OIG/97A-20 - Review of NRC's Management Directive 6.1
Contents
- Overview
- Report Synopsis
- Introduction
- Findings
- Conclusion
- Recommendation
- Agency Comments
- Objectives, Scope, and Methodology
- Major Contributors to this Report
- Glossary: Office of the Inspector General Products
Overview
Office of the Inspector General
U.S. Nuclear Regulatory Commission
Washington, D.C. 20555-0001
September 5, 1997
| Memorandum For: | L. Joseph Callan Jesse L. Funches Anthony J. Galante |
| From: | Thomas J. Barchi Assistant Inspector General for Audits |
| Subject: | Review of NRC's Management Directive 6.1 |
Attached is the Office of the Inspector General's audit report entitled, "Review of NRC's Management Directive 6.1."
On August 29, 1997, the Executive Director for Operations responded to our draft report. He agreed with our recommendations and stated corrective actions will be complete by March 2, 1998.
Please contact me on 415-5915 if we can assist you further in this matter.
Report Synopsis
Office of Management and Budget Circular A-50, "Audit Follow-up," requires each agency to establish systems to assure the prompt and proper resolution and implementation of audit recommendations. These systems shall provide for a complete record of actions taken on all recommendations.
In light of NRC's recent organizational changes and establishment of an Executive Council, we reviewed the adequacy of the agency's current directive for responding to Office of the Inspector General (OIG) audit reports and for reaching resolution on recommendations.
While the agency maintains a centralized tracking system, we found that Management Directive 6.1/Handbook needs to be updated to reflect organizational changes made by the Commission that became effective in January 1997. Specifically, OIG recommended that NRC clarify who is responsible for: (1) reviewing and responding to OIG draft audit reports and (2) resolving disagreements on audit recommendations that arise between the OIG and agency officials.
Introduction
Audit follow-up is an integral part of good management and is a shared responsibility of agency management officials and auditors. Corrective action by management on agreed upon findings and recommendations is essential to improving the effectiveness and efficiency of agency operations.
In light of NRC's recent organizational changes, we reviewed the agency's directive for responding to Office of the Inspector General (OIG) audit reports and for reaching resolution on recommendations to determine if the directive needed revision.
Background
Office of Management and Budget (OMB) Circular A-50, "Audit Follow-up," requires each agency to establish systems to assure the prompt and proper resolution and implementation of audit recommendations. These systems shall provide for a complete record of actions taken on all recommendations.
OMB Circular A-50 also requires that agency heads designate a top management official to oversee audit follow-up, including resolution and corrective action. The agency's audit follow-up official (AFO) has the responsibility for ensuring that systems of audit follow-up, resolution, and corrective action are documented and in place.
NRC's Management Directive 6.1/Handbook, "Resolution and Follow-up of Audit Recommendations," outlines specific responsibilities for senior management personnel and requires the documentation of management actions and decisions related to follow-up activity. The current Directive designates the Executive Director for Operations (EDO) to serve as the AFO. To achieve the purpose of both the OMB Circular and Management Directive 6.1/Handbook, NRC's AFO uses a centralized tracking system called the Work Item Tracking System.
In January 1997, the NRC Chairman realigned the EDO's responsibility and established a three-person Executive Council. The Executive Council is made up of the Executive Director for Operations, the Chief Information Officer (CIO), and the Chief Financial Officer. All three report directly to the Chairman.
Findings
We found that the agency's guidance for handling and resolving OIG audit recommendations is outdated and needs to be revised to reflect the current organizational structure and establishment of an Executive Council.
Management Directive 6.1/Handbook provides internal guidance to NRC personnel for implementing OMB Circular A-50. Moreover, existing guidance assigns the EDO as the AFO. As such, the EDO is currently responsible for resolving disagreements between the Deputy Executive Directors for Operations (DEDOs) and the Inspector General regarding internal audit findings and recommendations. Additionally, DEDOs are responsible for reviewing and responding to draft internal audit reports for their respective areas of responsibility. However, the EDO and DEDO's authority was documented in 1993 -- prior to the agency's January 1997 major organizational realignment.
We believe NRC's Management Directive 6.1/Handbook needs to be revised to reflect this organizational change. Specifically, organizational responsibilities and delegations of authority need to be clarified to establish who is responsible for: (1) reviewing and responding to OIG draft audit reports and (2) resolving disagreements on audit recommendations that arise between OIG and agency officials.
In our discussions with the Secretary of the Executive Council, he agreed Management Directive 6.1/Handbook needs revision to reflect current responsibilities for reviewing OIG draft reports and resolving disagreements on recommendations. He also advised us that OIG draft reports should continue to be sent to the deputy official primarily responsible for the program under audit as required by current guidance. He added, however, because a deputy position for information management (CIO organization) does not currently exist, draft reports in this area should be sent directly to the CIO for review and response. Further, the NRC Chairman should resolve disagreements on audit recommendations that arise between OIG and the CIO.
Conclusion
Management Directive 6.1/Handbook needs to be revised to reflect current organizational changes that took effect January 5, 1997. Specifically, organizational responsibilities and delegations of authority need to be clarified responsibility for: (1) reviewing and responding to OIG draft audit reports and (2) resolving disagreements on audit recommendations that arise between OIG and agency officials.
Recommendation
The EDO should revise Management Directive 6.1/Handbook to identify the NRC officials responsible for:
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Reviewing and responding to OIG draft audit reports.
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Resolving disagreements on audit recommendations that arise between OIG and agency officials.
Agency Comments
On August 29, 1997, the Executive Director for Operations responded to our draft report. He agreed with our recommendations and stated corrective actions will be complete by March 2, 1998.
Objectives, Scope, and Methodology
The objective of the Office of the Inspector General's review, in light of NRC's recent organizational changes, was to review the adequacy of the agency's current directive for responding to audit reports and for reaching resolution on recommendations.
To accomplish this objective, we reviewed NRC's policies and procedures regarding audit follow-up and the authorities and responsibilities delegated to NRC managers. We interviewed the Secretary of the Executive Council as well as other persons assigned follow-up responsibility on behalf of the audit follow-up official. We did not test the completeness or accuracy of the agency's centralized tracking system for audit recommendations.
Our review was performed at NRC Headquarters during the period July through August 1997 in accordance with generally accepted Government auditing standards.
Major Contributors to this Report
Anthony C. Lipuma
Team Leader
Michael A. Cummins
Auditor
Glossary: Office of the Inspector General Products
Investigative
1. Investigative Report - White Cover
An Investigative Report documents pertinent facts of a case and describes available evidence relevant to allegations against individuals, including aspects of an allegation not substantiated. Investigative reports do not recommend disciplinary action against individual employees. Investigative reports are sensitive documents and contain information subject to the Privacy Act restrictions. Reports are given to officials and managers who have a need to know in order to properly determine whether administrative action is warranted. The agency is expected to advise the OIG within 90 days of receiving the investigative report as to what disciplinary or other action has been taken in response to investigative report findings.
2. Event Inquiry - Green Cover
The Event Inquiry is an investigative product that documents the examination of events or agency actions that do not focus specifically on individual misconduct. These reports identify institutional weaknesses that led to or allowed a problem to occur. The agency is requested to advise the OIG of managerial initiatives taken in response to issues identified in these reports but tracking its recommendations is not required.
3. Management Implications Report (MIR) - Memorandum
MIRs provide a "ROOT CAUSE" analysis sufficient for managers to facilitate correction of problems and to avoid similar issues in the future. Agency tracking of recommendations is not required.
Audit
4. Audit Report - Blue Cover
An Audit Report is the documentation of the review, recommendations, and findings resulting from an objective assessment of a program, function, or activity. Audits follow a defined procedure that allows for agency review and comment on draft audit reports. The audit results are also reported in the OIG's "Semiannual Report" to the Congress. Tracking of audit report recommendations and agency response is required.
5. Special Evaluation Report - Burgundy Cover
A Special Evaluation Report documents the results of short-term, limited assessments. It provides an initial, quick response to a question or issue, and data to determine whether an in-depth independent audit should be planned. Agency tracking of recommendations is not required.
Regulatory
6. Regulatory Commentary - Brown Cover
Regulatory Commentary is the review of existing and proposed legislation, regulations, and policies so as to assist the agency in preventing and detecting fraud, waste, and abuse in programs and operations. Commentaries cite the IG Act as authority for the review, state the specific law, regulation or policy examined, pertinent background information considered and identifies OIG concerns, observations, and objections. Significant observations regarding action or inaction by the agency are reported in the OIG Semiannual Report to Congress. Each report indicates whether a response is required.
