OIG/96A-19 - Principal Statements for Fiscal Year 1996
Office of the Inspector General
U.S. Nuclear Regulatory Commission
Washington, D.C. 20555
Contents
- Statement of Financial Position
- Notes to Principal Statements September 30, 1996 and 1995
- Note 1. Summary of Significant Accounting Policies
- Note 2. Fund Balances with Treasury
- Note 3. Accounts Receivable, Net
- Note 4. Advance and Prepayments
- Note 5. Property and Equipment, Net
- Note 6. Accounts Payable and Advances
- Note 7. Accrued Payroll and Benefits
- Note 8. Other Liabilities Covered by Budgetary Resources
- Note 9. Other Liabilities Not Covered by Budgetary Resources
- Note 10. Intragovernmental Activities
- Note 11. Net Position
- Note 12. Appropriated Capital Used
- Note 13. Other Revenues and Financing Sources
- Note 14. Operating Expenses
- Note 15. Employee Retirement Plans
- Note 16. Other Expenses
- Note 17. Excess or (Shortage) of Revenues and Financing Sources over Total Expenses
- Note 18. Non-operating Changes
- Note 19. Prior Period Adjustment
- Appendix: Comments of The Acting Chief Financial Officer
Statement of Financial Position September 30, 1996 and 1995
| ASSETS | 1996 | Restated 1995 |
|---|---|---|
| Entity Assets: | ||
| Intragovernmental assets: | ||
| Fund balances with Treasury (Note 2) | $210,748,055 | $258,602,386 |
| Accounts receivable, net (Note 3) | 5,822,652 | 8,231,231 |
| Advances and prepayments (Note 4) | 4,948,524 | 2,466,180 |
| Governmental assets: | ||
| Accounts receivable, net (Note 3) | 24,079,551 | 28,310,335 |
| Advances and prepayments (Note 4) | 472,592 | 695,961 |
| Property and equipment, net (Note 5) | 38,189,091 | 37,175,412 |
| Total entity assets | 284,260,465 | 335,481,505 |
| Non-Entity Assets: | ||
| Governmental assets: | ||
| Accounts receivable, net (Note 3) | 312,470 | 692,881 |
| Total non-entity assets | 312,470 | 692,881 |
| Total assets | $284,572,935 | $336,174,386 |
| Liabilities | 1996 | Restated 1995 |
|---|---|---|
| Liabilities Covered by Budgetary Resources: | ||
| Intragovernmental liabilities: | ||
| Accounts payable and advances (Note 6) | $11,805,497 | $12,989,462 |
| Other intragovernmental liabilities (Note 8) | 26,519,644 | 41,532,847 |
| Governmental liabilities: | ||
| Accounts payable (Note 6) | 21,229,287 | 22,515,321 |
| Other governmental liabilities (Note 8) | 7,143,659 | 8,324,101 |
| Accrued payroll and benefits (Note 7) | 11,527,847 | 10,276,907 |
| Total liabilities covered by budgetary resources: | 78,225,934 | 95,638,638 |
| Liabilities Not Covered by Budgetary Resources: | ||
| Governmental liabilities: | ||
| Other governmental liabilities (Note 9) | 32,710,987 | 31,052,458 |
| Total liabilities not covered by budgetary resources | 32,710,987 | 31,052,458 |
| Total liabilities | 110,936,921 | 126,691,096 |
| NET POSITION | ||
| Balance (Note 11): | ||
| Unexpended appropriations | 168,157,910 | 203,360,336 |
| Invested capital | 38,189,091 | 37,175,412 |
| Future funding requirements | 32,710,987 | 31,052,458 |
| Total net position | 173,636,014 | 209,483,290 |
| Total liabilities and net position | $284,572,935 | $336,174,386 |
Statement of Operations and Changes in Net Position for the years ended September 30, 1996 and 1995
| Revenues and Financing Sources | 1996 | Restated 1995 |
|---|---|---|
| Appropriated capital used (Note 12) | $ 52,837,295 | $ 35,558,585 |
| Other revenues and financing sources (Note 13) | 452,184,128 | 492,783,452 |
| Excess current year receipts of fees over billings | 14,633,020 | 23,015,654 |
| Less: Receipts transferred to the Treasury or other agencies | (2,925,845) | (3,518,733) |
| Total revenues and financing sources | 516,728,598 | 547,838,958 |
| EXPENSES | ||
| Program Expenses (Note 14) | ||
| Salaries and expenses | 505,810,836 | 533,794,349 |
| Office of Inspector General | 4,013,899 | 4,557,825 |
| Total program expenses | 509,824,735 | 538,352,174 |
| Depreciation (Note 5) | 8,540,608 | 9,129,575 |
| Interest | 4,683 | 13,143 |
| Other expenses (Note 16) | 17,101 | 287,045 |
| Total expenses | 518,387,127 | 547,781,937 |
| Excess or (Shortage) of revenues and financing sources over total expenses (Note 17) | 1,658,529 | 5,021 |
| Net position, ending balance | $209,483,290 | $219,540,854 |
| Prior period adjustment (Note 19) | ||
| Net position, beginning balance, as restated | - | (5,456,000) |
| Excess (Shortage) of revenues and financing sources over expenses | (1,658,529) | 57,021 |
| Plus non-operating changes (Note 18) | (34,188,747) | (4,658,585) |
| Net position, ending balance | $173,636,014 | $209,483,290 |
Statement of Cash Flows for the years ended September 30, 1996 and 1995
| CASH PROVIDED (USED) BY OPERATING ACTIVITIES | 1996 | Restated 1995 |
|---|---|---|
| Cash Provided: | ||
| Fees for licensing and inspection and other services (Note 12) | $454,049,512 | $501,871,000 |
| Other operating cash provided | 8,450,358 | 16,852,614 |
| Total cash provided | 462,499,870 | 518,723,614 |
| Cash Used: | ||
| Personnel services and benefits | ||
| Travel and transportation | (259,816,269) | (266,399,073) |
| Rent, communications and utilities | (16,275,698) | (16,238,339) |
| Printing and reproduction | (26,342,185) | (25,804,325) |
| Other contractual services | (1,554,538) | (2,132,047) |
| Supplies and materials | (193,678,520) | (224,466,951) |
| Insurance claims and indemnities | (11,162,708) | (11,372,953) |
| Grants, subsidies and contributions | (98,271) | (131,742) |
| Other operating cash used | (1,527,452) | (1,378,879) |
| Total cash used | (6,867,038) | (5,406,669) |
| Net cash provided (used) by operating activities | (517,322,679) | (553,330,978) |
| CASH PROVIDED (USED) BY INVESTING ACTIVITIES | (54,822,809) | (34,607,364) |
| Purchase of property and equipment | (11,680,069) | (7,101,108) |
| Net cash used by investing activities | (11,680,069) | (7,101,108) |
| CASH PROVIDED (USED) BY FINANCING ACTIVITIES | 18,536,875 | 22,000,000 |
| Appropriations Add: Transfers of cash from others | 111,672 | 8,900,000 |
| Net appropriations | 18,648,547 | 30,900,000 |
| Fee collections not used to offset current year's appropriation | 7,218,611 | |
| Net cash provided (used) by financing activities | 18,648,547 | 38,118,611 |
| Net cash provided (used) by operating, investing and financing activities | (47,854,331) | (3,589,861) |
| Fund balances with Treasury, beginning | 258,602,386 | 262,192,247 |
| Fund balances with Treasury, ending | $210,748,055 | $258,602,386 |
| Reconciliation of Shortage of Revenues and Financing Sources Over Total Expenses | ||
| Excess or (Shortage) of Revenue and Financing Sources Over Total Expenses | $(1,658,529) | $57,021 |
| Adjustments to Reconcile Shortage of Revenues and Financing Sources Over Total Expenses to Net Cash Provided by Operating Activities: | ||
| Appropriated Capital Used | ||
| Decrease (Increase) in Accounts Receivable | (52,837,295) | (35,558,585) |
| Decrease (Increase) in Other Assets | (2,823,343) | (254,047) |
| Increase (Decrease) in Accounts Payable | (2,258,975) | 370,145 |
| Increase (Decrease) in Other Liabilities | (887,331) | (6,227,518) |
| Depreciation and Amortization | (6,682,254) | (3,980,949) |
| Other Unfunded Expenses | 8,540,608 | 9,129,575 |
| Other Adjustments | 1,658,529 | (57,021) |
| Total adjustments | 2,125,781 | 1,914,015 |
| Net Cash Provided (Used) by Operating | (53,164,280) | (34,664,385) |
| Activities | $(54,822,809) | $(34,607,364) |
Statement of Budget and Actual Expenses for the years ended September 30, 1996 and 1995
| Program Name | Budget Resources |
Obligations | Actual 1996 Expenses |
Restated Actual 1995 Expenses |
|
|---|---|---|---|---|---|
| Direct | Reimbursement | ||||
| Salaries and expenses | $559,321,035 | $512,113,674 | $7,860,985 | $514,373,228 | $543,224,112 |
| Office of Inspector | 6,068,881 | 4,319,768 | 88,156 | 4,013,899 | 4,557,825 |
| General | $565,389,916 | $516,433,442 | $7,949,141 | $518,387,127 | $547,781,937 |
| Budget Reconciliation | |||||
| Total expenses | $518,387,127 | $547,781,937 | |||
| Add: | |||||
| Capital acquisition | 11,680,069 | 7,101,108 | |||
| Other expended budget authority | (2,105,885) | (1,914,015) | |||
| Less: Expenses not covered by available budgetary resources: | |||||
| Depreciation | (8,540,608) | (9,129,575) | |||
| Unfunded annual leave expense | (795,701) | (140,435) | |||
| Unfunded Workers' Compensation expense | (862,828) | 197,456 | |||
| Accrued expenditures | 517,762,174 | 543,896,476 | |||
| Less reimbursements | (9,842,179) | (10,409,373) | |||
| Accrued expenditures, direct | $507,919,995 | $533,487,103 | |||
Notes to Principal Statements September 30, 1996 and 1995
Note 1. Summary of Significant Accounting Policies
A. Basis of Presentation
These principal statements were prepared to report the financial position and results of operations of the U.S. Nuclear Regulatory Commission (NRC) as required by the Chief Financial Officers Act of 1990. The principal statements were prepared from the books and records of NRC in accordance with the form and content for entity financial statements specified by the Office of Management and Budget (OMB) in OMB Bulletin 94-01 and NRC accounting policies summarized in this note. These statements are therefore different from the financial reports, also prepared by NRC pursuant to OMB directives, which are used to monitor and control NRC's use of budgetary resources.
B. Reporting Entity/Program Name
NRC is an independent agency of the Federal Government created by the Energy Reorganization Act of 1974, as amended. Its purposes are defined by the Energy Reorganization Act of 1974, as amended, and the Atomic Energy Act of 1954, as amended. NRC was created by the U.S. Congress to ensure adequate protection of the public health and safety, common defense and security, and the environment in the civilian use of nuclear materials in the United States.
NRC has two appropriations:
31X0200 - Salaries and Expenses
31X0300 - Office of Inspector General
The 31X0200 appropriation includes approximately $11 million and $22 million for Fiscal Year 1996 and 1995, respectively, of funds transferred from the Department of Energy (DOE), Nuclear Waste Fund to NRC in accordance with the provisions of Public Law 104-46 and Public Law 103-316. Public Laws 104-134 and 104-19 rescinded $.7 million and $1.7 million from the fiscal year 1996 and 1995 NRC Salaries and Expenses Appropriation, respectively.
In addition, in Fiscal Years 1996 and 1995, $.5 million and $8.9 million, respectively, of the appropriation received by the U.S. Agency for International Development was transferred for the Nuclear Safety Assistance Program in Russia and the Ukraine which is under the control of NRC.
The accompanying financial statements of NRC include the accounts of all funds under NRC control.
C. Budgets and Budgetary Accounting
For the past 22 years, Congress has enacted no-year appropriations which are available for obligation by NRC until expended. The Omnibus Budget Reconciliation Act (OBRA) of 1990 requires NRC to recover approximately 100 percent of its new budget authority, less the amount appropriated from Nuclear Waste Fund, by assessing fees. At the end of the fiscal year, NRC's appropriations are reduced by the amount of revenues collected during the fiscal year.
D. Basis of Accounting
Transactions are recorded on both an accrual accounting basis and on a budgetary basis. Under the accrual method, revenues are recognized when earned and expenses are recognized when a liability is incurred, without regard to receipt or payment of cash. Budgetary accounting facilitates compliance with legal constraints and controls over the use of federal funds.
E. Revenues and Other Financing Sources
Licensing fees and fees for inspections and other services assessed in accordance with OBRA are recognized as other financing sources when earned.
For reporting purposes, appropriations are recognized as revenues (Appropriated Capital Used) at the time expenses are accrued. At the end of the fiscal year, appropriations recognized are reduced by the amount of assessed fees collected during the fiscal year to the extent of new budget authority for the year. Collections which exceed the new budget authority are held to offset subsequent years' appropriations. The fees collected during 1996 include $8.1 million billed in fiscal year 1996 for services performed in previous years. Appropriations expended for property and equipment are recognized as expenses when the asset is consumed in operations (depreciation). Appropriated Capital Used does not include appropriations used to purchase capital items or expenses incurred but not yet funded by Congress, such as Workers' Compensation benefits and annual leave expenses. The differences between the accrual basis recognition of appropriations expended and the budgetary basis recognition of outlays are presented in the Statement of Budget and Actual Expenses.
Miscellaneous receipts collected by NRC are not available to NRC for obligation or expenditure. These receipts must be transferred to the U.S. Treasury when collected.
F. Funds with the Treasury and Cash
NRC cash receipts and disbursements are processed by the U.S. Treasury. The Funds with the Treasury and Cash are primarily appropriated funds that are available to pay current liabilities and to finance authorized purchase commitments. Cash balances held outside the U.S. Treasury are not material.
G. Accounts Receivable, Net of Allowance
The amounts due for receivables are stated net of an allowance for uncollectible accounts. The estimate of the allowance is based on an analysis of the outstanding balances and the application of estimated uncollectible percentages to categories of aged receivable balances.
H. Advances
NRC makes cash payments to other Federal agencies, employees, grantees, and contractors to provide for future NRC program expenditures. These advance payments are recorded as assets which are reduced when reports of expenditures are received by NRC or when accruals of cost estimates are made by NRC.
I. Property and Equipment
The land and buildings in which NRC operates are provided by the General Services Administration (GSA), which charges NRC rent that approximates the commercial rental rates for similar properties.
Property with a cost of $50,000 or more per unit and a useful life of two years or more are capitalized at cost and depreciated. Other property items are expended when purchased. Normal repairs and maintenance are charged to expense as incurred.
Property is depreciated using the straight-line method over useful lives which range from 5 to 20 years.
J. Prepaid and Deferred Charges
Payments in advance of the receipt of goods and services are recorded as prepaid charges at the time of prepayment and are recognized as expenditures/expenses when the related goods and services are received.
K. Liabilities
Liabilities represent the amount of monies or other resources that are likely to be paid by NRC as the result of a transaction or event that has already occurred. However, no liability can be paid by NRC absent an appropriation. Liabilities for which an appropriation has not been enacted and for which there is no certainty that an appropriation will be enacted are classified as Liabilities not Covered by Budgetary Resources. Also, liabilities of NRC arising from sources other than contracts can be abrogated by the Government acting in its sovereign capacity.
L. Contingencies
NRC is a party to various administrative proceedings, legal actions, environmental suits, and claims brought by or against it. Based on the advice of legal counsel concerning contingencies, it is the opinion of NRC management that the ultimate resolution of these proceedings, actions, suits, and claims will not materially affect the financial position or results of operations of NRC.
M. Annual, Sick, and Other Leave
Annual leave is accrued as it is earned and the accrual is reduced as leave is taken. Each year, the balance in the accrued annual leave liability account is adjusted to reflect current pay rates.
Sick leave and other types of nonvested leave are expended as taken.
N. Retirement Plans
NRC employees hired after December 31, 1983, are automatically covered by the Federal Employees' Retirement System (FERS), which was implemented on January 1, 1987. Employees hired prior to that date could elect to join FERS or to remain in the Civil Service Retirement System (CSRS). Approximately 60 percent of NRC employees belong to CSRS and 40 percent belong to FERS. For employees in FERS, NRC withholds 0.8 percent of base pay earnings in addition to Federal Insurance Contribution Act and matches the withholding with a 11.4 percent contribution. The sum is transferred to the Federal Employees Retirement Fund. For employees covered by CSRS, NRC withholds 7 percent of their base pay earnings. This withholding is matched by NRC and the sum of the withholding and the match is transferred to the CSRS.
On April 1, 1987, the Federal government initiated the Thrift Savings Plan (TSP) which is a retirement savings and investment plan for employees covered by either FERS or CSRS. For employees covered by FERS, NRC automatically contributes one percent of base pay to their account and matches contributions up to an additional four percent. The maximum percentage that an employee participating in FERS may contribute is 10 percent of base pay. Employees covered by CSRS may contribute up to five percent of their base pay, but there is no NRC matching of the contribution. The maximum amount that either FERS or CSRS employees may contribute to the plan in a calendar year is $9,500. The sum of the employee and NRC contributions is transferred to the Federal Retirement Thrift Investment Board.
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 Office of Personnel Management.
O. Net Position
NRC's net position comprises the following components:
-
Unexpended appropriations include the undelivered orders and unobligated balances of NRC's funds. All appropriations remain available for obligation until expended.
-
Invested capital represents U.S. Government resources invested in NRC's property and equipment. Increases to invested capital are recorded when assets are acquired with direct appropriations, and decreases are recorded as a result of the depreciation, and disposition of capital assets.
-
Future funding requirements represent (a) accumulated annual leave earned but not taken as of the financial statement date and (b) actual and estimated future payments to be made for Workers Compensation pursuant to Federal Employees Compensation Act (FECA). The expense for these accruals is not funded from current appropriations, but rather will be funded from future appropriations and assessments.
P. Department of Energy Charges
Financial transactions between DOE and NRC are fully automated through the U.S. Treasury's On-Line Payment and Collection (OPAC) System. The OPAC System allows the DOE to collect amounts due from NRC directly from NRC's account at Treasury for goods and/or services rendered. Project manager verification of goods and/or services received is subsequently accomplished through a system-generated voucher approval system. The vouchers are returned to the Division of Accounting and Finance documenting that the charges have been accepted. Annually, NRC makes approximately $89 million in payments to DOE in this manner for research conducted by the DOE National Laboratories.
Q. Reclassifications
Certain amounts for 1995 have been reclassified to conform with the 1996 presentation.
Note 2. Fund Balances With Treasury
Fund balances with Treasury consist of the following amounts as of September 30, 1996 and 1995:
| Appropriated funds: | 1996 | 1995 |
|---|---|---|
| Obligated | $180,045,631 | $195,094,034 |
| Unobligated | 28,682,412 | 54,738,792 |
| Other fund types | 208,728,043 | 249,832,826 |
| 2,020,012 | 8,769,560 | |
| $210,748,055 | $258,602,386 |
U.S. Government cash is handled on an overall consolidated basis by Treasury. "Funds with Treasury" represent NRC's right to draw on Treasury for allowable expenditures. All amounts are available to NRC for current use except for $5.6 million in fiscal year 1995 which related to fees collected which are held to offset subsequent years' appropriations. The obligated and unobligated balances exclude amounts related to unfilled customer orders.
Note 3. Accounts Receivable, Net
Accounts receivable, net is composed of the following amounts as of September 30, 1996, and 1995:
Entity Assets
Intragovernmental accounts receivable consists primarily of receivables and reimbursements due from other Federal agencies which were $5,822,652 and $8,231,231 at September 30, 1996, and 1995, respectively.
Governmental accounts receivable is comprised of the following amounts as of September 30, 1996 and 1995:
| 1996 | 1995 | |
|---|---|---|
| Materials and facilities fees - billed | $3,532,779 | $6,982,690 |
| Materials and facilities - unbilled | 22,667,134 | 24,388,455 |
| Other | 103,295 | 132,035 |
| Total accounts receivable | 26,303,208 | 31,503,180 |
| Less: Allowance for uncollectible accounts | (2,223,657) | (3,192,845) |
| Accounts receivable, net | $24,079,551 | $28,310,335 |
Governmental accounts receivable represents primarily amounts due for fees assessed for licensing and inspections of nuclear facilities and radioactive materials and other services. In the year collected, the amounts will be used to offset NRC's appropriations.
Non-Entity Assets
Governmental accounts receivable, net, represents miscellaneous amounts due from the public $312,470 and $692,881 at September 30, 1996, and 1995, respectively, which when collected, must be transferred to the U.S. Treasury.
NRC's methodology to estimate the allowance for uncollectible accounts is based on an analysis of the outstanding balances and the application of estimated uncollectible percentages to categories of aged receivable balances.
Note 4. Advances and Prepayments
Advances and prepayments as of September 30, 1996, and 1995, consist primarily of the following:
| Entity Assets: | 1996 | 1995 |
|---|---|---|
| Intragovernmental: | ||
| Advances - other Federal agencies | $4,948,524 | $2,466,180 |
| Governmental: | ||
| Travel advances | $472,592 | $695,961 |
Advances and prepayments are recorded as assets until receipt of the goods or services involved or until contract terms are met. When goods or services are received or contract terms are met, the advance or prepayment is reduced and the expense or acquired asset is recognized. There were no outstanding prepayments as of September 30, 1996 and 1995.
Note 5. Property and Equipment, Net
Property and equipment, net, consists of the following as of September 30, 1996, and 1995:
| Fixed Asset Class | Service Years | Acquisition Value | Accumulated Depreciation |
1996 Net Book Value | 1995 Net Book Value |
|---|---|---|---|---|---|
| Equipment | 5-8 | $ 29,015,324 | $20,933,828 | $ 8,081,496 | $ 9,958,283 |
| ADP software | 5 | 45,798,876 | 40,883,323 | 4,915,553 | 8,065,383 |
| ADP software under development |
9,002,437 | - | 9,002,437 | 3,632,345 | |
| Leasehold improvements | 5-20 | 17,230,286 | 2,604,692 | 14,625,594 | 15,519,401 |
| Leasehold improvements in progress | 1,564,011 | - | 1,564,011 | - | |
| Total | $102,610,934 | $64,421,843 | $38,189,091 | $37,175,412 |
The straight-line depreciation method is used for all classes of fixed assets. Depreciation expense for fiscal years 1996 and 1995 was $8,540,608 and $9,129,575 respectively.
In fiscal year 1995, NRC increased the capitalization dollar amount on property and equipment from $5,000 to $50,000. All property items previously capitalized ($5,000 to $49,999.99) will continue to be depreciated over the remaining useful lives.
The land and buildings occupied by NRC are provided by the GSA. For fiscal years 1996 and 1995, the GSA charged NRC $18,446,487 and $18,580,348, respectively, for the use of these facilities based on a rental fee which is to approximate the commercial rates for similar properties.
Note 6. Accounts Payable and Advances
Accounts payable and advances consist of the following as of September 30, 1996 and 1995:
| Intragovernmental: | 1996 | 1995 |
|---|---|---|
| Accounts payable | $ 9,368,752 | $ 9,826,949 |
| Department of Energy | 2,282,932 | 2,994,531 |
| Other Federal agencies | 11,651,684 | 12,821,480 |
| Advances | 153,813 | 167,982 |
| Governmental: | $11,805,497 | $12,989,462 |
| Accounts payable | $19,743,864 | $20,855,270 |
| Vendors payable | 1,485,423 | 1,660,051 |
| Contract holdbacks | $21,229,287 | $22,515,321 |
The vendors payable are all current. Current payables represent amounts which are expected to be paid within the fiscal year following the reporting date.
Note 7. Accrued Payroll and Benefits
Accrued payroll and benefits as of September 30, 1996 and 1995 consists of:
| 1996 | 1995 | |
|---|---|---|
| Accrued personnel services | $ 9,824,164 | $ 8,699,085 |
| Accrued benefits | 1,703,683 | 1,577,822 |
| $11,527,847 | $10,276,907 |
Accrued payroll and benefits represent wages and benefits which have been earned but not paid as of the financial statement date.
Note 8. Other Liabilities Covered by Budgetary Resources
Other liabilities as of September 30, 1996 and 1995 include:
| 1996 | 1995 | |
|---|---|---|
| Accrued personnel services | $1,554,395 | $1,550,759 |
| Accrued benefits | 5,589,264 | 6,773,342 |
| $7,143,659 | $8,324,101 |
The liability for deposit funds consists primarily of liabilities arising from payroll deductions and tax withholdings. Advances from others consists of funds primarily from foreign governments for the participation in cooperative research programs.
| 1996 | 1995 | |
|---|---|---|
| Intragovernmental: | ||
| Liability to offset net accounts receivable for fees assessed | $26,206,946 | $35,204,023 |
| Liability related to fees collected which will offset subsequent years' appropriations | - | 5,635,943 |
| Liability to offset net miscellaneous accounts receivable | 312,698 | 692,881 |
| Totals | $26,519,644 | $41,532,847 |
The liability to offset the net accounts receivable for fees assessed represents amounts which, when collected, will be transferred to the U.S. Treasury to offset NRC's appropriations in the year collected.
The liability related to fees collected which will be used to offset subsequent years' appropriation represents amounts which will be transferred to the U.S. Treasury to offset subsequent years' appropriation.
The liability to offset net miscellaneous accounts receivable represents amounts which will be reverted to the U.S. Treasury when collected.
All Other Liabilities except Advances from others are current. Current liabilities represent amounts which are expected to be paid within the fiscal year following the reporting date. Advances from others may not be liquidated in the fiscal year following the reporting date.
Note 9. Other Liabilities Not Covered by Budgetary Resources
Unfunded liabilities as of September 30, 1996 and 1995 include:
| 1996 | Restated 1995 | |
|---|---|---|
| Governmental: | ||
| Accrued annual leave | $25,359,485 | $24,563,784 |
| Accrued Workers' Compensation | 1,476,502 | 1,261,674 |
| Benefits Paid | 5,875,000 | 5,227,000 |
| Estimated Future Benefits | $32,710,987 | $31,052,458 |
Accrued annual leave represents the amount of annual leave earned by NRC employees but not yet taken. Accrued Workers' Compensation includes: (1) FECA benefits paid by the Department of Labor (DOL) on NRC's behalf which had not been billed to or paid by NRC as of September 30, 1996 and 1995 and (2) an actuarial estimate for future disability benefits. The 1996 future workers' compensation estimate was generated by DOL from an application of actuarial procedures developed to estimate the liability for FECA which includes the expected liability for death, disability, medical and miscellaneous costs for approved compensation cases. The liability is determined using the paid losses extrapolation method calculated over the next 23-year period. This method utilizes historical benefit payment patterns related to a specific incurred period to predict the ultimate payments related to that period. These annual benefit payments were discounted to present value. The interest rates utilized for discounting ranged between 6.21 percent for year one to 5.10 percent for years six and beyond.
Accrued annual leave and accrued workers' compensation are not funded by current or prior years' appropriations and assessments. Funding will be provided from future years' appropriations and assessments (see Note 11).
Note 10. Intragovernmental Activities
The NRC reporting entity's financial activities interact with and are dependent upon those of the Federal government as a whole. Other Federal agencies make financial decisions and report certain financial matters on behalf of all Federal agencies. The practice of having Federal agencies record or report only those government-wide financial matters for which they are directly responsible is consistent with generally accepted accounting principles for Federal agencies which seek to identify financial matters of the department or agency that has been granted budget authority and resources to manage them. Activities which are performed or reported by other Federal agencies in which NRC is indirectly involved are as follows:
NRC funds a portion of its employee pension benefits under the CSRS and the FERS but does not disclose actuarial data with respect to accumulated plan benefits, plan assets, or the unfunded pension liability relative to its employees. Reporting of these amounts is the responsibility of the Office of Personnel Management.
In addition, NRC makes contributions to the TSP on behalf of its employees. NRC does not have control over the plan's assets. The TSP is administered by the National Finance Center of the Department of Agriculture.
Certain legal matters to which NRC may be a named party are administered, and in some cases, litigated by other Federal agencies. Amounts paid under any decision, settlement, or award pertaining thereto are generally funded through the Treasury.
In most cases, claims (including personal injury claims) are administered and resolved by the Department of Justice and any amounts necessary for resolution are obtained from a special fund maintained by the Treasury. Any legal actions for Workers' Compensation claims brought by NRC employees fall under FECA, which is administered by the Employment Standards Administration of the U.S. Department of Labor. The cost of administering, litigating, and settling these legal matters has not been allocated to individual Federal agencies.
Interest on borrowings of the U.S. Treasury is not included as a cost to NRC's programs and is not included in the accompanying financial statements.
Note 11. Net Position
The net position consists of the following as of September 30, 1996 and 1995:
| 1996 | Restated 1995 | |
|---|---|---|
| Unexpended appropriations: | $ 34,765,076 | $ 62,857,857 |
| Unobligated | 133,392,834 | 140,502,479 |
| Undelivered orders | 168,157,910 | 203,360,336 |
| Invested capital | 38,189,091 | 37,175,412 |
| Future funding requirements (Note 9) | (32,710,987) | (31,052,458) |
| $173,636,014 | $209,483,290 |
Unexpended appropriations include (1) unobligated appropriation balances and (2) undelivered orders, which are amounts which have been obligated but not yet expended. The unobligated appropriations balance does not include $6,262,153 and $8,911,666 in unfilled customer orders - unobligated as of September 30, 1996 and 1995, respectively. The undelivered orders balance does not include $6,082,665 and $8,119,066 in unfilled customer orders - obligated as of September 30, 1996 and 1995, respectively.
Invested capital represents the net investment of the U.S. Government appropriations expended for NRC's capitalized property and equipment.
Future funding requirements represent the amount of future funding needed to pay the accrued unfunded expenses as of September 30, 1996 and 1995. These accruals are not funded from current or prior appropriations and assessments, but rather should be funded from future appropriations and assessments. Accordingly, future funding requirements have been recognized for these expenses that will be paid from future appropriations (see Note 9).
Note 12. Appropriated Capital Used
Appropriated Capital Used, a financing source, is recognized to the extent that appropriated funds have been consumed less the amount collected from fees assessed for licensing, inspections, and other services. During fiscal years 1996 and 1995, $454.0 million and $501.9 million, respectively, were collected from fees assessed for licensing, inspections and other services. OBRA requires NRC to recover approximately 100 percent of its new budget authority, less the amount appropriated from the Nuclear Waste Fund, by assessing fees. At the end of the fiscal year, appropriations recognized are reduced by the amount of assessed fees collected during the fiscal year to the extent of new budget authority for the year. Collections which exceed the new budget authority are held to offset subsequent years' appropriations.
For fiscal years 1996 and 1995, $454.0 million and $501.9 million, respectively, of collections were used to reduce the fiscal year's appropriations recognized:
| 1996 | 1995 | |
|---|---|---|
| Appropriated funds consumed | $506,886,420 | $537,429,585 |
| Less: Collection from fees assessed | (454,049,125) | (501,871,000) |
| $ 52,837,295 | 35,558,585 |
The appropriated capital used for fiscal years 1996 and 1995 includes $34,188,747 and $4,658,585 respectively, of available funds from prior years (see Note 18).
Note 13. Other Revenues and Financing Sources
Other revenues and financing sources for September 30, 1996 and 1995 were:
| 1996 | 1995 | |
|---|---|---|
| Fees for licensing, inspection and other services | $439,416,105 | $478,855,346 |
| Other miscellaneous receipts | 2,925,844 | 3,518,733 |
| Appropriation reimbursements | 9,842,179 | 10,409,373 |
| $452,184,128 | $492,783,452 |
Note 14. Operating Expenses
Operating expenses by object class are as follows:
| 1996 | Restated 1995 | |
|---|---|---|
| Personnel services and benefits | $263,043,067 | $263,462,136 |
| Travel and transportation | 16,174,764 | 16,139,326 |
| Rent, communication, and utilities | 25,240,443 | 25,581,602 |
| Printing and reproduction | 1,579,151 | 2,005,287 |
| Contractual services | 189,329,595 | 216,219,114 |
| Supplies and materials | 12,868,778 | 13,353,246 |
| Grants, subsidies, and contributions | 1,486,946 | 1,456,333 |
| Insurance claims and indemnities | 101,896 | 131,477 |
| Other | 95 | 3,653 |
| Totals | $509,824,735 | $538,352,174 |
Note 15. Employee Retirement Plans
Total NRC contributions for employee retirement plans for fiscal years 1996 and 1995 were as follows:
| 1996 | 1995 | |
|---|---|---|
| Civil Services Retirement System (CSRS) | $ 9,022,093 | $ 9,226,610 |
| Federal Employees' Retirement System (FERS) | 9,476,956 | 9,115,078 |
| Federal Insurance Contribution Act (FICA) | 6,078,868 | 5,923,317 |
| Thrift Savings Plan (TSP) | 3,754,354 | 3,580,292 |
| $28,332,271 | $27,845,297 |
Data on the actuarial present value of accumulated benefits, assets available for benefits, and unfunded pension liability are maintained by other Federal agencies and are not allocated to individual departments and agencies.
Note 16. Other Expenses
Other expenses as of September 30, 1996 and 1995 consist of:
| 1996 | 1995 | |
|---|---|---|
| Loss on disposal of property | $41,403 | $281,951 |
| Bad debt expense | (24,302) | 5,094 |
| $17,101 | $287,045 |
Note 17. Excess or (Shortage) of Revenues and Financing Sources over Total Expenses
The excess or (shortage) of revenues and financing sources over total expenses represents expenses not covered by budgetary resources for the years ended September 30, 1996 and 1995, and consists of:
| 1996 | Restated 1995 | |
|---|---|---|
| Accrued annual leave | $ (795,701) | $(140,435) |
| Accrued Workers' Compensation | (862,828) | 197,456 |
| $(1,658,529) | $57,021 | |
| Expenses not covered by budgetary resources are not funded from current appropriations but are to be funded from future appropriations and assessments. | ||
Note 18. Non-operating Changes
Non-operating changes for the fiscal years ended September 30, 1996 and 1995, consist of the following:
| 1996 | 1995 | |
|---|---|---|
| Changed in unexpended appropriations | $(35,202,426) | $(716,103) |
| Change in invested capital | 1,013,679 | (3,942,482) |
| $(34,188,747) | $(4,658,585) |
Note 19. Prior Period Adjustment
Beginning in 1996, DOL, the agency which administers the FECA program, began reporting NRC's estimated actuarial liability for future Workers' Compensation benefits. The estimated liability as of October 1, 1994, was $5.5 million. The impact of this adjustment on the Statement of Operations and Changes in Net Position was to decrease Fiscal Year 1995 beginning net position by $5.5 million. The effect on program expenses was nominal.
Appendix: Comments of The Acting Chief Financial Officer
February 27, 1997
| Memorandum to: | Thomas J. Barchi Assistant Inspector General for Audits |
| From: | Ronald M. Scroggins Acting Chief Financial Officer |
| Subject: | Results of the Audit of U.S. Nuclear Regulatory Commission's Fiscal Year 1996 Financial Statements |
We have reviewed the draft audit report of the U.S. Nuclear Regulatory Commission's fiscal year 1996 financial statements. We appreciate your assistance with the Department of Energy in our effort to obtain audit assurance and your recognition that we have accomplished all that is possible to satisfy this issue.
The reportable condition "Capitalization Procedure for Automated Data Processing (ADP) Software Need Improvement" contains two recommendations. Our comments are:
Recommendation 1: Revise the software capitalization procedure to specify the responsible NRC group, position, or contractor for making capitalization decisions and oversight.
Response: The current Division of Accounting and Finance (DAF) capitalization procedures are written to apply to whomever is assigned the task of reviewing ADP software purchases to determine the applicability of capitalization. When this assignment is made, the person designated is advised of the agency policy and procedural requirements. While a contractor may be assigned certain duties associated with capitalization, it is not appropriate to assign a contractor the responsibility of making agency capitalization decisions as the ultimate responsibility for software capitalization rests with the Office of the Controller. Therefore, we believe the current procedures are adequate to define the process required to identify capitalized software. However, ADP software capitalization by its very nature often requires subjective judgements to be made when determining capitalization (i.e., identifying the difference between enhancements and maintenance) therefore, our emphasis in correcting this condition has been placed on your second recommendation.
Recommendation 2: Reemphasize the need for adequate oversight, of contractor decisions.
Response: Upon discovery of this oversight OC reemphasized with its internal project management staff the need for adequate oversight of all contractor produced work products. Software capitalization will continue to be maintained as a matter of management emphasis for future financial statements.
The carryover reportable condition "Payroll System Must Be Integrated With The General Ledger and Possess Labor Distribution Capabilities" did not contain any recommendation as it was recognized that we are continuing our implementation of a new payroll system. We would like to point out that we are currently in the process of developing a plan for an agency-wide integrated financial management system. It is anticipated that consideration of a labor cost distribution system will be part of that plan. This process and the related priorities will influence the time frame for the institution of a labor cost distribution system.
We appreciate the opportunity to respond to the draft audit report.
