ML20212F635
| ML20212F635 | |
| Person / Time | |
|---|---|
| Issue date: | 12/30/1986 |
| From: | Zech L NRC COMMISSION (OCM) |
| To: | Oneill T HOUSE OF REP., SPEAKER OF THE HOUSE |
| Shared Package | |
| ML20212F633 | List: |
| References | |
| NUDOCS 8701120093 | |
| Download: ML20212F635 (10) | |
Text
$r o p neg'o UNITED STATES
.- ! o. NUCLEAR REGULATORY COMMISSION g i WASHINGTON, D. C. 20568
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CHAIRMAN
- / December 30, 19S6 The Honorable Thomas P. O'Neill, Jr.
Speaker of the United States House of Representatives Washington, D. C. 20515
Dear Mr. Speaker:
An evaluation of the system of internal accounting and administrative control
-of the U. S. Nuclear Regulatory Commission in effect during the year ending December 31, 1986 was performed in accordance with Guidelines for the Evaluation and Improvement of and Reporting on Internal Control Systems in '
the Federal Government, issued by the Director of the Office of Management and Budget, in consultation with the Comptroller General, as required by the Federal Managers' Financial Integrity Act'of 1982. Other guidance is contained in the OMB memoranda of August 20, 1986 and November 13, 1986.
The evaluation included an analysis of whether the system of internal accounting and administrative control of the Nuclear Regulatory Commission was in compliance with the standards prescribed by the Comptroller General.
The objectives of the system are to provide reasonable assurance that:
- Obligations and costs are in ccmpliance with applicable law; Funds, property, and other assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and Revenues and expenditures applicable to agency operations are properly recorded and accounted for to permit the preparation of accounts and reliable financial and statistical reports and to maintain accountability over the assets.
The concepts of reasonable assurance recognizes that the cost of internal
, control should not exceed the benefits expected to be derived therefrom, and that the benefits consist of reductions in the risks of failing to achieve the stated objectives. Estimates and judgments are required to assess the expected benefits and related costs of control precedures. Furthermore, errors or irregularities may occur and not be detected because of inherent limitations in any system of internal accounting and administrative control, including those limitations resulting from resource constraints, Congressional restrictions, and other facters. Finally, projection of any evaluation of the system to future periods is subject to the risk that procedures may be inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate.
8701120093 861230 PDR COMMS NRCC (r e g t es W eg g e , PDR
'r a The Honorable Thomas P. O'fleill, Jr. The results of the evaluation described in the first paragraph, assurances given by appropriate Nuclear Regulatory Commission officials, plans for correcting weaknesses found, and other information provided indicate that the system of internal accounting and administrative control of the Nuclear Regulatory Connission in effect during the year ending December 31, 1986, complies with the requirement to provide reasonable assurance that the above-mentioned objectives were achieved within the limits described in the preceding paragraph.
Enclosure A contains a statistical summary of NRC accomplishments under the Federal Managers' Financial Integrity Act of 1982, Sections 2 and 4.
Enclosure B describes the NRC evaluation process, highlighting progress in making it part of general management. Enclosure C lists the accounting systems subject to Section 4 of the Federal Managers' Financial Integrity Act.
Respectfully, A&ths W. .
Lando W. Ze , Jr.
Enclosures:
As stated cc w/ enclosures:
The Honorable James C. Miller, III Director, Office of Management and Budget l
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. ENCLOSURE A STATISTICAL
SUMMARY
OF PERFORMANCE Section 2 of Federal Managers' Financial Integrity Act Overall compliance X Ye3 _ _ No Material weaknesses Reported Corrected Pending Prior years 0 0 0 1985 Report 0 0 0 1986 Report 0 0 0 Total 0 0 0 Section 4 of Federal Managers' Financial Integrity Act Overall conformance X Yes No Section 4 systems
- Total In Conformance 1983 Report 13 13 1984 Report 13 13 1985 Report 13 13 1986 Report 13 13 Material nonconformances Reported Corrected Pending Prior years 0 0 0 1985 Repcrt 0 0 0 1986 Report 0 _
0 0 Total 0 0 C
- See Enclosure P Section 1.8, for descriptions.
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ENCLOSURE B 1986 INTERNAL CONTROL REVIEW PROCESS I. DESCRIPTION OF INTERNAL CONTROL EVALUATIONS A. Internal Control Systems In accordance with the Office of Management and Budget (OMB)
Circular A-123 " Internal Control Systems, the U. S. Nuclear Regulatory Comission (NRC) created an Internal Control Comittee (ICC) and published NRC Manual Chapter 0801, " Internal Controls."
The primary purpose of the ICC is to provide overall guidance and appraisal nf NRC's evaluation process of internal controls.
In 1986, the NRC (1) refined its process for conducting vulnerability assessments; (2) considered revisions to its Assessable Unit Inventory; (3) completed one Internal Control Review (ICR) and began another; and (4) cor. ducted evaluations of each of the agency's internal control systems, including a review of actions taken to correct previous weaknesses. Technically, one material weakress was discerned during this year's review. The weakness is described in Enclosure C.
The assessable units are as follows:
Administrative Timekeeping Travel Personnel Payroll Procurement of Goods and Services for Administrative and Program Support Administrative Support Services Imprest Funds Resource and Management Analyses Management Directives General Ledger Reporting
- Employee Financial Disclosures Public Affairs Programmatic Reactor Operating License Review Regulation of Operating Reactors Operator Licensing
- TMI-2 Cleanup and Recovery Unresolvec Safety and Gereric Issues j - Regulatory Reovirements
' - Nuclear Safety Pesearch
- Fuel Cycle ard Materials l
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- Safeguards
- Waste Management
- Inspection
- Quality Assurance
- Enforcement
- Agreement States
- Indemnification
- Import / Export Licensing
- International Information Exchange
- Analysis and Evaluation of Operational Information
- License Fee Management
- Investigation (External and Internal)
- Audit
- Training
- Automated Data Processing The " streamlining" of the evaluation process has improved as the process has become increasingly intitutionalized: the Manual Chapter implementing A-123'has been in place for more than one cycle; a system for capturing control-related items from audits has been established; the corrective actions to be taken have been integrated into the agencywide system of tracking work; and Internal Control Cocrdinators in the offices have been active participants in the evaluation process.
NRC has several weakresses from past years which are not material and for which corrective actions are underway. These relate to the:
- effectiveness of measures for evaluating training programs. An action plar will take effect in 1987.
- annual appointment of a review parel for the program for airing differing professional opinions. The next panel will be appointed in January,1987.
- effectiveness of the process for instituting changes in the technical specifications of licensees. The Commission is formally considering alternatives.
- implementation of the !ntegrated Financial Management Information System (IFMIS). A status report will be provided to the Commission by December 31, 1986.
- preparation of a formal procedure for ADF planning and budgeting. The formal procedures have been published; the Manual Chapter will be prepared when the recrqanization of NRC's administrative services is complete.
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3 submission of semi-annual reports to the Comission on the status of the agencywide data network. The reporting will resume after SBA has determined the eligibility of a proposer for developing the network.
establishment of procedures to implement requirements in
" Guidelines for Evaluating Financial Management /Acccunting Systems". This has been completed for limited reviews. Guidance for detailed evaluations will be prepared during the planning period in accordance with NRC Bulletin 1103-19. Several detailed evaluations will be performed in 1987.
delay of deposits of civil payment penalties. Implementation of an 0IA recommendation will occur when 10 CFR 15 is revised by December 31, 1987. The delay in implementation results in additional interest costs to the Treasury of less th in $100 per year.
development of a plan for the cyclical evaluation of NRC accounting systems in response to OM8 Circular A-127. The plan is in place.
In compliance with requirements for periodic reviews, NRC will conduct in 1987 vulnerability assessments on the entire inventory of assessable units and detailed evaluations of its accounting systems.
Also, during 1987, the Office of Auditor and Inspector (0IA) and that General Accounting Office (GA0) are expected to conduct a number of audits and reviews of NRC programs and operations. The results will be reviewed for internal control implications.
B. Accounting Systems In accordance with the provisions of Section 4 of the Federal Managers' Financial Integrity Act of 1982, limited reviews of the accounting systems were conducted. The objective of these reviews was to determine whether these systems confern to the principles and standards developed by the Comptroller General of the United States (CG) under Section 112 of tne Accounting and Auditing Act of 1950 and implemented through OMB Circular A-127, " Financial Manacement Systems." NRC Bulletin 1103-19, " Financial Management System,"
prescribes the NRC policies and procedures fer implementation of 0FB Circular A-127. This Bulletin establishes an inventory of NRC accounting systems, identifies the system manager 'or each accounting system. and recuires the identified system manager to perform an annual evaluation of the system. The review process for each of the systems is described belcw.
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- 1. Payroll System The purpose of the payroll system is to collect, control, manage and maintain pay and leave data on NRC employees and consultants. The system was approved by the CG on September 18, 1982. As a result of an 0IA audit in 1985, NRC's Office of Resource Management (RM) has strengthened the control desk function, and has taken action to revise the manuals no later than the end of FY 1988. As a result of the 1986 limited review, the system manager has provided reasonable assurance that the system is in general conformance with the OM8 financial arrangement and accounting objectives.
- 2. Administrative Accounting Systems The purpose of the administrative accounting systems is to accumulate, maintain and report all accounting and budget execution information other than pay and leave data maintained in the payroll system. There are six administrative accounting systems: travel authorization and voucher system; travel advance system; plant and equipment subsidiary ledger system; funds control system; general ledger; and a system for preparation and issuance of bills. Two of these s (travel autherization and travel advance systems) were ystems absorbed by the IFMIS during FY 1986. (See Enclosure D for further discussion.)
During 1986, a limited review of the last system was performed, as the OMB Guidelines do not recuire a review of systems scheduled to be combined into other systems within the next two fiscal years. The system manager for the reviewed systems has provided reasonable assurance that they are in general conformance with the OMB financial manacerent and accounting objectives.
- 3. Systems for Billing Licensees for Reccverable Costs The systems for billing licensees for recoverable costs have as their purpose the recovery of fees for nuclear facilities and materials licensees and other regulatory services. Two systems capture NRC manpower data while two other systems capture technical-assistance contractor costs. A manual system determines appropriate hourly billing rates, applies the billing rates to NRC manpower data, aggregates technical assistance contractor costs and NRC manpower costs, and generates informatien from which bills tn licensees can be produced.
5 Considering the limited nature of the 1985 vulnerability assessment, it was not possible to provide assurance that the l systems, generally conformed to the principles and standards developed by the CG and implemented through OMB Circular A-127.
Therefore, an ICR was begun in 1986, which is being performed under contract. (See II.A. below.)
- 4. Property and Supply System i
The purpose of the property and supply system is to maintain records concerning property and supply transactions, warehouse inventory, stock reorder points, NRC item identification catalog, and abnormal maintenance incident rates.
During 1986, a limited review of the property and supply system was performed in accordance with the OMB Guidelines. The system manager for this system has provided reasonable assurance that the system is in general conformance with the OMB financial ,
manacement and accounting objectives.
l l II. SPECIAL REVIEWS A. The Internal Control Committee undertook twn major ICR's in 1986, on personal computers and license fee management.
1 Personal Computer ICR: Partially as a result of an 0IA review, the ADP program is beino re-evaluated. This is occurring as part of a t
major agency reorganization. In the meantime, the ICR dealing with the acouisition, use and accountability of personal computers and related ecuipment was undertaken, and completed in December 1986.
The fundamental objective was to ensure that basic, common sense internal controls exist and are being follnwed with regard to the acquisition, use and accountability of NRC personal computers and their related hardware and software. This review uncovered no material weaknesses.
License Fee ICR: By the end of the reporting period, specific pla7s were made to beoin an ICR on the process for billing licensees for recoverable costs. The purpose of the licer.se fee management ICR is to systematically and comprehersively review the current internal controls established to bill licensees for recoverable costs, to ensure their adequacy and to propose any improvements. To provide adequate staffing and cbjectivity, the ICR will be done under contract. The review is scheduled to begin at the end of December and to end in July 1987.
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- Breach of Confidentiality Investigation of Leaked Transcripts
- Management of Generic Safety Issues Allegations Management for Diablo Canyon
- NRC's ADP Activities
- Technical Specification for Near-Term
- Effect of CRGR on Safety Issues NRC's Training Function C. In its guidance of August 20 and November 13, 1986, the OMB requested reviews be made of ADP security, prompt payment systems, debt collection, erroneous payments measures, and conformance with Audit Followup Standards of OM8 Circular A-50.
- 1. ADP Security: (See A, above)
- 2. Prompt Payment Systems: NRC has reasonable assurance that its reports accurately reflect complete compliance with the Prompt Payment Act. In FY 1986, the agency paid 118 invoices subsequent to the 15-day grace period following the due date, resulting in interest of $6,718.89. This number of invoices represents .4 percent of the total paid in FY 1986. The majority of invoices are paid after 30 days, but within the 15-day grace period. The agency has reascnable assurance that its repcrts accurately reflect complete compliance with the Prompt Payment Act.
- 3. Debt Collection: Debts of NRC licensees in the form of license fees constitute virtually all of the debts owed NRC. No special review was made of debt collection inasmuch as the risk of license revocation assures the timely payment of amounts owed, and fee collection will be part of the ICR conducted on license fees (see A, above). In addition, starting in November, 1986, NRC initiated mandatcry use of electronic funds transfer for payment of fees.
- 4. Erroneous Payments Measures: The agency does not have a "formalizeo" system to measure erroneous payments. When employees are overpaid, they are either billed or future salary payments are offset. In the case of nrants, of which there are very few, we are unaware of " erroneous" payments until such time as the contract i's femally closed out and the Contracts Division informs the grantee and the Accounting Division that money is due the agency. At that time, a receivable is established. The agency feels that this procedure is not a weakness, and that any errors are insignificant because of the small volume of activity. In addition, OIA conducted a review of payments within the past two years and found only one duplicate payment had been made.
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- 5. Conformance with Audit Followup Standards (OMB Circular A-50)
In its guidance of November 13, 1986, OMB requested a report on the status of NRC conformance with the Follow-up Standards contained in OMB Circular A-50, as well was a copy of the most recent periodic assessment of required actions and a copy of the September 30, 1986, semi-annual report on audit follow-up.
At the Attachment is the NRC's latest semi-annual report, which covers January I through June 30, 1986. The next report will cover the next period through December 31, 1986. The attached report includes the assessment of required actions.
No significant weaknesses have been found in the audit follow-up system. No unresolved recommendations, as defined in A-50, exist at this time. While the audit report shows five unresolved audit recommendations over six months old, these are not unresolved within the context of Paragraph 6.b of A-50 in -
that the audit organization (OIA) and agency management agree that no action needs to be taken on these recommendations until OIA performs a follow-up review. These recommendations will be followed by OIA and reinstituted as recommendations to be resolved if, after 'ollow-up, they believe the case so warrants.
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