ML21287A643

12-08-21 Letter to the President and Congress from Chairman Hanson Submits the Nrc'S Fiscal Year 2021 Agency Financial Report

ML21287A643
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Issue date:	12/08/2021
From:	Christopher Hanson NRC/Chairman
To:	Biden J, Carper T, Feinstein D, Harris K, Kaptur M, Leahy P, Maloney C, Manchin J, Markey E, Pallone F, Pelosi N, Peters G, Rush B, Sanders B, Thompson B, Tonko P, Yarmuth J US Congress, US Executive Office of the President, Office of the Vice President, US HR (House of Representatives), US SEN (Senate)
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Fiscal Year 2021 Agency Financial Report UNITED STATES NUCLEAR REGULATORY COMMISSION

AVAILABILITY OF REFERENCE MATERIALS IN NRC PUBLICATIONS NRC Reference Material Non-NRC Reference Material As of November 1999, you may electronically access Documents available from public and special technical NUREG-series publications and other NRC records at the libraries include all open literature items, such as books, NRCs Library at www.nrc.gov/reading-rm.html. Publicly journal articles, transactions, Federal Register notices, released records include, to name a few, NUREG-series Federal and State legislation, and congressional reports.

publications; Federal Register notices; applicant, licensee, Such documents as theses, dissertations, foreign reports and vendor documents and correspondence; NRC and translations, and non-NRC conference proceedings correspondence and internal memoranda; bulletins and may be purchased from their sponsoring organization.

information notices; inspection and investigative reports; licensee event reports; and Commission papers and their Copies of industry codes and standards used in a attachments. substantive manner in the NRC regulatory process are maintained at NRC publications in the NUREG series, NRC regulations, The NRC Technical Library and Title 10, Energy, in the Code of Federal Regulations Two White Flint North may also be purchased from one of these two sources.

11545 Rockville Pike Rockville, MD 20852-2738

1. The Superintendent of Documents U.S. Government Publishing Office These standards are available in the library for reference Washington, DC 20402-0001 use by the public. Codes and standards are usually Internet: www.bookstore.gpo.gov copyrighted and may be purchased from the originating Telephone: (202) 512-1800 organization or, if they are American National Standards, Fax: (202) 512-2104 from American National Standards Institute

2. The National Technical Information Service 5301 Shawnee Road 11 West 42nd Street Alexandria, VA 22312-0002 New York, NY 10036-8002 Internet: www.ansi.org Internet: www.ntis.gov Telephone: (212) 642-4900 1-800-553-6847 or, locally, (703) 605-6000 A single copy of each NRC draft report for comment is available free, to the extent of supply, upon written Legally binding regulatory requirements are stated only in request as follows: laws; NRC regulations; licenses, including technical specifications; or orders, not in NUREG-series publications.

Address: U.S. Nuclear Regulatory Commission The views expressed in contractor prepared publications in Office of Administration this series are not necessarily those of the NRC.

Digital Communication and Administrative Services Branch The NUREG series comprises (1) technical and Washington, DC 20555-0001 administrative reports and books prepared by the staff E-mail: Reproduction.Resource@nrc.gov (NUREG-XXXX) or agency contractors (NUREG/CR-XXXX),

Facsimile: (301) 415-2289 (2) proceedings of conferences (NUREG/CP-XXXX),

(3) reports resulting from international agreements Some publications in the NUREG series that are posted (NUREG/IA-XXXX), (4) brochures (NUREG/BR-XXXX),

at the NRCs Web site address www.nrc.gov/reading-rm/ and (5) compilations of legal decisions and orders of the doc-collections/nuregs are updated periodically and may Commission and Atomic and Safety Licensing Boards differ from the last printed version. Although references to and of Directors decisions under Section 2. 206 of the NRCs regulations (NUREG-0750).

material found on a Web site bear the date the material was accessed, the material available on the date cited DISCLAIMER: This report was prepared as an account may subsequently be removed from the site.

of work sponsored by an agency of the U.S. Government.

Neither the U.S. Government nor any agency thereof, nor any employee, makes any warranty, expressed or implied, or assumes any legal liability or responsibility for any third partys use, or the results of such use, of any information, apparatus, product, or process disclosed in this publication, or represents that its use by such third party would not infringe privately owned rights.

About This Report The Agency Financial Report (AFR) for the U.S. Nuclear Regulatory Commission (NRC) provides financial and summary performance information in accordance with Office of Management and Budget Circular A-136, Financial Reporting Requirements. This AFR is an account of the agencys stewardship of its resources during fiscal year 2021, which covers the period from October 1, 2020, to September 30, 2021. The report is organized into the following three chapters:

• Chapter 1: Managements Discussion and Analysis This chapter provides an overview of the NRC financial information and summary-level program performance information. It includes an overview of program performance, current status of systems, internal controls, financial management, and the FY 2021 financial statement analysis.

• Chapter 2: Financial Statements and Auditors Report This chapter contains details on the NRCs finances for FY 2021. It includes a message from the Chief Financial Officer, the financial statements, and accompanying notes, required supplementary information, and the independent auditors report.

• Chapter 3: Other Information This chapter provides the Office of the Inspector Generals discussion of management and performance challenges, a summary of the financial statement audit, information on payment integrity and fraud, details on space occupancy, a glossary of acronyms, and other information.

NRC Reports on the Agency Web Site:

• The Annual Performance Plan is reflected in the NRCs FY 2022 Congressional Budget Justification and is posted on the NRCs Web site at https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1100/.

• Since FY 2017, AFRs are located at https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr2220/

• Before publication of the AFR, the NRC prepared Performance and Accountability Reports, which are located at https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1542/.

Public Protection Notification The NRC may not conduct or sponsor, and a person is not required to respond to, a request for information or an information collection requirement unless the requesting document displays a currently valid Office of Management and Budget control number.

The document NUREG-2220, Volume 5, has been reproduced from the best available copy.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment iii

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment iv

Table of Contents The Commission .......................................................................................................... vi A Message from the Chairman ................................................................................... vii Chapter 1: Managements Discussion and Analysis ..1 Mission - Vision - Principles of Good Regulation .. 2 About the NRC . 3 The NRCs Organizational Structure . 4 The NRCs Regulatory Activities 5 The Nuclear Industry .6 Future Challenges........10 Source of Funds. .................................................................................................................12 Analysis of the Financial Statements .....................................................................................13 Management Assurances, Systems, Controls, and Legal Compliance ..................................18 Program Performance Overview............................................................................................27 Chapter 2: Financial Statements and Auditors Report .......................................... 35 A Message from the Chief Financial Officer ...........................................................................36 Financial Statements .............................................................................................................37 Notes to the Financial Statements .........................................................................................41 Required Supplementary Information ....................................................................................64 Inspector Generals Letter Transmitting Independent Auditors Report ..................................69 Independent Auditors Report ................................................................................................73 Managements Response to the Independent Auditors Report .............................................90 Chapter 3: Other Information .................................................................................... 95 Inspector Generals Assessment of the Most Serious Management and Performance Challenges Facing the NRC ..................................................................................................97 Summary of Financial Statement Audit and Management Assurances ................................117 Payment Integrity.................................................................................................................118 Fraud Reduction Report ......................................................................................................119 Real Property ......................................................................................................................120 Civil Monetary Penalty Adjustment for Inflation ....................................................................121 Grants Oversight and New Efficiency Act Requirements .....................................................122 Acronyms and Abbreviations ...............................................................................................124 FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment v

The Commission The authority of the U.S. Nuclear Regulatory Commission is vested in a Commission of five members, with one member designated by the President of the United States to serve as Chairman. With the advice and consent of the Senate, the President appoints each member to serve a 5-year term. The Chairman is the chief executive officer and official spokesperson for the Commission. The Commission as a whole formulates policies and regulations governing the safety and security of nuclear reactors and materials, issues orders to licensees, and adjudicates legal matters brought before it. The Executive Director for Operations carries out program policies and decisions made by the Commission. At the end of FY 2021, two of the five Commissioner positions were vacant.

Chairman Christopher T. Hanson Commissioner Jeff Baran Commissioner David A. Wright FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment vi

A Message from the Chairman The U.S. Nuclear Regulatory Commission (NRC) is pleased to present its fiscal year 2021 Agency Financial Report (AFR).

This AFR details the NRC's continuing success in achieving its mission, which is to license and regulate the Nation's civilian use of radioactive materials in a manner that provides reasonable assurance of adequate protection of public health and safety and promotes the common defense and security. The AFR provides key financial information and a summary of program performance to the President, Congress, and the American people, detailing how we used our resources during FY 2021.

The AFR is available at https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr2220/.

The NRC is an independent regulatory agency dedicated to the effective and efficient regulatory oversight of the Nation's operating power, research, and test nuclear reactors. The agency also maintains regulatory oversight of nuclear reactors in various stages of decommissioning. The NRC reviews all safety aspects of new reactor designs, siting, and construction. Further, the agency focuses on the safe and secure use of nuclear materials in the energy, medical, educational, and industrial sectors through effective regulatory oversight of fuel facilities, uranium recovery sites, decommissioning sites, spent nuclear fuel sites, and nuclear material users.

The NRC is committed to good governance and the prudent management of its resources.

Based on assessments the agency conducted consistent with the Federal Managers' Financial Integrity Act of 1982 (Integrity Act), I have concluded the NRC is able to provide an unmodified statement of assurance that the internal control and financial management systems meet the objectives of the Integrity Act. The FY 2021 AFR includes the results of the independent audit of the NRC's FY 2021 financial statements, which I am pleased to announce is an unmodified opinion. The audit does include a material weakness to management controls over financial reporting and a significant deficiency due to management controls over user accounts. The NRC will continue to take corrective actions and strengthen controls in these areas. The financial and summary performance data published in this report are complete, accurate, reliable, and timely, in accordance with the Reports Consolidation Act of 2000 and Office of Management and Budget Circular A-136, "Financial Reporting Requirements." Additionally, I have concluded that the agency is in substantial compliance with the Federal Financial Management Improvement Act of 1996 (FFMIA), based on the NRC's application of the FFMIA risk model.

The performance and dedication of NRC employees in achieving the agency's safety and security goals is evident. As an agency, we look forward to continuing to provide the high-quality service the American people have come to expect from us.

Christopher T. Hanson Chairman FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment vii

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment viii

Chapter 1: Managements Discussion and Analysis FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 1

Chapter 1 Managements Discussion and Analysis Mission The U.S. Nuclear Regulatory Commission (NRC) licenses and regulates the Nations civilian use of radioactive materials to provide reasonable assurance of adequate protection of public health and safety, and to promote the common defense and security, and to protect the environment.

Vision Demonstrate the Principles of Good Regulation in performing the agencys mission.

To be successful, the NRC must not only excel in carrying out its mission but must do so in a manner that engenders the trust of the public and stakeholders. The Principles of Good Regulation independence, openness, efficiency, clarity, and reliabilityguide the agency.

They affect how the NRC reaches decisions on safety, security, and the environment; how the NRC performs administrative tasks; and how its employees interact with each other as well as with external stakeholders. By adhering to these principles, the NRC maintains its regulatory competence, conveys that competence to stakeholders, and promotes trust in the agency. The agency puts these principles into practice with effective, realistic, and timely actions.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 2

Chapter 1 Managements Discussion and Analysis About the NRC The U.S. Congress established the NRC on January 19, 1975, as an independent Federal agency regulating the commercial and institutional uses of nuclear materials. The Atomic Energy Act of 1954, as amended, and the Energy Reorganization Act of 1974, as amended, define the NRCs purpose. These acts provide the foundation for the NRCs mission to regulate the Nations civilian use of byproduct, source, and special nuclear materials to provide adequate protection of public health and safety, to promote the common defense and security, and to protect the environment. The agency regulates civilian nuclear power plants and other nuclear facilities, as well as other uses of nuclear materials. These other uses include nuclear medicine programs at hospitals; academic activities at educational institutions; research work; industrial applications, such as gauges and testing equipment; and the transport, storage, and disposal of nuclear materials and wastes. Additional information about the NRC is available in the Information Digest at https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1350/.

NRC Headquarters is located in Rockville, MD. The agency Operations Center in the headquarters building coordinates communications with NRC licensees, State agencies, and other Federal agencies. This center is the focal point for assessing and responding to operating events in the industry. NRC operations officers staff the Operations Center 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> a day, 7 days a week. The agency also has four regional offices located in King of Prussia, PA; Atlanta, GA; Lisle, IL; and Arlington, TX. The regional offices allow the agency to work closely with the agencys licensees to ensure safety. The NRC also employs at least two resident inspectors at each of the Nations nuclear power reactor, new reactor, and fuel fabrication sites.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 3

Chapter 1 Managements Discussion and Analysis The NRCs Organizational Structure FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 4

Chapter 1 Managements Discussion and Analysis The NRCs Regulatory Activities The NRC performs five principal regulatory functions: developing regulations and guidance for applicants and licensees; licensing or certifying applicants to use nuclear materials, operate nuclear facilities, construct new nuclear facilities, and decommission facilities; inspecting and assessing licensee operations and facilities to verify that licensees are complying with NRC requirements and taking appropriate follow-up or enforcement actions when necessary; evaluating operational experience of license facilities and activities; and conducting research, holding hearings, and obtaining independent reviews to support regulatory decisions (see Figure 1).

The standards and regulations established by the agency set the rules that users of radioactive materials must follow. Drawing on the knowledge and experience of the agencys scientists and engineers, these rules are the basis for protecting workers and the general public from the potential hazards associated with the use of radioactive materials.

With a few exceptions, any organization or individual intending to have or use radioactive materials must obtain a license. A license identifies the type and amount of radioactive material that may be held and used. NRC Figure 1 How the NRC Regulates scientists and engineers evaluate the license application to ensure that the potential licensees use of nuclear materials meets the agencys safety and security requirements.

The NRC regulates 93 commercial nuclear power reactors operating in 28 states at 55 sites; 31 research and test reactors; 25 nuclear reactors in various stages of decommissioning; 81 independent spent fuel storage installations; 9 licensed fuel cycle facilities; 3 uranium recovery sites; and nearly 2,200 licenses for medical, academic, industrial, and general uses of nuclear materials. The agency conducts approximately 600 to 800 safety and security inspections of its nuclear materials licensees annually.

Under the NRCs Agreement State program, 39 states have assumed primary regulatory responsibility for the industrial, medical, and other users of nuclear materials within their states, accounting for more than 16,000 licenses. The NRC works closely with these states to assist them in maintaining public safety through acceptable licensing and inspection procedures.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 5

Chapter 1 Managements Discussion and Analysis The Nuclear Industry The NRC is responsible for regulating all aspects of the civilian nuclear industry. The industry can best be described by examining the nuclear fuel cycle (see Figure 2). The nuclear material cycle begins with the mining and production of nuclear fuel or the use of nuclear materials for medical, industrial, and other applications, continues with the use of nuclear fuel to power the Nations nuclear power plants, and ends with the safe transportation and storage of spent nuclear fuel and other nuclear waste. The NRCs regulatory programs provide reasonable assurance that radioactive materials are used safely and securely at every stage in the nuclear material cycle. To address safety and security issues, the NRC has developed regulatory practices, knowledge, and expertise specific to each activity in the nuclear fuel cycle.

Fuel Facilities The production of nuclear fuel begins at uranium mines where milled uranium ore is used to produce a uranium concentrate called yellowcake. At a special facility, the yellowcake is converted into uranium hexafluoride (UF6) gas and loaded into cylinders. The cylinders are sent to a gaseous diffusion plant, where uranium is enriched for use as reactor fuel.

The enriched uranium is then converted into oxide powder, fabricated into fuel pellets (each about the size of a fingertip),

loaded into metal fuel rods about

4. 3 meters long and bundled into Figure 2 The Nuclear Fuel Cycle reactor fuel assemblies at a fuel fabrication facility. Assemblies are then transported to nuclear power plants, non-power research reactor facilities, and naval propulsion reactors for use as fuel (see Figure 3). The NRC licenses eight major fuel fabrication and production facilities and three enrichment facilities in the United States. Because they handle extremely hazardous material, these facilities take special precautions to prevent theft, diversion, and dangerous exposures.

Figure 3 Simplified Fuel Fabrication Process FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 6

Chapter 1 Managements Discussion and Analysis Reactors The NRC licensed nuclear reactors generate approximately 19 percent of the U.S. gross electricity needs, or about 807 billion kilowatt hours annually. The NRC regulates about 80 different reactor designs. To generate electricity, power plants change one form of energy into another. Electrical generating plants convert heat energy, the kinetic energy of wind or falling water, or solar energy into electricity. Other types of heat-conversion plants burn coal, oil, or gas to produce heat energy that is then used to produce electricity. Nuclear energy cannot be seen. Heat energy is not produced by the burning of fuel in the usual sense. Rather, energy is given off by the nuclear fuel as certain types of atoms split in a process called nuclear fission.

This energy is in the form of fast-moving particles and radiation. As the particles and radiation move through the fuel and surrounding water, the energy is converted into heat, which generates electricity. The radiation energy can be hazardous, and facilities take special precautions at nuclear power plants to protect people and the environment from these hazards (see Figures 4 and 5).

Because the fission reaction produces potentially hazardous radioactive materials, nuclear power plants are equipped with safety systems to protect workers, the public, and the environment. Radioactive materials require careful use because they produce radiation, a form of energy that can damage human cells. Depending on the amount and duration of the exposure, radiation can potentially cause cancer. In a nuclear reactor, most hazardous radioactive substances, called fission byproducts, are trapped in the fuel pellets, or in the sealed metal tubes holding the fuel. However, small amounts of these radioactive fission byproducts, principally gases, become mixed with the water passing through the reactor. Other impurities in the water also become radioactive as they pass through the reactor. The facility processes and filters the water to remove these radioactive impurities and then returns the water to the reactor cooling system.

Figure 4 The Boiling-Water Reactor Figure 5 The Pressurized-Water Reactor FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 7

Chapter 1 Managements Discussion and Analysis Materials Users The medical, academic, and industrial fields all use nuclear materials. For example, about one-third of all patients admitted to U.S. hospitals are diagnosed or treated using radioisotopes.

Most major hospitals have specific departments dedicated to nuclear medicine. Of the nuclear medicine or radiation therapy procedures performed annually, the vast majority are used in diagnoses. Radioactive materials used as a diagnostic tool can identify the status of a disease and minimize the need for surgery. Radioisotopes give doctors the ability to look inside the body and observe soft tissues and organs, in a manner similar to the way x-rays provide images of bones. Radioisotopes carried in the blood also allow doctors to detect clogged arteries or check the functioning of the circulatory system.

The same property that makes radiation hazardous can also make it useful in treating certain diseases like cancer. When living tissue is exposed to high levels of radiation, cells can be destroyed or damaged. Doctors can selectively expose cancerous cells (cells that are dividing uncontrollably) to radiation to either destroy or damage these cells.

Many of todays industrial processes also use nuclear materials. Technologically advanced methods that ensure the quality of manufactured products often rely on radiation generated by radioisotopes. To determine whether a well drilled deep into the ground has the potential for producing oil, geologists use nuclear well-logging, a technique that employs radiation from a radioisotope inside the well, to detect the presence of different materials. Radioisotopes are also used to sterilize instruments, find flaws in critical steel parts and welds that go into automobiles and modern buildings, authenticate valuable works of art, and solve crimes by spotting trace elements of poison. Radioisotopes can also eliminate dust from film and compact discs and reduce static electricity (which may create a fire hazard) from can labels. In manufacturing, radiation can change the characteristics of materials, often giving them features that are highly desirable. For example, wood and plastic composites treated with gamma radiation resist abrasion and require low maintenance. As a result, they are used for some flooring in high-traffic areas of department stores, airports, hotels, and churches.

Waste Disposal During normal operations, a nuclear power plant generates both high level radioactive waste, which consists of used fuel (usually called spent fuel), and low level radioactive waste, which includes contaminated equipment, filters, maintenance materials, and resins used in purifying water for the reactor cooling system. Other users of radioactive materials also generate low level waste.

Nuclear power plants handle each type of radioactive waste differently. They must use special procedures in the handling of the spent fuel because it contains the highly radioactive fission byproducts created while the reactor was operating. The spent fuel from nuclear power plants can be stored in water-filled pools at each reactor site. The water in the spent fuel storage pool provides cooling and adequately shields and protects workers from the radiation. Nuclear power plants also use dry casks to store spent fuel. These large metal or concrete casks rest on concrete pads adjacent to the reactor facility. The thick layers of concrete and steel in these casks shield workers and the public from radiation.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 8

Chapter 1 Managements Discussion and Analysis Currently, most spent fuel in the United States remains stored at individual plants. Permanent disposal of spent fuel from nuclear power plants will require a disposal facility that can provide reasonable assurance that the waste will remain isolated for thousands of years.

Licensees often store low-level waste on site until its radioactivity has decayed and the waste can be disposed of as ordinary trash, or until amounts are large enough for shipment to a low-level waste disposal site in containers approved by the U. S. Department of Transportation.

The NRC has developed a waste classification system for low-level radioactive waste based on its potential hazards and has specified disposal and waste form requirements for Class A, Class B, and Class C waste. Generally, Class A waste contains lower concentrations of radioactive material than Class B and Class C wastes. The three disposal facilities that accept a broad range of low-level wastes are located in Barnwell, SC, Richland, WA, and Andrews, TX.

Spent Fuel Dry Cask Storage FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 9

Chapter 1 Managements Discussion and Analysis Future Challenges Many challenges and external factors influence the NRCs ability to achieve its strategic goals and associated objectives. The most significant challenges include industry operating experience, national priorities, a potential significant incident at a domestic or non-U.S. nuclear facility, the security and threat environment, legislation, Federal court litigation, market forces, new technologies, and resource availability. The NRC strives to respond promptly to shifts in agency priorities necessitated by these challenges. The nuclear industry has maintained an excellent safety record at nuclear power plants over decades as both the nuclear industry and the NRC have gained substantial experience in the operation and maintenance of nuclear power facilities. Maintaining this excellent safety record requires that the agency take proactive measures to ensure the accomplishment of its mission. The performance and dedication of the NRC employees in achieving the agency's safety and security goals is evident by the efforts shown during the coronavirus (COVID-19) Pandemic. COVID-19 has had minimum effect on NRC (i.e., increased telework). The sections below highlight the key challenges the agency faces.

Market Forces Many market forces affect the nuclear industry. These can affect the business operations of facility operators and license applicants subject to NRC jurisdiction and therefore the workload before the agency. The NRC must be prepared with the regulatory infrastructure to continue to provide reasonable assurance of the safety and security of operating facilities, support areas such as decommissioning of nuclear power plants, changes in exports and imports, and licensing of new technologies and facilities.

Globalization and Development of Nuclear Technology Technological changes may affect the development of advanced nuclear systems and support infrastructure, resulting in impacts to the industry activities subject to NRC jurisdiction.

Increased globalization of nuclear technology, including small modular reactors and advanced reactor designs, could increase competition in the nuclear supply chain and; therefore, could affect industry operating costs and increase the complexity of regulatory oversight due to the need to encompass foreign vendors. In addition to operating and regulatory impacts on the domestic nuclear industry, globalization increases the value of the NRCs enhanced cooperation with international organizations for licensing activities, training, development and implementation of codes and standards, and conventions and treaties to ensure safe and secure use of nuclear technology.

Incidents The U.S. national security landscape will continue to be dynamic, encompassing a full range of threats and incidents, including the identification of and protection against, cyber and physical security threats. As a result, the regulatory approach needed to ensure the safety and security of nuclear materials and infrastructure may need to evolve in response to such incidents and threats. A significant incident at a nuclear facility, whether caused by adversaries, natural disaster, or other factors, could prompt the agency to reassess its safety and security requirements and could impact the agencys focus. The NRC must anticipate and be prepared for an operational and regulatory response to threats and incidents involving nuclear FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 10

Chapter 1 Managements Discussion and Analysis infrastructure. An incident at a non-U.S. facility could also cause the NRC to reassess its safety and security requirements.

Legislative and Executive Branch Actions Congressional or Executive Branch actions may affect the NRCs regulatory responsibilities, and strategies to comply with new direction would need to be developed.

International Treaties and Conventions The ratification by the United States of international instruments related to the safety of nuclear facilities or radioactive materials could potentially impose binding provisions on the Nation that can affect responsible governmental agencies, such as the NRC. Strategies to comply with new provisions would need to be developed.

Workforce Dynamics The agencys most valuable resource is its staff, and its ability to recruit, hire, train, motivate, and retain qualified staff in a competitive job market is critical to meeting its strategic goals. The agency must also maintain a high-performing, diverse, engaged, and flexible workforce supported by a healthy organizational culture with a focus on safety, security, and continuous improvement to meet mission needs. This will require the NRC to better understand and meet the needs of its employees and become a more flexible and agile organization.

Information Technology Advances Information technology developments in an increasingly mobile society will impact the agencys operations. The NRC will need to take advantage of technology to enable an effective and efficient work environment. It is essential to maintain a reasonable balance between the need to maximize technological innovation to perform the agencys mission and the secure use and protection of sensitive and proprietary information. The NRC needs to be aware of the heightened risk that sensitive information held by the agency or its licensees could be lost, misplaced, or intercepted and obtained by unauthorized users. The agency will need to develop and maintain a knowledgeable workforce capable of addressing both these technology and security challenges.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 11

Chapter 1 Managements Discussion and Analysis Source of Funds Appropriations The NRC receives two appropriations: (1) Salaries and Expenses and (2) the Office of the Inspector General (OIG). For FY 2021, the NRC received total appropriations of

$844.4 million, which included $830.9 million for the Salaries and Expenses appropriation and $13.5 million for the OIG. The NRCs Salaries and Expenses appropriation decreased $14.6 million compared to the prior-year. The appropriation for the OIG decreased by $0.1 million.

The Salaries and Expenses appropriation is available until expended. This includes a provision that not more than $9.5 million be made available for the Office of the Commission; these funds are available for obligation by the NRC through September 30, 2022. After that date, the remaining funds that have not been obligated for the Office of the Commission are available until expended as part of the Salaries and Expenses appropriation.

The OIG appropriation is available to obligate for 2 years (FY 2021 and FY 2022) through September 30, 2022. This 2-year funding includes $1.2 million for Inspector General services provided to the Defense Nuclear Facilities Safety Board (DNFSB).

Total Budget Authority The total budget authority Table 1 Total Budget Authority (IN MILLIONS) available for the NRC to For the fiscal years ended 2021 2020 Inc/(Dec) obligate in FY 2021 was September 30,

$982.7 million and Appropriations Salaries and Expenses $830.9 $845.5 $(14.6) included $844.4 million Office of the Inspector General 13.5 13.6 (0.1) for current year Total Appropriations 844.4 859.1 (14.7) appropriations, Other Budget Authority

$109.7 million from Unobligated balance from prior-year appropriations, prior-year budget authority, 109.7 87.1 22.6

$22.5 million from brought forward October 1 recoveries of prior-year Recoveries of prior-year 22.5 18.2 4.3 obligations, and $6.1 obligations million spending authority Spending Authority from 6.1 6.3 (0.2)

Offsetting Collections from offsetting collections. Funds Total Other Budget Authority 138.3 111.6 26.7 available to obligate in Total NRC Budget Authority $982.7 $969.8 $12.0 FY 2021 increased from the FY 2020 amount of $969.8 million by $12.0 million, primarily as a result of a decrease of $14.7 million in appropriations, offset by increase of $22.6 million in unobligated balances from prior-year budget authority, increase of $4.3 million in recoveries of prior-year obligations, and a decrease of $0.2 million in spending authority from offsetting collections.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 12

Chapter 1 Managements Discussion and Analysis Fee Collection Offset of Appropriations Nuclear Energy Innovation Table 2 Sources of Funds for Appropriations (IN MILLIONS) and Modernization Act For the fiscal years ended (NEIMA), which, beginning 2021 2020 Inc/(Dec)

September 30, with FY 2021, requires the Reactor Fees Collected $645.0 $639.2 $5.8 NRC to recover, to the Materials Fees Collected 69.6 65.8 3.8 maximum extent Nuclear Waste Fund 0 0 0 practicable, approximately Treasury General Fund 129.8 154.1 (24.3) 100 percent of its annual Total Sources of Funds $844.4 $859.1 $(14.7) budget less certain amounts excluded from this fee recovery requirement. Funds equal to fees collected are transferred to the NRCs two appropriations, and the U.S. Department of the Treasury (Treasury) issues a negative warrant for the amount of the fee transfer to reduce the NRCs appropriations.

In FY 2021, the NRC collected and transferred fees of $714.6 million to the Treasury and the net received from the Treasury general fund was $129.8 million (see Table 2).

The fees collected during FY 2020 and transferred to the Treasury totaled $705.0 million.

Analysis of the Financial Statements Chapter 2 of this AFR presents the NRCs financial statements, accompanying notes, and required supplementary information, along with the report of the independent auditors. The independent auditors issued an unmodified opinion on the FY 2021 financial statements and identified a material weakness over management controls over financial reporting and a significant deficiency over user account management controls for users with access to NRC financial data, for the FY ending 2021. Additionally, the independent auditors found no reportable instances of noncompliance with laws and regulations.

The principal financial statements are prepared to report the financial position and results of operations of the NRC, pursuant to the requirements of 31 United States Code (U.S.C.) § 3515(b). The statements are prepared from the books and records of the NRC in accordance with Federal generally accepted accounting principles (GAAP) and the formats prescribed by the Office of Management and Budget (OMB). Reports used to monitor and control budgetary resources are prepared from the same books and records. The financial statements should be read with the realization that they are for a component of the U.S. Government.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 13

Chapter 1 Managements Discussion and Analysis We present the following analysis of the financial statements and significant changes.

Table 3 Key Measures (IN MILLIONS)

For the fiscal years ended FY 2021 FY 2020 Inc/(Dec)  %

September 30, Assets:

Fund Balance with Treasury $376.8 $390.7 $(13.9) (3.6%)

Accounts Receivable, Net 64.7 70.7 (6.0) (8.5%)

Advances and Prepayments 3.8 5.1 (1.3) (25.5%)

Property & Equipment, Net 37.1 46.7 (9.6) (20.6%)

Total Assets $482.4 $513.2 $(30.8) (6.0%)

Liabilities:

Accounts Payable $29.7 $33.3 $(3.6) (10.8%)

Federal Employee Benefits 4.1 4.6 (0.5) (10.9%)

Other Liabilities 93.5 94.6 (1.1) (1.2%)

Total Liabilities $127.3 $132.5 $(5.2) (3.9%)

Net Position (Assets minus Liabilities) $355.1 $380.7 $(25.6) (6.7%)

COST BY PROGRAMS Nuclear Reactor Safety $692.8 $723.0 $(30.2) (4.2%)

Nuclear Materials and Waste Safety 201.4 204.6 (3.3) (1.6%)

LESS: Earned Revenue (License Fees) 711.9 715.7 (3.8) (0.5%)

Net Cost of Operations $182.2 $211.9 $(29.7) (14.0%)

COST BY STRATEGIC GOALS Safety $855.5 $884.0 $(28.5) (3.2%)

Security 38.6 43.6 (5.0) (11.5%)

LESS: Earned Revenue (License Fees) 711.9 715.7 (3.8) (0.5%)

Net Cost of Operations $182.2 $211.9 $(29.7) (14.0%)

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 14

Chapter 1 Managements Discussion and Analysis Analysis of the Balance Sheet Assets. The NRCs total assets were $482.4 million as of September 30, 2021, representing a decrease of $30.8 million from the fiscal year ended September 30, 2020. Changes in major categories include decreases of $13.9 million in the Fund Balance with Treasury, $0.3 million in Intragovernmental Accounts Receivable, $5.7 million in With the Public Accounts Receivable, $1.3 million in Advances and Prepayments, and $9.6 million in Property and Equipment, net.

The Fund Balance with Treasury was $376.8 million as of September 30, 2021, which accounts for 78 percent of total assets. This account consists of cash or cash equivalents from appropriated funds, license fee collections, and other funds maintained at the U.S. Treasury to pay current liabilities and to finance authorized purchase commitments. The Fund Balance with Treasury can vary largely due to timing of disbursing payments and receiving collections as well as changes in the appropriations.

Accounts Receivable, Net consists mainly of amounts that other Federal agencies and the public owe to the NRC for license fees. As of September 30, 2021, Accounts Receivable, Net was $64.7 million, which includes an offsetting allowance for doubtful accounts of $2.8 million.

This represents a net decrease in Accounts Receivable, net of $6.0 million from the FY 2020 amount of $70.7 million. The decrease is primarily due to reductions in intragovernmental billed fees receivable of $0.3 million and billed fees receivable of $13.0 million offset by increases in unbilled fees receivable of $6.2 million and miscellaneous receivables with the public of $0.3 million. In addition, there was a decrease in the allowance of doubtful accounts of $0.8 million offset to accounts receivable.

Property and Equipment, Net consists primarily of office equipment, leasehold improvements, nuclear reactor simulators, and computer hardware and software. The NRC has no real property. The land and buildings in which the NRC operates are leased from the U.S. General Services Administration (GSA). At the end of FY 2021, Property and Equipment, Net was $37.1 million, a $9.6 million decrease from the FY 2020 amount of

$46.7 million. The decrease primarily results from the amortization expense of $1.6 million recognized on equipment and the removal from the NRC books of $2.4 million of Leasehold Improvement projects and $10.5 million of ADP Internal Use Software and $1.5 million depreciation expense for equipment; offset by an increase from amortization expense of $5.9 million of ADP Internal Use Software.

Liabilities. Total Liabilities were $127.3 million as of September 30, 2021, representing a decrease of $5.2 million from the FY 2020 balance of $132.5 million. Liabilities consist primarily of accounts payable to other Federal agencies and the public, grants payable, accrued salaries and benefits, and other accrued employee benefits.

Total Liabilities include liabilities not covered by budgetary resources, which represent expenses recognized in the financial statements that will be paid from future appropriations.

The liabilities not covered by budgetary resources are $60.2 million for FY 2021, compared to

$60.3 million for end of FY 2020, a $0.1 million decrease. For FY 2021, the liabilities not covered by budgetary resources represent 47 percent of Total Liabilities and include $49.2 million in unfunded accrued annual leave that has been earned but not yet taken, $4.1 million as an actuarial estimate of accrued future workers compensation expenses included in FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 15

Chapter 1 Managements Discussion and Analysis Federal employee benefits, $0.9 million in accrued workers compensation included in Other Liabilities, and a $5.7 million accrual to GSA for future annual rent increases on the rent of NRC office buildings.

Net Position. The difference between Total Assets and Total Liabilities, Net Position, was

$355.1 million as of September 30, 2021, a decrease of $25.6 million from the FY 2020 year-end balance. Net Position comprises two components: Unexpended Appropriations and Cumulative Results of Operations which is the cumulative excess of financing sources over expenses. The analysis of the Statement of Changes in Net Position provides additional information on the significant changes to Net Position for FY 2021 year-end.

Analysis of the Statement of Net Cost The Statement of Net Cost presents the gross cost of the NRCs two major programs (Nuclear Reactor Safety and Nuclear Materials and Waste Safety) as identified in the NRC Annual Performance Plan, offset by earned revenue. The purpose of this statement is to link program performance to the cost of programs. The NRCs net cost of operations for the year ended September 30, 2021, was $182.2 million, representing a decrease of $29.7 million compared to the FY 2020 net cost of $211.9 million. This represents a decrease in gross costs of $33.5 million and a decrease in earned revenue of $3.8 million.

Gross Cost. The NRCs total gross costs were $894.1 million for FY 2021, a decrease of

$33.5 million from the prior-year amount of $927.6 million. The gross costs in FY 2021 for the Nuclear Reactor Safety program were $692.8 million compared to FY 2020 gross costs of

$723.0 million, a decrease of $30.2 million. The gross costs in FY 2021 for the Nuclear Materials and Waste Safety program were $201.3 million compared to FY 2020 gross costs of $204.6 million, a decrease of $3.3 million. Thus, the gross cost of both programs decreased a total of $33.5 million. The decrease is due to reductions in travel and transportation costs of $4.1 million, rent, telecommunications, and utilities of $3.7 million, and property and equipment of $11.7 million, and grants of $3.9 million, and contract support of $12.8 million offset by an increase in employee and salaries and benefits of $2.7 million. The gross cost of $894.1 million as incurred by the NRCs goals of Safety and Security were $855.5 million for the Safety goal and $38.6 million for the Security goal.

Earned Revenue. Total earned revenue for FY 2021 was $711.9 million, a decrease of

$3.8 million from the FY 2020 earned revenue of $715.7 million. Revenue for the Nuclear Reactor Safety program in FY 2021 was $644.9 million compared to $644.7 million in FY 2020, an increase of $0.2 million. Revenue from the Nuclear Materials and Waste Safety program in FY 2021 was $67.0 million compared to $71.0 million in FY 2020, a decrease of

$4.0 million. The decrease in earned revenue is primarily a result of reductions in the fee base, that is, the amount of the appropriated budget that Congress directs the NRC to recover in license fees.

The NRC is required to collect approximately 100 percent of its annual budget, less certain amounts excluded from this fee recovery requirement, through license fee billing. The agency collects fees for reactor and materials licensing and inspections in accordance with Title 10 of the Code of Federal Regulations (10 CFR) Part 170, Fees for Facilities, Materials, Import and Export Licenses, and Other Regulatory Services under the Atomic Energy Act of 1954, as amended, at https://www.nrc.gov/reading-rm/doc-collections/cfr/part170/, and 10 FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 16

Chapter 1 Managements Discussion and Analysis CFR Part 171, Annual Fees for Reactor Licenses and Fuel Cycle Licenses and Materials Licenses, Including Holders of Certificates of Compliance, Registrations, and Quality Assurance Program Approvals and Government Agencies Licensed by the NRC, at https://www.nrc.gov/reading-rm/doc-collections/cfr/part171/.

Analysis of the Statement of Changes in Net Position The Statement of Changes in Net Position reports the change in net position for the reporting period. Net position is affected by the changes in two components: (1) Cumulative Results of Operations and (2) Unexpended Appropriations. In FY 2021, the NRC had a decrease in Net Position of $25.6 million resulting from a decrease in Cumulative Results of Operations of $15.1 million, and $10.5 million in Unexpended Appropriations.

The change in Unexpended Appropriations results from appropriations received, net of license fee collections, being more or less than the appropriations used to finance the NRC operations. The decrease in FY 2021 Unexpended Appropriations of $10.5 million resulted from a decrease in the beginning balance of $25.2 million and $25.0 million appropriations received, net of license fees collected and a decrease of $39.5 million in appropriations used to finance the NRC operations. The decrease in appropriations received, net of license fees collected, resulted from appropriations received for FY 2021 of $844. 4 million, reduced by current year license fee collections of $714.9 million, as compared to appropriations received in FY 2020 of $859.2 million, reduced by FY 2020 license fee collections of $704.3 million.

Analysis of the Statement of Budgetary Resources The Statement of Budgetary Resources (SBR) provides information on budgetary resources available to the NRC and their status at the end of the period. In FY 2021, the Total Budgetary Resources of $960.1 million were available. This was $7.5 million more than the

$952.6 million available for FY 2020. The major component contributing to the decrease in Total Budgetary Resources resulted from a $14.8 million decrease in appropriations, offset by an increase of $22.6 million in the beginning unobligated balance brought forward, net on October 1, and a decrease of $0.3 million in spending authority from offsetting collections.

The SBR accounts for operational activities funded by NRCs budgetary resources during the fiscal year. The NRCs obligations for FY 2021 were $883.1 million, an increase of $17.9 million from the prior year amount of $865.2 million. The increase was due to reductions in grants $3.9 million; travel $4.1 million; rent, telecommunications, and utilities of $3.7 million;

$11.7 million for property and equipment; and contract support for $12.8 million; offset by an increase in employee salaries and benefits of $2.7 million.

The SBR also accounts for the funds that were not obligated and used for operations during the fiscal year. The balance of unobligated budgetary resources at the end of FY 2021 was

$77.1 million, compared to $87.3 million for the prior year. The decrease in appropriations received offset against the decrease in current year obligations are the primary contributors resulting in the decrease of $10.2 million in total budgetary resources not obligated at the end of the FY.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 17

Chapter 1 Managements Discussion and Analysis Management Assurances, Systems, Controls, and Legal Compliance Federal Managers Financial Integrity Act of 1982 The Federal Managers Financial Integrity Act of 1982 (FMFIA or Integrity Act) requires that Federal agencies establish effective internal control and provide reasonable assurance that the following objective are being met:

• Program Management - Programs are achieving their intended results, and are protected from waste, fraud, abuse, and mismanagement;

• Resource Management - Resources are being used consistently with the agencys mission;

• IT Systems - Information systems are authorized and appropriately secured;

• Laws and Regulations - Laws and regulations are followed; and

• Communication - Reliable and timely information is obtained, maintained, reported, and used for sound decision-making.

The agencys program, operational, and administrative areas, as well as accounting and financial management, are covered by the Integrity Act. The Act also requires the NRC Chairman to provide an assurance statement on the adequacy of internal controls and on theconformance of financial systems with Government-wide standards.

Enterprise Risk Management and Programmatic Internal Control Enterprise Risk Management (ERM) provides an enterprise-wide, strategically-aligned portfolioview of organizational challenges that provides better insight about how to most effectively prioritize resource allocations to ensure successful mission delivery. A principal component of ERM is Internal Control, which the U.S. Government Accountability Office in GAO-14-704G, Standards for Internal Control in the Federal Government, defines as a process effected by an entitys oversight body, management, and other personnel that provides reasonable assurance that the objectives of an entity will be achieved.

OMB Circular A-123, Managements Responsibility for Enterprise Risk Management and Internal Control, provides Federal agencies guidance on how to comply with the Integrity Act and requires Federal managers to effectively manage risks that may impact agencies in meeting their strategic objectives.

The NRCs ERM Framework meets OMB requirements. The Framework includes the following:

• Incorporating ERM and Performance Management into the agencys Internal Control policy document which is Management Directive 4.4, Enterprise Risk Management and Internal Control FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 18

Chapter 1 Managements Discussion and Analysis

• Leveraging appropriate agency governance organizations and processes currently in place such as the NRC Internal Control Governance Framework, Quarterly Performance Review meetings, and Executive Committee on Enterprise Risk Management meetings

• Standing up the agencys Programmatic Senior Assessment Team as the agency evaluation structure for enterprise risks

• Developing and applying the agencys Be RiskSMART initiative which generalizes existing risk-informed decision-making concepts to make them more broadly applicable to any decision made at the NRC (see Figure 7)

• Incorporating ERM into executive decision-making and managements evaluation of the NRCs internal control and reasonable assurance processes Under the NRCs FMFIA Governance Framework (see Figure 6), reading from right to left: the Chief Financial Officer (CFO) is responsible for ensuring that the agency complies with the Federal Financial Management Improvement Act of 1996 (Improvement Act), and Section 4 of the Integrity Act, Financial Systems.

The Senior Assessment Team (SAT),

chaired by the CFO, is responsible for ensuring that the agency complies with Appendix A of OMB Circular A-123, Management of Reporting and Data Figure 6 The NRCs Integrity Act Integrity Risk. The Executive Governance Framework Committee on Enterprise Risk Management (ECERM), co-chaired by Figure 6 the CFO and the Executive Director for The NRCs FMFIA Governance Framework Operations, is responsible for ensuring that the agencys internal control over programmatic operations complies with the Integrity Act.

The other members that comprise the ECERM are senior executives from the Office of the Executive Director for Operations and the Chief Information Officer. The agencys General Counsel, Inspector General, and the agencysG Internal Control Team Leader serve as advisory members. The other members of the SAT Include senior executives from the Office of the Chief Financial Officer (OCFO) as well as senior officials from the agencys corporate support product lines, (i.e., the Chief Human Capital Officer, the Chief Information Officer, and the Director of the Office of Administration, who oversees the agencys Division of Acquisitions).

The ECERM assessed the agencys programmatic operations, financial systems, and internal control over reporting and found there is reasonable assurance that NRC internal control is achieving its intended results. The ECERM voted to recommend that the Chairman sign the agencys Federal Managers Financial Integrity Act Statement (see Figure 8).

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 19

Chapter 1 Managements Discussion and Analysis Integrity Act Results As required by Section 2 of the Integrity Act and under the guidance established in OMB Circular A-123, all NRC business line leads and corporate support product lines certified that, as of September 30, 2021, there was reasonable assurance that internal control was in place producing intended results. Based on managements certification of reasonable assurance, the NRC can provide a statement of assurance that its internal control met the objectives of the Integrity Act and conforms to Government-wide standards.

Figure 7 Transforming the NRC FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 20

Chapter 1 Managements Discussion and Analysis U.S. NUCLEAR REGULATORY COMMISSION FISCAL YEAR 2021 FEDERAL MANAGERS FINANCIAL INTEGRITY ACT STATEMENT The U.S. Nuclear Regulatory Commission's (NRC) managers are responsible for establishing and maintaining effective internal control and financial management systems that meet the objectives of the Federal Managers' Financial Integrity Act of 1982 (Integrity Act). The NRC is able to provide an unmodified statement of assurance that the internal control and financial management systems meet the objectives of the Integrity Act.

The NRC conducted its assessment of the agency's overall system of internal control and Enterprise Risk Management (ERM) in accordance with Office of Management and Budget Circular A-123, Management's Responsibility for Enterprise Risk Management and Internal Control (Circular A-123) guidelines. Based on the results of this evaluation, NRC can provide reasonable assurance that its internal control over programmatic operations, as well as its ERM efforts, are in compliance with applicable laws and guidance, as of September 30, 2021.

In addition, the NRG conducted its assessment of the effectiveness of internal control over reporting, which includes safeguarding of assets and compliance with applicable laws and regulations, in accordance with the requirements of Appendix A of Circular A-123. Based on the results of the evaluation, the NRG can provide reasonable assurance of internal control over reporting as of September 30, 2021.

The Agency's independent auditor issued an unmodified opinion on the NRC's Fiscal Year 2021 financial statements. However, two exceptions in NRC's internal controls were reported, including a material weakness for lack of appropriate management controls over financial reporting and a significant deficiency for lack of user account management controls for users with access to NRG financial data. The NRG will continue to take corrective actions to strengthen controls in these areas.

In accordance with the requirements of the Federal Financial Management Improvement Act of 1996 and Circular A-123 guidance, the Chief Financial Officer reviewed audit reports and other sources of information, and as of September 30, 2021, can provide reasonable assurance that NRC's financial systems substantially comply with Federal financial system requirements, applicable Federal accounting standards, and the U.S. Department of Treasury standard general ledger at the transaction level.

Christopher T. Hanson Chairman U.S. Nuclear Regulatory Commission December 8, 2021 Figure 8 FY 2021 Federal Managers Financial Integrity Act Statement FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 21

Chapter 1 Managements Discussion and Analysis Office of Management and Budget Circular A-123, Managements Responsibility for Enterprise Risk Management and Internal Control Management of Reporting and Data Integrity Risk (Appendix A)

The NRC conducted its assessment of the effectiveness of internal control over reporting, which includes safeguarding of assets and compliance with applicable laws and regulations, in accordance with the requirements of Appendix A of OMB Circular A-123. Based on the results of the evaluation which included an analysis of NRCs Data Quality Plan, the NRC can provide reasonable assurance that its internal control over reporting as of September 30, 2021, was operating effectively, and no material weaknesses were found in the design or operation of the internal control over reporting.

A Risk Management Framework for Government Charge Card Programs (Appendix B)

The Government Charge Card Abuse Prevention Act (Charge Card Act) of 2012 establishes reporting and audit requirement responsibilities for executive branch agencies. NRCs Office of Administration has procedures in place for use of Purchase Cards. Managed by the OCFO, NRC's Travel Charge Card Management Plan was last updated in January 2020. NRC has reviewed the Purchase and Travel Card programs for compliance withthe Charge Card Act and can provide reasonable assurance that appropriate policies and controls are in place to mitigate the risk of fraud and inappropriate charge card practices in accordance with OMB Circular A-123, Appendix B.

Requirements for Payment Integrity Improvement (Appendix C)

In accordance with the Payment Integrity Information Act of 2019 (PIIA) the NRC conducts a risk assessment to determine whether any programs were susceptible to making significant improper payments on a triennial basis. The NRC conducted the latest risk assessment in FY 2021.

The FY 2021 risk assessment did not identify any programs that were susceptible to making significant improper payments. Although the results of the FY 2021 risk assessment identified programs as low risk, the NRC continues to monitor its payment processes, in addition to conducting periodic reviews of key controls for PIIA programs identified by management. The NRC will continue to conduct a risk assessment on a triennial basis, in accordance with PIIA and OMB guidance. The next NRC PIIA risk assessment will take place in FY 2023. In addition, the NRC will conduct additional risk assessments, as needed, if there are material changes in programs operations or if the NRC establishes new programs.

Chapter 3, Other Information, of this report presents additional information in the Payment Integrity section.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 22

Chapter 1 Managements Discussion and Analysis Federal Financial Management Improvement Act of 1996 The Federal Financial Management Improvement Act of 1996 (FFMIA or Improvement Act) requires each agency to implement and maintain systems that comply substantially with:

(1) Federal financial system requirements; (2) applicable Federal accounting standards; and, (3) the standard general ledger at the transaction level. FFMIA requires the Chairman to determine whether the agencys financial management system complies with FFMIA and to develop remediation plans for systems that do not comply.

Improvement Act Results In September 2021, the CFO has entered the planning phase for system and business implementation of the April 2022 GSA Unique Entity Identifier (UEI) mandate and October 2022 Treasury G-Invoicing mandate. The agencys core financial system, Financial Accounting and Integrated Management Information System (FAIMIS) will complete a system upgrade by the end of 2nd quarter FY 2022 to incorporate UEI and G-Invoicing functionality into NRC Financial Management business processes.

The CFO reviewed audit reports and other sources of information and, as of September 30, 2021, can provide reasonable assurance that NRCs financial systems substantially comply with applicable Federal accounting standards as required by the Improvement Act.

Digital Accountability and Transparency Act (DATA Act) of 2014 The DATA Act aims to establish Government-wide financial data standards and increase the availability, accuracy, and usefulness of Federal spending information. The DATA Act has the following purposes:

• Establish Government-wide data standards for financial data and provide consistent, reliable, and searchable Government-wide spending data that are accurately displayed.

• Expand accountability of the Federal Funding Accountability and Transparency Act of 2006 to disclose direct Federal Agency expenditures and link Federal contract, loan, and grant spending information to programs.

• Simplify reporting for entities receiving Federal funds by streamlining requirements and reducing compliance costs while improving transparency.

• Improve data quality submitted to USASpending.gov by holding Federal agencies accountable for the completeness and accuracy of the information submitted.

• Apply approaches developed by the Recovery Accountability and Transparency Board for spending across the Federal Government to increase spending transparency and reduce reporting burden.

The DATA Act requires that the OIG audit DATA Act compliance every 2 years. The results of the OIG audit of FY 2019 first quarter data issued in November 2019 reported that the agency submitted complete and generally accurate data that conformed to OMB and Treasury requirements. However, the OIG audit identified a small percentage of discrepancies with contractual data elements between File C records generated from agency source systems and File D1 records extracted from the Data Act Brokers government-wide source systems, and provided a recommendation for the NRC to improve its internal control and error detection and FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 23

Chapter 1 Managements Discussion and Analysis reconciliation procedures. Actions related to this recommendation are completed and considered closed. At the time of this report, the DATA Act audit for FY 2021 is concluding and final results and recommendations are not yet available.

In order to address the reporting requirements of the CARES Act and guidance released in OMB Memorandum M-20-21, DATA Act Information Model Schema (DAIMS), version 2. 0 was implemented in July 2020.

• Adds Disaster Emergency Fund Code data element

• Supports monthly Data Act submission and publishing to USASpending. gov, including CARES Act funds used by the NRC

• Supports quarterly certification for agencies who report monthly

• Requires all program activity starting FY 2021 NRC successfully implemented the required system changes in our core financial system and reporting system on time. Also, NRC submitted and published monthly files which were certified on a quarterly basis.

Financial Management Systems Strategies The OCFO Robotic Process Automation (RPA) Team

• conducted workshops to understand process functional area walkthroughs and to assess business case: financial reporting, central allowance, financial services and operations, budget operations, and funds control and analytics

• prioritized list automation opportunities; sought top three manual resource intensive business processes as candidates for RPA

• selected a financial reporting process that has high value and high viability for the proof-of-concept and demonstration to OCFO management; generated monthly reports including data integrity, data reconciliation and static reports RPA team demonstrated that software could be used to automate most of the financial reporting manual task, which would result in business efficiencies such as minimizing input errors and saving time. OCFO will evaluate the potential benefits of RPA and implementation feasibility in FY 2022.

Prompt Payment The Prompt Payment Act of 1982, as amended, requires Federal agencies to make timely payments to vendors for supplies and services, to pay interest penalties when payments are made after the due date, and to take cash discounts when they are economically justified. In FY 2021, the NRC paid 98.59 percent of the 5,029 invoices subject to the Prompt Payment Act on time.

Debt Collection The Debt Collection Improvement Act of 1996 enhances the ability of the Federal Government to service and collect debts. The agencys goal is to maintain the level of delinquent debt owed to the NRC at year end to less than 1 percent of its annual billings. The NRC met this goal. At the end of FY 2021, delinquent debt was $4.5 million or less than 1 percent of annual billings.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 24

Chapter 1 Managements Discussion and Analysis The NRC was able to refer 99.76 percent of all eligible debt over 180 days delinquent to the Treasury for collection and 100 percent over 120 days old in accordance with the DATA Act. In addition, the NRC met the collections requirements of NEIMA which requires the agency to recover through fees approximately 100 percent of its annual budget, less certain amounts excluded from this fee recovery requirement, in the current fiscal year.

Biennial Review of User Fees The Chief Financial Officers Act of 1990 requires agencies to conduct a biennial review of fees, royalties, rents, and other charges imposed by agencies and to make revisions to cover program and administrative costs incurred. The NRC conducted the following reviews in FY 2021:

• Small Materials - Completed February 2021

• Import and Export Licenses - Completed February 2021

• Administrative Charges for Criminal History Checks - Completed September 2021

• Administrative Charges for Delinquent Debt - Completed September 2021

• U.S. Navy Review Services - Completed September 2021

• Fees for the Public Use of the Auditorium - Completed September 2021

• Fees for Information Access and Materials Access Authorization Programs -

Completed September 2021 On June 16, 2021, the NRC issued a final rule in the Federal Register (FR) amending the licensing, inspection, special project, and annual fees charged to its applicants and licensees.

These amendments are necessary to implement NEIMA, which, beginning with FY 2021, requires the NRC to recover, to the maximum extent practicable, approximately 100 percent of its annual budget less certain amounts excluded from this fee recovery requirement.

The FY 2021 rule can be found at https://www.federalregister.gov/documents/2021/06/16/2021-12546/revision-of-fee-schedules-fee-recovery-for-fiscal-year-2021 By law, the following appropriated amounts are excluded from the fee-recovery requirement: any type of fee-relief activity as identified by the Commission, generic homeland security activities, waste incidental to reprocessing activities, Nuclear Waste Fund (NWF) activities, advanced reactor regulatory infrastructure activities, Inspector General services for the DNFSB, for advanced nuclear reactor technologies, international activities, generic homeland security activities, Waste Incidental to Reprocessing, and Inspector General services for the Defense Nuclear Facilities Safety Board, research and development at universities in areas relevant to the NRCs mission, and a nuclear science and engineering grant program.

Based on the Consolidated Appropriations Act, 2021, the final rule reflects a budget authority in the amount of $844.4 million. After accounting for the fee-recovery exclusions and net billing adjustments, the NRC must recover approximately $721.4 million in fees in FY 2021.

Additionally, to comply with the Congressional Review Act concerning 60 days, on August 13th NRC issued a correction to the final rule in the FR, amending the effective date from August 16, 2021 to August 20, 2021. This rule can be found at:

https://www.federalregister.gov/documents/2021/08/13/2021-17399/revision-of-fee-schedules-fee-recovery-for-fiscal-year-2021 FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 25

Chapter 1 Managements Discussion and Analysis Inspector General Act of 1978 The NRC has established and continues to maintain an excellent record in resolving and implementing OIG open audit recommendations. The status of these recommendations can be found at: https://www.nrc.gov/reading-rm/doc-collections/insp-gen.

Callaway Nuclear Generating Station FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 26

Chapter 1 Managements Discussion and Analysis Program Performance Overview The NRCs mission is to license and regulate the Nations civilian use of radioactive materials to provide reasonable assurance of adequate protection of public health and safety, to promote the common defense and security and to protect the environment. Therefore, the trends for progress on the agencys strategic goals and objectives are to be at either zero or very low levels. The agency works to prevent or minimize the outcomes tracked by the safety and security performance indicators.

The NRC carries out its safety and security activities through two major programs: Nuclear Reactor Safety, consisting of the Operating Reactors and New Reactors business lines; and, Nuclear Materials and Waste Safety, consisting of the Fuel Facilities, Nuclear Materials Users, Decommissioning and Low-Level Waste, and Spent Fuel Storage and Transportation business lines. The agency accomplishes its mission to provide reasonable assurance of adequate protection for public health and safety through regulatory activities that include licensing, oversight, and rulemaking. The NRC oversees licensees through inspection, assessment, investigation, and enforcement actions. Investigations and enforcement actions are a subset of oversight in cases of suspected or proven instances of noncompliance with safety or security regulations. The NRCs event response activities prepare for and respond to emergencies involving radioactive materials. The following narrative highlights the agencys progress during FY 2021 in achieving its Safety and Security goals.

Performance Results The NRCs FY 2018-2022 Strategic Plan describes the agencys mission, goals, and strategies and can be found at https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1614/v7/.

The results of these goals/indicators are reported in this years AFR. The agencys two strategic goals are focused on Safety and Security.

The Safety goal is to: Ensure the safe use of radioactive materials.

The Security goal is to: Ensure the secure use of radioactive materials.

Strategic Goal 1: Ensure the Safe Use of Radioactive Materials Strategic Objective Strategic objectives express more specifically the results that are needed to achieve a strategic goal. The safety objective for Goal 1 is: Prevent, mitigate, and respond to accidents and ensure radiation safety.

Minimizing the likelihood of accidents and reducing the consequences of an accident (should one occur) are the key elements for achieving the NRCs safety goal. The NRC employs defense-in-depth approaches to ensure that multiple layers of defense protect against accidents and their effects to ensure that the risk to the public is acceptably low. In this approach, the agency does not rely solely on preventing accidents but also recognizes that provisions are needed to mitigate the effects of accidents that may occur. The agency must ensure that effective preparedness and response programs are in place if an accident were to occur.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 27

Chapter 1 Managements Discussion and Analysis In FY 2021, the NRC achieved its Safety goal strategic objective. The NRC uses five performance indicators to determine whether it has met its Safety goal. The agency met all five performance indicator targets in FY 2021. Table 4 shows the outcomes for the last 5 years (FY 2017-FY 2021). The cost of achieving the agencys Safety goal in FY 2021 was $855.5 million.

Grey Water Pond at Palo Verde FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 28

Chapter 1 Managements Discussion and Analysis Safety Performance Indicators: FY 2017-2021 Table 4 FY 2017-2021 Safety Performance Indicators Goal-Safety: Ensure the Safe Use of Radioactive Materials

1. Prevent radiation exposures that significantly exceed regulatory limits.

Business Line FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Target Actual Target Actual Target Actual Target Actual Target Actual Operating Reactors 0 0 0 0 0 0 0 0 0 0 New Reactors 0 0 0 0 0 0 0 0 0 0 Fuel Facilities 0 0 0 0 0 0 0 0 0 0 Decommissioning and 0 0 0 0 0 0 0 0 0 0 Low-Level Waste Spent Fuel Storage and 0 0 0 0 0 0 0 0 0 0 Transportation Nuclear Materials Users 3 0 3 1 3 1 3 2 3 0

2. Prevent releases of radioactive materials that significantly exceed regulatory limits.

Business Line FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Target Actual Target Actual Target Actual Target Actual Target Actual Operating Reactors 0 0 0 0 0 0 0 0 0 0 New Reactors 0 0 0 0 0 0 0 0 0 0 Fuel Facilities 0 0 0 0 0 0 0 0 0 0 Decommissioning and 0 0 0 0 0 0 0 0 0 0 Low-Level Waste Spent Fuel Storage and 0 0 0 0 0 0 0 0 0 0 Transportation Nuclear Materials Users 0 0 0 0 0 0 0 0 0 0

3. Prevent the occurrence of any inadvertent criticality events.

Business Line FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Target Actual Target Actual Target Actual Target Actual Target Actual Operating Reactors 0 0 0 0 0 0 0 0 0 0 Fuel Facilities 0 0 0 0 0 0 0 0 0 0 Decommissioning and 0 0 0 0 0 0 0 0 0 0 Low-Level Waste

4. Prevent accident precursors and reductions of safety margins at commercial nuclear power plant (operating

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or under construction) that are of high safety significance.

Business Line FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Target Actual Target Actual Target Actual Target Actual Target Actual Operating Reactors 3 0 3 0 3 0 3 0 3 0 New Reactors 3 0 3 0 3 0 3 0 3 0

5. Prevent accident precursors and reductions of safety margins at nonreactor facilities or during transportation

---

of nuclear materials that are of high safety significance.

Business Line FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Target Actual Target Actual Target Actual Target Actual Target Actual Fuel Facilities 0 0 0 0 0 0 0 0 0 0 Decommissioning and 0 0 0 0 0 0 0 0 0 0 Low-Level Waste Spent Fuel Storage and 0 0 0 0 0 0 0 0 0 0 Transportation FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 29

Chapter 1 Managements Discussion and Analysis Safety Objective 1: Prevent, mitigate, and respond to accidents and ensure radiation safety.

Performance Goal 1: Prevent radiation exposures that significantly exceed regulatory limits.

Performance Indicator: Number of radiation exposures that meet or exceed Abnormal Occurrence (AO) criteria I. A. 1 (unintended radiation exposure to an adult), I. A. 2 (unintended radiation exposure to a minor), or I. A. 3 (radiation exposure that has resulted in unintended permanent functional damage to an organ or physiological system).

Discussion: This indicator tracks the effectiveness of the NRCs nuclear safety regulatory programs, in part through the number of significant radiation exposures to the public and occupational workers that exceed AO criteria. This indicator tracks exposures from both nuclear reactors and other uses of nuclear materials, such as hospitals and industrial uses. In FY 2021, there were no radiation exposures that exceeded AO criteria 1. A. 1.

Performance Goal 2: Prevent releases of radioactive materials that significantly exceed regulatory limits.

Performance Indicator: Number of releases of radioactive materials that meet or exceed AO criterion I. B (discharge or dispersal of radioactive material from its intended place of confinement).

Discussion: This indicator tracks the effectiveness of the NRCs nuclear material regulatory programs. Exceeding the applicable regulatory limits is defined as a release of radioactive material that causes a total effective radiation dose equivalent to individual members of the public greater than 0. 1 rem in a year, exclusive of dose contributions from background radiation. In FY 2021, there were no releases of this nature.

Performance Goal 3: Prevent the occurrence of any inadvertent criticality events.

Performance Indicator: Number of instances of unintended nuclear chain reactions involving NRC-licensed radioactive materials.

Discussion: This indicator tracks the effectiveness of the NRCs criticality safety regulatory programs through the number of unintended self-sustaining nuclear reactions occurring within a fiscal year. Intended criticality events include the startup of a nuclear power reactor. There were no inadvertent criticality events during FY 2021.

Performance Goal 4: Prevent accident precursors and reductions of safety margins at commercial nuclear power plants (operating or under construction) that are of high safety significance.

Performance Indicator: Number of malfunctions, deficiencies, events, or conditions at commercial nuclear power plants (operating or under construction) that meet or exceed AO criteria II. A-II.E (commercial nuclear power plant licensees).

Discussion: The NRCs Reactor Oversight Process monitors nuclear power plant performance in three areas: (1) reactor safety, (2) radiation safety, and (3) security. Analysis of individual plant performance is based on both licensee-submitted performance indicators and NRC inspection findings, which are independent assessments of licensee performance that the NRC FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 30

Chapter 1 Managements Discussion and Analysis conducts as the regulatory authority. Each issue is evaluated and assigned one of four categories in order of increasing significance: green, white, yellow, or red. When the rating is higher (more severe), the NRC applies a greater level of oversight. A red finding or performance indicator is the most severe rating and signals a significant reduction in the safety margin in the measured area. The NRC issued no red findings in FY 2021.

Performance Goal 5: Prevent accident precursors and reductions of safety margins at nonreactor facilities or during transportation of nuclear materials that are of high safety significance.

Performance Indicator: Number of malfunctions, deficiencies, events, or conditions at nonreactor facilities or during transportation of nuclear materials that meet or exceed AO criteria III. A or III. B (events at facilities other than nuclear power plants and all transportation events).

Discussion: This indicator tracks the effectiveness of the NRCs regulatory safety programs for nonreactor facilities or during transportation of nuclear materials through the number of instances in which safety margins at nonreactor facilities are at unacceptable levels. No occurrences of this nature took place during FY 2021.

Safety Goal Strategies The NRCs FY 2018-2022 Strategic Plan describes the five Safety goal strategies at the following link: https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1614/v7/.

Strategic Goal 2: Ensure the Secure Use of Radioactive Materials Strategic Objectives Strategic objectives more specifically express the results that are needed to achieve a strategic goal. The two security objectives for Goal 2 follow in bold text.

1. Ensure protection of nuclear facilities and radioactive materials.

Protecting nuclear facilities and radioactive materials are key elements for achieving the NRCs Security goal. Nuclear facilities and radioactive materials are protected against threats by two primary means: (1) control of access to facilities and materials; and (2) accountability controls for radioactive materials. These controls are intended to prevent threats from either damaging a nuclear facility in such a way that a significant release of radioactive material to the environment occurs or obtaining enough radioactive material for malevolent use.

2. Ensure protection of classified and controlled unclassified information.

Protecting classified and controlled unclassified Information is another key contributor to achieving the agencys Security goal. This is accomplished primarily by controlling access to this information to ensure that potential adversaries cannot use it for malevolent purposes, such as sabotage, theft, or diversion of radioactive materials.

The security objectives specify the conditions that must be met for the agency to ensure the secure use of radioactive materials.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 31

Chapter 1 Managements Discussion and Analysis In FY 2021, the NRC achieved its Security goal strategic objectives. The NRC also uses three Security goal performance indicators to determine whether the agency has met its Security goal.

The agency met all three performance indicator targets in FY 2021. Table 5 shows the outcomes from FY 2017-FY 2021. The cost of achieving the agencys Security goal was $38.6 million in FY 2021.

Security Performance Indicators: FY 2017-2021 Table 5 FY 2017-2021 Security Performance Indicators Goal - Security: Ensure Secure Use of Radioactive Materials

1. Prevent sabotage, theft, diversion, or loss of risk-significant quantities of radioactive material.

Business Line FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Target Actual Target Actual Target Actual Target Actual Target Actual All Business Lines 0 0 0 0 0 1* 0 0 0 0

• In 2019, an NRC Agreement State reported the theft of three industrial radiography cameras that were recovered by law enforcement within hours (Event Number: 54033).

2. Prevent substantial breakdowns of physical security, cybersecurity, or material control and accountability.

Business Line FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Target Actual Target Actual Target Actual Target Actual Target Actual All Business Lines 1 0 1 0 1 0 1 0 1 0

3. Prevent significant unauthorized disclosures of classified or Safeguards Information.

Business Line FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Target Actual Target Target Actual Actual Target Actual Target Actual All Business Lines 0 0 0 0 0 0 0 0 0 0 Security Objective 1: Ensure protection of nuclear facilities and radioactive materials.

Performance Goal 1: Prevent sabotage, theft, diversion, or loss of risk significant quantities of radioactive material.

Performance Indicator: Number of instances of sabotage, theft, diversion, or loss of risk-significant quantities of radioactive material that meet or exceed AO Criteria I. C. 1 (stolen, abandoned or unrecovered lost), I. C. 2 (radiological sabotage), or I. C. 3 (substantiated case of actual theft, diversion, or loss of a formula quantity of SNM or inventory discrepancy)

Discussion: This indicator measures the agencys effectiveness in preventing sabotage, theft, diversion, or loss of risk-significant quantities of radioactive material through tracking any loss or theft of radioactive nuclear sources that the NRC has determined to be of significant risk. The indicator also measures the agencys performance in ensuring the proper accounting for radioactive sources of significant risk that could be used for malicious purposes. It also measures whether NRC-licensed facilities maintain adequate protective capabilities to prevent theft or diversion of nuclear material or sabotage that could result in substantial harm to the public health and safety. No such incidents took place during FY 2021.

Performance Goal 2: Prevent substantial breakdowns of physical security, cybersecurity, or material control and accountability.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 32

Chapter 1 Managements Discussion and Analysis Performance Indicator: Number of substantial breakdowns of physical security, cybersecurity, or material control and accountability that meet or exceed AO criterion I. C. 4 (substantial breakdown of physical security, cybersecurity, or material control and accountability) or I. C. 3 (substantiated case of actual theft, diversion, or loss of a formula quantity of SNM or an inventory discrepancy).

Discussion: This indicator measures the agencys effectiveness in maintaining security by tracking any substantial breakdowns in access control, containment, or accountability systems that significantly weakened the protection against theft, diversion, or sabotage for nuclear materials that the agency has determined to be of significant risk. In FY 2021, there were no incidents of this nature.

Security Objective 2: Ensure protection of classified and controlled unclassified information.

Performance Goal 3: Prevent significant unauthorized disclosures of classified or safeguards information.

Performance Indicator: Number of significant unauthorized disclosures of classified or safeguards information by licensees as defined by AO criterion I. C. 5 and by NRC employees or contractors as defined by NRC internal criteria.

Discussion: This indicator includes significant unauthorized disclosures of classified or safeguards information that cause damage to national security or public safety. This indicator reflects whether information that can harm national security (classified information) or cause damage to the public health and safety has been protected sufficiently to prevent its disclosure to terrorist organizations, other nations, or personnel without a need to know. No significant unauthorized disclosures occurred in FY 2021.

Security Goal Strategies The NRCs FY 2018-2022 Strategic Plan describes the three Security goal strategies at the following link: https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1614/v7/.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 33

Chapter 1 Managements Discussion and Analysis FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 34

Chapter 2 Financial Statements and Auditors Report Chapter 2: Financial Statements and Auditors Report FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 35

Chapter 2 Financial Statements and Auditors Report A Message from the Chief Financial Officer This Annual Financial Report illustrates our sound stewardship of the U.S. Nuclear Regulatory Commission (NRC) resources. As noted in Chapter 1, the NRC has reduced its costs while meeting all its goals and objectives. Chapter 2 presents the NRC's financial statements and the independent auditor's report. Finally, Chapter 3 presents other relevant information, such as the Inspector General's assessment of the most serious management and performance challenges facing the NRC.

The independent auditor issued an unmodified opinion on the fiscal year 2021 financial statements and identified a material weakness due to a lack of appropriate management controls over financial reporting and a significant deficiency in the oversight of the user account management controls for users with access to financial data. NRC management evaluated the auditors findings and will continue to take corrective actions to strengthen controls in these areas. Moreover, the auditors concluded that the NRC was in substantial compliance with applicable laws and regulations.

The NRC implemented Section 102(e) of Public Law 115-439, "Nuclear Energy Innovation and Modernization Act" (NEIMA) in FY 2021, which excludes additional amounts from the funding the NRC must recover through fees, including research and development at universities; directs the NRC to collect fees equal to its budget authority, less excluded amounts; limits NRC's spending on corporate support costs; and places a cap on the amount of the annual fee that may be charged to an operating reactor, which the NRC may waive if the cap compromises the NRC's safety and security mission. In addition, the NRC implemented processes to ensure accurate invoicing and expanded resource tools to enhance and transform the agencys approach to the planning and execution of budget, contracts, and workforce.

The NRC remains committed to its mission of ensuring the safety and security of the Nation's civilian use of radioactive materials in the most effective and efficient manner. The regulation of the Nation's nuclear industries during times of fiscal and regulatory challenges requires us to strategically plan and prepare our workforce to be successful and to continue using sound business practices to accomplish our regulatory mission, keeping the trust of our stakeholders.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 36

Chapter 2 Financial Statements and Auditors Report Consolidated Balance Sheets (IN THOUSANDS)

As of September 30, 2021 2020 Assets Intragovernmental Fund balance with Treasury (Note 2) $ 376,798 $ 390,731 Accounts receivable, net (Note 3) 2,940 3,211 Advances and prepayments 3,818 4,950 Total intragovernmental 383,556 398,892 With the public Accounts receivable, net (Note 3) 61,725 67,485 General Property and equipment, net (Note 4) 37,106 46,764 Advances and prepayments 25 76 Total with the public 98,856 114,325 Total Assets $ 482,412 $ 513,217 Liabilities Intragovernmental Accounts payable $ 7,548 $ 9,199 Other liabilities (Note 5) 13,342 12,734 Total intragovernmental 20,890 21,933 With the public Accounts payable 22,132 24,113 Federal employee benefits payable (Note 6) 4,129 4,607 Other liabilities (Note 5) 80,193 81,890 Total with the public 106,454 110,610 Total Liabilities 127,344 132,543 Net Position Unexpended appropriations 305,238 315,755 Cumulative results of operations (Note 8) 49,830 64,919 Total Net Position 355,068 380,674 Total Liabilities and Net Position $ 482,412 $ 513,217 The accompanying notes to the financial statements are an integral part of these statements.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 37

Chapter 2 Financial Statements and Auditors Report Consolidated Statements of Net Cost (IN THOUSANDS)

For the years ended September 30, 2021 2020 Nuclear Reactor Safety Gross costs $ 692,771 $ 723,021 Less: Earned revenue (644,864) (644,719)

Net Cost of Nuclear Reactor Safety (Note 9) 47,907 78,302 Nuclear Materials and Waste Safety Gross costs 201,368 204,585 Less: Earned revenue (67,038) (70,966)

Total Net Cost of Nuclear Materials and Waste Safety (Note 9) 134,330 133,619 Net Cost of Operations $ 182,237 $ 211,921 The accompanying notes to the financial statements are an integral part of these statements FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 38

Chapter 2 Financial Statements and Auditors Report Consolidated Statements of Changes in Net Position (IN THOUSANDS)

For the years ended September 30, 2021 2020 Unexpended Appropriations Beginning Balance $ 315,755 $ 340,983 Appropriations received 129,813 154,852 Other adjustments (181) (438)

Appropriations used (Note 11) (140,149) (179,642)

Net Change in Unexpended Appropriations (10,517) (25,228)

Total Unexpended Appropriations, ending balance 305,238 315,755 Cumulative Results of Operations Beginning Balance $ 64,919 $ 74,817 Appropriations used (Note 11) 140,149 179,642 Nonexchange revenue (Note 11) 767 797 Imputed financing from costs absorbed by others (Note 11) 26,999 22,381 Other (767) (797)

Net Cost of Operations (182,237) (211,921)

Net Change in Cumulative Results of Operations (15,089) (9,898)

Cumulative Results of Operations, ending balance $ 49,830 $ 64,919 Net Position $ 355,068 $ 380,674 The accompanying notes to the financial statements are an integral part of these statements.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 39

Chapter 2 Financial Statements and Auditors Report Combined Statements of Budgetary Resources (IN THOUSANDS)

For the years ended September 30, 2021 2020 Budgetary Resources Unobligated balance from prior-year budget authority, net $ 109,673 $ 87,091 (discretionary and mandatory)

Appropriations (discretionary and mandatory) 844,399 859,180 Spending authority from offsetting collections 6,061 6,322 (discretionary and mandatory)

Total Budgetary Resources $ 960,133 $ 952,593 Status of Budgetary Resources New obligations and upward adjustments (total) (Note 12) $ 883,053 $ 865,239 Unobligated balance, end of year Apportioned, unexpired accounts 74,618 84,983 Exempt from apportionment, unexpired accounts 299 756 Unexpired unobligated balance, end of year 74,917 85,739 Expired unobligated balance, end of year 2,163 1,615 Unobligated balance, end of year (total) 77,080 87,354 Total Budgetary Resources $ 960,133 $ 952,593 Outlays, Net, and Disbursements, Net Outlays, net (total) (discretionary and mandatory) 858,151 879,882 Distributed offsetting receipts (-) (714,916) (704,328)

Agency Outlays, net $ 143,235 $ 175,554 The accompanying notes to the financial statements are an integral part of these statements.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 40

Chapter 2 Financial Statements and Auditors Report Notes to the Financial Statements (All tables are presented in thousands)

Note 1 - Summary of Significant Accounting Policies A. Reporting Entity The U.S. Nuclear Regulatory Commission (NRC) is an independent regulatory Agency of the U.S. Federal Government that Congress created to regulate the Nations civilian use of byproduct, source, and special nuclear materials to ensure adequate protection of 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 Nations civilian use of nuclear materials.

The NRC operates through the execution of its congressionally approved appropriations for Salaries and Expenses (which includes funds derived from the Nuclear Waste Fund (NWF) and OIG.

The reporting entity is a component of the U.S. Government. For this reason, some of the assets and liabilities reported by the entity may be eliminated for Government-wide reporting because they are offset by assets and liabilities of another U.S. Government entity.

B. Basis of Presentation These financial statements for FY 2021 and FY 2020 (prior-year) are presented on a comparative basis. They report the financial position and results of operations of the NRC as required by the Chief Financial Officers Act of 1990 and the Government Management Reform Act of 1994. These financial statements were prepared from the books and records of the NRC in conformance with GAAP for Federal entities of the United States and the form and content for entity financial statements specified in OMB Circular A-136. GAAP for Federal entities are the standards prescribed by the Federal Accounting Standards Advisory Board (FASAB). The FASAB has been recognized by the American Institute of Certified Public Accountants (AICPA) as the official accounting standard setting authority for the Federal government. These statements are different from the financial reports prepared by the NRC in compliance with OMB directives, which are used to monitor and control the NRC's use of budgetary resources.

Presentation of the budget accounts on the Combining Statement of Budgetary Resources shows columns for the no-year Salaries and Expenses appropriation, which includes funding for the Office of the Commission; no-year and 2-year funds aggregated for the OIG, and the Nuclear Facility Fees, which reflects the Distributed Offsetting receipts.

The NRC collects miscellaneous receipts for information requests under the Freedom of Information Act; civil penalties; and interest, administrative, and penalty charges on FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 41

Chapter 2 Financial Statements and Auditors Report delinquent debt. All miscellaneous receipts, when collected, are returned to the U.S. Treasury. The NRC has not presented these amounts on a Statement of Custodial Activity as the amounts involved are immaterial and incidental to the agency's operations and mission.

C. Budgets and Budgetary Accounting Budgetary accounting measures appropriation and consumption of budget spending authority or other budgetary resources and facilitates compliance with legal constraints and controls over the use of Federal funds. Under budgetary reporting principles, budgetary resources are used at the time of purchase. Assets and liabilities, which do not use current budgetary resources, are not reported, and only those liabilities for which valid obligations have been established are considered to use budgetary resources. Congress passed the Consolidated Appropriations Act, 2021 that funded the NRCs budget at a level of $830.9 million for FY 2021. Not more than $9.5 million of the appropriation was made available for the costs of the Office of the Commission until September 30, 2022. Additionally, Congress enacted a two-year appropriation of $13.5 million for expenses of the OIG, which is available for obligation through September 30, 2022.

Congress passed the Further Consolidated Appropriations Act, 2020 that funded the NRCs budget at a level of $842.2 million for FY 2020. Not more than $9.5 million of the appropriation was made available for the costs of the Office of the Commission until September 30, 2021. Congress enacted a 2-year appropriation of $13.3 million for the OIG, which is available for obligation by the NRC through September 30, 2021.

Additionally, Congress passed the Coronavirus Aid, Relief, and Economic Security Act, 2020 that made available supplemental funding of $3.3 million until September 30, 2021 for costs to prevent, to prepare for, and to respond to coronavirus.

D. Basis of Accounting These financial statements reflect both accrual and budgetary accounting transactions.

Under the accrual method, revenues are recognized when earned and expenses are recognized when a liability is incurred, without regard to receipt or payment of cash.

Budgetary accounting is also used to record the obligation of funds prior to the accrual-based transaction. SBR presents total budgetary resources available to the NRC, the status of total budgetary resources, and net outlays for the year.

E. Revenues and Other Financing Sources The NRC is required to offset its appropriations by revenue received during the FY from the assessment of fees. The NRC assesses two types of fees to recover its appropriation:

1. Fees assessed to recover the NRCs costs of providing individually identifiable services to specific applicants and licensees under 10 CFR Part 170, Fees for Facilities, Materials, Import and Export Licenses, and Other Regulatory Services under the Atomic Energy Act of 1954, as Amended, for licensing, inspection, and other services under the authority of the Independent Offices Appropriation Act of 1952.

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Chapter 2 Financial Statements and Auditors Report

2. Annual fees assessed for nuclear facilities and materials licensees under 10 CFR Part 171, Annual Fees for Reactor Licenses and Fuel Cycle Licenses and Materials Licenses.

Licensing revenues are recognized on a straight-line basis over the licensing period.

The annual licensing period for reactor and materials fees begins October 1 and ends September 30. Annual fees for reactors are invoiced in four quarterly installments, before the end of each quarter. The NRC invoices licensees for materials annual fees in the month the license is originally issued. Fees are recorded as revenues when the services are performed.

For accounting purposes, appropriations are recognized as a financing source (appropriations used) at the time goods and services are received. Periodically during the FY, appropriations recognized are reduced by the amount of assessed fees collected during the FY to the extent of new budget authority for the year. Collections that exceed 100 percent of the NRC's appropriation, excluding amounts appropriated for Waste Incidental to Reprocessing, Generic Homeland Security, Regulatory Infrastructure for Advanced Reactor Technologies, Fee Relief activities, Integrated University Grants program, and OIG services for the DNFSB, are held to offset subsequent years appropriations. The NRC recognizes appropriated expenses over the useful life of property and equipment as reflected by depreciation and amortization expense.

F. Fund Balance with Treasury The Treasury processes the NRCs cash receipts and disbursements. The Fund Balance with Treasury is primarily appropriated funds and license fee collections that are available to pay current liabilities and to finance authorized purchase commitments. The Fund Balance with Treasury represents the NRCs right to draw on the U.S. Treasury for allowable expenditures.

G. Accounts Receivable Accounts receivable consist of amounts that other Federal agencies and the public owe to the NRC. Amounts due from the public are presented net of an allowance for uncollectible accounts. The allowance is determined based on the age of the receivable and allowance rates established from historical experience. Receivables from Federal agencies are expected to be collected; therefore, there is no allowance for uncollectible accounts for Federal agencies. An allowance for Federal agencies is considered based on FASAB Technical Bulletin 2020-01, but the NRC deems the Federal accounts receivable to be receivable based on historical experience.

H. Non-Entity Assets Non-entity assets consist of miscellaneous fees assessed for Freedom of Information Act requests; civil penalties; and interest, administrative charges, and penalties assessed on delinquent debt due from the public. Once collected, the funds are transferred to the U.S. Treasury.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 43

Chapter 2 Financial Statements and Auditors Report I. Property and Equipment Property and equipment consist primarily of typical office furnishings, leasehold improvements, nuclear reactor simulators, and computer hardware and software. The costs of internal use software include the full cost of salaries and benefits for agency personnel involved in software development. The NRC has no real property as the land and buildings in which the NRC operates are leased through the GSA. The rent 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 is capitalized at cost and depreciated using the straight-line method over the useful life of the assets. Other property items are expensed when purchased. Normal repairs and maintenance are charged to expense as incurred.

J. Accounts Payable The NRC uses an estimation methodology to calculate the accounts payable balance, which represents costs for billed and unbilled goods and services received but unpaid before year-end. The NRC calculates the accounts payable amount using an average based on the historical trend of validated accruals. The estimation methodology is validated quarterly.

K. Liabilities Not Covered by Budgetary Resources Liabilities not Covered by Budgetary Resources represents the amount of future funding needed to pay the accrued unfunded expenses as of the end of the FY. These liabilities are not funded from current or prior-year appropriations and assessments, but instead they are funded from future appropriations and assessments.

Liabilities represent the amount of monies or other resources that are likely to be paid by the NRC as a result of a transaction or event that has already occurred. The NRC cannot pay Liabilities without an appropriation. Liabilities for which an appropriation has not been enacted are classified as Liabilities Not Covered by Budgetary Resources" and fall into the following three categories:

• Intragovernmental. The NRC records a liability to the U.S. Department of Labor (DOL) for Federal Employees Compensation Act (FECA) benefits paid by the DOL on behalf of the NRC. The NRC also accrued a liability to GSA for Broker Commission Credits received by the NRC and annual step rent increases on the occupancy agreements for rent of NRC office space. The NRC amortizes the liability on a straight-line basis and pays GSA over the life of the occupancy agreements.

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Chapter 2 Financial Statements and Auditors Report

• Federal Employee Benefits. Federal employee benefits represent the actuarial liability for estimated future FECA disability benefits. The DOL generates the future workers' compensation estimate from an application of actuarial procedures developed to estimate the liability for FECA, which includes the expected liability for death, disability, medical, and miscellaneous costs for approved compensation cases.

• Other. This category includes the amount of accrued annual leave earned by the NRC employees, but not yet taken; and contingent liabilities which have the probable likelihood of an adverse outcome.

L. Contingencies Contingent liabilities are those for which the existence or amount of the liability cannot be determined with certainty pending the outcome of future events. The uncertainty should ultimately be resolved when one or more future events occur or fail to occur.

Accounting treatment of the contingency depends on if the likely outcome is considered probable, reasonably possible, or remote.

A contingency is considered probable when the future confirming event or events are more likely than not to occur, with the exception of pending or threatened litigation and unasserted claims. This type of contingency is recorded in the financial statements as a contingent liability (included in Other Liabilities) and as an expense. It should be recorded when a past event or exchange transaction has occurred, a future outflow or other sacrifice of resources is probable, and the future outflow or sacrifice of resources is measurable.

A contingency is considered reasonably possible when the chance of the future confirming event or events occurring is more than remote but less than probable. This type of contingency is disclosed in the notes to the financial statements (Note 17) if any of the conditions for liability recognition are not met and there is at least a reasonable possibility that a loss or an additional loss may have been incurred.

A contingency is considered remote when the chance of the future event or events occurring is slight. This type of contingency is not recognized as a liability and as an expense in the financial statements, nor is it disclosed in the notes when the chance of the future event or events occurring is remote.

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. To the extent that current or prior-year funding is not available to cover annual leave earned but not taken, funding will be obtained from future financing sources. Sick leave and other types of non-vested leave are expensed as taken.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 45

Chapter 2 Financial Statements and Auditors Report N. Retirement Plans The NRC employees belong to either the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS).

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 amounts is the responsibility of the U.S. Office of Personnel Management (OPM). The portion of the current and estimated future outlays for FERS and CSRS not paid by the NRC is included in NRCs financial statements as an imputed financing source in the Statement of Changes in Net Position and as program costs on the Statement of Net Cost.

The NRC employees make mandatory contributions to their retirement plans through payroll deductions as required by law. For employees belonging to FERS and receiving an appointment before January 1, 2013, the NRC withheld 0.8 percent of base pay earnings and made an employer contribution of 17.3 percent in 2021 and 13.7 percent in 2020. In accordance with Public Law 112-96, Section 5001 of the Middle Class Tax Relief and Job Creation Act of 2012, employees hired after January 1, 2013, as Federal Employees Retirement System - Revised Annuity Employees (FERS-RAE) must pay 3.1 percent of their salary to retirement contributions with 15.5 percent in 2021 and 11.9 percent in 2020 for employer matching contributions. For employees hired after January 1, 2014, as FERS-RAE must pay 4.4 percent of their salary to retirement contributions with 15.5 percent in 2021 and 11.9 percent in 2020 for employer matching contributions. The sum is transferred to the Federal Employees Retirement Fund. For employees covered by CSRS, the NRC withholds 7 percent of base pay earnings. The NRC matched this withholding with a 7 percent contribution in 2021 and 2020.

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for employees belonging to either FERS or CSRS. The maximum percentage of base pay that an employee participating in FERS or CSRS may contribute is unlimited, but it is subject to the maximum contribution of $19,500 in 2021 and 2020. For employees participating in FERS, the NRC automatically contributes 1 percent of base pay to the employee's account and matches contributions up to an additional 4 percent. For employees participating in CSRS, the NRC does match the contribution. The sum of the employees and the NRCs contributions is transferred to the Federal Retirement Thrift Investment Board.

O. Leases The NRC has two types of leases: capital leases and operating leases (Note 7):

Capital leases: Capital leases are leases that transfer substantially all the benefits and risks of ownership to the lessee. Capital leases are reported in the Balance Sheet as an asset under Property and Equipment and as a liability under Other Liabilities. If at its inception, a lease meets one or more of the following four criteria, the lessee should classify the lease as a capital lease:

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Chapter 2 Financial Statements and Auditors Report

1. The lease transfers the ownership of the property to the lessee by the end of the lease term.

2. The lease contains an option to purchase the leased property at a bargain price.

3. The lease term is equal or greater than 75 percent of the estimated economic life of the leased property.

4. The present value of rental or other minimum lease payments, excluding that portion of the payments representing executor cost, equals or exceeds 90 percent of the fair value of the leased property.

The NRC's capital leases are for personal property consisting of reproduction equipment that is installed at the NRC Headquarters.

Operating leases: The FASAB defines an operating lease as a lease in which the Federal entity does not assume the risks of ownership of the property, plant, and equipment (PP&E). It is an agreement conveying the right to use property for a limited time in exchange for periodic rental payments.

Operating leases at the NRC consist of real property leases with the GSA. The NRC holds Occupancy Agreements with the GSA, which are not leases but are treated as leases for accounting purposes. The leases are for the NRCs Headquarters, regional offices, and Technical Training Center (TTC). The GSA charges the NRC lease rates that approximate commercial rates for comparable space.

P. Pricing Policy The NRC provides nuclear reactor and materials licensing and inspection services to the public and other Government entities. In accordance with OMB Circular A-25, Transmittal Memorandum #1, User Charges, and the Independent Offices Appropriation Act of 1952, the NRC assesses fees under 10 CFR Part 170 for licensing and inspection activities to recover the full cost of providing individually identifiable services.

The NRCs policy is to recover the full cost of goods and services provided to other Government entities where the services performed are not part of the agency's statutory mission and the NRC has not received appropriations for those services. Fees for reimbursable work are assessed at the 10 CFR Part 170 rate with minor exceptions for programs that are nominal activities of the NRC.

Q. Net Position The NRCs net position consists of unexpended appropriations and cumulative results of operations. Unexpended appropriations represent (1) appropriated spending authority that is unobligated and has not been withdrawn by the U.S. Treasury, and (2) unliquidated obligations and expenditures not yet disbursed. Cumulative results of operations represent the excess of financing sources over expenses since inception.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 47

Chapter 2 Financial Statements and Auditors Report R. Use of Management Estimates The preparation of the accompanying financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates.

S. Transfers The NRC had been a party to non-expenditure transfers of funds, as a receiving entity, from the U.S. Agency for International Development. The transfers were for the international development of nuclear safety and regulatory authorities in other countries.

Transfers are legal delegations by one agency of its authority to obligate budget authority and outlay funds to another agency.

T. Statements of Net Cost The programs as presented on the Statement of Net Cost are based on the annual performance budget and are described as follows:

The Nuclear Reactor Safety program encompasses all the NRC efforts to ensure that civilian nuclear power reactor facilities and research and test reactors are licensed and operated in a manner that adequately protects public health and safety, and the environment, and protects against radiological sabotage and theft or diversion of special nuclear materials. The Nuclear Reactor Safety program consist of the following activities: operating reactors and new reactors.

The Nuclear Materials and Waste Safety program encompasses all the NRC efforts to protect the public health and safety and the environment and ensures the secure use and management of radioactive materials. The Nuclear Materials and Waste Safety program consist of the following activities: fuel facilities, nuclear materials users, decommissioning and low-level waste, spent fuel storage and transportation, and a high-level waste repository.

For intragovernmental gross costs and revenue, the buyers and sellers are Federal entities. For earned revenues from the public, the buyers of the goods or services are non-Federal entities.

U. Classified Activities Accounting standards require all reporting entities to disclose that accounting standards allow certain presentations and disclosures to be modified, if needed, to prevent the disclosure of classified information.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 48

Chapter 2 Financial Statements and Auditors Report Note 2 - Fund Balance with Treasury As of September 30, 2021 2020 Fund Balances Appropriated funds $ 376,478 $ 389,975 Nuclear Waste Fund 320 426 Other fund types - 330 Total $ 376,798 $ 390,731 Status of Fund Balance with Treasury Unobligated balance Available - Appropriated funds $ 74,917 $ 85,739 Unavailable Expired accounts 2,163 1,615 Obligated balance not yet disbursed 299,718 303,377 Total $ 376,798 $ 390,731 The Fund Balance with Treasury consists of the unobligated and obligated budgetary account balances, including NWF activity. The NWF unobligated balance was $0.3 million as of September 30, 2021 and $0.4 million as of September 30, 2020.

Other fund types in the Fund Balance with Treasury represent license fee collections used to offset the NRC current-year budget authority, miscellaneous collections, and adjustments that will offset revenue in the following FY.

Note 3 - Accounts Receivable As of September 30, 2021 2020 2020 Intragovernmental Fee receivables and reimbursements $ 2,940 $ 3,211 Receivables with the Public Materials and facilities fees-billed $ 3,991 $ 16,995 Materials and facilities fees-unbilled 58,100 51,925 Other 2,420 2,119 Total Receivables with the Public 64,511 71,039 Less: Allowance for uncollectible accounts (2,786) (3,554)

Total Receivables with the Public, Net $ 61,725 $ 67,485 Total Accounts Receivable $ 67,451 $ 74,250 Less: Allowance for uncollectible accounts (2,786) (3,554)

Total Accounts Receivable, Net $ 64,665 $ 70,696 Refer to Note 1G, Summary of Significant Accounting Policies, Accounts Receivable for more information.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 49

Chapter 2 Financial Statements and Auditors Report Note 4 - Property and Equipment, Net As of September 30, 2021 Accumulated Fixed Assets Class Service Acquisition Depreciation Net Book Years Value and Value Amortization Equipment 5 $ 14,449 $ (9,929) $ 4,520 Leased equipment 5 463 (463) -

IT software 5 68,169 (63,617) 4,552 IT software under development - 1,701 - 1,701 Leasehold improvements Life of 60,776 (35,461) 25,315 related lease Leasehold improvements in

- 1,018 - 1,018 progress Total $ 146,576 $ (109,470) $ 37,106 As of September 30, 2020 Accumulated Fixed Assets Class Service Acquisition Depreciation Net Book Years Value and Value Amortization Equipment 5 $ 13,925 $ (8,402) $ 5,523 Leased equipment 5-8 924 (924) -

IT software 5 78,715 (69,504) 9,211 IT software under development - 2,292 - 2,292 Leasehold improvements 4-16 63,152 (34,798) 28,354 Leasehold improvements in

- 1,384 - 1,384 progress Total $ 160,392 $ (113,628) 46,764 For the years ended September 30, 2021 2020 Balance beginning of year $ 46,764 $ 55,649 Capitalized acquisitions 2,749 12,792 Disposals (1,768) (13,076)

Depreciation expense (9,908) (9,490)

Other (731) 889 Total $ 37,106 $ 46,764 In accordance with Statement of Federal Financial Accounting Standards (SFFAS) No.

44, "Accounting for Impairment of General Property, Plant, and Equipment Remaining in Use," the NRC repairs or replaces capital assets as required and does not recognize impairment losses. Refer to Note 1I, Summary of Significant Accounting Policies, Property and Equipment for more information.

In FY 2020, NRC discovered and corrected an overstatement of amortization expenses in leasehold improvements by $2.1 million. In FY 2020, NRC also wrote-off a total of

$21.8 million in leasehold improvement costs and accumulated amortization expenses of $8.8 million with a net book value of $13.1 million.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 50

Chapter 2 Financial Statements and Auditors Report Note 5 - Other Liabilities As of September 30, 2021 2020 Intragovernmental Liability to the U.S. Treasury General Fund for misc. receipts $ 152 $ 65 Liability for advances from other agencies 16 15 Accrued workers' compensation 914 953 Accrued unemployment compensation 3 1 Employee benefit contributions 6,579 5,893

• Other liabilities 5,678 5,807 Total Intragovernmental Other Liabilities $ 13,342 $ 12,734 With the Public Accrued annual leave $ 49,245 $ 48,531 Accrued salaries and benefits 20,946 19,539 Employer Contributions & Payroll 975 898 Taxes Payable Contract holdbacks, advances, capital lease liability, and other 1,001 1,447 Contingent Liabilities 250 354 Grants Payable 7,776 11,121 Total With the Public Other Liabilities $ 80,193 $ 81,890 Total Intragovernmental and With the Public Other Liabilities $ 93,535 $ 94,624

• Other Liabilities represents the accrual of broker commission credits (BCC) received by the NRC and the sum of annual step rent increases paid to GSA for rent of NRC office space. The credits received by the NRC and the step rent increases are amortized on a straight-line basis over the life of the occupancy agreements.

• Other liabilities are current except for the $5.7 million accrual for BCC and annual step rent increases on the existing occupancy agreements with GSA.

Note 6 - Liabilities Not Covered by Budgetary Resources As of September 30, 2021 2020 Intragovernmental FECA paid by DOL $ 914 $ 953 Accrued unemployment compensation 3 1 Federal Employee Benefits Future FECA 4,129 4,607 Other Accrued annual leave 49,245 48,531 Contingent Liabilities 250 354 Other Liabilities 5,678 5,807 Total Liabilities Not Covered by Budgetary Resources 60,219 60,253 Total Liabilities Covered by Budgetary Resources 67,125 72,290 Total Liabilities $ 127,344 $ 132,543 Liabilities not Covered by Budgetary Resources represents the amount of future funding needed to pay the accrued unfunded expenses as of September 30, 2021, and 2020. These liabilities are not funded from current or prior-year appropriations and assessments, but rather they FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 51

Chapter 2 Financial Statements and Auditors Report should be funded from future appropriations and assessments. Accordingly, future funding requirements have been recognized for the expenses that will be paid from future appropriations.

The projected annual benefit payments for FECA are discounted to present value. For FY 2021, projected annual payments were discounted to present value based on the OMBs interest rate assumptions, which were interpolated to reflect the average duration in years for income payments and medical payments. The interest rate assumptions used for FY 2021 discounting were 2.231 percent in year 1 and year 2 for wage benefits, and 2.060 percent in year 1 and year 2 for medical benefits.

Note 7 - Leases As of September 30, 2021 2020 Assets Under Capital Leases:

Copiers and booklet maker $ 463 $ 924 Accumulated amortization (463) (924)

Net Assets Under Capital Leases $ - $ -

Future Lease Payments Due:

As of September 30, 2021 Fiscal Year Operating Operating Non- Cancellable Cancellable 2022 $ 15,008 $ 20,415 $ 35,423 2023 11,368 19,650 31,018 2024 11,523 18,232 29,755 2025 9,738 18,404 30328,142 2026 9,419 17,431 1 74 26,850

,840 2027 and thereafter 24,899 88,299 113,198 Total Future Lease Payments $$ 81,955 $ 182,431 $ 264,386 As of September 30, 2020 Fiscal Year Operating Operating Non- Cancellable Cancellable 2021 $ 11,993 $ 21,118 $ 33,111 2022 12,097 19,540 31,637 2023 13,066 18,676 303 31,742 2024 13,246 17,315 1 7430,561

,840 2025 11,489 17,487 28,976 2026 and thereafter 31,438 114,426 $ 145,864 Total Future Lease Payments $$ 93,329 $ 208,562 $ 301,891 FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 52

Chapter 2 Financial Statements and Auditors Report For Future Lease Payments, the NRC calculated the Capital Lease Liability as of September 30, 2021 and subtracted the imputed interest to arrive at the Total Future Lease Payments. The reproduction equipment is generally depreciated over 5 years using the straight-line method with no salvage value. The lease agreement ended in the first quarter of FY 2019.

The land and buildings in which the NRC operates are leased through GSA. The NRC Headquarters complex consists of three office buildings and a warehouse located in Rockville, MD, with one of the headquarters office buildings jointly leased with the U.S. Food and Drug Administration (FDA) and the National Institutes of Health (NIH). The NRC has four regional offices that are located in King of Prussia, PA, Atlanta, GA, Lisle, IL, and Arlington, TX. In addition, the NRC operates and maintains the TTC located in Chattanooga, TN. See table below for description of lease arrangements.

Lease Cancellable vs. Lease End Leased Property Begin Noncancellable Date Date Headquarters: Office Building One &

Cancellable 03/01/2018 02/29/2028 Parking Headquarters: Office Building Two &

Cancellable 12/01/2020 12/14/2033 Parking Headquarters: Office Building Three &

Non-cancellable 10/01/2020 11/02/2027 Parking Headquarters: Lot 4 Non-cancellable 11/12/2018 11/11/2028 Headquarters: Warehouse Cancellable 12/01/2020 12/14/2021 Non-cancellable 1 04/09/2012 04/30/2022 Region I: King of Prussia, PA Non-cancellable 2 05/01/2022 04/30/2032 Region II: Atlanta, GA Non-cancellable 12/01/2009 11/30/2024 Region III: Lisle, IL Cancellable 07/01/2013 06/30/2023 Region IV: Arlington, TX Cancellable 04/06/2021 04/05/2026 TTC: Chattanooga, TN Non-cancellable 10/17/2016 10/16/2036 Through numerous cost saving efforts in the past several years, NRCs will be saving $8 million per year as compared to the FY 2016 annual rent - see table below.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 53

Chapter 2 Financial Statements and Auditors Report Fiscal Year Total Annual Rent FY 2016 $41,138,518.34 FY 2021 $33,070,966.96 Savings $ 8,067,551.38 In the Three White Flint North (3WFN) office building, the NRC occupies 24,889 usable square feet and the NRC is no longer the primary tenant. The NRC occupies the Data center (half of fourth floor), Operations center (floor B2), and the Conference center. The FDA and NIH occupy the other floors. In early FY 2020, NRC released two and a half floors of 3WFN.

In the Two White Flint North (2WFN) office building, the NRC occupies 266,204 usable square feet, 662 structured parking spaces, and 19 surface parking spaces. In FY 2021, NRC released the tenth floor of 2WFN. The lease bill for 2WFN will be approximately $1.0 million less per year.

In FY 2021, the NRC signed a 10-year lease for the relocation of the Region I office. The NRC will occupy 32,539 useable square feet with an anticipated occupancy date of May FY 2022. The new lease for Region I will be approximately $1.9 million dollars less per year.

The NRC leases for land and buildings do not have renewal options or contingent rental restrictions.

The joint lease for the 3WFN office building with the FDA and NIH and the leases for the four regional office buildings have escalation clauses. The lease for 2WFN increases in the tenth year with the shell rate increasing from $22.92 per square feet to $25.20 per square feet. The leases for the two remaining headquarters office buildings, the warehouse, and the TTC do not have escalation clauses.

The lease for the Headquarters warehouse is expiring in November 2021, but size of the warehouse was decreased 48,325 to 19,402 Rentable Square Feet in March 2020.

Note 8 - Cumulative Results of Operations As of September 30, 2021 2020 Liabilities not covered by budgetary resources (Note 6) $ (60,219) $ (60,253)

Investment in property and equipment, net (Note 4) 37,106 46,764 Contributions from foreign cooperative research agreements 9,571 8,587 Nuclear Waste Fund 407 430 Office of the Commission (financed by Fees) - -

Accounts receivable - fees 62,480 68,957 Fee Collection Revenue Not Transferred - 330 Other 485 104 Cumulative Results of Operations $ 49,830 $ 64,919 FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 54

Chapter 2 Financial Statements and Auditors Report Note 9 - Suborganization Program Cost For the fiscal years ended September 30, 2021 2020 Nuclear Reactor Safety:

Intragovernmental gross costs $ 205,900 $ 207,385 Less: Intragovernmental earned revenue (44,506) (44,062)

Intragovernmental net costs 161,394 163,323 Gross costs with the public 486,871 515,636 Less: Earned revenues from the public (600,358) (600,657)

Net costs with the public (113,487) (85,021)

$ 47,907 $ 78,302 Total Net Cost of Nuclear Reactor Safety Nuclear Materials and Waste Safety:

Intragovernmental gross costs $ 59,179 $ 56,762 Less: Intragovernmental earned revenue (4,892) (4,625)

Intragovernmental net costs 54,287 52,137 Gross costs with the public 142,189 147,823 Less: Earned revenues from the public (62,146) (66,341)

Net costs with the public 80,043 81,482 Total Net Cost of Nuclear Materials and Waste Safety $ 134,330 $ 133,619 Nuclear Reactor Safety and Nuclear Materials and Waste Safety represent the NRC's two major programs as identified in the NRC Strategic Plan.

Note 10 - Exchange Revenues For the periods ended September 30, 2021 2020 Fees for licensing, inspection, and other services $ 707,798 $ 709,471 Revenue from reimbursable work 4,104 6,215 Total Exchange Revenues $ 711,902 $ 715,686 Earned revenues or exchange revenues arise when an entity provides goods and services to the public or another Government entity for a price. The NRCs revenues are primarily recorded at full cost for services provided for inspections, fees for licensing, and reimbursable work.

Note 11 - Financing Sources Other Than Exchange Revenue For the periods ended September 30, 2021 2020 Appropriations Used Collections are used to reduce the fiscal year's appropriations:

Funds consumed $ 854,841

$ $ 883,647 Less: Collection of fees assessed (714,586) (703,998)

Less: Nuclear Waste Fund Expense (106) (7)

Less: Office of the Commission (financed by Fees) - -

$ 140,149 $ 179,642 Total Appropriations Used Funds consumed include $77.7 million and $62.5 million through September 30, 2021, and 2020, respectively, of available funds from prior years. Current year funds consumed were

$777.0 million and $821.1 million through September 30, 2021 and 2020, respectively.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 55

Chapter 2 Financial Statements and Auditors Report For the fiscal years ended September 30, 2021 2020 Non-Exchange Revenue Civil penalties $ 605 $ 455 Miscellaneous receipts 162 455 342 NonExchange Revenue 767 797 Contra-Revenue (767) (797)

Total NonExchange Revenue, Net of Funds Returned to the U.S. Treasury For the periods ended September 30, 2021 2020 Imputed Financing Civil Service Retirement System $ 2,712 $ 2,972 Federal Employees Retirement System 3,825 (498)

Federal Employee Health Benefit 20,385 19,830 Federal Employee Group Life Insurance 77 77 Judgments/Awards - -

Total Imputed Financing $ 26,999 $ 22,381 Note 12 - Total Obligations Incurred For the periods ended September 30, 2021 2020 Direct Obligations Category A $ 877,989 $ 861,428 Exempt from Apportionment 456 5 Total Direct Obligations 878,445 861,433 Reimbursable Obligations 4,607 3,806 Total Obligations Incurred $ 883,053 $ 865,239 Category A obligations consist of the NRC appropriations only. Obligations exempt from apportionment represent funds derived from the NWF.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 56

Chapter 2 Financial Statements and Auditors Report Note 13 - Undelivered Orders at the End of the Period As of September 30, 2021 2020 Undelivered Orders - Unpaid Salaries and Expenses $ 237,385 $ 235,096 Federal 3,748 (13,857)

Non-Federal 233,637 248,953 Inspector General $ 1,328 1,221 Federal (332) (634)

Non-federal 1,660 1,855 Nuclear Waste Fund $ 21 $ -

Federal - -

Non-Federal 21 -

Total Undelivered Orders - Unpaid $ 238,734 $ 236,317 Undelivered Orders - Paid Salaries and Expenses $ 3,314 $ 4,703 Federal (1,390) (1660)

Non-Federal 4,704 6,363 Inspector General $ 504 $ 336 Federal 257 (428)

Non-Federal 247 764 Nuclear Waste Fund - -

Federal - -

Non-Federal - -

Total Undelivered Orders - Paid $ 3,818 5,039 Total Undelivered Orders $ 242,552 $ 241,356 Note 14 - Nuclear Waste Fund The NWF funding provided to the NRC in FY 2011 and prior years has been carried forward to subsequent years for the purpose of performing activities associated with the DOE's application for a high-level waste repository at Yucca Mountain, NV.

The SFFAS 43 "Funds from Dedicated Collections: Amending Statement of Federal Financial Accounting Standards 27, Identifying and Reporting Earmarked Funds," lists three defining criteria for funds from dedicated collections.

• A statute committing the Federal government to use specifically identified revenues and/or other financing sources that are originally provided to the Federal government by a non-federal source only for designated activities, benefits or purposes;

• Explicit authority for the fund to retain revenues and/or other financing sources not used in the current period for future use to finance the designated activities, benefits, or purposes; and FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 57

Chapter 2 Financial Statements and Auditors Report

• A requirement to account for and report on the receipt, use, and retention of the revenues and/or other financing sources that distinguishes the fund from the Federal governments general revenues.

In 1982, Congress passed the Nuclear Waste Policy Act of 1982 (Public Law 97-425) establishing the NWF to be administered by the U.S. Department of Energy (42 U.S.C.10222).

For the NRC, the NWF transfer is a source of financing from other than non-Federal sources.

The NRC collects no revenue on behalf of the NWF and has no administrative control over it.

Furthermore, the Treasury has no separate fund symbol for the NWF under the NRCs agency location code. The receipt and expenditure of NWF funding is reported to the U.S. Treasury under the NRCs primary Salaries and Expenses Treasury Account Symbol (X0200).

As a result, the NWF is not a fund from dedicated collections from the NRC's perspective.

However, to provide additional information to the users of these financial statements, the table below presents enhanced disclosure of the fund.

For the periods ended September 30, 2021 2020 Appropriations Received $ - $ -

Expended Appropriations $ 106 $ 7 Obligations Incurred $ 126 $ 5 Unobligated Balances (includes recoveries of prior year $ 299 $ 426 obligations)

Note 15 - Explanation of Differences between the Statement of Budgetary Resources and the Budget of the U.S. Government SFFAS 7, Accounting for Revenue and Other Financing Sources and OMB Circular A-136 require the NRC to reconcile the budgetary resources reported on the SBR to the actual budgetary resources presented in the Presidents Budget and explain any material differences.

The NRC does not have any material differences between the budgetary resources reported on the SBR for FY 2020 and the FY 2020 actuals in the proposed President's Budget for FY 2022.

The reconciliation was based on actual numbers for FY 2020 because the Budget of the United States (also known as the Presidents Budget) was not published at the time that these financial statements were issued.

The FY 2021 actual budgetary resources numbers will be available in the FY 2023 Presidents Budget which is expected to be published in 2022 and will be available on the OMB Web site https://www.whitehouse.gov/omb and through the U.S. Government Publishing Office.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 58

Chapter 2 Financial Statements and Auditors Report Note 16 - Reconciliation of Net Cost to Net Outlays For the fiscal year ended September 30, 2021 2021 Intra-governmental With the Total Public Net Cost $ 215,681 $ (33,444) $ 182,237 Components of the Net Cost That Are Not Part of Net Outlays Property, plant, and equipment depreciation - (9,908) (9,908)

Property, plant, and equipment disposal & - (1,768) (1,768) revaluation

- (731) (731)

Other- ADP Software Cost Capitalization Increase/(decrease) in assets:

Accounts receivable (273) (5,782) (6,055)

Other assets (1,132) (51) (1.183)

(Increase)/decrease in liabilities:

Accounts payable 1,651 1,983 3,634 Salaries and benefits - 478 478 Other liabilities (417) 2,307 1,890 Financing sources:

Federal employee retirement benefit cost paid by (26,999) (26,999)

OPM and imputed to the agency -

Total Components if Net Cost That Are Not Part of Net Outlays $ (27,170) $ (13,472) $ (40,642)

Components of Net Outlays That Are Not Part of Net Cost Acquisition of capital assets 87 1,805 1,892 Financing sources:

Transfers out (in) without reimbursements - - -

Total Components of Net Outlays That Are Not Part 87 1,805 1,892 of Net Cost Misc. Items:

Distributed offsetting receipts (714,916) - (714,916)

Custodial/Non-exchange revenue 162 (605) (443)

Non-Entity Activity 677 - 677 Appropriated Receipts for Trust/Special Funds 714,430 - 714,430 Total Other Reconciling Items 353 (605) (252)

Net Outlays $ 188,953 $ (45,718) $ 143,235 FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 59

Chapter 2 Financial Statements and Auditors Report Note 16 - Reconciliation of Net Cost to Net Outlays, continued For the fiscal year ended September 30, 2020 2020 Intra-governmental With the Public Net Cost of Operations $ 215,460 $ (3,539) $ 211,921 Components of the Net Cost That Are Not Part of Net Outlays Property, plant, and equipment depreciation - (9,490) (9,490)

- (13,076) (13,076)

Property, plant, and equipment disposal & revaluation - 535 535 Other- ADP Software Cost Capitalization Subtotal - (22,031) (22,031)

Increase/(decrease) in assets:

Accounts receivable (2,355) 6,647 4,292 Other assets (2,088) 31 (2,057)

Subtotal (4,443) 6,678 2,235 (Increase)/decrease in liabilities:

Accounts payable (1,426) 3,260 1,834 Salaries and benefits (1,298) (3,139) (4,437)

Other liabilities (263) (4,477) (4,740)

Subtotal (2,987) (4,356) (7,343)

Other Financing sources:

Federal employee retirement benefit cost paid by OPM and imputed to the Agency (22,381) - (22,381)

Other imputed financing Judgement Fund with Treasury - - -

Subtotal (22,381) - (22,381)

Total Components of Net Cost That Are Not Part of

$ (29,811) $ (19,709) $ (49,520)

Net Outlays Components of Net Outlays That Are Not Part of Net Cost Acquisition of capital assets 7,475 5,317 12,792 Other 816 (455) 361 Other Timing Differences Prior Period Adjustment - - -

Total Components of Net Outlays That Are Not Part 8,291 4,862 13,153 of Net Cost Net Outlays $ 193,940 $ (18,386) $ 175,554 FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 60

Chapter 2 Financial Statements and Auditors Report Note 17 - Contingencies The NRC is subject to potential liabilities in various administrative proceedings, legal actions, environmental suits, and claims brought against it. In the opinion of the NRCs management and legal counsel, the ultimate resolution of these proceedings, actions, suits, and claims will not materially affect the financial position or net costs of the NRC.

Probable Likelihood of an Adverse Outcome:

As of September 30, 2021, the NRC was involved in a case with the likelihood of an adverse outcome being probable. The NRC accrued a legal contingency of $250 thousand. The estimated range of loss is $250 thousand on the lower end to $350 thousand on the upper end. As of September 30, 2020, the NRC was involved in a case with the likelihood of an adverse outcome being probable. NRC accrued a legal contingency of $354 thousand. The estimated range of loss is $354 thousand on the lower end to $585 thousand on the upper end.

Reasonably Possible Likelihood of an Adverse Outcome:

As of September 30, 2021, the NRC was involved in nine cases with the likelihood of an adverse outcome being reasonably possible with an estimated loss of $130 thousand to

$190 thousand for one case. The remaining eight cases have unknown estimated loss.

As of September 30, 2020, the NRC was involved in four cases with the likelihood of an adverse outcome being reasonably possible, with the expected loss being unknown.

Note 18 - Financial Statements to Reclassified Financial Statements To prepare the Financial Report of the U.S. Government (Financial Report), the Department of the Treasury requires agencies to submit an adjusted trial balance, which is a listing of amounts by U.S. Standard General Ledger account that appear in the financial statements. Treasury uses the trial balance information reported in the Government-wide Treasury Account Symbol Adjusted Trial Balance System (GTAS) to develop a Reclassified Statement of Net Cost and a Reclassified Statement of Changes in Net Position for each agency, which are accessed using GTAS. Treasury eliminates all intragovernmental balances from the reclassified statements and aggregates lines with the same title to develop the Financial Report statements. This note shows the NRCs financial statements and the NRC's reclassified statements prior to elimination of intragovernmental balances and prior to aggregation of repeated Financial Report line items.

A copy of the 2020 Financial Report can be found here: Bureau of the Fiscal Service - Reports, Statements & Publications (treasury.gov) and a copy of the 2021 Financial Report will be posted to this site as soon as it is released.

https://www.fiscal.treasury.gov/reports-statements/financial-report/index.html The term intragovernmental is used in this note to refer to amounts that result from other components of the Federal Government.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 61

Chapter 2 Financial Statements and Auditors Report The term non-Federal is used in this note to refer to Federal Government amounts that result from transactions with non-Federal entities. These include transactions with individuals, Statement of Net Cost to Reclassified Statement of Net Cost For the period ended September 30, 2021 NRC SNC Line Items Used to Prepare the Government-wide SNC Financial Statement Line Amount Total Reclassified Financial Statement (Consolidated) Line Non-Federal Costs

$ 629,028 Non-Federal Gross Cost 629,028 Total Non-Federal Costs Intragovernmental Costs 95,130 Benefit Program Costs Gross Costs $ 894,139 26,999 Imputed Costs 115,455 Buy/Sell Costs 87 Purchase of Assets (87) Purchase of Assets Offset 27,527 Other Expenses (w/o Reciprocals) 265,111 Total Intragovernmental Costs Total Gross Costs 894,139 894,139 Total Reclassified Gross Costs 662,505 Non-Federal Earned Revenue 662,505 Total Non-Federal Revenue Earned Revenue 711,902 49,397 Buy/Sell Revenue 49,397 Total Intragovernmental Earned Total Earned Revenue 711,902 711,902 Total Reclassified Earned Revenue Net Cost $ 182,237 $ 182,237 Net Cost businesses, non-profit entities, and State, local, and foreign governments.

Note 18 - Financial Statements to Reclassified Financial Statements NRC does not have funds from dedicated collections.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 62

Chapter 2 Financial Statements and Auditors Report Statement of Changes in Net Position For the period ended September 30, 2021 Line Items Used to Prepare the Government-wide NRC SCNP SCNP Financial Statement Line Amount Total Reclassified Financial Statement (Consolidated) Line Unexpended Appropriation Unexpended Appropriations,

$ 315,755 $ 315,824 Net Position, Beginning of Period Beginning Balance Appropriations Received as Adjusted Appropriations Received 129,813 129,633 Other Adjustments (181)

Appropriations Used (140,149) (140,219) Appropriations Used (Federal)

Total Unexpended

$ 305,238 $ 305,238 Total Unexpended Appropriations Appropriations Cumulative Results of Operations Cumulative Results, Beginning

$ 64,919 $ 64,849 Net Position, Beginning of Period Balance Non-Federal Non-Exchange Revenues Non-Exchange Revenues 767 767 Other Taxes and Receipts 767 Total Non-Federal Non-Exchange Revenues Total Reclassified Non-Exchange Total Non-Exchange Revenues 767 767 Revenues Intragovernmental Other (677) Accrual of Collections Yet to be Transferred to Treasury Accounting Other (767) Symbols Other than the General Fund (90) Other Budgetary Financing Sources (767) Total Intragovernmental Other Total Other (767) (767) Total Reclassified Other Imputed Financing 26,999 26,999 Imputed Financing Sources (Federal)

Total Financing Sources 167,148 167,218 Total Financing Sources Net Cost of Operations (182,237) (182,237) Net Cost of Operations Ending Balance - Cumulative 49,830 49,830 Net Position - Ending Balance Results of Operations Total Net Position $ 355,068 $ 355,068 Total Net Position NRC does not have funds dedicated collections.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 63

Chapter 2 Financial Statements and Auditors Report Required Supplementary Information Deferred Maintenance and Repairs for General Property, Plant, and Equipment (G-PP&E)

Information on deferred maintenance and repairs (DM&R) is required under SFFAS 42, "Deferred Maintenance and Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29, and 32. "

SFFAS 42 defines DM&R as maintenance and repairs that were not performed when they should have been or were scheduled to be and which are put off or delayed for a future period.

"Maintenance and repairs (M&R) are defined as activities directed toward keeping fixed assets in an acceptable condition. Activities include preventive maintenance, replacement of parts, systems, or components; and other activities needed to preserve or maintain the asset. M&R, as distinguished from capital improvements, excludes activities directed towards expanding the capacity of an asset or otherwise upgrading it to serve needs different from, or significantly greater than, its current use.

DM&R should include funded and unfunded M&R activities that have been delayed to a future period. DM&R on inactive or excess G-PP&E should be included to the extent that it is required to maintain those items in acceptable condition. The NRC evaluated DM&R activities for leased facilities, the multiple components of the agency information technology (IT) infrastructure, and individual capital asset purchases with a cost equal to or greater than $50,000. The NRC did not include noncapitalized PP&E with a cost of less than $50,000, which are deemed immaterial.

Deferred Maintenance and Repairs for the NRC Facilities, Other Structures, and Capital Equipment For the NRC leased facilities and capital equipment purchases, the NRC typically does not have any DM&R. The NRC had no DM&R for facilities, other structures, and capital equipment as of September 30, 2021, and 2020.

Defining and Implementing Maintenance and Repair Policies in Practice For the NRC Headquarters facilities, the agency uses the GSA guidelines for maintenance activities along with industry best practices to determine the preventive maintenance activities to perform and the schedule for those activities. For the building structures and systems, the maintenance contractor performs all required periodic maintenance to keep the systems and buildings in a good state of repair. The contractor is held to a 98 percent scheduled completion rate, with all the preventive maintenance completed within a reasonable time. When equipment reaches the end of its useful life, it is generally replaced with like-kind or upgraded equipment.

For any type of an emergent failure to facilities, the NRC would request additional funding, as needed, for repairs or replacement to structures and equipment.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 64

Chapter 2 Financial Statements and Auditors Report For the regional offices, the building management (lessor) is responsible for performing all required periodic maintenance to keep the systems and buildings in a good state of repair.

Generally, the regional leases contain the fixed assets, including equipment purchased to support the operations of the agency's leased space, such as diesel generators and chillers for the Incident Response Center, the local area network, and power cooling. Equipment requiring repair results in a service repair call. For those instances where equipment is purchased to support the NRC regional operations, maintenance contracts are put in place to provide periodic service and maintenance on the equipment. When equipment reaches the end of its useful life, it is generally replaced with like-kind or with upgraded equipment. For any type of an emergent failure, the NRC would request additional funding, as needed, for repairs or replacement of equipment.

The TTC facility and associated systems are leased and maintained by the lessor. This includes any emergent repairs that may occur, as well as any scheduled maintenance. Assets within the TTC are predominantly maintained by facilities personnel or in some cases, such as for simulator systems, contractor personnel perform all required emergent and periodic maintenance to keep the simulator systems in a good state of repair. When equipment reaches the end of its useful life, it is replaced with like-kind or upgraded equipment.

Ranking and Prioritization of Maintenance and Repair Activities Personnel safety is a top priority at the NRC leased facilities. Maintenance activity, such as for fire alarms and emergency exits, is given top priority. If a preventative maintenance activity must be deferred, which is typically only for 2 to 4 weeks, the impact to personnel safety and building functionality is considered during the review. Other M&R activities are executed as required so that there is no disruption to the NRC operations and the TTC training schedules.

Factors Considered in Determining Acceptable Condition The NRC's Facilities Management Branch at the headquarters facilities perform the daily inspections and maintenance of the buildings and major systems. The NRC internally reviews planned maintenance activity records and historical logs of M&R to monitor condition information for equipment. Based on the information gathered, the NRC will determine whether planning for replacement or upgrade is needed. Additionally, the GSA conducts onsite inspections every 3 to 5 years at the headquarters facilities to assess the overall condition of the buildings and to determine when major systems and components need to be scheduled for replacement. For the TTC and regional offices, the NRC has a Facilities Management staff person onsite to work with the GSA to manage the buildings with support from the lessors. As a result, the GSA performs more frequent onsite inspections of the facilities. The NRC works in close coordination with the GSA to ensure that M&R activities are performed on a timely basis for all NRC-occupied facilities.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 65

Chapter 2 Financial Statements and Auditors Report Deferred Maintenance and Repairs for Information Technology Infrastructure and Systems The NRC had no DM&R for IT Infrastructure and Systems as of September 30, 2021 and 2020.

The NRC IT infrastructure is a network of multiple equipment, software, and service components, taken as a whole, which provides the critical communication network that allows the NRC to accomplish its mission. The NRC IT infrastructure encompasses the following:

• End-user systems and support and end-user hardware includes desktop, laptop, and handheld devices; peripherals (local printers, shared printers); software (personal computer operating systems, office automation suites, messaging, and groupware), and hardware and software for help desks. Also included are network operations command centers, wire closets, and cable management. For regional offices, this includes regional end-user support similar to that provided by the Customer Support Center at the NRC Headquarters, which includes contract support and Federal full-time equivalent (FTE).

• Telecommunications services includes data networks and telecommunications (including wireless, multimedia, and local and long-distance telephone); hardware and software operations; licenses; maintenance; and backup, continuity of operations, and disaster recovery. For regional offices, this includes local telecommunications, which includes contract support and Federal FTE.

• Production operations include mainframes and servers (including Web hosting, but not Web content development and management); hardware and software operations; licenses; maintenance; and backup, continuity of operations, and disaster recovery.

Also included resources related to carrying out Homeland Security Presidential Directive-12, which requires all Federal Executive departments and agencies to implement a Government-wide standard for secure and reliable forms of identification for access to Federal facilities and information systems.

The NRC relies on the asset project and program managers to execute the maintenance budget and to establish and modify the M&R schedule as needed. Ranking factors that may impact the M&R schedule include personnel safety, age of the asset, scheduled replacement date, budget constraints, and unforeseen or unexpected events.

Additionally, for IT systems, whether computer-off-the-shelf or internally developed software, the NRC relies on the project and program managers to establish a M&R budget and schedule.

Minor repairs, enhancements, and upgrades are completed internally through the regular M&R operations process. For major upgrades and replacement systems, the project manager must submit a request to perform the work to the appropriate IT governance boards for their approval.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 66

Chapter 2 Financial Statements and Auditors Report Defining and Implementing Maintenance and Repair Policies in Practice All of the NRC IT infrastructure M&R activities are performed under various contracts which includes leasing of servers, computers, printers, and software and provides provisions for periodic monitoring, maintenance, and repairs. Replacement of miscellaneous equipment components and software is scheduled as needed when the equipment reaches the end of its useful life and before the equipment and software become obsolete. Desktops and laptops are upgraded on a 3-year rolling schedule so that they do not become obsolete.

Ranking and Prioritization of Maintenance and Repair Activities The NRC program managers determine the requirements for ranking, scheduling, and performing IT infrastructure M&R activities and include them in the contractor statement of work.

For the critical IT infrastructure and support services contract, the main ranking factor is the age of the asset (e.g., desktop, laptop, printer), followed by cost and budget constraints. However, when applicable, personnel safety is considered and is the highest priority.

Factors Considered in Determining Acceptable Condition In determining acceptable condition, the NRC mainly considers the assets age, remaining useful life, and compatibility with current and required software.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 67

Chapter 2 Financial Statements and Auditors Report Combining Statement of Budgetary Resources (IN THOUSANDS)

Office of the Salaries and Inspector Nuclear For the fiscal year ended September 30, 2021 Expenses Facility Fees Total General Budgetary Resources:

Unobligated balance from prior-year budget authority, net $ 103,980 $ 5,363 $ 330 $ 109,673 Appropriations 830,900 13,499 - 844,399 Spending authority from offsetting collections 5,954 107 - 6,061 Total Budgetary Resources $ 940,834 $ 18,969 $ 330 $ 960,133 Status of Budgetary Resources:

New obligations and upward adjustments (total) (Note 12) $ 869,351 $ 13,372 $ 330 $ 883,053 Unobligated balance, end of period:

Apportioned, unexpired accounts 71,085 3,533 - 74,618 Exempt from apportionment, unexpired accounts 299 - - 299 Unapportioned, unexpired accounts - - - -

Unexpired unobligated balance, end of year 71,384 3,533 - 74,917 Expired unobligated balance, end of year 99 2,064 - 2,163 Unobligated balance, end of year 71,483 5,597 - 77,080 Total Status of Budgetary Resources $ 940,834 $ 18,969 $ 330 $ 960,133 Outlays Net and Disbursements Net:

Outlays Net and Disbursements Net 845,300 12,521 330 858,151 Distributed offsetting receipts - - (714,916) (714,916)

Agency Outlays, Net $ 845,300 $ 12,521 $ (714,586) $ 143,235 Office of the Salaries and Inspector Nuclear For the fiscal year ended September 30, 2020 Expenses Facility Fees Total General Budgetary Resources:

Unobligated balance from prior-year budget authority, net $ 83,343 $ 3,748 $ - $ 87,091 Appropriations 845,536 13,314 330 859,180 Spending authority from offsetting collections 6,322 - - 6,322 Total Budgetary Resources $ 935,201 $ 17,062 $ 330 $ 952,593 Memorandum Entries: 963,865,757 Net adjustments to unobligated balance brought forward, $ 17,312 $ 845 $ - $ 18,157 Oct. 1 Status Oct. 1 of Budgetary Resources:

New obligations and upward adjustments (total) (Note 12) $ 853,085 $ 12,154 $ - $ 865,239 Unobligated balance, end of period:

Apportioned, unexpired accounts 81,598 3,385 - 84,983 Exempt from apportionment, unexpired accounts 426 - 330 756 Unapportioned, unexpired accounts - - - -

Unexpired unobligated balance, end of year 82,024 3,385 330 85,739 Expired unobligated balance, end of year 92 1,523 - 1,615 Unobligated balance, end of year (total) 82,116 4,908 330 87,354 Total Status of Budgetary Resources $ 935,201 $ 17,062 $ 330 $ 952,593 Outlays Net:

Outlays, net 867,622 12,260 - 879,882 Distributed offsetting receipts - - (704,328) (704,328)

Agency Outlays, Net $ 867,622 $ 12,260 $ (704,328) $ 175,554 FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 68

Chapter 2 Financial Statements and Auditors Report Inspector Generals Letter Transmitting Independent Auditors Report FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 69

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Chapter 2 Financial Statements and Auditors Report Managements Response to the Independent Auditors Report FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 90

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Chapter 2 Financial Statements and Auditors Report Chapter 3: Other Information FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 95

Chapter 3 Other Information FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 96

Chapter 3 Other Information Inspector Generals Assessment of the Most Serious Management and Performance Challenges Facing the NRC FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 97

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Chapter 3 Other Information Summary of Financial Statement Audit and Management Assurances Summary of Financial Statement Audit for FY 2021 Audit Opinion Unmodified opinion on the financial statements and adverse opinion on internal controls over financial reporting as a result of the material weakness in the Auditors report. NRC assessed the material weakness reported by the auditor to be a significant deficiency and not required to be reported in its FMFIA assurance statement. NRCs conclusion was based on the results of its evaluation of the agencys overall system of internal control and enterprise risk management procedures performed. NRC will continue to take corrective action to strengthen controls in this area.

Restatement No Beginning Ending Material Weaknesses Balance New Resolved Consolidated Balance Controls over Leases/Leasehold 1 0 1 0 0 Improvements Management Controls over Financial 0 1 0 0 1 Reporting Total Material Weaknesses 1 1 1 0 1 Summary of Management Assurances for FY 2021 Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance Unmodified Beginning Ending Material Weaknesses New Resolved Consolidated Reassessed Balance Balance None 0 0 0 0 0 0 Total Material Weaknesses 0 0 0 0 0 0 Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance Unmodified Beginning Ending Material Weaknesses Balance New Resolved Consolidated Reassessed Balance None 0 0 0 0 0 0 Total Material Weaknesses 0 0 0 0 0 0 Conformance with Financial Management System Requirements (FMFIA § 4)

Statement of Assurance Federal systems conform to financial management system requirements Beginning Ending Non-conformances New Resolved Consolidated Reassessed Balance Balance None 0 0 0 0 0 0 Total Non-conformances 0 0 0 0 0 0 Compliance with Section 803 (a) of the Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

1. Federal Financial Management Systems No Lack of Compliance Noted No Lack of Compliance Noted Requirements

2. Applicable Federal Accounting Standards No Lack of Compliance Noted No Lack of Compliance Noted

3. United States Standard General Ledger at the No Lack of Compliance Noted No Lack of Compliance Noted Transaction Level FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 117

Chapter 3 Other Information Payment Integrity Risk Assessment The NRC is required to complete risk assessments to determine whether any programs were susceptible to making significant improper payments in accordance with PIIA. At this time, only intragovernmental transactions are exempt from PIIA requirements.

The NRC performed a risk assessment as of September 30, 2020. Management identified commercial payments, grant payments, employee payments, payroll, and Government charge cards as potential areas to include in the PIIA risk assessment. In FY 2020, the NRC reviewed FY 2019 disbursements of selected programs to determine the appropriate threshold to conduct a risk assessment and possible testing. For FY 2019, total commercial payments were $194.8 million; total grants payments were $16.3 million; total employee payments were $12.9 million; total payroll payments were $428.0 million; total purchase cards were $2 million; and travel cards were $4.8 million.

For the programs selected for testing, as part of the qualitative and quantitative risk assessment, the NRC used its best judgment to select samples from each program under review, based on the universe of payments, which were reconciled to the general ledger. This sample was not meant to be statistically valid, as testing was performed to support the risk assessment process versus conducting full improper payment testing for high-risk programs.

The testing was further refined through the identification of select attributes for each program to determine whether the right recipient received the right payment amount for the right goods or services at the right time.

The results of the FY 2020 risk assessment did not identify any programs that were susceptible to making significant improper payments. Although the results of the FY 2020 risk assessment identified programs as low risk, the NRC continues to monitor its payment processes, in addition to conducting periodic reviews of key controls for PIIA programs identified by management. The NRC will continue to conduct risk assessments on a triennial basis, in accordance with the PIIA, as well as OMB guidance. The next PIIA risk assessment will take place in FY 2023. In addition, the NRC will conduct risk assessments, as needed, if there are material changes in the way programs operate or if the agency establishes new programs. More detailed information on improper payments can be found at https://paymentaccuracy.gov.

Recapture of Improper Payments Reporting As noted above, the NRC conducted a risk assessment in FY 2020 and discovered no significant improper payments. Based on no improper payments at the NRC and the substantial cost of conducting recapture audits, the agency determined that recovery or recapture audits are not cost effective. The NRC conducts risk assessments every 3 years as required by PIIA.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 118

Chapter 3 Other Information Agency Improvement of Payment Accuracy with the Do Not Pay Initiative The NRC uses the Treasurys Do Not Pay automated tools to monitor and reduce improper payments. This process has not resulted in the capture of any improper payments. Instead, the NRC captures improper payments through the agencys internal controls. The NRC uses the Federal Awardees Performance and Integrity Information System and other data systems such as the System for Award Management and financial reports to establish whether a contractor has the integrity and business ethics to receive a Federal contract and is otherwise responsible, which is consistent with applicable statutes and regulations.

To date, the NRC awards grants only to educational institutions and other entities, not individuals. The NRC uses the System for Award Management and other data systems to ensure that only responsible and otherwise eligible applicants receive the NRC grants.

The agency uses the same monitoring practices for both grantees and commercial vendors. The NRC reviews for debarments and suspensions as part of the pre-award risk review for eligibility and takes appropriate action internally to debar and suspend grant recipients, as appropriate. The NRC continues to follow the lead of the Office of Federal Procurement Policy on award recipients and continues to implement any changes directed by the policy. The NRC will also continue to use Do Not Pay to review and monitor improper payments.

Fraud Reduction Report Historically, the NRC has had appropriate processes and control mechanisms in place to mitigate the low level of fraud risk within the NRC operations. As a result, the NRC did not implement any additional financial or administrative controls as a result of the Fraud Reduction and Data Analytics Act. The NRC has determined that the agency is at low risk of fraud for many reasons, including the following:

• The NRC uses the U.S. Department of the Interior to manage its payroll and does not make any entitlement payments.

• Grants at the NRC represent less than 1.5 percent of the overall NRC program.

• Over the past few fiscal years, there have been no instances of fraud identified through internal nor external reviews.

The NRC mitigates fraud risk through existing activities such as the following:

• Pursuant to the requirements established in OMB Circular A-123, NRC has implemented an ERM. Through this framework, the NRC conducts quarterly enterprise risk assessments, including an assessment of fraud risk within the NRC operational activities. In FY 2013, OCFOs Internal Control Team updated the agencys Internal Control Framework, which included conducting facilitated risk assessments with each of the NRCs business lines to identify programmatic and cross- cutting risks. The cross-cutting risks identified during these risk assessments became the initial baseline ERM risks. As part of the ERM Framework, beginning in FY 2017, the agency transformed its quarterly performance review process into its current ERM risk analysis process.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 119

Chapter 3 Other Information

• NRCs Internal Control Program, as required by the Integrity Act, includes Internal Control Planning where the Business Line Internal Control Plans are formally and independently reviewed by OCFOs Internal Control Team on a quarterly basis. At a summary level, this review centers on the relatively high-risk areas including those that have recently been affected by changes or are perceived to have the potential for fraud, waste, or abuse.

• The NRC consistently adheres to the requirements of OMB Circular A-123, Appendix A (reporting processes), Appendix B (purchase cards), and triennial implementation of Appendix C (improper payments). As the NRC has previously determined and documented that it is at low risk of improper payments, it performs a risk assessment every 3 years to determine whether there is sufficient risk to apply additional IPERIA requirements. The FY 2020 risk assessment confirmed that the NRC remains at low risk with regard to improper payments, including those that would arise from fraud.

• The NRC uses analytical tools to monitor and manage the NRCs issued travel charge cards, including an automated comparison of travel charges against the eTravel System, a creditworthiness check that will result in reduced credit limits for those with lower credit scores, and the analysis of Merchant Category Codes so that the NRC travel cards may not be used at inappropriate locations.

• The NRCs operational units conduct self-assessments and a variety of other reviews to measure their effectiveness and efficiency and validate that fraud, waste, and abuse are minimized.

Real Property The NRCs end of FY 2021 real property portfolio comprises a total of approximately 961,000 usable square feet (USF), which represents a reduction of approximately 30,000 USF from the FY 2020 end of year portfolio. The agency plans on releasing an additional 168,000 USF from FY 2022 through FY 2023. The square footage to be released is 80,000 USF greater than the previously reported reductions due anticipated reductions in Region 3 and TWFN (as a result of a new, smaller footprint lease) and the application of updated estimates and actual measurements.

NRC is well into the process of implementing its space reduction strategy of releasing a total of approximately 271,000 USF of office and warehouse space (including FY 2020 reductions), at its Rockville, MD, headquarters and four regional office locations. The plan (updated annually and periodically) reduces the total portfolio from 1.134M USF in FY 2018 to approximately 0.863M USF by FY 2024. This will represent a reduction of over 24 percent of NRCs real property portfolio over the five-year period of FY 2021 through FY 2026. Once complete, the reductions are anticipated to save the agency $9.2M million in annual rent and related costs. NRC does not own or lease real property, and therefore does not report expenses on owned and direct lease facilities. The agency does however have delegated authority to operate and maintain two of its office locations in Rockville, MD.

https://www.gsa.gov/policy-regulations/policy/real-property-policy/asset-management/federal-real-property-profile-frpp/federal-real-property-public-data-set FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 120

Chapter 3 Other Information Civil Monetary Penalty Adjustment for Inflation On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act of 1990 was amended by the Federal Civil Penalties Inflation Adjustment and Improvements Act of 2015 (Sec.701, Pub.L.114-74, 129 Stat.599). This act requires that the head of each agency annually adjust for inflation the amounts of any civil monetary penalties assessed under statutes enforced by that agency.

As displayed in the table below, the NRC annually adjusts two civil penalty amounts for inflation, most recently on January 15, 2021. With respect to civil penalties for violations of the Atomic Energy Act of 1954, as amended, the NRC codifies the maximum civil penalty amount at 10 CFR 2.205, Civil Penalties, although individual penalties are assessed based on the class of licensee and severity of violation in accordance with the NRC Enforcement Policy (available at https://www.nrc.gov/docs/ML1935/ML19352E921.pdf). With respect to monetary penalties under the Program Fraud Civil Remedies Act, the NRC codifies the maximum penalty amount at 10 CFR 13.3, Basis for Civil Penalties and Assessments.

Penalty (Name of Statutory Year Date of Current Location for Penalty) Authority Enacted Current Penalty Penalty Adjustment Level Update Details Maximum civil Atomic Energy 1980 January $307,058 Federal penalty for Act of 1954, as 2021 Register; violations of the amended 86 FR 3745 Atomic Energy Act (42 U.S.C. 282) (January 15, 2021)

Fraudulent false Program Fraud 1986 January $11,803 Federal claims and Civil Remedies 2021 Register; statements Act (31 U.S.C. 85 FR 3745 3802) (January 15, 2021)

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 121

Chapter 3 Other Information Grants Oversight and New Efficiency Act Requirements Category 2-3 Years >3-5 Years >5 Years Number of Grants/Cooperative Agreements with 9 7 0 Zero Dollar Balances Number of Grants/Cooperative Agreements with 18 7 0 Undisbursed Dollar Balances Total Amount of Undisbursed Balances $302,673.84 117,186.19 $0.00 The NRC made closeouts a priority during FY 2021 and reduced the number of open grants two or more years old from 49 grants to 41 grants. The agency no longer has any grants that expired more than 5 years ago waiting for closeout. The remaining 41 grants are in the process of being closed out. The NRC has made progress in reducing the number of our oldest grants awaiting closeout and will continue this focus during FY 2022.

FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 122

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Chapter 3 Other Information Acronyms and Abbreviations Acronym Full Title 3WFN Three White Flint North 10 CFR Title 10 of the Code of Federal Regulations AFR Agency Financial Report AO abnormal occurrence BCC Broker Commission Credits CARES Act Coronavirus Aid, Relief, and Economic Security Act, 2021 CFO Chief Financial Officer Charge Card Act Government Charge Card Abuse Prevention Act of 2012 COVID-19 coronavirus disease 2020 CSRS Civil Service Retirement System DATA Act Digital Accountability and Transparency Act of 2014 DM&R Deferred maintenance and repairs DNFSB Defense Nuclear Facilities Safety Board DOL U.S. Department of Labor ECERM Executive Committee on Enterprise Risk Management ERM Enterprise Risk Management FAIMIS Financial Accounting and Integrated Management Information System FASAB Federal Accounting Standards Advisory Board FDA U.S. Food and Drug Administration FECA Federal Employees Compensation Act of 1993 FERS Federal Employees Retirement System FERS-RAE Federal Employees Retirement System-Revised Annuity Employees FFMIA Federal Financial Management Improvement Act of 1996 FMFIA Federal Managers Financial Integrity Act of 1982 FR Federal Register FTE full-time equivalent FY fiscal year GAAP generally accepted accounting principles GAO U.S. Government Accountability Office GSA U.S. General Services Administration FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 124

Chapter 3 Other Information Acronym Full Title IPERA Improper Payments Elimination and Recovery Act of 2010 IPERIA Improper Payments Elimination and Recovery Improvement Act of 2012 IPIA Improper Payments Information Act of 2002 IT information technology NEIMA Nuclear Energy Innovation and Modernization Act NIH National Institutes of Health NRC U.S. Nuclear Regulatory Commission NUREG Nuclear Regulatory Commission document identifier NWF Nuclear Waste Fund OCFO Office of the Chief Financial Officer OIG Office of the Inspector General OMB Office of Management and Budget OPM Office of Personnel Management PIIA Payment Integrity Information Act of 2020 PP&E property, plant, and equipment RPA Robotic Process Automation team SAT Senior Assessment Team SBR Statement of Budgetary Resources SFFAS Statement of Federal Financial Accounting Standards Treasury U.S. Department of the Treasury TTC Technical Training Center UF6 uranium hexafluoride UO2 uranium dioxide U.S.C. United States Code USF usable square feet FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 125

Chapter 3 Other Information FY 2021 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 126

NRC FORM 335 U.S. NUCLEAR REGULATORY COMMISSION 1. REPORT NUMBER (12-2010) (Assigned by NRC, Add Vol., Supp , Rev.

NRCMD 3. 7 , and Addendum Numbers, if any. )

BIBLIOGRAPHIC DATA SHEET (See instructions on the reverse) NUREG-2220, Vol. 5

2. TITLE AND SUBTITLE 3. DATE REPORT PUBLISHED U.S Nuclear Regulatory Commission MONTH YEAR Fiscal Year 2021 December 2021 Agency Financial Report 4. FIN OR GRANT NUMBER

5. AUTHOR(S) 6. TYPE OF REPORT Annual Patrice Williams-Johnson, Rosalyn Jones, Susan Jones, et al

7. PERIOD COVERED (Inclusive Dates)

Fiscal Year 2021

8. PERFORMING ORGANIZATION - NAME AND ADDRESS (If NRC, provide Division, Office or Region, U.S. Nuclear Regulatory Commission, and mailing address; if contractor, provide name and mailing address.)

Division of the Comptroller Office of the Chief Financial Officer U.S Nuclear Regulatory Commission Washington, DC 20555-0001

9. SPONSORING ORGANIZATION - NAME AND ADDRESS (If NRC, type "Same as above", if contractor, provide NRC Division, Office or Region, U.S. Nuclear Regulatory Commission, and mailing address.)

Same as above

10. SUPPLEMENTARY NOTES

11. ABSTRACT (200 words or less)

The Fiscal Year 2021 Agency Financial Report (AFR) presents the agency's financial results of operations which includes the audited annual financial statements of the NRC.

The AFR also provides a summary of NRC program performance and cost. The information is presented in accordance with applicable statutes and OMB requirements in OMB Circular A-136, Financial Reporting Requirements.

12. KEY WORDS/DESCRIPTORS (List words or phrases that will assist researchers in locating the report.) 13. AVAILABILITY STATEMENT unlimited

14. SECURITY CLASSIFICATION Agency Financial Report (AFR) Fiscal Year 2021 (This Page) unclassified (This Report) unclassified

15. NUMBER OF PAGES

16. PRICE

United States Nuclear Regulatory Commission NUREG-2220, Vol. 5 December 2021