ML20126F041
| ML20126F041 | |
| Person / Time | |
|---|---|
| Issue date: | 10/31/1992 |
| From: | NRC OFFICE OF THE INSPECTOR GENERAL (OIG) |
| To: | |
| References | |
| NUREG-1415, NUREG-1415-V05-N01, NUREG-1415-V5-N1, NUDOCS 9212300091 | |
| Download: ML20126F041 (41) | |
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w , 9212300091 921031 PDR NUREG 1415 R PDR
Meuoaanovu ro rus cusiauan i I am pleased to submit to you our semiannual report, which summarizes our significant activities from April 1,1992, through September 30,1992. This sub-mittal complies with Section 5 of the inspector General Act of 1978, as amended. During this period, we completed seven audits of the U.S. Nuclear Regula-tory Commission's (NRC) programs,1 audit of an NRC contract, and analyzed 50 contract audits asissued by the Defense Contract Audit Agency (DCAA). Our internal audit reports resulted in identifying over $9.6 million as funds that could be put to better use and six recommendations to NRC management. The con-tract audit work resulted in identifying over $3.8 million as funds that could be put to better use and $367,120 as questioned costs. We also completed 46 inves-tigations and 1 inspection concerning the integrity of the fire barrier material known as "Thermo-Lag." It is encouraging to report that NRC management has continued to provide complete access and cooperation for our investigative and audit initiatives. There were no instances in which any records or documents were denied to my statf. We appreciate the support of NRC management and employees and look forward to continuing our work in enhancing the integrity and accountability of the programs and operations of the NRC. Sincerely, Y0 LkALEmw David C. Williams Inspector General ( l w - . . - - , . w -r ,--,,y e-
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EXECUTIVE
SUMMARY
4 THE U.S. NUCLEAR REGULATORY ! COMMISSION 8 , THE OFFICE OF THE INSPECTOR GENERAL 10 THE FEDERAL MANAGERS' FINANCIAL INTEGRITYACT I1 l l THE AUDIT PROGRAM 13 l - THE INVESTIGATIVE PROGRAM 22 i REGULATORYREVIEW 28
- l. OTHER ACTIVITIES 29
, SPECIAL FEA TURE: THE CHIEF FINANCIAL OFFICERS ACT 31 i-l APPENDICES 33 i AUDIT LISTINGS 33 ABBREVIATIONS 38 ! - GLOSSARY 39
a i i l Execurivs suuusar i i i AUDITS i ! During the past 6 months, the Office of the Inspector General (OlG) has contin-ued to conduct audits necessary to fulfill numerous legislative requirements,in-cluding those mandated by the Chief Financial Officers Act of 1990. The OIG l { has also increased its audit effort in the areas of audit follow-up and NRC con-l tracting. In addition to this work, the OlG is evaluating three critical areas within i the NRC: the safetyinspection programs, the automated information programs, l and the research program. A summary of the work completed by the OlG during this reporting period is described below. E The OlG conducted a broad survey of NRC's inspection programs as part of j its strategic audit plan for Fiscal Year (FY) 1992. The report of this survey pro-l vides the foundation for a series of audits that the OIG will conduct over the next l several years covering NRC's inspection programs. The report accomplishes two ! main objectives: (1) it describes in a single document how NRC develops and
- administers its inspection programs, and (2) it prosides detailed information l about the allocation and use of inspection resources.
OlG stqfmeml>en Anthony ?' J lipuma andi:Ime Allen dss-f cuss auditfindings. c [ j r
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l C E y,M4g g c, y g; ww Aw: ! E The OlG reviewed NRC's estimated and requested budgets for its inspec-tion programs to determine the nature and the extent of the programmatic in-creases from FY 1992 to FY 1993.The OIG determined that the budgeted costs I 4
l i . i l i for salary adjustments are projected to increase by 2 percent from FY 1992 to FY j 1993 but identified no programmatic growth. O NRC's inventory of completed, but not yet closed, contracts increased from l 591 in May 1986 to 829 by October 1991. As a result, over $8 million could have i been available for NRC programs, but was unnecessarily tied up as contract obli- ! gations.The 010 made one recommendation to strengthen NRC's management and oversight of the contract closeout process and two additional recommenda-tions regarding the deobligation of unexpended balances on completed con-tracts. i l 0 The OlG conducted a review of NRC's process for managing allegations concerning potential safety problems in the design, construction, and operation of the Nation's commercial nuclear power reactors. The OIG determined that i NRC's process for managing allegations met the intent of Commission policy
- and NRC guidance. The OIG further determined that both headquarters and regional staff had implemented NRC guidance.
O The OlO conducted a budget review of NRC's Office of Nuclear Regula-l tory Research (RES) to determine the extent of budget changes and to ascertain j why they occurred.The OlG review disclosed that the RES budget has not grown significantly. In fact, as NRC's budget increased in recent years, RES's portion
- remained fairly constant resulting in a decreased share of the agency's overall
- budget. However, program changes being considered to support advanced reac-tor design testing may increase RES's budget by $13 million or more through FY 1995.
l l 0 As required, the OlG conducted a review of NRC's compliance with the i Anti-Lobbying Act. The OIG reviewed 65 contract actions over $100,000 that ' were obligated during FY 1992.The review was conducted to determine whether the required certifications and contract clauses were included in the contract
- package, where necessary. The OIG found that 3 of the 65 contract actions did not contain the certifications and contract clauses required by the act.
O The OIG reviewed the project management practices in RES for acquiring services from the Department of Energy (DOE).The OIG found that since 1986, the NRC has disbursed approximately $500 million to DOE for laboratory serv-ices. The disbursements were made without employing the required review and approval process for cost vouchers and without verifying the payments for accu-racy.The OlG made three recommendations to ensure that NRC will review and approve cost vouchers and subsequently verify payments to DOE as required. 5
i i 1 l l l INVESTIGATIONS i I; rom April 1,1992, through September 30,1992, the OIG initiated 53 newin- { vestigations, and closed 47. OlG investigations led to 4 referrals to the Depart- , ment of Justice (DOJ), and 60 referrals to NRC management. At the end of the l reporting period,51 investigations were still in progress. The OIG continues to receive an increasing number of allegations of wrongdoing that are resulting in i some complex investigations. Brief summaries of selected cases follow. ! E The OIG conducted an inspection to assess the NRC staff's performance in I reviewing and accepting a fire barrier material called "Thermo-Lag."This mate-
- rial is used in nuclear power plants to comply with NRC fire protection require-
! ments. The OIG determined that the NRC staff's performance on this matter, ' ! and their response to reported problems with the material over a 10-year period, l was inadequate. 01G inspaton (standing)
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- l 5 The O10 investigated reports of misconduct and a conflict of interest relat-ing to an NRC research project conducted by Sandia National Laboratory (SNL). Although the investigation revealed no evidence of criminal misconduct, l
the OlG determined that an organizational conflict ofinterest was involved. An 6
s i SNL engineer was assigned to work simultaneously on research projects for the NRC and for the nuclear industry.
- I i O The OlG investigated allegations of potential misconduct by NRC employ .
ees associated with managing a major contract. The investigators determined l
- that members of a program offia inappropriately fraternized with contract em-i ployees and failed to exercise adequate management oversight of the contrac-tor's activities.
O Charges of sexual harassment by an NRC manager were mishandled by sen-ior NRC supervisors. The OlG investigators determined that the senior supeni- ' sors failed to adequately investigate the charges of inappropriate behavior. O Inspectors from an NRC region allegedly failed to adequately examine ra-diological safety concerns expressed by a former executive of an NRC licensee. The OIG determined that the alleger's concerns were not adequately examined during a 1990 inspection. A second NRCinspection disclosed inaccuracies in the initial inspection and disclosed a number of violations committed by the licen-see. I O The OIG investigated an allegation that a senior NRC engineer converted frequent flyer mileage obtained through official Government air travel to per- - _ sonal use. The OIG investigators determined that, on several occasions, the en.
- gineer inappropriately redeemed frequent flyer miles in exchange for free airline tickets.
O The NRC Division of Security notified the OIG that an NRC employee was - under investigation by the Federal Bureau of Investigation (FBI) for bank fraud. 3 At the FBI's request, OIG investigators provided investigative support to assist in the prosecution of the employee. 1-d 7
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4 IIE U.S. NUCLEAR REGUlstTORY l COMMISSION f j The U.S. Nuclear Regulatory Commission (NRC) was established as an inde-l pendent Federal agency by the Energy Reorganization Act of 1974, as amended. l This act, along with the Atomic Energy Act of 1954, as amended, provides the l foundation for the regulation of the Nation's commercial nuclear power indus-try. l 1he NRC Hhte ihnt Com-l pie.r tscheisted completion, December i993k i 1 i
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EZnZWATEME:E!1&Mirmrien.=amdOMBEE?iE?P5522EEG ! The NRC's scope of responsibilityis diverse and complex. Its mission is to ensure that civilian uses of nuclear materials in the United States are carried out in a way , that will adequately protect the public health and safety, the environment, and the national security.The NRC fulfills these responsibilities through a system of licensing and regulatory activities. Some of its major activities include-e licensing the construction and operation of nuclear reactors and other nu-clear facilities, such as nuclear fuel cycle facilities, medical use facilities, and nonpower test and research reactors: l . licensing the operators of nuclear power and nonpower test and research re-actors: e licensing the siting, design, construction, operation, and closure oflow level radioactive waste disposal sites under NRCjurisdiction and the construction, operation, and closure of the geologic repository for high-level radioactive waste: 8
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i o inspecting licensed facilities and activities; o investigating nuclear incidents and allegations concerning any matter regu-l lated by the NRC; and 'o conducting the principal Government research program on light-water
- reactor safety.
To carry ou:its mission, the NRC is headed by five Commissioners who are ap-l pointed by the President and confirmed by the Senate for 5-year terms. One Commissioner is designated by the President to be the Chairman and serves as l the official spokesperson for the Commission. The staff, headed by the Execu-i rive Director for Operations (EDO), carries out the policies and decisions made by the Commission. The NRC has approximately 3,335 full time equivalent
- - (FFE) staff in the Washington, D.C., commuting area and the five regional of-
- _ fices located near Philadelphia, Atlanta, Chicago, Dallas, and San Francisco.
l During FY 1992, the agency operated with an estimated budget of approxi-mately $513 million. The FY 1993 budget is approximately $540 million with 3,3 77 FFE staff. 4 a 4 s 1 t I' i 9
Tus oreics or rusinsescroR GENERAL The NRC's OlG was established as a statutory entity on April 15,1989, in accor-dance with the Inspector General Act of 1978,as amended in 1988, it is one of 26 such entities within the Executive liranch. The inspector General (IG) is ap-pointed by the President of the United States with the advice and consent of the Senate. To ensure the independence of the office, the 10 may only be removed by the President, wl.o must communicate the reasons to the Congren. NRC's 10 reports to and is under the general supervision of the NRC Chairman, but oper. ates with independent budget authority. Iny.ertor General, Dand C. l Hiltonms ee nh 1homas J. ) llart hi. the Anntant lay.re. tor Generalfor Audas, and Hotert W hhideler althrillG I'lannurg Conferrace. l l l x 1 -- l
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i1 ~. L C L a -t < 1. . .. d. ow . .u . , ,1 1 One cf the primary goals of the 01G is to assist the NRC in operating more ef fec-tively and efficiently by identifying ways to improve the NRC's programs and op- , erations. To accomplish this objective, the OlG, among other things, performs i the following activities:
. Performs audits and makes recommendations concerning the effectiveness and efficiency of NRC programs and operations:
. Conducts, a nd reports on, investigations and inquiries, as necessa ry, to ascer-tain and verify the facts affecting the integrity of all NRC programs and op-erations:
l e Recommends policies to (1) promote economy and efficie ncy and (2) preve nt I and detect fraud and abuse in the agency's activities; and e Keeps the Commission and the Congress fully informed of operational and > program deficiencies and problems. The NRC's OlG was authorized 41 positions for FY 1993 with a budget of approximately $4.6 million. i 10
i j TuurununstnsusGunseixsuCist INTuGRITYilCT l l ! The f . deral hianagers' Financial Integrity Act (Fh1FI A)was enacted in 1982 in i response to continuing disclosures of waste, loss, unauthorized use, and misap- I propriation of funds or assets associated with weak internal wntrol and account-
- ing systems. Congress believed these abuses hampered the effectiveness and ac-
! countability of the Federal Government and eroded the public's confidence in j Government. The Fh1FI A equires Federal managers to establish a continuous
- process of evaluating, improving, and reporting on the internal control and ac-I counting systems for which they are respornible. On an annual basis, the NRC is required to disclose any material weakness (see Glossary) in its financial rnan-agement to the Presiden 1nd the Congress.The 01G is required to report on the
) agency's compliance with the FhtFIA at the end of each calendar year.
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In its 1991 FhiFI A report to the President and the Congress, the NRC reported that the management of contract work placed with the DOli laboratories re-quired improvement to adequately protect NRC's business interests. NRC at-tributed the deficiencies in this area to the lack of an agency wide standard for contract management. A recent OlG audit revealed that NRC failed to implement the required review, approval, and verification process for more than $500 million in payments to DOE for laboratory services over a 6 year period. Therefore, the NRC has no i assurance of billing accuracy for the senices that DOE rendered. NRC's 11
position has been that this is a minimum risk area because Doliis another Fed. eral agency. In addition, as a result of this OlG audit, the NRC initiated a review of its DOli task orders. Over 300 task orders were identified as candidates for closure with an astimated $1.4 million in funds that could be put to better use if deobligated, in another audit, the 010 identified a major breakdown in the agency's imple. nientation of a process for closing out completed commercial contracts. This breakdown resulted in over 800 completed contracts with an estimated $8.1 mil. lion in unexpended funds that could be put to better use if they were deobligated. The NRC's Chief Financial Officer (CFO) has taken a very active role in mcni. toring the actions recommended by the 010 to correct problems in the financial = management area. Additionally. NRC is currently in the process of clarifying to senior managers what it considers to be a material weakness (see Glossary).The goalis to preclude officials from narrowly interpreting a material weakness and thus not reporting serious problems that require management attention. The 010 is continuing to oversee these and other programs operating under the requirements of the FMFIA.The 01G willissue a separate report in December 1992 that will address 01G findings on NRC's compliance with the FMFI A. 12
Tiissuoirraooruu in the presious reporting period, October 1,1991 through March 31,1992, the OlG reported that the agency did not complete corrective action on recommen-dations contained in two audit reports. The first report concerned recommenda-tions to deter the unauthorized use of the Federal Telecommunications System. Although the NRC initially expected to complete its study by June 1992,it is still reviewing the cost effectiveness of the 01G recommendations. The revised schedule calls for the study to be completed in early Calendar Year 1993, in the , second report, the OIG recommended that NRC develop an automated license fee billing system. The NRC still expects to complete development and imple-mentation of this system in early FY 1993. During this reporting period, the OlG completed seven audits addressing the NRC's administrative and programmatic functions, completed one audit of an NRC contract, and analy7ed 50 contract audit reports that the DCAA issued. The internal audits resulted in six recommendations to NRC management and j the identification of $9,695,281 as funds that could be put to better use.The con-tract audit work resulted in questioning $367,120 and identifying an additional
$3,808,308 as funds that could be put to better use. Summaries of the program r audits follow, i1UDIT SUMM1 RIES NRC Compliance with the ifnti Lobbying itet; Section 319 of Public Law 101-121 .
The Anti Lobbying Act requires that the IG provide an annual report to Con-gress regarding the NRC's compliance with its provisions. Section 319 of the act requires each person who requests or receives a Federal contract, a cooperative agreement, a loan, or a Federal commitment to insure or guarantee a loan, to disclose whether they used appropriated funds to lobby for the specific contract. The law applies to awards of contracts, grants, or cooperative agreements ex- , ceeding $ 100,000. Each person who requests consideration for an award or actu-ally receives an award must file a certification or disclosure form regarding any-lobbying effort. The 01G reviewed 65 FY 1992 contract actions that exceeded $100,000 to deter. mine whether the required certifications and contract clauses were contained in each contract package. The 01G found that 3 of the 65 contract actions did not contain the certifications and contract clauses required by this act. One possible
- cause for their omission was that the original estimate of the contract action was ;
less than $100,000, which meant that the certifications and contract clauses i required by the act were not needed. When the negotiations were completed, 13
however, the contract actions exceeded $100,000 and thus required the neces-sary certifications and clauses. The contract negotiators did not revisit the need for the certifications and clauses and did not add them. In response to OlG's 1991 report on contracts exceeding $100,000, the NRC modified the checklist used by its contract administrators to determine which documents or clauses may be required as a result of a contract mod lfication but did not modify the contract negotiator's checklist. As a result of the recent 01G review, NRC modified the negotiator's checklist to correspond to the adminis-trator's checklist. Surrey ofNRC's inspection Programs The 01G conducted a broad survey of NRC's inspection programs. The inspec-tion programs are one of the primary methods by which NRC ensures that licen-sees are adhering to regulatoly requirements and industry standards. This survey was conducted as part of OlG's strategic audit plan for FY 1992. The results of t he survey will be used to identify potential issues for future audits, it describes in a single document how NRC administers and allocates resources among its many inspection programs. The survey report accomplished two objectives. First, it documents how NRC develops and manages its inspection programs. The report describes NRC's inspection programs for. power and nonpower reac-tors, vendors, and reactor construction. In addition, it outlines the Office of Nu-clear Material Safety and Safeguards' licensee inspection programs for fuel fa-cilities, materials, transportation, safeguards, low level waste, and uranium re-covery. Second, the report gives detailed information about the allocation and use of inspection resources.This information goes beyond the data presented in either NRC's Five Year Plan or its formal budget documents byisolating resources for inspection from resources for other activities, such as licensing. This body of work provides the foundation for a series ofinspection audits that will be per-formed during the next several years. OlG Review of Budget Changesfor NRC's Inspection Programs The report of the Senate Committee on Appropriations that accompanied the
.NRC's FY 1992 appropriation expressed concern about yearly increases for
- NRC's programs. The Comn.ittee questioned the need for"across the board in-creases in all mission areas" and directed the Commission to conduct an external reviewof these increases.The Commission subsequently requested that the 010 review and report on budget changes in NRC's inspection programs.
14
The OIG reviewed and compared the NRC's FY 1992 estimated budget with the FY 1993 requested budget for inspection programs. The resiew revealed that budgeted costs for inspection portions are projected to grow $2.3 million (2 percent) from FY 1992 to FY 1993. This increase, however, is for salary ad-justments and not for programmatic growth. In fact, both staffing levels and pro-gram support (contract) costs are projected to decrease for reactor inspection programs. In NRC's materials and low level waste inspection programs, staffing levels will decrease slightly, while program support costs will remain constant. Review of NRC's Contract Closcout Process The closcout of a completed contract is basically the process of gathering all es-sential documents reDecting the completion and satisfaction of a wide list of ob-ligations that are created during the course of the contract. Contract closeout is normally completed by the submission of a final invoice by the contractor and its acceptance and payment by the NRC. The NRC's backlog of completed but not yet administratively closed contracts increased significantly since the issuance of an October 1987 report on this sub-ject. Although NRC obtained a contractor in April 1990 to assist in reducing the backlog, only limited progress was made. NRC's inventory of compteted but not yet closed contracts increased from 591 in May 1986 to 829 as of October 1991. Many of these contracts had been completed for several years and were valued over $100,000. As a result, the OlG estimated that over $8 million in contract obligations could be made available for use in NRC programs. i The OlG concluded that the backlog would continue to remain unacceptably high unless NRC takes aggressive managerial action to improve its oversight of the contract closcout process.The OlG recommended that NRC strengthen its managerial oversight of this process and made two other recommendations about the deobligation of unexpended balances on completed contracts. Review ofNRC's Allegation Management System in the early 1980s, the Commission recognized a need for a more systematic and structured process for handling allegations. This was especially important for al-legations that were made to the NRC at the end of the licensing approval proc-ess. As part of this recognition, the Commission issued policy statements on
" late filed" allegations and matters of confidentiality concerning the individuals making them. Additionally, the Commission wanted to ensure that allegations that involved potential wrongdoing issues were effectively tracked and investi-gated.
i 15
In late 1982, responding to the Commission's concerns, NRC managers estab. lished the Allegation Tracking System (ATS) as a mechanism to track the large number of allegations that NRC was receiving. Presiously. the NRC did not have a system to address and manage the flow of allegations it received. The system was subsequently renamed the Allegation Management System (AMS). The OlG conducted a review of the allegation management process and con-cluded that (1) NRC's process for managing allegations met the intent of the Commission's policy:(2) the agency's expectations were clearly documented in NRC guidance, and (3) both headquarters and regional staff had implemented the guidance. Budget Changes in the OBice of Nuclear Regulatory Research As noted previously, the report of the Senate Committee on Appropriations that accompanied NRC's FY 1992 appropriation expressed concern about NRC's budget increases, including requests for increased research funding. The report directed the agency to conduct an external review of this growth. The Commis-sion subsequently asked the OlG to review and report on increases in NRC's research budget. The Office of Nuclear Regulatory Research (RES)is one of three NRC of fices established by the Energy Reorganization Act of 1974, as amended. The act di-rects RES to identify research needs and contract with various organizations to conduct research in support of NRC's licensing and related regulatory functions. Most of RES's $119 million budget for FY 1992 will be used to suppori about 670 research projects. The 010 review disclosed that RES's portion of NRC's budget has not grown significantly; in fact, as NRC's budget increased in recent years, RES's portion remained fairly constant, resulting in a decreased share of the agency's overall budget, While the budget for some of RES's various program elemenic have in-creased,its 3-percent budget growth rate has been about half that of NRC's overall budget growth rate.The OlO review, however, also noted shifts in RES's budget that could lead to future increases. For example, NRC and the nuclear inductry are developing a scale model testing program to support advanced reac-tor design certification. The testing program could increase NRC costs by more than $13 million through FY 1995. 16
1 linprorcinent Needed in NRC's Processfor Approving Payrnents to DOE in December 1991, the OlG initiated a review of NRC's contract management practices relating to the senices DOli provides. The audit revealed that since 1986, the NRC has paid about $500 million to DOE without employing the re-quired review and approval of DOE cost vouchers and subsequently verifying the accuracy of the payments. This failure to follow statutory and prescribed agency policies and procedures is a serious breakdown in internal controls that leaves NRC vulnerable to fraud, waste, and abuse. Until corrected, the OlG believes this condition constitutes a material weakness in the agency's internal controls over disbursements to DOE. Subsequent to the 01G exit briefing on the results of the review, NRC manage-ment (1) directed that corrective actions be made and (2) notified the Ohill that the agency willidentify the management of agreements with DOE as a material weak ness. NRC management disagreed,however,with one of the thice 010 rer_,mmenda-tions concerning the final posting of payments to the accounting system. The OIC stated that although program offices have delegated responsibility for the review and approval of payments, the Office of the Controller is ultimately re-sponsible for ensuring that vouchers are verified as correct for payment before their final posting to the accounting system. The agency's tollowup official is cur-rently reviewing the disagreement. AUDITS IN PROGRESS E Review of IRhi's Oversight of its Commercial Contracts-hiany of the in-formation resources senices provided by the Office of Information Pesources hianagement (IRhi) are performed by contractors; in fact, contractors perform the majority of these senices.These contracts account for a large percentage of IRhi's overall budget. The objective of this review is to assess the adequacy of IRhi's oversight of its contracts.The OlG will evaluate the various controls and processes that IRh1 uses to manage its contracts. E Review of N RC's Computer Security Program- As pari of an ongoing audit of NRC's IRhi contract management practices, the 010 examined the results of an independent compliance review of NRC's computer security program.The 010 is assessing the status of NRC's actions to implement the recommendations that resulted from the review. 17
M Review of the Management of NRC's Research Program-During this review, the OlG will assess the adequacy of the procedures NitC and the Of fice of Nuclear llegulatory Research use to ensure that NRC conducts necessary and beneficial research. This audit responds to concerns about program cost in-creases expressed in a Senate Appropriations Committee Report on NRC's FY 1992 appropriation request and by NRC's Chairman. N Review of NRC's lludget Execution Process-The objective of this review is to determine whether NRC's budget is being executed in an efficient and ef fec-tive manner. It willinclude an examination of the methods the NRC employs to maintain administrative control over its appropriated funds and an assessment of the NRC's ability to esecute its budget according to the original budget planning assumptions. N Reviewof the Management of the Work Placed with DOE's National 1. abo-ratories-The review is assessing the adequacy of NRC's administrative man-agement practices for closing out completed projects managed by the Of fice of Nuclear Regulatory Research. N Review of NRC's Policies for Deferring Materials inspections-The OlG initiated this review to follow up on a programmatic issue raised by an OlG in-vestigative report. In the investigative report, the 010 noted that a licensee was not inspected annually, as required, because a regional office believed that no licensed activities were underway. In effect, the required inspections were de-ferred for several years. 010 subsequently learned that the licensee was, in fact, conducting licensed operations. OlG is therefore reviewing the adequacy of NRC's policies and procedures for deferring materials inspections. R Followup Review of the Atomic Safety and Licensing lloard Panel (ASLilP)-In June 1990, the OlG issued a report on its review of the functions and operations of the ASLflP. The report contained seven recommendations: five to the Chief Administrative Judge, ASLilP, and two to NRC's Executive Di-rector for Operations. This follow-up review is to determine whether (1) the rec-ommendations have been implemented and (2) the resulting actions meet the intent of the report. R Review of NRC's Policy and Practice Regarding the Use of Frequent Flyet llenefits-This audit is to determine whether NRC's policies and practices en. sure that frequent flyer benefits resulting from official travel are used for the agency's economic benefit. 18
O Iteview of NitC's "M" Account-The OlG, with the support of contracted services,is conducting a review of certain aspects of NilC's prior fiscal year fund accounting. The audit objectives are to examine the composition of the "M" ac-count (see Glossary) and NitC's oversight of it. A UDIT TABLES The NitC's dependence on commercial contract activity is relatively small. Thus, questioned costs and savings are inherently smaller than those reported by most other agencies. During the reporting period, the 010 analyzed 50 contract audit reports issued by the DCAA and performed one audit of an NitC contract.The following tables depict the cost savings from this contract work and two other internal audits. 19
Table i Omce of the Inspector General iteports Containing Questioned Costs (Dollar Value) Number of Questioned Unsupported Iteports Reports Costs Costs A For which no management 1 33,876' 0 decision had been made by the conunencement of the reporting period II. Which were issued during 2" 367,120 0 the repotting period Subtotals (A + 11) 3 400,996 0 C. For which a management 2 762 0 decision was made during the reporting period: (i) dollar value of disallowed 2 762 0 costs (ii) dollar value of costs not 0 0 0 disallowed D. For which no management 1 366.358 0 decision had been made by the end of the reporting period E. For which no management 0 0 0 decision was made within 6 months of issuance
*The beginning figure of $33,876 was reduced 10 0 after further discussion with IX'AA.
"The figure differs from the number of postaward contracts reviewed because 11 audit reports resulted in no questioned costs.
20
Tmuumrnoomm Table 11 Office of the Inspector Gentral iteports issued With Recommendations That Funds ik l'ut to Hetter Use Dollar Number of Value Iteports Reports of Funds A. For which no management decision had 2 *i2,020 been nyade by the conunencement of the reporting period
- 11. Which were issued during the reporting period 9" 13,283.806' Subtotals ( A + 11) 11 13.355.826' C For which a management decision was made 7 10,88tl.146 during the reporting period:
(i) dollar value of recommendations that were 7 10.880.146 " ' agreed to by management (ii) dollar value of recommendations that were 0 0 not agreed to by management 1 ). I or which no management decision had been 4 62.840 made by the end of the reporting period li For which no management decision was 0 0 made within 6 montns of issuance
*l)ollar figure contains the average cost savings for four different contracts that base nc4 been awarded. * thirty one other pte. award audit ieports reported cither zero funds wcre available for better use or no contract was awarded *"The report (J savings on one contract was eventually reduced during the negouation phase because of adJitional proposed costs subinitted by the contractor that wcre concurred with by I X? AA.
21
Tne musno,rnve noonw During this reporting period, the OlG received 161 allegations, initiated 53 new investigations and closed 47 cases; 4 referrals were made to the Department of Justice and 60 to NRC management.The next section presents summaries of the OlG's most significant investigations. INl'ESTIGitTll'E CitSE SUMMitRIES Inspection of NRC Stag's Review and iteceptance of Fire Harrier Material The NRC received an allegation that questioned the capabilities of a fire barrier . material commonly used by the nuclear industry. The material, Thermo 12g, is installed in a majority of the Nation's power plants to satisfy NRC fire protection requirements, llecause of the widespread use ol.this material since 1981, the OlG conducted an inspection to assess the adequacy of the NRC staff's review and acceptance of Thermo lag. In addition, the inspection assessed the staf f's response to prob- ' lems with Thermo lag reported to the NRC over approximately a 10 year period. The 01G inspectors determined that the NRC staff did not conduct an adequaie review of the fire protection capabilities of Thermo 12g and other related infor-mation. lf the staff had conducted a thorough review of thisinformation and veri-fied test reports submitted by the nuclear industry, a number of problems with the test program and Thermo 12g would have been discovered. Because the NRC had not conducted the proper reviews and inspections, the staff did not de-termine until 1991 that Thermo-lag might not meet NRC requirements. In ad-dition, the NRC did not take substantive action between 1981 and 1991 when NRC received reports of problems with Thermo-12g. The OlG inspection disclosed at least seven instances in which NRC staff failed to pursue possible problems with Thermo-12g. As a result of the inspection, a commission directed task force is currently addressing the findings of the OlG report. 22
Insestigators Hiuiam J. AtryLer and Roert A. H allins attered an OlG wnfe re nc e. 1
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Alleged Conflict ofInterest if1th a Sandia National Laboratory Contract The NitC staff reported a potential conflict of interest relating to an NRC re-search project at the Sandia National laboratory (SNI.)in Albuquerque, New Mexico. An SNL engineer formerly assigned to the NitC project continued serv-ing as a technical reviewer af ter being reassigned to a Department of linergy (DOli) project benefiting the nuclear industry. It was also reported that the engi-neer inappropriately obtained NItC research information to prepare an induttry report. OlG determined that the NRC project manager requested the engineer's continued participation in the NRC research program even though the NRC program was to have been separate and distinct from the Doli project. The pro-ject manager failed to obtain a waiver for a conflict of interest as required by NRC policy. The OlG has not determined whether the information exchanged by the SNL engineers constituted personal misconduct. Ilowever 01G concluded that SNI. created an organizational conflict of interest by allowing an engineer to work simultaneously for the industry and the NRC on similar research projects. NRC Ernployces Counseledfor Fraternizing ifith Contractors The OlG received allegations that certain employees assigned to a program of-fice were involved in inappropriate activities during the course of their work. It 23
was alleged that the employees were guilty of time and attendance abuse, had developed an inappropriate relationship with a contractor, and had failed to ex-ercise proper oversight responsibilities during their management of a major NRC contract. The investigation confirmed that the employees attended luncheon meetings with contractor employees. Some of these meetings lasted several hours and in-ciuded the consumption of alcohol. The investigation further determined that inadequate management oversight by these NRC employees allowed the con-tractor to purchase several types of automated data processing equipment with-out prior approval of the NRC contracting officer as mandated in the contract terms. The employees were counseled by NRC management, and one received a letter of reprimand and was rclieved of super ismy duties, The Division of Contracts and Property Management, in concert with the program office, developed a training curriculum designed to cover acquisition procedures and ethical con-duct relating to procurement. Allegations of Sexual liarassment Against an NRC Manager An NRC program office notified the OlG after a female employee complained of several incidents involving sexual harassment and the handling of the inci-dents by NRC managers. OlG investigators determined that an NRC manager made repeated advances toward a female employee that she found offensive. Despite her attempts to discourage the manager, his behavior continued. It was also determined that cognizant supenisors failed to appropriately address the issue when it was reported to them. The 010 investigative report was sent to NRC management for possible administrative action. Inspection of Radiological Safety Concerns Found inadequate and incomplete The OlG investigated allegations that staff from an NRC region failed to ade-quately address safety concerns brought to their attention. A former executive of a nuclear industry consulting firm advised the 010 that NRC inspectors per-formed an inadequate and incomplete inspection of reported radiological safety violations by his firm, an NRC licensee. The 01G determined that the alleger's concerns were not adequately examined during a 1990 NRC inspection.The NRC inspectors did not inteniew witnesses purportedly capable of corroborating the alleger's claims and did not examine key documents disputing certain assertions the licensee made. The regional staf f 24
conducted a second inspection that revealed inaccuracies in the report of the in-itial inspection and Jisclosed a number of siolations by the licensee. The 010 investigative report was sent to NltC management, and a task force is being convened to address lessons learned in connection with this matter. Misuse of Frequent Flyer Mileage by an NRC Engineer The OlG received information that a senior NRC engineer repeatedlyconverted frequent flyer mileage accumulated through official Government air travel to personal use. Investigators determined that the engineer inappropriately re-deemed frequent flyer mileage credit on numerous occasions to obtain bonus tickets for personal airline travel, which included foreign travel. The accumu-lated value of the personal travel was approximately $10,750. The U.S. Attorney, llaltimore, Maryland, declined prosecution of the engineer in lieu of administrat;ve action by the NRC. As a result ofIhis and several similar investigations, the OlG audit staff is review-ing the NRC program for the use of travel benefits to reduce the cost of Govern-ment travel. Alleged Hank Fraud by an NRC Employee The NRC Division of Security notified the OlG that an NRC employee was un-der investigation by the Fill for an alleged violation of Title 18, United States Code, Section 1344 (llank Fraud). At the Fill's request,010 investigators pro-vided investigative support that aided in the arrest of the employee. Following the employee's arrest, the OlG provided background information about the em-ployee invohing a similar pnor offense that was not previously available to the pretrial service officer. The employee resigned from the NRC soon after being arrested and is currently awaiting Federal prosecution. 25
INVESTIGATIVE STATISTICS ALLEGATIONS Source Number NRC employee 34 NRC management 34 Congress 1 Other Government agencies 6 Intenenor 16 General public 18 Media 1 010 investigation or audit 3 Contractor 0 Regulated industiy (licensee / utility) 33 Anonymous- 15 Total 161'
'Of the 161 allegations,27 resulted from hotline calls, Allegations Number Carried forward from previous period 0 Received during this period 161 Total 161 Disposition Number Closed administratively 24 Referred for 010 investigation or inspection 74 Referred for 01G audit 0 Referred to NRC management and staff 60 Referred to external agency 3 Pending review or action J Total 161 26
INf'ES7' IGA TIONS Status of Investigations Number Pending DOJ action 5 DOJ declinations 4 Indictments and arrests 1 Convictions O PFCRA referrals _ 0 Total 10 s NRC ADAfINISTRATIVE ACTIONS Status of NRC Actions Number Terminations and resignations 4 Suspensions and demotions 2 Other administrative actions 13 Total 19 Carried in Classification of Investigations Over Opened Closed Progress A - Conflict of interest 3 5 1 7 B - Internal fraud 8 5 10 3 C - Contract / contractor related 2 5 3 4 misconduct D - Falsification of records or 4 2 3 3 statements E - Deft related offenses 1 7 6 2 F - Misuse of Government 1 0 1 0 property G - Employee misconduct 6 7 6 7 affecting NRC programs 11 - Management misconduct 12 15 9 18 and abuse 1 - Other 8 7 8 7 Total 45 53 47 51 l l 27
Rsavuroaraunsw The inspector General Act of 1978, as amended, requires the 10 to review exist-ing and proposed legislation and regulations and to make recommendations in the semiannual report concerning their impact on the economy and efficiency of the administration of the agency's programs and operations and on the preven-tion of fraud, waste, and abuse. In carrying out its responsibilities under Section 4(a), the OlG reviewed numerous initiatives. The OlG provided comments on draft NRC management directives in several topic areas. The directives are the agency's central referencing system. They provide infarmation on responsibilities and processes for NRC's major programs. liefore publication, the NRC submits the draft directives to the OlG for review and concurrence. The following directives warranted 010 comment. The proposed directive on the I reedom ofInformation Act (FOI A) procedures required clarification of the OlG 1 OIA denial and appeal authority. Specifi-cally, the OlG requested that its I;OIA function be segregated and that more detail be provided in the directive concerning the OlG FOI A processes. As a result of OlG's comments, the draft directive on implementing the llatch Act was revised to more correctly identify the investigative and reporting respon-sibilities of the 010 and coordination by the OlG with the Office of the General Counsel. In addition, the OlO provided extensive comments on the draft directive on "NRC Procedures and Management Controls for Placement and Monitoring of Work With the Department of linergy."These remarks focused on the need for clarifying NRC's procedures for controlling and monitoring the contract work placed with the Department of IInergy. In addition, the OlG provided an assessment of the impact of the proposed
" Contractor Licensing Reform Act of 1992." Specifically, the OlG noted the need for (1) establishing adequate criteria for conducting the required audits and (2) identifying the scope of the subject area concerning the audit of possible circumventions of personnel ceilings.
28
0THER ACTIVITIES During this reporting period, the OlG has engaged in several activities to en-hance the performance of its audit and investigative responsibilities. lirief sum-maries of the activities follow. Legal Update Serninar The President's Council on Integrity and Efficiency Investigative Standards ar.d Training Subcommittee, chaired by the NRC's IG, sponsored a Legal Update Seminar during the first week of September 1992.The seminar, held in Washing-ton, D.C., brought together senior OlG investigators, OlG attorneys, and ac-complished instructors from the Department of Treasury's Federal 12w En. forcement Training Center.The purpose of this conference was to provide the 10 community with current updates and changes regarding recent court deci-sions and legislation in selected topic areas. e f( Participanu in the PCll: Standards and Training Subcommit-tre I,rgal I plate Semi. nar (September IV9D. g
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Ap a 7 The seminar featured a 2-day program that was tailored to the needs and inter-ests of the attendees. liighlights of the session included briefings on evidence, entrapment, and electronic surveillance. Individuals participated in selected briefings and then joined together for a half day plenary session on civilliberties. The plenary session addressed the current status of applicable civil statutes and case law relating to the vulnerability of the executive manager to civil suit. OlG Planning Conference in September 1992, the second annual OlG Planning Cot Arence was held at the liyatt Regency in liethesda, Maryland.The conference was designed to focus on 29
issues that will affect the NRC in the coming years and to assist the OlG wJit staff in structuring its annual audit plan. This year's conference focused on the growing importance of performance indicators and how these unique manage-ment tools could be developed to assess the NRC's effectiveness. llecause of re-cent legislation, specifically the Chief Financial Officers Act and its mandated requirement for performance measures, the IG is particularly interested in how NRC perceives these indicators. NRC berutive Director ' for Operations, James bl. Taylor (center) exchanges hiem with panel member . Robert Af. llernero (right) and Afr. John llidanigo. . l .. W ;Q
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.. , . _ ..c Through a series of panels, various perspectives were presented. The first panel addressed the views of NRC's senior managers on performance indicators, while the second panel presented the vicws of the utility industry on license renewal.
The final panel provided thoughts from the Office of Management and Iludget (OMil), the Congress, a public interest group, and a nuclear medicine profes-sional assocision regarding NRC's regulatory process. 30
Srucwume Tills Cilll!F FINi1NClitL OFFICl!RS /1CT OF 1990 in November 1990, Congress passed Public 12w 101-576, the Chief Financial Officers Act of 1990. The purpose of the act is to bring more effective general and financial management practices to the Federal Government. As a result, each executive department and major executive agency in the Government is re-quired to have a Chief Financial Officer (CFO). lleginning in 1992, and every year thereafter, each agency is required to prepare and submit a financial state-ment for the preceding year to Ohtll. The statements are due no later than htarch 31 each year. The Director of Ohillis responsible for prescribing the form and content of the financial statements consistent with applicable accounting principles, standards, and requirements. Each agency's financial statements will reflect its (1) overall financial position,(2) results of operations,(3) cash flow or changes in financial position, and (4) reconciliation to its budget. The act further specifies that the financial statements prepared by an agency will be audited in accordance with generally accepted Government auditing stan-dards by the IG or an independent external auditor, as determined by the IG. An audit report on the financial statements is required by June 30 following the fis-cal year for which a financial statement is submitted. The audi: report will be made up of at least the following three parts: e a report containing an opinion as to whether the agency's principal state-ments, including the notes to the principal statements, and the combining statements are fairly presented in all material respects in accordance with ap-plicable accounting standards; e a report on internal controls; and e a report on compliance with applicable laws and regulations, including an assessment of the process by which the agency identifies and evaluates weak-nesses required to be reported under the Fh1FIA. Agency CFOs are also responsible for preparing annual reports and transmitting them to the agency heads and ON111.These reports are due within 60 days of the submission of the auditor's report on its audit of the annual financial statements. The CFO's report should include the following information: e a description and analysis of the status of the agency's financial managemert; e the annual financial statements and audit reports prepared under the act; e a summary of the reports on internal accounting and administrative control systems submitted to the President and the Congress under the FhtFI A; and 31
. other information the agency head considers appropriate concerning agency financial management.
To emphasize the significance of NRC's Executive Director for Operations' (EDO's) role in financial management, the EDO is the agency's appointed CFO. Since the NRC Controller has the authority for most of the agency's day to day financial management activities, the Controller's position is designated as the Deputy CFO (DCFO). As a result, the CFO, assisted by the deputy, is responsi-ble for the following CFO act related duties:
. developing, maintaining, and overseeing the implementation of policies, procedures, and standards for carrying out all financial management activi-ties:
. developing and maintaining an integrated agency accounting and financial management system; e monitoring the financial execution of the NRC's budget and submitting timely performance reports to the Chairman; e preparing agency financial statements:
. ensuring that these financial statements are auditable; and
. preparing the annual report.
The NRC's Office of the Controller (OC) has complemented its existing staff by adding individuals who possess significant Government financial management experience. OC has also obtained the senices of an independent certified public accounting firm to assist in preparing the agency's financial statements. As a result of the CFO legislation, the NRC must ensure that itsinternal controls are in place and are operating as intended. The OlG has established a financial management audit team whose purpose is to review the financial management controls within the agency. This team places the OlG in a position to assist the agency in implementing the provisions of the act. Guidelines have been formu-lated that will allow the OlG to advise the agency on matters affecting the prepa-ration of the financial statement while maintaining 010 independence. The OlG has also obtained the senices of a certified public accounting firm to assist in reviewing the financial management practices within the agency. This assistance ensures that key financial areas will undergo a thorough review as the agency prepares and issues its audited financial statements in accordance with the requirements of the act. NRC's management and the OlG are working together to ensure that the goals of the CFO act are successfully achieved. 32
PPENDICES AUDIT LISTINGS INTERNAL. AUDIT REI' ORTS Date Title Number ut/03/92 Review of NRC's Allegations OlG/91A417 Management System 05/01/92 Iludget Changes in the Office of OlG/92A4)3 Nuclear Regulatory Research 05/01/92 Iludget Changes in NRC's inspection OlG/91A-13A Programs 06/26/92 Review of NRC's Contract OlG/92A-414 Close-out Process 07/27/92 Survey of NRC's inspection OlG/91A-13 Program 08/17/92 NRC's Compliance with the Anti- OlG/92A-14 lobbying Act. Section 319 of Public Law 101-121 08/31/92 Improvements Needed in NRC's OlG/92A-08 Process for Approving Payments to the Department of Energy 33
CCNTMCTAUDIT REPORTS Funds Questioned Put to OlG Costs lletter Use issued Contractor (Dollars) (Dollars) (M/06/92 liernard flodes Adveulsing 0 RS-PER-91-322 (M/17/92 ERC Environmental Services Co. O NRC-05-M-160, NRC-05-M-151: NRC-05-86-155; NRC-05-86-158-002 04/17/92 United Engineers & Construction 0 NRC-33-SS-311 04/17/92 Science & Engineering Associates 0 NRC-33-83-407 04/17/92 Science & Engineering Associates 762 NRC-33-83407 04/17/92 Science & Engineering Associates 0 NRC-33-84-407 (M/17/92 Washington Data Systems, Inc. O RS-IRM-92-173 05/01/92 Southwest Research Institute 3,494,758 NRC-02-88-005 OlG/92A-09A 05/(M/92 Analytical & Research Technology 0 RS-lRM-92-203 05/05/92 Ruland & Associates (Subcontractor) 0 RS-IRM-92-203 05/11/92 Technology Applications,Inc. O NRC-33-85-330 05/13/92 Systems Automation Corp. O RS-IRM-92-203 05/13/92 Creative Associates International 0 RS-1RM-92-203 05/13/92 R.S. Data Systems, Inc. O RS-1RM-92-203 05/13/92 American Management Systems 0 RS-1RM-92-203 05/20/92 Buffalo Material Research 366,358 NRC-04-84-102 05/20/92 Applied Management Systems,Inc. O RS-1RM-92-203 34
Funds Questioned Put to OlG Costs lletter Use issued Contractor (Dollars) (Dollars) 05/20/92 Pinkerton Computer (Subcontractor to O Applied hianagement Systems, Inc.) RS-NRR-92-203 05/20/92 VGS, Inc. (Subcontractor to User 0 Technology Associates) RS-NRR-92-203 05/26/92 hiastech S stem Corporation 0 RS-IRhi->2-203 05/27/92 Itasca Consulting Group. Inc. O NRC-02-85-002 05/27/92 User Technology Associates O RS-lRht-92-203 06/01/92 Computech, Inc. O RS-IRht-92-203 06/01/92 Science Applications International Corp. O RS-NRR-92-033 06/02/92 Sonalyst, Inc. 39,519 RS-NR R-92-034 06/02/92 Science Applications International Corp. O RS-NRR-92-021 06/02/92 Science Applications international Corp. O RS-NRR-92-027 06/02/92 Science Applications International Corp. O RS-NRR-92-035 06/02/92 Science Applications International Corp. O RS-NRR-92-034 06/N/92 Scientech (Subcontractor to Sonalyst) 0 RS-NRR-92-034 06/11/92 Science & Engineering Associates 47,901 RS-NRR-92-021 06/11/92 Science & Engineering Associates 28,331 RS-NRR-92-027 06/11/92 Science & Engineering Associates 97,971 RS-NRR-92-033 35
Funds Questioned Put to 010 Costs lletter Use issued Contractor (Dollars) (Dollars) 06/11/92 Science & Engineering Associates 30,927 RS-NRR-92-035 06/15/92 Science & Engineering Associates 68,901 RS-NRR-92-034 06/15/92 Comex Corp. (Subcontract to Science 0 and Engineering Associates Inc.) RS-NRR-92-021 06/15/92 Comex Corp. (Subcontract to Science 0 and EngineerinJt Associates, Inc.) RS-N R R-92-027 06/15/92 Comex Corp. (Subcontract to Science 0 and Engineering Associates, Inc.) - RS-NRll-92-033 06/15/92 Comex Corp. (Subcontract to Science 0 and Engineerin4 Associates, Inc.) RS-NR R-924L 4 06/15/92 Scientech, Inc. O RS-NRR-92-033 06/15/92 Scientech, Inc. O RS-NRR-92-021 06/15/92 Scientech, Inc. O RS-N RR-92-027 06/23/92 PAL Consultants (Subcontract to Science 0 and Engineering Associates, Inc.) RS-92-035-021 07/01/92 Logicon H&D Associates, Inc. O NRC-03-83-092 07/14/92 Compuware Corp. (Subcontract 0 to Systems Automation Corp.) RS-I R M-90-203 07/15/02 Analvtical & Research Technology 0 NRd-33--91-183 08/11/92 S. Cohen and Associates, Inc. O RS-RES-92-061 08/11/92 Science & Encineering Associates O RS-NRR-92-D21 36 1 _
Funds Questioned Put to 010 Costs Better Use issued Contractor (Dollars) (Dollars) 08/19i92 Quality Services International, Inc, O RS-AGD-92-266 08/24'92 Westinghouse Electric Corp, O NRC-N-85-103 08/25/92 National Council on Radiation 0 Protection and Measures NRC-04-85-118; NRC-G-04-81-027 Sebtotal $367,120 $3,808,308 INTERNAL AUDIT REPORTS 06/26/92 Review of NRC's Contract Close-out 8,295,281 Process 08/31/92 Improvements Needed in NRC's 1,4(XI,(XXI Process for Approving Payments to the Department of Energy Subtotal $367,120 $9,695,281 TOTAL $367,120 $13,503,589 w 37
i ABBREVIATIONS , AMS Allegation Management System ) , ASLBP Atomic Safety and Licensing Board Panel I ATS Allegation Tracking System rFO' Chief Financial Officer
-' A certified public accountant U.S. Defense Contract Audit Agency
> Deputy Chief Financial Officer 7' U.S. Department of Energy U.S. Department of Justice
-it- NRC's Executive Directs.. for Operations 4
, FBI U.S. Federal Bureau of Investigation FMFIA Federal Managers' Financial Integrity Act
- FOIA Freedom of Information Act <
FTE full time equivalent FY fiscal year ! IG Inspector General IRM NRC's Office of Infoi- < an Resources Management NF< r U.S. Nuclear Regulatory Commission NPR NRC's Office of Nuclear Reactor Regulation OC Office of tFe Contioller l OIG NRC's Of: .e of the Inspector General OMB U.S. Office of Management and Budget PCIE President's Council on Integrity and Efficiency
- PFCRA Program Fraud Civil Remedies Act i
RES NRC's Office of Nuclear Regulatory Research SNL Sandia National Laboratory i l l
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GLOSSARY FINAL A CTION. The completion of all management actions discussed in man-l agement decisions concerning audit recommendations and findings. Final action occurs when management issues a decision. FINANCIA L A UDIT. Financial audits are carried out to assess the effectiveness of internal control systems, transaction processing, financial systems, and con-tracts, FUNDS PUT TO BETTER USE. Funds identified in audit recommendations , that could be used more efficiently bf avoiding unnecessary expenses. HOTLINE. A toll-free telephone number (1-800-233-3497) available to anyone for the reporting of incidents of possible fraud, waste, and abuse to the NRC's Office of Inspector General. l iCCOUNT. Unliquidated obligations under an appropriation are trans-m (or merged into) an "M" account at the end of the second full fiscal year ving expiration.The "M" account remains available for the payment of the
.,,uidated obligations charged to various-year appropriation accounts.
MANAGEMENT DECISION. Management evaluation of audit recommenda-tions and findings. A final decision is issued that is based on management's response to recommendations and findings. MATERIAL IVEAKNESS. A specific instance of non-compliance with the Federal Managers' Financial Integrity Act of sufficient importance to be reported to the President and the Congress. A weakness that would significantly impair the fulfillment of an agency's component's mission; deprive the public of needed services; violate statutory or regulatory requirements; significantly weaken safeguards against waste, loss, unauthorized use or misappropriation or funds, property, or other assets; or result in a conflict of interest. NONCONFORMANCE. The failure of an agency's accounting system to con-form with appropriate accounting principles, requirements, and/or standards. OBLIGATlONS. Amounts of orders placed, contracts awarded, services rendered. or other commitments made by Federal agencies during a given period, that will require outlays during the same or some future period. QUESTIONED COST. A cost questioned as a result of an alleged violation of law, regulation, contract, or agreement governing the expenditure of funds l (costs unsupported by adequate documentation or funds for a particular purpose that are unnecessary or unreasonable). UNSUPPORTED COST. A cost questioned because of a lack of adequate documentation at the time of the audit. l 39
4 i THE INSPECTOR GENERAL ' HOTLINE : A toll free number (1-800-233-3497) was established by the Office of the In-3 spector General to provide NRC employees, contractors, and others with direct ' access to OIG's Hotline Program. Hotline procedures and guidelines were care. fully developed to ensure the confidentiality of NRC employees wishing to re-port incidents of possible fraud, waste, and abuse within the NRC. Trained OIG staff are available to answer calls Monday through Friday, between 10:00 a.m. and 4:00 p.m. (eastern standard time). Individuals may also provide information to hotline personnel by writing to the address below. 4 i i 1 l l I i U.S. Nuclear Regulatory Commission i
- ' The Office of the Inspector General l i
Hotline Program Mail Stop EW/W 542 Washington, D.C. 20555 I 4 9 i HOTLINE NUMBER: 1-800-233-3497 4 i 4 5 9 40
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