any internal control structure, losses, noncompli-ance, 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 condi-tions, or that the degree of compliance with the policies or procedures may deteriorate.
U.s. SITI.13R RIEL'I AIORY CO%1\\llssioN
R. Navarro & Associates, Inc.
We performed our work in accordance with generally accepted auditing standards, Government Auditing Standards and OMB Bulletin 93-06. Audit Requirementsfor Federal Financial State-ments, as amended.
AGENCY COMMENTS 1
On February 6,1998, the CFO responded to the Inspector General on our draft report and ad-dressed the two recommendations noted in the report. The CFO did not provide specific reme-dial actions for the substantial non-compliance relating to business continuity. liowever, the CFO has indicated that a Iremediation] plan will be prepared by June 1,1998, in conjunction with the CIO. Based on our review of the CFO's comments, we are satisfied that the actions described meet the intent of our recommendations and FFMIA guidelines. The CFO's comments are appended to this report in their entirety.
Under separate cover, commen'.s will be provided to NRC management outlining opportunities for strengthening internal control and operating efficiency. We appreciate NRC staff's coopera-tion and continued interest in improving financial management within the agency.
l This report is intended solely for the use of management of the U.S. Nuclear Regulatory Com-mission and the Office of Inspector General. This restriction is not intended to limit the distribu-tion of this report, which upon acceptance by the Office of Inspector General is a matter of public record.
,h two ( 0EO l
l January 23,1998
{
o
f' i
I' i
1 b
.t.
o l
0 E
l 1-i L
l
- t. '
PRINCIPAL STATEMENTS r.
m.
i i r FOR FISCAL YEAR 1997 l
U. S. NUCLEAR REGULATORY COMMISSION h
l n-l lv l
t ;
l f.
L h
i-l b: j i
l i
j.. I
!..1 d
l p,' j
'I t
(
Fl k
h r;
1997 ACrol'NTAllil.IIT RI:l'OR f a
l;.
u_
STATEMENT OF FINANCI Al, POSITION September 30,1997 and 1996 ASSETS 1997 1996 E Entity Assets:
Intragovernmentalassets:
Fund balances with Treasury (Note 2)
$176,556,311
$210,748,055 Accounts receivable (Note 3) 3,019,507 5,822,652 Advances and prepayments (Note 4) 2,948,348 4,948,524 Governinentalassets:
Accounts receivable, net (Note 3) 28,854,870 24,079,551 Advances and prepayments (Note 4) 512,767 472,592 Property and equipment, net (Note 5) 35.798.569 38.189.091 Total entity assets
$247.690.372
$284.260.465 INon E'ntith Assets:
~
Governmentalassets:
Accounts receivable, net (Note 3) 55.061 312.470 Total non-entity assets 55.061 312.470 Total assets
$247.745.433 5284.572.935 4
(continued on page 48)
The accompanying notes to the principal statements are an integral part of this statement.
1997 ACCOl'N'14ltil.IIT lti:14)l(T
Audit ofIT 1996 Financial Statement (continued) l STATEMENT OF FINANCIAL POSITION (Continued)
September 30,1997 and 1996 LIABILITIES 1997 1996
! L'labill'tles CoNM By Budketary Resources:]
Intragovernmentalliabilities:
Accounts payable and advances (Note 6)
$ 12,775,896
$ 11,805,497 Otherintragovernmentalliabilities (Note 8) 30,754,696 26,519,644 Governmentalliabilities:
Accounts payable (Note 6) 21,155,283 21.229,287 Other governmentalliabilities (Note 8) 5,525,519 7,143,659 Accrued payroll and benefits (Note 7) 12.450.388 11.527.847 Total liabilities covered by budgetary resources S 82.661.782 S 78.225.934
[Liabilhies Noi CovArid}By Budgetary Resources:!
Governmentalliabilities:
Other governmental liabilities (Note 9) 36.635.843 32.710.987 Total liabilities not covered by budgetary resources 36.635.843 32.710lfl Totalliabilities
$119.297.625
$110.936.921 NET POSITION
[Balancef(Note 11)[
Unexpended appropriations 129,285,082 168,157,910 Invested capital 35,798,569 38,189,091 Future funding requirements (36.635.843)
(32.710.987)
Total net position
$128.447.808
$173.636.014
.I Totalliabilities and net position
$247.745.43J
$284.572.935 p-o The accompanying notes to the principal statements g
are an integral part of this statement.
U.S. MTI. EAR REGt'I.AToRv Co%1%IlssioN I
STATEMENT OF OPERATIONS AND CIIANGES IN NET POSITION for the years ended September 30,1997 and 1996 Restated g -
m m
- REVENUESAND FINANCING SOURCES 1997 l996 Appropriated capital used (Note 12)
$ 62,086,597
$ 52,837.295 Other revenues and financing sources (Note 14) 477,704,094 452,184,128 Excess (shortage) of current year receipts of fees over billings (4,707.194) 14,633,020 Imputed financing (Note 13) 19,976,493 20,478,243 Less: Receipts transferred to the Treasury or other agencies (6.055.409)
(2.925.1M)
Total revenues and financing sources
$549.004.581 5537.206.841 y
m--
(EXPENSES Operating Expenses Personnel services and benefits
$291,993,719
$283,521,310 Travel and transportation 15.451,061 16,174,764 Rent, conununication, and utilities 26,276,698 25.240,443 Printing and reproduction 1,605,504 1,579,151 Contractual services 194,959.500 189,329,595 Supplies and materials 13,829,863 12,868,778 Grants, subsidies, and contributions 1,653,680 1,486,946 Insurance claims and indemnities and other 40.903 101.991 Total operating expenses 545.810.928 530.302.978 t
Depreciation and amortization (Note 5) 6,462,011 8,540,608 l\\
Interest 3.370 4,683 Other expenses (Note 17) 653.130 17.101 Total expenses
$552.929.439
$538.865.370 Excess or (shortage) of revenues and financing sources over total expenses (Note 18)
$._D.924,858)
$ (J.658.529)
[ Net position, beginning balancei
$173,636,014
$209,483,290 Excess (shortage) of revenues and financing sources over expenses (3,924,858)
(),658,529)
Plus non-operating changes (Note 19)
(41.263.348)
(34.188.747)
LNN position,emlinibalancej
$128,447.808
$173.636.014
~'
(wntinued on page.%)
The accompanying notes to the principal statements are an integral part of this statement.
1997 ACCOUNT Alm.I rv RIPold
l W
Audit ofIT 1996 Financial Statement (continued) l 3
STATEN1ENT OF CASil FI,0WS for the years ended September 30,1997 and 1996 (CASH PROVIDED'(USED) BY OPERATING ACTIVITIES -
1997 1996 Cash Provided:
Fees for licensing, inspection, and other services (Note 12)
$ 458,626,753 S 454,049.125 Other operating cash provided 8.968.118 8.450.745 Total cash provided S 467.594.871 5 462.499.870 Cash Used:
Personnel services and benefits (267,638,742)
(259,816,269)
Travel and transportation (15,766,363)
(16.275,698)
Rent, communications, and utilities (25,184,924)
(26,342,185)
Printing and reproduction (1,670,930)
(1,554,538)
Other contractual services (l88,142,460)
(193,678,520)
Supplies and materials (14,406,394)
(l1,162,708)
Insurance claims and indemnities (44,125)
(98,271)
Grants, subsidies, and contributions (1,489,740)
(1,527,452)
Other operating cash used (l.900.841)
'6.867.038)
Total cash used S(516.244.519)
$(517.322.679)
Net cash used by operating activities S (48.649.648)
S (54.822.809) l CASH SED BYINVESTING ACTIVITIES '
^
s, Purchase of property and equipment (6.365.343)
(I1.680.069) b Net cash used by investing activities S (6.365.343)
$ ( l 1.680.069) t-l CASH PROVIDED 'BY FINANCING ACTIVITIES i
Appropriations 18,173,247 18,536,875 Add: Transfers of cash from others 2.650.000 111.622 Net appropriations S 20.823.247 S I8.648.547 Net cash provided by financing activities S 20.823.247 S 18.648.547 The accompanying notes to the principal statements are an integral part of this statement.
l h
U.E NL ClJAR RIEt IJIoR) C0%1\\l1%Io%
s
STATEMENT OF CASil Fl.OWS (Continued) for the years ended September 30,1997 and 1996 y
i 1997 1996 Net cash provided (used) by operating, investing, and financing activities
$ (34,191,744)
$ (47,854,331)
Fund balances with Treasury, beginning 210.748.055 258.602.386 Fund balances with Treasury, ending
$ 176.556.311
$210.748.055
' Reconciliation ofShortage of Revenues and
~
Financing Sources Over TotalExpenses:
Excess (shortage) of revenue and financing sources over total expenses S (3,924,858)
S (1,658,529)
Adjustments to Reconcile Shortage Of Revenues and Financing Sources Over Total Expenses to Net Cash Provided by Operating Activities:
Appropriated capital used (62,086,597)
(52.837,295)
Decrease (increase) in accounts receivable 2,740,306 (2,823,343)
Decrease (increase) in other assets 1,960,001 (2,258,975)
Increase (decrease) in accounts payable 896,395 (887.331)
Increase (decrease) in other liabilities (911,952)
(6,682,254)
Depreciation and amortization 6,462,011 8,540,608 Other unfunded expenses 3,924,858 1,658,529 Other adjustments 2.290.188 2.125.781 i
Total adjustments (44.724.790)
(53.164.280)
Net Cash Used by Operating Actirities
$ (48.649.648)
$ t54.822.809)
-l 1
l b
wontinued on page n>
.]
The accompanying notes to the principal statements are an integral part of this statement.
i 1997 ACrot:NTAllllITv RI: PORI
a EE!l5$jS k@$:dimj~
)
) ) ) )
)
0 0
095 81 83 49 5
3 7
7 768 0024 77 9
d e
3, 3
3,0,8 6,7,8,2 1,
1 9
s a6 s
5 5
505 0528 22 9
l e
au9 n
6 6
680 4967 64 t
1 e
8, 8
8, 6, 1, 5,7 8 4 7, 8 9
tc9 p
t 1
8 8
81 2 8(
0 79 7
(
seA x
0 3
3 31 (
(
2 1
(
R E
(
5 5
5 5
5
)
) ) ) )
)
73 23 9
6 9
938 1 1 3657 1
1 059 56 8
7 3
346 1
s 39056 1
a7 s
0,6,5,9,3, 0, 8, 4
4, 3, 0, 0,5 3,4 3, 0 2
e l
u9 n
6071 3 27 9
953 2686 31 2
e 42066 66 2
269 6477 31 2
t 9
p 8,5,7,6,2, 4, 4 9
9, 3, 6, 4,5 3,9 2, 3 9
c S
1 8271 5 6
2 261 6( 39 78 8
E A
x E
336 5
5
(
(
( 1 2
(
1 S
(
5 21 1 5
5 N
EP s
t X
n E
e 5665 -
2 m
2997 9
s L
6 e
8, 2, 5, 1, 8
tn A9 sr 451 3 4
e U9 u
9346 3
m T1 b
8 8,9,1 8
e Cd m
31 6
t 3
An s
i 5
at t
n a
n e
s e
o R
am D 7 l
i N9 pe t
9 a
i t
A1 g
c a nt i
S l
s i
E0 b
r 23952 1
s 3
pi Cr O
37909 0
3,2,6,7,6, 7
eh t
t t
Re e
c h
f Ub g
e 89345 1
t o
r 65284 8
o Omd e
D 7,4,4,5 2, 4
i t t u
r St H
31 625 9
s a e p Ep 21 5 9
s t
4 e
ol 21 1
ReS c
n a r
r Yd u
gg o
n e Re s
t i
d e
yn An s
68009 36 r
i es n
Te e
4503 3
8 y
s r an 1
r ne pa Es c
0,9,0,0,8, 1
9 r
a eh a
pt me Gr u
91 307 5
6 t
o r
De o
61 007 2
8 e
s 6, 1, 0, 5, 8, 5
6 g
x oa d
e y c
Uy e
c 79436 4
5 u
nb a
l e
R 21 6 1
3 b
od l
h e
1 5
ei ia h
7 Ft 21 e n s
t n a Or yb o s p T
l o
e f
ai pnt t
t T
s i
ei rloia x
f az pe N
m h vie mn E
ar u a ne e
t ov ob M
s g a yma c
E m m mo n
t b
r e
ale 's o
c t
a ap gd ri e
T a r r
edl e s r
a A
r g got sd r n uk n i
T go not o nu e a n r e d
S rP m iord n ob v op or pe s i
nn a
d n
i d o s e c ioaws s
)
P amt ota t
e 5
s d d'e t
r s
r 1
s r a zt n
o id t
t r
et s ogri c
i d
u t
un oa e e r
u e k> f e
e pogr t
icdd yu n t
s a
qe n r
e to n pP o o t
i l
c ps e n not i
l m
r u u pd m d
r a s i
N mvSE Pma e u e a c
s l
i a x e n
ct cdOladl n ng n
el es pf f
ne a oo cr r
ao o
st r n e nnme a
s e
(
ai t
l r
p r
e ge nDe na s wr c
nie eDUUEpu y-m rf f n x
e ph p xb e
of a at e p
e pat x e m os o R
xCOE di d
a pet oe n n
nnl o l
N yye nGo e at t
e e e e
e ur u
mor i s p
d s r r t
m oo et ois x el g
r s l
i a e d
r a
a a gat cn e nt d
ad:
e a
s t
s c s c
t t
go u
od e
c e c
u c ee r s r
luu l
g l
a ue r pe sit B
TA L
AL A
p n
s o
gga gpp xhi s s e t
n r
ee e
a P
RRMRInD eOU
?kdghh{E53j?j n
n NOTES TO PRINCll%L STATEMENTS September 30,1997 and 1996 NOTE 1.
SUMMARY
OF SIGNIFICANT ACCOUNTING POI ICIES 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 state-ments specified by the Office of Management and Budget (OMB) in OMB Bulletins 94-01 and 97-01 and NRC accounting policies summarized in this note. These state-ments are, therefore, different from the financial reports, also prepared by the NRC pursuant to OMB directives, which are used to monitor and control NRC's use of budgetary resources.
B.
Reporting Entity / Program Name
\\
The NRC is an independent regulatory agency of the Federal Government that was created by the U.S. Congress to regulate the Nation's civilian use of byproduct, source, and special nuclear materials to ensure adequate protection of the public health and safety, to promote the common defense and security, and to protect the environment. Its purposes are defined by the Energy Reorganization Act of 1974, as amended, along with the Atomic Energy Act of 1954, as amended, which provide the foundation for regulating the Nation's civilian uses of nuclear materials.
NRC has two appropriations:
31X0200 - Salaries and Expenses 31XO300 - Office of Inspector General The 31X0200 appropriation includes approximately $1I million for FY 1997 and for FY 1996 of funds derived from the Nuclear Waste Fund in accordance with the provi-sions of Public Law 104-206. Public Law 104-134 rescinded $0.7 million from the i
FY 1996 NRC Salaries and Expenses Appropriation, in addition, $2.65 million and $0.5 million of the appropriation received by the U.S.
Agency for International Development for FY 1997 and 1996, respectively, was trans-ferred for the Nuclear Safety Assistance Program in Russia, Armenia, Kazakhstan and the Ukraine which is under the control of NRC. The accompanying financial statements of NRC include the accounts of all funds under NRC control.
1 1
w,ninua,,n w 1997 u r ot NIAltliITv itituirl I
l Audit of IT 1996 l'inancial Statement (contin ued) h NOTES TO PRINCH'AL STATEMENTS
+
September 30,1997 and 1996 1
)
C.
Budgets and Budgetary Accounting ij For the past 23 years, Congress has enacted no-year appropriations which are available i
for obligation by NRC until expended. The Omnibus Budget Reconciliation Act (OBRA)
S of 1990 requires NRC to recover approximately 100 percent of its new budget authority, j
less the amount derived from the Nuclear Waste Fund, by assessing fees. For FY 1997, 1
Congress appropriated funds for the commercial vitrification of high-level radioactive waste at the Hanford, Washington, site. These funds are exempt from the requirement in OBRA for fee recovery. At the end of the fiscal year, NRC's appropriations are reduced q
by the amount of revenues collected during the fiscal year.
H D.
Basis ofAccounting d9 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 control over the use of i
Federal funds.
E.
Revenues and Other Financing Sources q
l Licensing fees and fees for inspections and other services, assessed in accordance with OBRA, are recognized as other fmancing sources when earned.
j 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 j
the extent of new budget authority for the year. Collections which exceed the new budget euthority are held to offset subsequent years' appropriations. Appropriations expended for property and equipment are recognized as expenses when the asset is consumed in j
operations (depreciation and amortization). Appropriated Capital Used does not include (a) appropriations used to purchase capital items; (b) expenses incurred but not yet funded by Congress, such as workers' compensation benefits and annual leave expenses;
']
and (c) expenses which are paid by other Federal agencies, such as retirement benefits.
4 The differences between the accrual basis recognition of appropriations expensed and the b'udgetary basis recognition of outlays are presented in the Statement of Budgetary Resources and Actual Expenses.
Miscellaneous receipts collected by NRC are not available to NRC for obligation or
.p expenditure. These receipts must be transferred to the U.S. Treasury when collected.
q U.s.Mrirru narrtAnour cosistissios t.fy LJ
h' l
6 NOTES TO PRINCHMI. STATESIENTS September 30,1997 and 1996
[
l E
Funds with the U.S. Treasury and Cash l
NRC cash receipts and disbursements are processed by the U.S. Treasury. The fund j
i balances with the Treasury and cash are primarily appropriated funds that are available to i
pay current liabilities and to finance authorized purchase commitments. Cash balances held outside the U.S. Treasury are not material.
[
G.
Accounts Receivable, Net ofAllowance E
L The amounts due for receivables, except those due from Federal agencies, are stated net I
of an allowance for uncollectible accounts. Since receivables from Federal agencies are expected to be collected, there is no allowance for uncollectible accounts. The estimate 4
of the allowance is based on an analysis of the outstanding balances and the application c
of estimated uncollectible percentages to categories of aged receivable balances.
H.
Advances 3
NRC makes cash payments to other Federal agencies, employees, grantees, and contrac-tors to provide for future NRC program expenditures. These advance payments are recorded as assets which are reduced when NRC receives reports of expenditures or when accruals of cost estimates are made.
I.
Property and Equipment e
The NRC's property and equipment consists primarily of typical office furnishings, nuclear reactor simulators, and computer hardware and software. The agency has no real property and loan or lo:m guarantee programs.
E(
The land and buildings in which NRC operates are provided by the General Services Administration (GSA), which charges NRC rent that approximates the commercial rental rates for similar properties.
Property with a cost of $50,000 or more per unit and a useful life of 2 years or more are I
capitalized at cost and depreciated. Other property items are expensed when purchased.
I Normal repairs and maintenance are charged to expense as incurred.
i F
Property is depreciated using the straight-line method over useful lives which range from 5 to 20 years.
j i
l 3
I (continued on page 56)%!
1997 ACCol'NTAltil.ITv RI:l' ORT i
l m
Audit of FY 1996 Financial Statunent (continued)
NOTES TO PRINCIIML STATEMENTS September 30,1997 and 1996 1
J.
Prepaid and Deferred Charges Payments in advance of the receipt of goods and services are recorded as prepaid charges i
at the time of prepayment and are recognized as expenditures / expenses when the related goods and services are received.
K.
liabilities e
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. liowever, no liability can be paid by NRC absent an appropriation. Liabilities for which an appropria-tion has not been enacted and for which there is no certainty that an appropriation will be enacted are classified as Liabilities not Covered by Budgetary Resources. Also, NRC liabilities arising from sources other than contracts can be abrogated by the Government acting in its sovereign capacity.
L.
Contingencies 3
NRC is a party to various administrative proceedings, legal actions, environmental suits, and claims brought by or against it. Based on the advice of legal counsel concerning contingencies, it is the opinion of management that the ultimate resolution of these proceedings, actions, suits, and claims will not materially affect the agency's fmancial position or results of operations.
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 reflect current pay rates.
Sick leave and other types of nonvested leave are expensed as taken.
N.
Retirement Plans NRC employees hired after December 31,1983, are automatically covered by the Federal Employees' Retirement System (FERS), which was implemented on January 1,1987.
Employees hired prior to that date could elect to join FERS or to remain in the Civil y
Service Retirement System (CSRS). Approximately 60 percent of NRC employees o
belong to CSRS and 40 percent belong to FERS. In FY 1997 and 1996, for employees in FERS, NRC withheld 0.8 percent of base pay earnings in addition to Federal Insurance e
Contribution Act (FICA) withholdings and matched the withholding with an 11.4 percent contribution. The sum was transferred to the Federal Employees Retirement Fund.
e h.
i NOTES TO PRINCil%L STATEMENTS N
September 30, I997 and 1996
{
The FY 1997 contribution resulted in approximately $622,000 being paid in excess of NRC's pension expense for the year. For employees covered by CSRS, NRC withholds 7 p
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.
l On April 1,1987, the Federal government initiated the Thrift Savings Plan (TSP) which k
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 i
maximum percentage that an employee participating in FERS may contribute is 10 percent of base pay. Employees covered by CSRS may contribute up to five percent of their base pay, but there is no NRC matching of the contribution. The maximum amount O
that either FERS or CSRS employees may contribute to the plan in a calendar year is
[
$9,500. The sum of the employees' and NRC's contributions is transferred to the Federal L
Retirement Thrift Investment Board.
E, h
The 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 g
amounts is the responsibility of the OfGee of Personnel Management. The portion of the f
current and estimated future outlays for CSRS not paid by NRC is included in NRC's
[
financial statements as an imputed Gnancing source (Note 13).
n T
0, Net Position The NRC's net position consists of the following components:
y 1.
Unexpended appropriations which include the undelivered orders and unobli-gated balances of NRC's funds. All NRC appropriations remain available for obligation until expended.
p 2.
Invested capital which represents U.S. Government resources invested in NRC's k
l property ar.d equipment increases to invested capital are recorded when assets are
[
acquired with direct appropriations, and decreases are recorded as a result of the
[
l depreciation, aniortization, and disposition of capital assets.
[
3.
Future funding requirements which represent (a) accumulated annual leave I
earned but not taken as of the financial statement date and (b) actual and estimated p
future payments to be made for worker's compensation pursuant to the Federal Employees Compensation Act (FECA). The expense for these accruals is not t
funded from current appropriations, but rather will be funded from future appropria-p tions and assessments.
F (continued on page 58) 1997 ACroUNrAltIIIIv Hl: PORT V
l l
l Audit of FY l996 Financial Statement (continued >
l NOTES TO PRINCU%L STATEMENTS September 30,1997 and 1996 i
P.
Department ofEnergy Charges Financial transactions between the Department of Energy (DOE) and NRC are fully automated through the U.S. Treasury's On-Line Payment and Collection (OPAC) System.
The OPAC System allows DOE to collect amounts due from NRC directly from NRC's account at the U.S. Treasury for goods and/or services rendered. Project manager verifi-I cation of goods and/or services received 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. For FY 1997 NRC made approximately S79.5 million in payments to DOE in this manner for research conducted by the DOE National Laboratories.
q a
i Q.
Restatement Certain amounts for FY 1996 have been restated to conform with the FY 1997 presentation.
i l
NOTE 2.
FUND llALANCES WITil Tile U.S. TREASURY Fund balances with the U.S. Treasury consist of the following amounts as of September 30,1997 and 1996:
J j
1997 199fi y
Appropriated funds:
Obligated
$153,920,505 5180,045,631 i
Unobligated 21.257.563 28.682.412
^l 175,178,068 208,728,043 Other fund types 1.378.243 2.020.012
$ 176.556.3L].
$210.748.055 a
'}
U.S. Government cash is handled on an overall consolidated basis by the U.S. Treasury. " Funds with Treasury" represent NRC's right to draw on the U.S. Treasury for allowable expenditures.
- i All amounts are available to NRC for current use. The obligated and unobligated balances exclude amounts related to unfilled customer orders.
e
>f s
t!.s.MCIIAR RILL 1.AToRv Co\\t\\1IwlON
?i k W
m i
NOTES TO PRINCll%L STATEMENTS September 3(1,1997 and 1996 NOTE 3.
ACCOUNTS RECEIVAllLE, NET Accounts receivable, net, is composed of the following amounts as of September 30,1997
(
and 1996:
Entity Assets Intragovernmental accounts receivable consists primarily of receivables and reimburse-ments due from other Federal agencies which were $3,019,507 and $5,822,652 at Sep-tember 30,1997 and 1996, respectively.
Governmental accounts receivable is comprised of the following amounts as of Septem-l ber 30.1997 and 1996:
1 1997 1226 l
Materials and facilities fees - billed S 4.,270,361
$ 3,532,779 Materials and facilities fees - unbilled 25,475,254 22,667,134 Other 121.624 103.295 Total accounts receivable
$29,867,239 26.303.208 Less: Allowance for uncollectible accounts (1.012.369)
(2.223.657)
Accounts receivable, net
$28.854.870
$24.079.55 i Governmental accounts receivable represents primarily amounts due for fees assessed for licensing and inspections of nuclear facilities and radioactive materials and other ser-vices. In the year collected, the amounts will be used to offset NRC's appropriations.
3 Non-Entity Assets I
Governmental accounts receivable, net, represents miscellaneous amounts due from the public ($55,061 and $312,470 at September 30,1997 and 1996, respectively), which, when collected, must be transferred to the U.S. Treasury.
The 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.
i
(
icentinued on page 60) l 1997 ACCotNiull.ITv kl10Rr
?
I A udit of IT 1996 Financial Statement (comtinued)
NOTES TO l'RINCllML STATEMENTS September 30,1997 and 1996 NOTE 4.
ADVANCES AND PREPAYMENTS Advances and prepayments as of September 30,1997 and 1996, consist primarily of the following:
1997 J996 Entity Assets Intragovernmental:
Advances - other Federal agencies 52,325,666
$4,948,524 Prepayment - pension expenses 622.682
$2.948.348 54.948.524 Governmental:
Advances S 512.767
$ 472.592 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.
NOTE 5.
PROPERTY AND EQUIPMENT, NET Property and equipment, net, consists of the following as of September 30,1997 and 1996:
1997 1996 Service Acquisition Accumulated Net liook Net liook
_ Years Bhm Deperciation Value Dhte Fiwd Assets Class Equipment 5-8
$ 26,587,156
$(20,400,890)
$ 6,186,266
$ 8,081,496 ADP software 5
45.249,731 (42,526,961) 2,722,770 4,915,553 ADP software 11,340,853 9,002,437 under development 11,340,853 Leasehold improvements 5-20 19,181,964 (3,633,284) 15,548,680 14,625,594
~
Leasehold improve-1.564.011 ments in progress Total
$JD2.359.704
$(66.561.135)
S35.798.569 S38.189.09 I t
h LLs. $1T1.l:AR HILL'IATolly Co%I%11SNioN w
m NOTES TO PRINCIPAL STATEMENTS September 30,1997 and 1996 The straight-line depreciation method is used for all classes of 6xed assets. Depreciation.
e pense for FY 1997 and 1996 was $6,462,011 and $8,540,608, respectively.
1 r
The land and buildings occupied by NRC are provided by GSA. For FY 1997 and 1996, GSA
[
charged NRC $19,499,176 and $24,100,381, respectively, for the use of these facilities based on P
a rental fee which is to approximate the commercial rates for similar properties.
)
i NOTE 6.
ACCOUNTS l'AYA11LE AND ADVANCES o
Accounts payable and advances consist of the following as of September 30,1997 and 1996:
Intragovernmental:
Accounts payable g
Depanment of Energy
$ 7,079,111
$ 9,368,75' i
Other Federal agencies 5.331.554 2.282.932 12,410,665 11,651,684 Advances 365.231 153.813
$12.775.896
$11.805.497
=
1 Governmental:
Accounts payable L
Vendors payable
$19,474,528
$19,743,864 Li Contract holdbacks 1.680.755 1.485.423 0
$21.155.283
$21.229,287 c
t The vendors payable are all current. Current payables represent amounts which are expected to 7
l be paid within the fiscal year following the reporting date.
NOTE 7.
ACCRUED l'AYROLL AND llENEFITS Accrued payroll and benefits as of September 30,1997 and 1996, consists of:
I l
1997 1996 l
Accrued personnel services
$10,629,617
$ 9,824,164 Accrued benefits 1.820.771 1.703.683
't
$12.450.388
$11.527.847 Accrued payroll and benefits represent wages and benefits which have been earned but nc,c paid as of the financial statement date.
(continued on page 62)
.i 1997 ACCOl'N I Altil ITv RI:10RT i
l i
Audit ofIT 1996 Financial Statement (continuedi l
NOTES TO PRINCIIML STATEAIENTS September 30,1997 and 1996 s
NOTE 8.
OTilER LIABILITIES COVERED llY llUDGETARY RESOURCES
)
I y
i Other liabilities as of September 30,1997 and 1996, include:
1997 1996 Governmental:
3 Liability for deposit funds
$1,126,887
$1,554,395 Advances from others 4.398.632 5.589.264
$5.525.519
$7.143.659 The liability for deposit funds consists primarily of liabilities arising from payroll deductions i
and tax withholdings. Advances from others consists of funds primarily from foreign govern-J ments for the participation in cooperative research programs.
1997 1996 Intragovernmental:
s Liability to offset net accounts receivable for fees assessed
$30,699,637
$26,206,946 S;
Liability to offset net miscellaneous 3
accounts receivable 55.059 312.698
$30.754.696 526.519.644 The liability to offset the net accounts receivable for fees assessed represents amounts which, q
when collected, will be transferred to the U.S. Treasury to offset NRC's appropriations in the 1
year collected.
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 g
amounts which are expected to be paid within the fiscal year following the reporting date.
l Advances from others may not be liquidated in the fiscal year following the reporting date.
p NOTE 9.
OTilER LIABILITIES NOT COVERED llY IlUDGETARY RESOURCES 1
g Unfunded liabilities as of September 30,1997 and 1996, include:
d 1997 1996 k
Governmental:
- l Accrued annual leave
$25,905,986
$25,359,485 Accrued workers' compensation:
Benefits paid 1,700,857 1,476,502 Estimated future benefits 9.029.000 5.875.000 S36.635.843
$32.710.981 q
u.s.smo mmuoxv a,mo sm, d
NOTES TO PRINCHML STATEMENTS September 30,1997 and 1996 Accrued annual leave represents the amount of annual leave earned by NRC employees but not yet taken. Accrued workers' compensation includes: (a) 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 Septem-ber 30,1997 and 1996, and (b) an actuarial estimate for future disability benefits. The FY 1997 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, and medical and miscellaneous costs for approved compensation cases.
The liability was calculated using historical benefit payment patterns related to a specific in-curred period to predict the ultimate payments related to that period. These projected annual benefit payments were discounted to present value.
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' appropria-tions and assessments (see Note 11).
NOTE 10. INTRAGOVERN.\\lENTAI, ACTIVITIES The NRC's financial activities interact with and are depcndent upon those of the Federal Gov-ernment as a whole. Other Federal agencies make financial decisions and report certain finan-cial matters on behalf of all Federal agencies. The practice of having Federal agencies record or report only those governmentwide financial matters for which they are directly responsible is consistent with generally accepted accounting principles for Federal agencies which seek to identify financial matters to the department or agency that has been granted budget authority and resources to manage them. Activities which are performed or reported by other Federal agencies in which NRC is indirectly involved are as follows:
The NRC funds a portion ofits employee pension benefits under the CSRS and the FERS (Note 16). The portion not funded by NRC is included in NRC's financial statements as an imputed financing source (Note 13). The NRC 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 respon-sibility of the Office of Personnel Management.
In addition, the NRC makes contributions to the TSP on behalf of its employees. The NRC does not have control over the plan's assets. The TSP is administered by the National Finance Center of the Department of Agriculture.
Certain legal matters to which NRC may be a named party are administered, and in t
some cases litigated, by other Federal agencies. Amounts paid under any decision, settlement. or award pertaining thereto are generally funded through the U.S. Treasury.
(continued on page 64) 1997 MTotNI AlHLilY RI'POHI l
s
(
Andit of FY 1996 Financial Statement (continued)
NOTES TO PRINCil%L STATEMENTS September 30,1997 and 1996 In most cases, claims (including personal injury claims) are administered and re-a solved by the Department of Justice, and any amounts necessary for resolution are obtained from a special fund maintained by the U.S. Treasury. Any legal actions for
- 1 workers' compensation claims brought by NRC employees fall under FECA, which is administered by DOL's Employment Standards Administration. The cost of adminis-1 tering, litigating, and settling these legal matters has not been allocated to individual j
Federal agencies.
d Interest on borrowings of the U.S. Treasury is not included as a cost to NRC's pro-
.i grams and is not included in the accompanying financial statements.
j 4
NOTEI1. NET POSITION f
The net position consists of the following as of September 30,1997 and 1996:
M 1997 1996 Unexpended appropriations:
Unobligated
$ 25,683.385 5 34,765,0'6 Undelivered orders 103.601.697 133.392.834 129,285,082 168,157,910 0
Invested capital 35,798,569 38,189,09i Future funding requirements (Note 9)
(36.635.843)
(32.710.987)
$128.447.808
$ 173.636.014 w
Unexpended appropriations include (a) unobligated appropriation balances and (b) undelivered orders, which are amounts which have been obligated but not yet expended. The unobligated g
appropriations balance does not include $4,306,364 and $6,262,153 in unfilled customer orders -
unobligated as of September 30,1997 and 1996, respectively. The undelivered orders balance does not include $4,425,821 and $6,082,665 in unfilled customer orders - obligated as of j
September 30,1997 and 1996, respectively.
Invested capital represents the net investment of the U.S. Government appropriations expended f
for NRC's capitalized property and equipment.
N-
[
Future funding requirements represent the amount of future funding needed to pay the accrued i
unfunded expenses as of September 30,1997 and 1996. These accruals are not funded from j
current or prior appropriations and assessments, but rather should be funded from future appro-priations and assessments. Accordingly, future funding requirements have been recognized for these expenses that will be paid from future appropriations (See Note 9).
M 3
u._,_ _ _ _
M
NOTES TO PRINCII%L STATEMENTS September 30,1997 and 1996 NOTE 12. APPROPRI ATED CAPITAL USED Appropriated capital used, a financing source, is recognized to the extent that appropriated funds have been consumed less the amount collected from fees assessed for licensing, inspections, and other services. During FY 1997 and 1996, $458.6 million and $454.0 million, respectively, 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 e
from the Nuclear Waste Fund and appropriated for work at the Hanford, Washington, site, by assessing fees. At the end of the fiscal year, appropriations recognized are reduced by the amount of assessed fees collected during the Hscal 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 FY 1997 and 1996, $458.6 million and $454.0 million, respectively, of collections were used to reduce the fiscal year's appropriations recognized:
1997 1996 Appropriated funds consumed
$520,713,350
$ 506,886,420 Less: Collection from fees assessed (458.626.753)
(454.049.125)
S 62.086.597 S 52.837.295 e
The appropriated capital used for FY 1997 and 1996 includes $41,263,348 and $34,188,747, respectively, of available funds from prior years (Note 19).
NOTE 13. IMPUTED FINANCING In accordance with Statement of Federal Financial Accounting Standards (SFFAS) Number 6, Accountingfor Liabilities of the Federal Govermnent, the Statement of Operations and Changes in Net Position includes an imputed financing source of $19,976,493 and $20,478,243 for FY 1997 and 1996, respectively. The imputed financing source represents the service costs related to NRC employees' post-employment benefits which are paid by the Office of Personnel Management, as follows:
1997 1996 Civil Service Retirement System
$13,156,011
$14,525,205 Federal Employee Health Benefit 6,788,439 5,921,303 Federal Employee Group Life insurance 32.043 31.735 S19.976.493
$20.478.243 (continucci on page 66) 1997 A(Tot VI AltitJTv RI-PORT
Audit of FY 1996 Financial Statement (ccmtinued)
NOTES TO PRINCIl%L STATEMENTS September 30,1997 and 1996 s
NOTE 14. OTIIER REVENUES AND FINANCING SOURCES I
Other revenues and financing sources for September 30,1997 and 1996, were:
s 1997 1996 Fees for licensing, inspection, and other services
$463,333,946
$439,416,105 Appropriation reimbursements 8,311,063 9,842,179 Other miscellaneous receipts 6,055,409 2,925,844 Gain on disposition of assets 3.676
$477.704.094
$452.I 84.I 23 NOTE 15. PROGRAMS The Statement of Budgetary Resources and Actual Expenses contains operating expenses by program for FY 1997. Comparative data for FY 1996 is not available. The description of NRC's five programs is as follows:
1.
Regulatory Program encompasses all NRC efforts to ensure that the operation of commercial and nonpower nuclear reactor facilities and all NRC-regulated aspects of nuclear fuel cycle facilities; nuclear materials licensing; nuclear waste transport, storage, and disposal; and decommissioning activities are conducted in a manner that provides reasonable assurance of adequate protection of public health and safety, as required by the Atomic Energy Act of 1954 and other relevant laws.
2.
Regulatory Effectiveness Program helps ensure adequate protection of the public health and safety, as required by the Atomic Energy Act of 1954, by providing the Commission with the technical bases for regulatory decisions for all regulatory programs.
3.
Management and Support Program encompasses NRC central policy direction, i
legal advice for the Commission, analysis of long-term policy issues, administrative
[
proceedings review and advice, liaison with outside constituents and other govern-
[*
ment agencies, financial management, all administrative and logistical support, information resources management, executive management services for the Com-(
mission, personnel and training, international programs, and matters involving small and disadvantaged businesses and civil rights.
p LN (I.s. StrllAR RIEL't.AloRY Co\\1\\llsSloN 4
i.
NOTES TO PRINCll%L STATEMENTS September 30,1997 and 1996 4.
Regulation of DOE Program involves the continued commitment of DOE and NRC to resolve issues of concern to either agency that relate to the regulation of nuclear facilities, projects, and activities in the protection of public health and safety and the environment.
5.
Inspector General Program independently evaluates the agency's programs and operations to ensure their efficiency and effectiveness and investigates allegations of fraud, waste, and abuse.
NOTE 16. ENIPLOYEE RETIRENIENT PLANS The NRC's contributions for employee retirement plans for FY 1997 and 1996 were as follows:
Restated 1997 1996 Civil Service Retirement System S 8,963,175 S 9.066,506 Federal Employees' Retirement System 10,174,861 9,476,956 Federal Insurance Centribution Act 9,850,629 6,078,868 Thrift Savings Plan 4f>48.337 3.754.354 S33.637.002
$28.376.684 Data on the actuarial present value of accumulated benefits, assets available for benefits, and I'
unfunded pension liability are maintained by other Federal agencies and are not allocated to individual departments and agencies. The portion of the current and estimated future outlays for CSRS not paid by NRC is included in NRC's financial statements as an imputed financing source (Note 13).
NOTE 17. OTIIER EXPENSES Other expenses as of September 30,1997 and 1996, consist of:
1997 1996 s
Loss on disposal of property 5613,338
$ 41,403 Bad debt expense 39.792 (24.302)
S653.130 S 17.101 (continued on page M) 1997 Accot N1 Allil ITv REIORT
f 1
Audit of IT IV96 Iinancial Statement (continuedI g"
NOTES TO PillNCHML SIATEMENTS September 30,1997 and 1996 i
NOTE 18. EXCESS Olt (SIIOllTAGE) OF ltEVENUES AND FINANCING SOUllCES OVER TOTAL EXPENSES The excess or (shortage) of revenues and financing sources over total expenses represents expenses not covered by budgetary resources for the years ended September 30,1997 and 1996, and consists of:
e 1997 1996 i
.s Accrued annual leave
$ (546,501)
$ (795,701)
Accrued workers' compensation (3.378.251)
(862.823)
S(3.924.858)
S(l.658.529)
Expenses not covered by budgeta y resources are not funded from current appropriations but are to be funded from future approp'iations and assessments.
[
NOTE 19. NON-OPER ATING CilANGES Non-operating charges for the fiscal years ended September 30,1997 and 1996, consist of the following:
1997 1996 I
[
Change in unexpended appropriation
$(38,872,829)
S(35,202,426) f Change in invested capital
,_D.390.519) 1.013.679 L
S(41.263.348)
S(34.188.747)
.-t F
l!.S. M TI.I.AM RI:Gl~t.A10Rv C0\\1\\11%I0%
r.
[,
g.-
f::-
S' L:y If U
fL-0 i
L t
p f4 --
O.
I i.:
V; v,..
t e
..t; APPENDIX i1.
[. ;
COMMENTS OF r
e p
l-TIIE CHIEF FINANCIAL OFFICER
[1
(
t;p e
f-c
- f. <
?
h:
e I f; t-h:.
s t..
iI hl';
M:
i yy in yl 4
i i!
n-I
.\\
o t..
- i. i
.n
b Audit of IT 1996 Iinancial Statement (continued) i I
434 RfCp
}$
UNITED STATES p
{
- ,E NUCLEAR REGULATORY COMMISSION WASHINGTON, DC 20555-0001 February 6,1998 MEMORANDUM TO
liubert T. Bell Inspector General 4
FROM:
Jesse L. Funches
/
Chief Financial Officer
SUBJECT:
DRAFF AUDIT REPORT - AUDIT OF THE NUCLEAR REGULATORY COMMISSION'S FISCAL YEAR 1997 FINANCIAL STATEMENTS We have reviewed the draft audit report of the Nuclear Regulatory Commission's FY 1997 finan-cial statements. There are two reponable conditions and recommendations. Our comments are:
Recommendation 1: The CFO should establish, for systems within the agency's control, initia-tives for designing recovery plans for all financial managements systems. In providing such guidance, the CFO should assess the priority of each system. Furthermore, the CFO should assure that policies are issued ensuring that the design or development of any new financial management systems, and the related security and maintenance programs of such systems include the development of a plan which is documented and tested. We recognize that NRC, as a user of the FFS, does not have the leverage to compel FMS to comply with a sound disaster recovery program. Therefore, no recommendation is offered other than continued monitoring of this condition through the user group.
2 Response Agency financial systems are currently undergoing major changes. The three sys-tems mentioned in the audit report are all scheduled for replacement within the next one to two years. The Federal Financial System (FFS) and the accounts receivable / license fee billing system will be replaced by the new agency-wide resource management system STARFIRE. The Payroll System will be replaced by the Payroll / Personnel (PAY /PERS) System. The OCFO and OClO will determine the cost effectiveness of developing continuity / contingency plans for the systems that are to be retired or replaced. The OCFO and OClO will then jointly prepare a plan by June I,1998, to develop the required continuity / contingency plans for continuing financial
(
systems. These plans will be developed in accordance with OMB Circular A-130, Management F
of Federal information Resources, and the NRC System Development and Life Cycle Manage-ment (SDLCM) Methodology.
, (
I U.s. NcCl.1:AR RIEL'LAloRY Co\\l%11ssioN w
e t
Recommendation 2: The CFO should reduce the number of persons holding the " lead accoun-tant" access profile and/or implement additional compensating controls. The compensating controls could include requiring supervisory review and certification of reconciliations and their i
resulting journal vouchers.
k Response: The OCFO will examine those persons holding the " lead accountant" access profile L
and determine whether it is appropriate to make any changes to access profiles. In addition, the OCFO will institute compensating controls consisting of review and certification of reconcilia-tions and their resulting journal vouchers by the Financial Team leader.
?
We appreciate the opportunity to respond to the draft audit report.
CONTACT:
Barbara K. Gusack, OCFO/DAF/ GAB i
415-6054 s
f I
f p
.r i-6 t
I d.'
l i
5 1997 ACCol'N'IAltli ITY RI.10RT
Appendix i
I i
1997 ACCol'NTill!!.I'IY Hl.I' ORT
>m mZo_X >
o 4
=f n
.R I
E1i v i
$d C
E n
s c, r
fo wj d
d n
r s d w n, i
o e
% R 5 a tcic r
v VA ir e
e r xgo n inc 0
Ds s
o C
e-e u
II "o
c v
I h
ru c
s e
e x
R E
y tp" u
e D
sr i
dlfa
~
%b I
A d
i
~,
lc tr u
a P
h C
I o
V s
n n
a oR h
I i
n a
g a
eD mr o
r e R
c i
I foi IH n
l O ta ie G
z
._N 1
i d
1 p
y 1
n I
% w.
I n x oc a
c i
geO e
g R
r S
O k,
v n
e c
I I
n I
o i,"
o ro f
i
,C I
o Wr r
A s
i
,h M
tc e
r e
R s
o r
s cd tc i
a.
4 i:eL I
D I
g m
r eT v
m
._A I
d I
D iur
.ni J
t F
E r
I c 'o
.r ev e o nC xl io u
cy c r E u ih e
e o i
D I
W%
I n p 9
o M
. z p
y ole tu R' xf i
E gd C
_a e o S
e R1 h D
P y
1 t
~,
r ls e
i h
o
_N fo t
c I
e a
E l
C u
s
_c e
D.
I d*~"
u g
i sb J
R la e
dg d
s
~
A e
w i
r c
nr d
r cG ic m
e I
ae a
R i
I FHmic I
m O
- d e
A 3
m O
s n
l E
c O
u N
d ns I
h e
S.
d *o ro f
I
%ts s.,
w C
r U
tc o
e n
e i
r m
i :m
- o. h I
r D
r
_I n= :_ R,.
. c e "!
l v
. o h
- e ty u
y c
e e
C d
x :.
A I
S E'.
j"c y
c d
m r
'u w
a pR
=
n I
k o
e t
o A
D d
B s
is te v n r
a
^
e o yg yWr S m ph u o mgl tc r a
d e
eo c
w o u
Wg DC N
I
%p
? >- ?s=,g?y3e O72 !c
4!l
APPENDIX B ABNORMAL OCCURRENCE CRITERIA AND GUIDELINES FOR OTHER EVENTS OF INTEREST An event will be considered an abnormal occurrence (AO) if it involves a major reduction in the degree of protection of the public health or safety. This type of incident or event would have a moderate or more severe impact on the public health or safety and could include, but need not be limited to the following:
(1) Moderate exposure to, or release of, radioactive material licensed by or otherwise regu-lated by the Commission; (2) Major degradation of essential safety-related equipment; or (3) Major deficiencies in design, construction, use of, or management controls for facilities or radioactive material licensed by or otherwise regulated by the Commission.
The following criteria for detennining an AO and the guidelines for "Other Events of Inter-est" were set forth in an NRC policy statement published in the Federal Register on December 19,1996,(61 FR 67072). The policy statement was revised to include criteria for gaseous diffusion plants and was published in the Federal Register on April 17,1997 (62 FR 18820).
Note that in addition to the criteria for fuel cycle facilities (Section 111 of the AO criteria) that are applicable to licensees and certificate holders, such as the gaseous diffusion plants, other criteria that reference " licensees," " licensed facility," or " licensed material" also may be applied to events at facilities of certified holders.
Abnormal Occurrence Criteria Criteria by types of events used to determine which events will be considered for reporting as AOs are as follows:
I. For All Licensees l
A. Iluman Exposure to Radiation from Licensed Material l
l
- 1. Any unintended radiation exposure to an adult (any individual 18 years of age or older) resulting in an annual total effective dose equivalent (TEDE) of 250 millisievert (mSv) (25 rem) or more; or an annual sum of the deep dose equiva-lent (external dose) and committed dose equivalent (intake of radioactive mate-rial) to any individual organ or tissue other than the lens of the eye, bone marrow, and the gonads of 2500 mSv (250 rem) or more; or an annual dose equivalent to the lens of the eye of I Sv (100 rem) or more; or an annual sum of the deep dose equivalent and committed dose equivalent to the bone marrow, and the gonads of l_
1 Sv (100 rem) or more; or an annual shallow-dose equivalent to the skin or extremities of 2500 mSv (250 rem) or more.
- 2. Any unintended radiation exposure to any minor (an individual less than 18 years of age) resulting in an annual TEDE of 50 mSv (5 rem) or more, or to an embryo /
fetus resulting in a dose equivalent of 50 mSv (5 rem) or more.
Icontinued on page 76) 1997 ACCoONTABn.ITY HEPoHT
Appendix il (continued)
- 3. Any radiation exposure that has resulted in unintended permanent functional damage to an organ or a physiological system as determined by a physician.
B. Discharge or Dispersal of Radioactive Material from its Intended Place of Confinement
- 1. The release of radioactive material to an unrestricted area in concentrations j
which, if averaged over a period of 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />, exceeds 5000 times the values specified in Table 2 of Appendix B to 10 CFR Part 20, unless the licensee has demonstrated compliance with s 20.1301 using s20.1302 (b)(1) or 20.1302 (b)(2)(ii).
- 2. Radiation levels in excess of the design values for a package or the loss of confinement of radioactive material resulting in one or more of the following:
i (a) a radiation dose rate of 10 mSv (I rem) per hour or more at 1 meter (3.28 feet) from the accessible external surface of a package containing radioactive material; (b) a radiation dose rate of 50 mSv (5 rem) per hour or more on the accessible external surface of a package containing radioactive material and that meet the requirements for" exclusive use" as defined in 10 CFR 71.47; or (c) release of radioactive material from a package in amounts greater than the regulatory limits in 10 CFR 71.51 (a)(2).
C. Theft, Diversion, or Loss of Licensed Material, or Sabotage or Security Breacn.5
- 1. Any lost, stolen, or abandoned sources that exceed 0.01 times the A, values, as listed in 10 CFR Part 71 Appendix A, Table A-1, for special form (scaled /
nondispersible) sources, or the smaller of the A, or 0.01 times the A, values, as listed in Table A-1, for nonnal form (unsealed / dispersible) sources or for sources for which the form is not known. Excluded from reporting under this criterion are those events involving sources that are lost, stolen, or abandoned under the following conditions: sources abandoned in accordance with the requirements of 10 CFR 39.77(c); sealed sources contained in labeled, rugged source housings:
recovered sources with sufficient indication that doses in excess of the reporting thresholds specified in AO criteria I.A.! and I.A.2 did not occur during the time the source was missing; and unrecoverable sources lost under such conditions that doses in excess of the reporting thresholds specified in AO criteiia 1.A.1 and I.A.2 were not known to have occurred.
- 2. A substantiated case of actual or attempted theft or diversiori of licensed material or sabotage of a facility.
- 3. Any substantiated loss of special nuclear material or any substantiated inventory discrepancy that isjudged to be significant relative to normally expected perfor-mance, and that is judged to be caused by theft or diversion or by substantial breakdown of the accountability system.
5 Information pertaining to certain incidents may be either classified or under consideration for classification because of national security implications. Classified information will be withheld when formally reporting these incidents in accordance with Section 208 of the Energy Reorganization Act of 1974 as amended. Any classified details regarding these incidents would be available to the Congress, upon request. under appropriate security arrangements.
U.S. N1 Cl. EAR HILL'ISloHy Co%I\\li%loN
I
- 4. Any substantial breakdown of physical security or material control (i.e., access control containment or accountability systems) that significantly weakened the protection against theft, diversion, or sabotage.
D. Other Events (i.e., those concerning design, analysis, construction, testing, l
operation, use, or disposal of licensed facilities or regulated materials).
j
- 1. An accidental criticality [10 CFR 70.52(a)].
I
- 2. A major deficiency in design, construction, control, or operation having signifi-cant safety implications requiring immediate remedial action.
- 3. A serious deficiency in management or procedural controls in major areas.
- 4. Series of events (where individual events are not of major importance), recuning -
incidents, and incidents with implications for similar facilities (generic incidents) that create a major safety concern.
II. For Commercial Nuclear Power Plant Licensees.
A. Malfunction of Facility, Structures, or Equipment.
- 1. Exceeding a safety limit of license technical specification (TS) Section 50.36(c).
- 2. Serious degradation of fuel integrity, primary coolant pressure boundary, or primary containment boundary.
- 3. Loss of plant capability to perfonn essential safety functions so that a release of radioactive materials, which could result in exceeding the dose limits of 10 CFR Part 100 or 5 times the dose limits of 10 CFR Part 50, Appendix A General J
Design Criterion (GDC) 19, could occur from a postulated transient or accident (e.g., loss of emergency core cooling system, loss of control rod system).
B. Design or Safety Analysis Deliciency, Personnel Error, or Procedural or Administrative Inadequacy.
.1
- 1. Discovery of a major condition not sp:cifically considered in the safety analysis report (SAR) or TS that requires imme liate remedial action.
I
- 2. Personnel error or procedural deficiences that result in loss of plant capability to perfonn essential safety functions so that i release of radioactive materials, which could result in exceeding the dose limits of 10 CFR Part 100 or 5 times the dose limits of 10 CFR Part 50, Appendix A, GDC 19, could occur from a postulated transient or accident (e.g., loss of emergency core cooling system, loss of control rod system).
Ill.
For Fuel Cycle Facilities A. A shutdown of the plant or portion of the plant resulting from a significant event and/or violation of a law, regulation, or a license / certificate condition.
B. A major condition or significant event not considered in the license certificate that requires immediate remedial action.
(continued on page 78) 1997 MToONTAlulJrv REPORT
Appendix B (continued)
C. A major condition or significant event that seriously compromises the ability of a safety system to perform its designated function that requires immediate remedial action to prevent a criticality, radiological or chemical process hazard.
IV. For Medical Licensees A medical misadministration that:
A. Results in a dose that is (1) equal to or greater than I gray (Gy)(100 rads) to a major portion of the bone marrow, to the lens of the eye, or to the gonads, m (2) equal to or greater than 10 Gy (1000 rads) to any other organ; and B. Represents either (1) a dose or dosage that is at least 50 percent greater than that prescribed in a written directive m (2) a prescribed dose or dosage that (i) is the wrong radiopharmaceuticali or (ii) is delivered by the wrong route of administration, or (iii) is delivered to the wrong treatment site, or (iv) is delivered by the wrong treatment mode, or (v) is from a leaking source (s).
Guidelines for "Other Events of Interest" The Conunission may determine that events other than AOs may be of interest to Con-gress and the public and be included in an appendix to the AO report as "Other Events of Interest." Guidelines for events to be included in the AO report for this purpose are items that may possibly be perceived by the public to be of health or safety significance. Such items would not involve a major reduction in the level of protection provided for public health or safety; therefore, they would not be reported as abnormal occurrences. An example is an event where upon final evaluation by an NRC Incident investigation Team, or an Agreement State equivalent response, a determination is made that the event does not meet the criteria for an abnormal occurrence.
- The wrong radiopharmaceutical as used in the AO criterion for medical misadministration refers to any radio-pharmaceutical other than the one listed in the w ritten directive or in the clinical procedures manual.
I U.s.Nt'CI. EAR REGl'tAloRY Co\\t\\H% ion
i
/
NUREG - 1542 Vol. 3 1
120555154486 1 1AN19A19B19C1 US NRC-DIRM TPS-PDR-AUREG 2WFN-6E7
{
WASHINGTON DC 20555
)
l l
l l
l l
r l
l l
ISBN 016-049490-7 l'
90000 i
l I l l l
H i
i I
i t
j i
i i,
.p 9 780160 494901'
l I
i NUREG - 1542 j
Vol. 3 t
b5 NkhOfR 6
1 1AN19A19819C1 TPS-POR-NUREG 2WFN-6E7 WASHINGTON DC 20555 l
l I
\\
\\
i I
i ISBN 016-049490-7 l
l i
l 90000 i
l l
I J
9 780160 494901
-