NUREG-2220 Volume 6, Fiscal Year 2022 Agency Financial Report

NUREG-2220, Volume 6, Fiscal Year 2022 Agency Financial Report

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Issue date:	11/30/2022
From:	Christine Galster NRC/OCFO
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NUREG-2220 V6
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Fiscal Year 2022 Agency Financial Report UNITED STATES NUCLEAR REGULATORY COMMISSION

AVAILABILITY OF REFERENCE MATERIALS IN NRC PUBLICATIONS NRC Reference Material As of November 1999, you may electronically access NUREG-series publications and other NRC records at the NRCs Library at www.nrc.gov/reading-rm.html. Publicly released records include, to name a few, NUREG-series publications; Federal Register notices; applicant, licensee, and vendor documents and correspondence; NRC correspondence and internal memoranda; bulletins and information notices; inspection and investigative reports; licensee event reports; and Commission papers and their attachments.

NRC publications in the NUREG series, NRC regulations, and Title 10, Energy, in the Code of Federal Regulations may also be purchased from one of these two sources.

1. The Superintendent of Documents U.S. Government Publishing Office Washington, DC 20402-0001 Internet: www.bookstore.gpo.gov Telephone: (202) 512-1800 Fax: (202) 512-2104

2. The National Technical Information Service 5301 Shawnee Road Alexandria, VA 22312-0002 Internet: www.ntis.gov 1-800-553-6847 or, locally, (703) 605-6000 A single copy of each NRC draft report for comment is available free, to the extent of supply, upon written request as follows:

Address: U.S. Nuclear Regulatory Commission Office of Administration Digital Communication and Administrative Services Branch Washington, DC 20555-0001 E-mail: Reproduction.Resource@nrc.gov Facsimile: (301) 415-2289 Some publications in the NUREG series that are posted at the NRCs Web site address www.nrc.gov/reading-rm/

doc-collections/nuregs are updated periodically and may differ from the last printed version. Although references to material found on a Web site bear the date the material was accessed, the material available on the date cited may subsequently be removed from the site.

Non-NRC Reference Material Documents available from public and special technical libraries include all open literature items, such as books, journal articles, transactions, Federal Register notices, Federal and State legislation, and congressional reports.

Such documents as theses, dissertations, foreign reports and translations, and non-NRC conference proceedings may be purchased from their sponsoring organization.

Copies of industry codes and standards used in a substantive manner in the NRC regulatory process are maintained at The NRC Technical Library Two White Flint North 11545 Rockville Pike Rockville, MD 20852-2738 These standards are available in the library for reference use by the public. Codes and standards are usually copyrighted and may be purchased from the originating organization or, if they are American National Standards, from American National Standards Institute 11 West 42nd Street New York, NY 10036-8002 Internet: www.ansi.org Telephone: (212) 642-4900 Legally binding regulatory requirements are stated only in laws; NRC regulations; licenses, including technical specifications; or orders, not in NUREG-series publications.

The views expressed in contractor prepared publications in this series are not necessarily those of the NRC.

The NUREG series comprises (1) technical and administrative reports and books prepared by the staff (NUREG-XXXX) or agency contractors (NUREG/CR-XXXX),

(2) proceedings of conferences (NUREG/CP-XXXX),

(3) reports resulting from international agreements (NUREG/IA-XXXX), (4) brochures (NUREG/BR-XXXX),

and (5) compilations of legal decisions and orders of the Commission and Atomic and Safety Licensing Boards and of Directors decisions under Section 2. 206 of the NRCs regulations (NUREG-0750).

DISCLAIMER: This report was prepared as an account of work sponsored by an agency of the U.S. Government.

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

About This Report The Agency Financial Report (AFR) for the U.S. Nuclear Regulatory Commission (NRC) provides financial and summary performance information in accordance with Office of Management and Budget Circular A-136, Financial Reporting Requirements. This AFR is an account of the agencys stewardship of its resources during fiscal year 2022, which covers the period from October 1, 2021, to September 30, 2022. The report is organized into the following three chapters:

Chapter 1: Managements Discussion and Analysis This chapter provides an overview of the NRC financial information and summary-level program performance information. It includes an overview of program performance, current status of systems, internal controls, financial management, and the FY 2022 financial statement analysis.

Chapter 2: Financial Statements and Auditors Report This chapter contains details on the NRCs finances for FY 2022. It includes a message from the Chief Financial Officer, the financial statements, and accompanying notes, required supplementary information, and the independent auditors report.

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

NRC Reports on the Agency Web Site:

The Annual Performance Plan is reflected in the NRCs FY 2023 Congressional Budget Justification and is posted on the NRCs Web site at https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1100/.

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

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

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

The document NUREG-2220, Volume 6, has been reproduced from the best available copy.

FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment iii

Table of Contents FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment v

The Commission........................................................................................................................ vi A Message from the Chair..................................................................................................... vii Chapter 1: Managements Discussion and Analysis........................................................1 Mission - Vision - Principles of Good Regulation...2 About the NRC........................................................................................................................................3 The NRCs Organizational Structure....................................................................................................4 The NRCs Regulatory Activities..........................................................................................................5 The Nuclear Industry..............................................................................................................................6 Future Challenges............................................................................................................................ 10 Source of Funds................................................................................................................................... 12 Analysis of the Financial Statements................................................................................................. 13 Management Assurances, Systems, Controls, and Legal Compliance....................................... 18 Program Performance Overview........................................................................................................ 25 Chapter 2: Financial Statements and Auditors Report................................................ 29 A Message from the Chief Financial Officer..................................................................................... 30 Financial Statements............................................................................................................................ 31 Notes to the Financial Statements..................................................................................................... 35 Required Supplementary Information................................................................................................ 59 Inspector Generals Letter Transmitting Independent Auditors Report........................................ 64 Independent Auditors Report............................................................................................................. 67 Managements Response to the Independent Auditors Report.................................................... 75 Chapter 3: Other Information............................................................................................... 77 Inspector Generals Assessment of the Most Serious Management and Performance Challenges Facing the NRC..78 Summary of Financial Statement Audit and Management Assurances..................................... 110 Payment Integrity............................................................................................................................... 111 Fraud Reduction Report................................................................................................................... 112 Real Property...................................................................................................................................... 113 Civil Monetary Penalty Adjustment for Inflation............................................................................. 114 Grants Oversight and New Efficiency Act Requirements............................................................. 115 Climate-Related Financial Risk 115 Acronyms............................................................................................................................................ 116

FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment vi The authority of the U.S. Nuclear Regulatory Commission is vested in a Commission of five members, with one member designated by the President of the United States to serve as Chair. With the advice and consent of the Senate, the President appoints each member to serve a 5-year term. The Chair is the chief executive officer and official spokesperson for the Commission. The Commission as a whole formulates policies and regulations governing the safety and security of nuclear reactors and materials, issues orders to licensees, and adjudicates legal matters brought before it. The Executive Director for Operations carries out program policies and decisions made by the Commission.

Chair Christopher T. Hanson Commissioner Jeff Baran Commissioner David A. Wright Commissioner Annie Caputo Commissioner Bradley Crowell

FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment vii A Message from the Chair The U.S. Nuclear Regulatory Commission (NRC) is pleased to present its fiscal year 2022 Agency Financial Report (AFR).

This AFR details the NRC's continuing success in achieving its mission, which is to license and regulate the Nation's civilian use of radioactive materials in a manner that provides reasonable assurance of adequate protection of public health and safety and promotes the common defense and security. The AFR provides key financial information and a summary of program performance to the President, Congress, and the American people, detailing how we used our resources during FY 2022.

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

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

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

Based on assessments the agency conducted consistent with the Federal Managers' Financial Integrity Act of 1982 (Integrity Act), I have concluded the NRC is able to provide an unmodified statement of assurance that the internal control and financial management systems meet the objectives of the Integrity Act. The FY 2022 AFR includes the results of the independent audit of the NRC's FY 2022 financial statements, which I am pleased to announce is an unmodified opinion. There is reasonable assurance the agency is in substantial compliance with all requirements pertaining to internal control, including laws, regulations, program management, resource management, and information technology. The financial and summary performance data published in this report are complete, accurate, reliable, and timely, in accordance with the Reports Consolidation Act of 2000 and the Office of Management and Budget Circular A-136, "Financial Reporting Requirements." Additionally, I have concluded that the agency is in substantial compliance with the Federal Financial Management Improvement Act of 1996 (FFMIA), based on the NRC's application of the FFMIA risk model.

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

Christopher T. Hanson Chair

Chapter 1: Managements Discussion and Analysis

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 2

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

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

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

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

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 3

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

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

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 4

The NRCs Organizational Structure

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 5

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

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

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

The NRC regulates 92 commercial nuclear power reactors operating in 28 states at 54 sites; 31 research and test reactors as part of nonpower production and utilization facilities; 25 nuclear reactors in various stages of decommissioning; 84 independent spent fuel storage installations; 9 licensed active fuel cycle facilities; 3 uranium recovery sites; and more than 2,100 licenses for medical, academic, industrial, and general uses of nuclear materials. The agency conducts approximately 600 to 800 safety and security inspections of its nuclear materials licensees annually.

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

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 6

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

Fuel Cycle Facilities The production of nuclear fuel begins at uranium mines where milled uranium ore is used to produce a uranium concentrate called yellowcake. At a special facility, the yellowcake is converted into uranium hexafluoride (UF6) gas and loaded into cylinders. The cylinders are sent to a uranium enrichment facility, where the concentration of the isotope uranium-235 is increased for use as reactor fuel. The enriched uranium is then converted into oxide powder, fabricated into fuel pellets (each about the size of a fingertip), loaded into metal fuel rods about 14 feet (4.3 meters) long and bundled into reactor fuel fabrication facility. Assemblies are then transported to nuclear power plants, non-power research reactor facilities, and naval propulsion reactors for use as fuel (see Figure 3). The NRC licenses all commercial uranium conversion, enrichment, and fuel fabrication facilities in the United States. Because they handle extremely hazardous material, these facilities take special precautions to prevent theft, diversion, and dangerous exposures.

Figure 3 Simplified Fuel Fabrication Process Figure 2 The Nuclear Fuel Cycle

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 7

Reactors Nuclear power reactors licensed by the NRC generate approximately 19 percent of the U.S.

gross electricity needs, or about 778 billion kilowatt hours annually. To generate electricity, power plants change one form of energy into another. Electrical generating plants convert heat energy, the kinetic energy of wind or falling water, or solar energy into electricity. Other types of heat-conversion plants burn coal, oil, or gas to produce heat energy that is then used to produce electricity. Nuclear energy cannot be seen. Heat energy is not produced by the burning of fuel in the usual sense. Rather, energy is given off by the nuclear fuel as certain types of atoms split in a process called nuclear fission. This energy is in the form of fast-moving particles and radiation. As the particles and radiation move through the fuel and surrounding water, the energy is converted into heat, which generates electricity. The radiation energy can be hazardous, and facilities take special precautions at nuclear power plants to protect people and the environment from these hazards (see Figures 4 and 5).

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

Figure 4 The Boiling-Water Reactor Figure 5 The Pressurized-Water Reactor

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 8

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

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

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

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

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

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

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 9

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

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

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

Spent Fuel Dry Cask Storage

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 10 Future Challenges Many challenges and external factors influence the NRCs ability to achieve its strategic goals and associated objectives. The most significant challenges include industry operating experience, national priorities, a potential significant incident at a domestic or non-U.S. nuclear facility, the security and threat environment, legislation, Federal court litigation, market forces, new technologies, and resource availability. The NRC strives to respond promptly to shifts in agency priorities necessitated by these challenges. The nuclear industry has maintained an excellent safety record at nuclear power plants over decades as both the nuclear industry and the NRC have gained substantial experience in the operation and maintenance of nuclear power facilities. Maintaining this excellent safety record requires that the agency take proactive measures to ensure the accomplishment of its mission. The performance and dedication of the NRC employees in achieving the agency's safety and security goals is evident by the efforts shown during the coronavirus (COVID-19) Pandemic. COVID-19 has had minimum effect on NRC (i.e., increased telework). The sections below highlight the key challenges the agency faces.

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

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

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

Incidents The U.S. national security landscape will continue to be dynamic, encompassing a full range of threats and incidents, including the identification of and protection against, cyber and physical security threats. As a result, the regulatory approach needed to ensure the safety and security of nuclear materials and infrastructure may need to evolve in response to such incidents and threats. A significant incident at a nuclear facility, whether caused by adversaries, natural disaster, or other factors, could prompt the agency to reassess its safety and security requirements and could impact the agencys focus. The NRC must anticipate and be prepared for an operational and regulatory response to threats and incidents involving nuclear infrastructure. An incident at a non-U.S. facility could also cause the NRC to reassess its safety and security requirements.

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 11 Legislative and Executive Branch Actions Congressional or Executive Branch actions may affect the NRCs regulatory responsibilities, and strategies to comply with new direction would need to be developed.

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

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

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

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 12 Source of Funds Appropriations The NRC receives two appropriations: (1) Salaries and Expenses and (2) the Office of the Inspector General (OIG). For FY 2022, the NRC received total appropriations of

$889.7 million, which included $875.9 million for the Salaries and Expenses appropriation and

$13.8 million for the OIG. The NRCs Salaries and Expenses appropriation increased $45 million compared to the prior year. The appropriation for the OIG increased by $0.3 million.

The Salaries and Expenses appropriation is available until expended. This includes a provision that not more than $9.5 million be made available for the Office of the Commission; these funds are available for obligation by the NRC through September 30, 2023. After that date, the remaining funds that have not been obligated for the Office of the Commission are available until expended as part of the Salaries and Expenses appropriation. On May 21, 2022, NRC received additional appropriation of $2 million to NRCs Salaries and Expenses account for the specific purpose of providing regulatory and technical support related to the situation in Ukraine, available until expended.

The OIG appropriation is available to obligate for 2 years (FY 2022 and FY 2023) through September 30, 2023. This 2-year funding includes $1.2 million for Inspector General services provided to the Defense Nuclear Facilities Safety Board (DNFSB).

Total Budget Authority The total budget authority available for the NRC to obligate in FY 2022 was

$1019.9 million and included $889.7 million for current year appropriations,

$100.7 million from prior-year appropriations,

$24.1 million from recoveries of prior-year obligations, and $5.4 million spending authority from offsetting collections.

Funds available to obligate in FY 2022 increased from the FY 2021 amount of

$982.7 million by $37.2 million, primarily as a result of an increase of $45.3 million in appropriations, offset by decrease of $9 million in unobligated balances from prior-year budget authority, increase of $1.6 million in recoveries of prior-year obligations, and a decrease of $0.7 million in spending authority from offsetting collections.

Table 1 Total Budget Authority (IN MILLIONS)

For the fiscal years ended September 30, 2022 2021 Inc/(Dec)

Appropriations Salaries and Expenses

$875.9

$830.9

$45.0 Office of the Inspector General 13.8 13.5 0.3 Total Appropriations 889.7 844.4 45.3 Other Budget Authority Unobligated balance from prior-year budget authority, brought forward October 1 100.7 109.7 (9.0)

Recoveries of prior year obligations 24.1 22.5 1.6 Spending Authority from Offsetting Collections 5.4 6.1 (0.7)

Total Other Budget Authority 130.2 138.3 (8.1)

Total NRC Budget Authority

$1,019.9

$982.7

$37.2

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 13 Fee Collection Offset of Appropriations Nuclear Energy Innovation Table 2 Sources of Funds for Appropriations (IN MILLIONS) and Modernization Act (NEIMA), beginning with FY 2021, requires the NRC to recover, to the maximum extent practicable, approximately 100 percent of its annual budget less certain amounts excluded from this fee recovery requirement.

Funds equal to fees collected are transferred to the NRCs two appropriations, and the U.S.

Department of the Treasury (Treasury) issues a negative warrant for the amount of the fee transfer to reduce the NRCs appropriations.

In FY 2022, the NRC collected $739.3 and the net received from the Treasury general fund was

$152.4 million (see Table 2). The fees collected during FY 2021 and transferred to the Treasury totaled $714.6 million.

Analysis of the Financial Statements Chapter 2 of this AFR presents the NRCs financial statements, accompanying notes, and required supplementary information, along with the report of the independent auditors. The independent auditors issued an unmodified opinion on the financial statements and an unmodified opinion on internal controls over financial reporting for the FY ended 2022.

Additionally, the independent auditors found no reportable instances of noncompliance with laws and regulations.

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

We present the following analysis of the financial statements and significant changes (see Table 3).

Treasury General Fund 152.4 129.8 22.6 Total Sources of Funds

$889.7

$844.4

$45.3 For the fiscal years ended September 30, 2022 2021 Inc/(Dec)

Reactor Fees Collected

$670.9

$645.0

$25.9 Materials Fees Collected 66.4 69.6 (3.2)

Nuclear Waste Fund 0

0 0

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 14 Table 3 Key Measures (IN MILLIONS)

For the fiscal years ended September 30, FY 2022 FY 2021 Inc/(Dec)

Fund Balance with Treasury

$384.3

$376.8

$ 7.5 2.0%

58.1 64.7 (6.6)

(10.2%)

Accounts Receivable, Net Advances and Prepayments 4.3 3.8 0.5 13.2%

Property & Equipment, Net 32.3 37.1 (4.8)

(12.9%)

Total Assets

$479.0

$482.4

$(3.4)

(0.7%)

Liabilities:

$31.7

$29.7

$2.0 6.7%

Accounts Payable Federal Employee Benefits 50.5 54.3 (3.8)

(7.0%)

Other Liabilities 26.3 43.3 (17.0)

(39.3%)

Total Liabilities

$108.5

$127.3

$(18.8)

(14.8%)

Net Position (Assets minus Liabilities)

$370.5

$355.1

$15.4 4.3%

COST BY PROGRAMS Nuclear Reactor Safety Nuclear Materials and Waste Safety

$699.1

$692.8

$6.3 0.9%

196.6 201.4 (4.8)

(2.4%)

LESS: Earned Revenue (License Fees) 737.3 711.9 25.4 3.6%

Net Cost of Operations

$158.4

$182.2

$(23.8)

(13.1%)

Assets:

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 15 Analysis of the Balance Sheet Assets. The NRCs total assets were $479.0 million as of September 30, 2022, representing a decrease of $3.4 million from the fiscal year ended September 30, 2021. Changes in major categories include increases of $7.5 million in the Fund Balance with Treasury and $0.5 million in Advances and Prepayments and decreases of $6.6 million in Accounts Receivable, net and

$4.8 million in Property and Equipment, net.

The Fund Balance with Treasury was $384.3 million as of September 30, 2022, which accounts for 80 percent of total assets. This account consists of cash or cash equivalents from appropriated funds, license fee collections, and other funds maintained at the U.S. Treasury to pay current liabilities and to finance authorized purchase commitments. The Fund Balance with Treasury can vary largely due to timing of disbursing payments and receiving collections as well as changes in the appropriations.

Accounts Receivable, Net consists mainly of amounts that other Federal agencies and the public owe to the NRC for license fees. As of September 30, 2022, Accounts Receivable, Net was

$58.1 million, which includes an offsetting allowance for doubtful accounts of $2.0 million. This represents a net decrease in Accounts Receivable, net of $6.6 million from the FY 2021 amount of $64.7 million. The decrease is primarily due to reductions in unbilled fees receivable of $9.3 million and miscellaneous receivables with the public of $0.3 million offset by increases in intragovernmental billed fees receivable of $1.6 million and billed fees receivable of $0.7 million. In addition, there was a decrease in the allowance of doubtful accounts of $0.8 million offset to accounts receivable.

Property and Equipment, Net consists primarily of office equipment, leasehold improvements, nuclear reactor simulators, and computer hardware and software. The NRC has no real property. The land and buildings in which the NRC operates are leased from the U.S. General Services Administration (GSA). At the end of FY 2022, Property and Equipment, Net was $32.3 million, a $4.8 million decrease from the FY 2021 amount of

$37.1 million. The decrease primarily results from the amortization expense of $9.2 million recognized on property and the removal from the NRC books of $2.7 million of property; offset by an increase in capitalized acquisitions $7.2 million.

Liabilities. Total Liabilities were $108.5 million as of September 30, 2022, representing a decrease of $18.8 million from the FY 2021 balance of $127.3 million. Liabilities consist primarily of accounts payable to other Federal agencies and the public, grants payable, accrued salaries and benefits, and other accrued employee benefits.

Total Liabilities include liabilities not covered by budgetary resources, which represent expenses recognized in the financial statements that will be paid from future appropriations. The liabilities not covered by budgetary resources are $57.1 million for FY 2022, compared to

$60.2 million for end of FY 2021, a $3.1 million decrease. For FY 2022, the liabilities not covered by budgetary resources represent 52.6 percent of Total Liabilities and mainly encompasses

$46.6 million in unfunded accrued annual leave that has been earned but not yet taken, $3.6 million as an actuarial estimate of accrued future workers compensation expenses included in

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 16 Federal employee benefits, $0.8 million in accrued workers compensation included in Other Liabilities, and a $5.6 million accrual to GSA for future annual rent increases on the rent of NRC office buildings.

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

$370.5 million as of September 30, 2022, an increase of $15.4 million from the FY 2021 year end balance. Net Position comprises two components: Unexpended Appropriations and Cumulative Results of Operations which is the cumulative excess of financing sources over expenses. The analysis of the Statement of Changes in Net Position provides additional information on the significant changes to Net Position for FY 2022 year-end.

Analysis of the Statement of Net Cost The Statement of Net Cost presents the gross cost of the NRCs two major programs (Nuclear Reactor Safety and Nuclear Materials and Waste Safety) as identified in the NRC Annual Performance Plan, offset by earned revenue. The purpose of this statement is to link program performance to the cost of programs. The NRCs net cost of operations for the year ended September 30, 2022, was $158.4 million, representing a decrease of $23.8 million compared to the FY 2021 net cost of $182.2 million. This represents an increase in gross costs of $1.6 million and an increase in earned revenue of $25.4 million.

Gross Cost. The NRCs total gross costs were $895.7 million for FY 2022, an increase of

$1.6 million from the prior-year amount of $894.1 million. The gross costs in FY 2022 for the Nuclear Reactor Safety program were $699.1 million compared to FY 2021 gross costs of

$692.8 million, an increase of $6.3 million. The gross costs in FY 2022 for the Nuclear Materials and Waste Safety program were $196.6 million compared to FY 2021 gross costs of

$201.4 million, a decrease of $4.8 million. Thus, the gross cost of both programs increased a total of $1.6 million. The increase primarily results from the Nuclear Reactor Safety Program costs with the public increase of $11.4 million offset by decreases in the Nuclear Reactor Safety Program intragovernmental costs of $5.0 million and Nuclear Materials Safety Program intragovernmental costs of $2.0 million and costs with the public of $2.8 million.

Earned Revenue. Total earned revenue for FY 2022 was $737.3 million, an increase of

$25.4 million from the FY 2021 earned revenue of $711.9 million. Revenue for the Nuclear Reactor Safety program in FY 2022 was $670.9 million compared to $644.9 million in FY 2021, an increase of $26.0 million. Revenue from the Nuclear Materials and Waste Safety program in FY 2022 was $66.4 million compared to $67.0 million in FY 2021, a decrease of $0.6 million.

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

The NRC is required to collect approximately 100 percent of its annual budget, less certain amounts excluded from this fee recovery requirement, through license fee billing. The agency collects fees for reactor and materials licensing and inspections in accordance with Title 10 of the Code of Federal Regulations (10 CFR) Part 170, Fees for Facilities, Materials, Import and Export Licenses, and Other Regulatory Services under the Atomic Energy Act of 1954, as amended, at https://www.nrc.gov/reading-rm/doc-collections/cfr/part170/, and 10 CFR Part 171, Annual Fees for Reactor Licenses and Fuel Cycle Licenses and Materials Licenses, Including Holders of Certificates of Compliance, Registrations, and Quality Assurance Program Approvals and Government Agencies Licensed by the NRC, at https://www.nrc.gov/reading-rm/doc-collections/cfr/part171/.

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 17 Analysis of the Statement of Changes in Net Position The Statement of Changes in Net Position reports the change in net position for the reporting period. Net position is affected by the changes in two components: (1) Cumulative Results of Operations and (2) Unexpended Appropriations. In FY 2022, the NRC had an increase in Net Position of $15.4 million resulting from a decrease in Cumulative Results of Operations of

$8.1 million, and an increase of $23.5 million in Unexpended Appropriations.

The change in Unexpended Appropriations results from appropriations received, net of license fee collections, being more or less than the appropriations used to finance the NRC operations.

The increase in FY 2022 Unexpended Appropriations of $23.5 million resulted from a decrease in the beginning balance of $10.5 million and an increase of $20.8 million appropriations received, net of license fees collected and a decrease of $14.0 million in appropriations used to finance the NRC operations. The decrease in appropriations received, net of license fees collected, resulted from appropriations received for FY 2022 of $889.7 million, reduced by current year license fee collections of $739.1 million, as compared to appropriations received in FY 2021 of $844.4 million, reduced by FY 2021 license fee collections of $714.9 million.

Analysis of the Statement of Budgetary Resources The Statement of Budgetary Resources (SBR) provides information on budgetary resources available to the NRC and their status at the end of the period. In FY 2022, the Total Budgetary Resources of $995.7 million were available. This was $35.6 million more than the

$960.1 million available for FY 2021. The major component contributing to the increase in Total Budgetary Resources resulted from a $45.3 million increase in appropriations, offset by a decrease of $9.0 million in the unobligated balance brought forward, net on October 1, and a decrease of $0.6 million in spending authority from offsetting collections.

The SBR accounts for operational activities funded by NRCs budgetary resources during the fiscal year. The NRCs obligations for FY 2022 were $890.7 million, an increase of $7.6 million from the prior year amount of $883.1 million. The increase was due to $10.8 million for contract support and $1.3 million in salaries and benefits; offset in $4.5 million for property and equipment.

The SBR also accounts for the funds that were not obligated and used for operations during the fiscal year. The balance of unobligated budgetary resources at the end of FY 2022 was

$105.1 million, compared to $77.1 million for the prior year. The increase in appropriations received with the increase in current year obligations are the primary contributors resulting in the increase of $28.0 million in total budgetary resources not obligated at the end of the fiscal year.

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 18 Management Assurances, Systems, Controls, and Legal Compliance Federal Managers Financial Integrity Act of 1982 The Federal Managers Financial Integrity Act of 1982 (FMFIA or Integrity Act) requires that Federal agencies establish effective internal control and provide reasonable assurance that the following objectives are being met:

Program Management - Programs are achieving their intended results, and are protected from waste, fraud, abuse, and mismanagement; Resource Management - Resources are being used consistently with the agencys mission; IT Systems - Information systems are authorized and appropriately secured; Laws and Regulations - Laws and regulations are followed; and Communication - Reliable and timely information is obtained, maintained, reported, and used for sound decision-making.

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

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

OMB Circular A-123, Managements Responsibility for Enterprise Risk Management and Internal Control, provides Federal agencies guidance on how to comply with the Integrity Act and requires Federal managers to effectively manage risks that may impact agencies in meeting their strategic objectives. Each year NRC has continually matured its ERM Framework. The NRCs ERM Framework meets OMB requirements.

In FY 2021, the OIG conducted an audit of the NRCs implementation of the ERM Process.

The report was issued in September 2021 and included eight recommendations to improve the overall alignment of the NRCs ERM to the guidance provided in OMB Circular A-123.

As of September 30, 2022, all the audit recommendations have either been deemed resolved by the OIG or are actively being implemented by the NRC.

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 19 Figure 6 The NRCs Integrity Act Governance Framework Under the NRCs FMFIA Governance Framework (see Figure 6), reading from right to left: the Chief Financial Officer (CFO) is responsible for ensuring that the agency complies with the Federal Financial Management Improvement Act of 1996 (Improvement Act), and Section 4 of the Integrity Act, Financial Systems. The Senior Assessment Team (SAT), chaired by the CFO, is responsible for ensuring that the agency complies with Appendix A of OMB Circular A-123, Management of Reporting and Data Integrity Risk. The Executive Committee on Enterprise Risk Management (ECERM), co-chaired by the CFO and the Executive Director for Operations, is responsible for ensuring that the agencys internal control over programmatic operations complies with the Integrity Act.

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

The ECERM assessed the agencys programmatic operations, financial systems, and internal control over reporting and found there is reasonable assurance that NRC internal control is achieving its intended results. The ECERM voted to recommend that the Chair sign the agencys Federal Managers Financial Integrity Act Statement (see Figure 7).

Integrity Act Results As required by Section 2 of the Integrity Act and under the guidance established in OMB Circular A-123, all NRC business line leads and corporate support product lines certified that, as of September 30, 2022, there was reasonable assurance that internal control was in place producing intended results. Based on managements certification of reasonable assurance, the NRC can provide a statement of assurance that its internal control met the objectives of the Integrity Act and conforms to Government-wide standards.

Figure 6 The NRCs FMFIA Governance Framework

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 20 Figure 7 FY 2022 Federal Managers Financial Integrity Act Statement

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 21 Office of Management and Budget Circular A-123, Managements Responsibility for Enterprise Risk Management and Internal Control Management of Reporting and Data Integrity Risk (Appendix A)

The NRC conducted its assessment of the effectiveness of internal control over reporting, which includes safeguarding of assets and compliance with applicable laws and regulations, in accordance with the requirements of Appendix A of OMB Circular A-123. Based on the results of the evaluation which included an analysis of NRCs Data Quality Plan, the NRC can provide reasonable assurance that its internal control over reporting as of September 30, 2022, was operating effectively, and no material weaknesses were found in the design or operation of the internal control over reporting.

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

The Government Charge Card Abuse Prevention Act (Charge Card Act) of 2012 establishes reporting and audit requirement responsibilities for executive branch agencies. NRCs Office of Administration has procedures in place for use of Purchase Cards. The OCFO also has procedures in place for the use of the travel charge card. Managed by the OCFO, NRC's Travel Charge Card Management Plan was last updated in January 2019. NRC has reviewed the Purchase and Travel Card programs for compliance with the Charge Card Act and can provide reasonable assurance that appropriate policies and controls are in place to mitigate the risk of fraud and inappropriate charge card practices in accordance with OMB Circular A-123, Appendix B.

Requirements for Payment Integrity Improvement (Appendix C)

In accordance with the Payment Integrity Information Act of 2019 (PIIA), the NRC conducts a risk assessment to determine whether any programs were susceptible to making significant improper payments on a triennial basis. The NRC conducted the latest risk assessment in FY 2020.

The FY 2020 risk assessment did not identify any programs that were susceptible to making significant improper payments. Although the results of the FY 2020 risk assessment identified programs as low risk, the NRC continues to monitor its payment processes, in addition to conducting periodic reviews of key controls for PIIA programs identified by management. The NRC will continue to conduct a risk assessment on a triennial basis, in accordance with PIIA and OMB guidance. The next NRC PIIA risk assessment will take place in FY 2023. In addition, the NRC will conduct additional risk assessments, as needed, if there are material changes in programs operations or if the NRC establishes new programs.

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

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 22 Federal Financial Management Improvement Act of 1996 The Federal Financial Management Improvement Act of 1996 (FFMIA or Improvement Act) requires each agency to implement and maintain systems that comply substantially with:

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

Improvement Act Results In April 2022, the CFO successfully completed an upgrade to the agencys core financial system, Financial Accounting and Integrated Management Information System (FAIMIS), to meet GSAs Unique Entity Identifier (UEI) mandate and lay the groundwork for incorporating functionality related to Treasurys G-Invoicing mandate.

The CFO also worked through the requirements, configuration, development and testing phases of enabling G-Invoicing functionality in FAIMIS, allowing the core financial system to meet Treasurys mandated date of October,1, 2022.

The CFO reviewed audit reports and other sources of information and, as of September 30, 2022, can provide reasonable assurance that NRCs financial systems substantially comply with applicable Federal accounting standards as required by the Improvement Act.

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

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

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

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

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

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

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 23 The DATA Act requires that the OIG audit DATA Act compliance every 2 years. The results of the OIG audit of FY 2021 data issued in October 2021 reported that the agency submitted generally complete, accurate, and timely data that conformed to OMB and Treasury requirements. However, the OIG audit identified minor errors in record-level data linkages between Files C and D1, which were also identified by NRC and some accuracy errors in record-level data elements tested for completeness, accuracy, and timeliness. Overall, the quality of NRCs data was excellent. All of OIGs recommendations from that audit have been implemented.

In order to address the reporting requirements of the Federal Funding Accountability and Transparency Act (FFATA) and guidance released in OMB Memorandum M-22-02, DATA Act Information Model Schema (DAIMS), version 2.2 was implemented in June 2022. This version builds on the foundation set by OMB M-20-21, as it relates to the CARES Act.

Increase availability, accuracy, and usefulness of online information regarding Federal spending.

Provides a more detailed view of Federal spending linked to Federal account and award-level information.

Supports monthly Data Act submission and publishing to USASpending.gov.

Supports quarterly certification for agencies who report monthly.

NRC successfully implemented the required system changes to our acquisition system, our core financial system and reporting system on time. Also, NRC submitted and published monthly files which were certified on a quarterly basis.

Financial Management Systems Strategies The OCFO continues to explore ways in which automation can result in increased efficiencies within the financial management business processes, specifically in the areas of transaction processing and data reconciliation. OCFO identified a key business process related to the movement of de-obligated prior year funds that utilized a heavily manual process and worked through developing a solution that automated a significant portion of the process.

OCFO also began the discovery phase of two additional automation initiatives, including the configuration of automated general tie-point reconciliation within FAIMIS and automating the reconciliation of Central Accounting Reporting System (CARS) transactions with FAIMIS transactions. Both initiatives will be pursued in FY2023 and should result in tangible benefits and business efficiencies.

In addition to focusing on areas ripe for automation, the OCFO also looks to increase cost savings by moving the remaining applications that are currently hosted on-premises onto a Cloud infrastructure, aligning with the agencys enterprise architecture strategy.

Prompt Payment The Prompt Payment Act of 1982, as amended, requires Federal agencies to make timely payments to vendors for supplies and services, to pay interest penalties when payments are made after the due date, and to take cash discounts when they are economically justified. In FY 2022, the NRC paid 98.75 percent of the 4,786 invoices subject to the Prompt Payment Act on time.

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 24 Debt Collection The Debt Collection Improvement Act of 1996 enhances the ability of the Federal Government to service and collect debts. The agencys goal is to maintain the level of delinquent debt owed to the NRC at year-end to less than 1 percent of its annual billings. The NRC met this goal. At the end of FY 2022, delinquent debt was $5.2 million or less than 1 percent of annual billings.

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

Biennial Review of User Fees The Chief Financial Officers Act of 1990 requires agencies to conduct a biennial review of fees, royalties, rents, and other charges imposed by agencies and to make revisions to cover program and administrative costs incurred. The NRC conducted the following reviews in FY 2022:

Small Materials - Completed August 2022 On June 22, 2022, the NRC issued a final rule in the Federal Register (FR) amending the licensing, inspection, special project, and annual fees charged to its applicants and licensees. These amendments are necessary to implement NEIMA, which requires the NRC to recover, to the maximum extent practicable, approximately 100 percent of its annual budget less certain amounts excluded from this fee-recovery requirement.

The FY 2022 rule can be found at https://www.federalregister.gov/documents/2022/06/22/2022-13169/revision-of-fee-schedules-fee-recovery-for-fiscal-year-2022.

By law, the following appropriated amounts are excluded from the fee-recovery requirement:

any type of fee-relief activity as identified by the Commission, generic homeland security activities, waste incidental to reprocessing activities, Nuclear Waste Fund (NWF) activities, advanced reactor regulatory infrastructure activities, Inspector General services for the Defense Nuclear Facilities Safety Board (DNFSB), research and development at universities in areas relevant to the NRCs mission, and a nuclear science and engineering grant program.

Based on the Consolidated Appropriations Act, 2022, the final rule reflects a budget authority in the amount of $ 887.7 million. On May 21, 2022, NRC received additional appropriation of $2 million to NRCs Salaries and Expenses account for support related to the situation in Ukraine, not reflected in final rule. After accounting for the fee-recovery exclusions and net billing adjustments, the NRC must recover approximately $752.7 million in fees in FY 2022.

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

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 25 Program Performance Overview The NRCs mission is to license and regulate the Nations civilian use of radioactive materials to provide reasonable assurance of adequate protection of public health and safety, to promote the common defense and security and to protect the environment. Therefore, the trends for progress on the agencys strategic goals and objectives are to be at either zero or very low levels. The agency works to prevent or minimize the outcomes tracked by the safety and security performance indicators.

The NRC carries out its safety and security activities through two major programs: Nuclear Reactor Safety, consisting of the Operating Reactors and New Reactors business lines; and, Nuclear Materials and Waste Safety, consisting of the Fuel Facilities, Nuclear Materials Users, Decommissioning and Low-Level Waste, and Spent Fuel Storage and Transportation business lines. The agency accomplishes its mission to provide reasonable assurance of adequate protection for public health and safety through regulatory activities that include licensing, oversight, and rulemaking. The NRC oversees licensees through inspection, assessment, investigation, and enforcement actions. Investigations and enforcement actions are a subset of oversight in cases of suspected or proven instances of noncompliance with safety or security regulations. The NRCs event response activities prepare for and respond to emergencies involving radioactive materials. The following narrative highlights the agencys progress during FY 2022 in achieving its Safety and Security goals.

Strategic Goals and Objectives The NRCs FY 2022-2026 Strategic Plan describes the agencys mission, goals, and strategies and can be found at https://www.nrc.gov/reading-rm/doc-collections/nuregs/staff/sr1614/v8/. Each strategic goal has supporting objectives and strategies that reflect the desired outcome and the NRCs role in achieving it. The NRC has established three strategic goals that are supported by eight strategic objectives. The Annual Performance Plan and Report is expected to be published around February annually. It will be posted to NRCs Our Plans, Budget, and Performance webpage.

STRATEGIC GOAL 1: ENSURE THE SAFE AND SECURE USE OF RADIOACTIVE MATERIALS Safety and Security Objective 1.1:

Provide quality licensing and oversight of nuclear facilities and radioactive materials.

Safety and Security Objective 1.2:

Ensure regulatory requirements adequately support the safe and secure use of radioactive materials.

Safety and Security Objective 1.3:

Maintain emergency preparedness and response capabilities for NRC and NRC-licensed facilities.

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 26 STRATEGIC GOAL 2: CONTINUE TO FOSTER A HEALTHY ORGANIZATION Organizational Health Objective 2.1:

Foster an organizational culture in which the workforce is engaged, adaptable, receptive to change, and makes data-driven and evidence-based decisions.

Organizational Health Objective 2.2:

Enable the workforce to carry out the agencys mission by leveraging modern technology, innovation, and knowledge management to support data-driven decisions in an evolving regulatory landscape.

Organizational Health Objective 2.3:

Attract, develop, and maintain a high-performing, diverse, engaged, and flexible workforce with the skills needed to carry out the NRCs mission now and in the future.

STRATEGIC GOAL 3: INSPIRE STAKEHOLDER CONFIDENCE IN THE NRC Stakeholder Confidence Objective 3.1:

Engage stakeholders in NRC activities in an effective and transparent manner.

Stakeholder Confidence Objective 3.2:

Uphold an NRC decision-making process that is data-driven and evidence-based while ensuring information is available and accessible to interested stakeholders.

Strategic Goals and Performance Measures In conjunction with the development of the agencys Strategic Plan for FYs 2022 - 2026, the NRC developed performance goals and indicators for each strategic objective. Performance goals and indicators for Strategic Goal 1, which focuses on safety and security, uses output-based performance indicators, which describe the level of product or activity that will be provided over time. The NRC works to prevent or minimize the outcomes tracked by the safety and security performance indicators.

Therefore, performance indicators demonstrating progress on meeting the agencys strategic goal and objectives for safety and security are to be at either zero or very low levels.

Strategic Goals 2 and 3 focus on organizational health and stakeholder confidence, respectively.

Performance indicators for these goals use outcome-based performance indicators, which describe the progress toward achieving the intended result.

For both output-and outcome-based performance indicators, the NRCs internal Performance Improvement Panel, consisting of agency senior leaders, develops performance indicators and identifies specific measures, milestones, or deliverables to be applied on an annual basis. This approach provides flexibility to take into consideration agency activities or initiatives as well as findings from agency priority questions included in the Evidence-Building Plan or significant program evaluations included in the Annual Evaluation Plan. The Programmatic Senior Assessment Team (PSAT) (ADAMS Accession No. ML16067A159) discusses output-based performance indicators that are out-of-standard to ensure mitigating strategies and determines whether the outcome-based performance indicators are achieving progress toward the intended results. The PSAT will make this determination during the agencys Quarterly Performance Review or Strategic Alignment Meetings.

Outcome-based performance indicators use targets of met and can also produce results of needs improvement or unmet.

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 27 STRATEGIC GOAL 1: ENSURE THE SAFE AND SECURE USE OF RADIOACTIVE MATERIALS The NRC is tasked with providing reasonable assurance of adequate protection of public health and safety, promoting the common defense and security, and protecting the environment. The agency accomplishes this through day-to-day activities such as reviewing, issuing, and renewing power reactor licenses and amendments; overseeing the safety and security of power reactor facilities, including the storage and transportation of spent fuel; and licensing and regulating non-power uses of radioactive materials, such as industrial and medical applications of radionuclides.

Although licensees and certificate holders have the primary responsibility for the safe and secure use of licensed radioactive material that they possess, the NRC establishes regulatory requirements, develops guidance, maintains continuing regulatory oversight, and, when necessary, enforces compliance with agency requirements throughout the license term.

STRATEGIC GOAL 2: CONTINUE TO FOSTER A HEALTHY ORGANIZATION The health of an organization is a vital factor that can affect an organizations capacity and capability to continuously improve. Focusing on organizational health provides opportunities to strengthen the workforce, culture, technology, and decision making which in turn enhances performance.

STRATEGIC GOAL 3: INSPIRE STAKEHOLDER CONFIDENCE IN THE NRC The NRC values building confidence with all stakeholders. Confidence is forward looking and reflects stakeholder belief in the integrity of future agency actions and decisions. To gain stakeholder confidence and trust, the agency must engage in a transparent, open, and independent manner and make data driven and evidence-based decisions.

Chapter 1 Managements Discussion and Analysis FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 28 Grey Water Pond at Palo Verde

Chapter 2: Financial Statements and Auditors Report

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 30 A Message from the Chief Financial Officer The fiscal year (FY) 2022 Agency Financial Report illustrates our sound stewardship of the U.S. Nuclear Regulatory Commission (NRC) resources. As noted in Chapter 1, the NRC has achieved all of the agencys Safety and Security goals. Chapter 2 presents the NRC's financial statements and the independent auditor's report.

Finally, Chapter 3 presents other relevant information, such as the Inspector General's assessment of the most serious management and performance challenges facing the NRC.

I am pleased to present the NRC FY 2022 financial statements. An independent auditor has issued an unmodified opinion on the NRC FY 2022 financial statements. The auditor concluded: The NRCs financial statements as of and for the FY ended September 30, 2022, are presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles; the NRC maintained, in all material respects, effective internal control over financial reporting as of September 30, 2022; and no reportable noncompliance for FY 2022 with provisions of applicable laws, regulations, contracts, and grant agreements they tested and no other matters.

During FY 2022, the NRC continued our financial management and system modernization enhancements to better utilize government resources. The NRC upgraded and enhanced the agencys core financial system to successfully support government-wide efficiencies, including the U.S. General Services Administrations Unique Entity Identifier and the U.S. Department of Treasurys G-Invoicing.

In FY 2022, the NRC reported to Congress on the Nuclear Energy Innovation and Modernization Act (NEIMA) Implementation, Impacts, and Recommendations for Improvement on the Nuclear Regulatory Commission's Annual Budget Justification; Fees and Charges; Performance and Reporting; and Accurate Invoicing. The report is available at https://www.nrc.gov/docs/ML2123/ML21237A033.pdf. As detailed in the report, the NRC implemented the requirements in NEIMA but encountered significant challenges, particularly related to the corporate support caps, that inhibit the agency's ability to comply with other federal mandates and to invest in physical and information technology infrastructure. The report included two recommendations to address these challenges.

The NRC remains committed to its mission of ensuring the safety and security of the Nation's civilian use of radioactive materials in the most effective and efficient manner. The regulation of the Nation's nuclear industries during this period of fiscal and regulatory challenges requires rigorous stewardship of taxpayer resources and demands superior financial performance. I am proud of the agencys sound business practices in the conduct of our regulatory mission and am confident that we will continue to make future improvements.

L. Ben Ficks Deputy Chief Financial Officer November 8, 2022

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 31 Financial Statements Consolidated Balance Sheets (IN THOUSANDS)

Assets Intragovernmental Fund balance with Treasury (Note 2) 384.244 376,798 Accounts receivable, net (Note 3) 4,482 2,940 Advances and prepayments 4,271 3,818 Total intragovernmental 392,997 383,556 With the public Accounts receivable, net (Note 3) 53,661 61,725 General Property and equipment, net (Note 4) 32,295 37,106 Advances and prepayments 55 25 Total with the public 86,011 98,856 Total Assets 479,008 482,412 Liabilities Intragovernmental Accounts payable 12,152 7,548 Other liabilities (Note 5) 9,163 13,342 Total intragovernmental 21,315 20,890 With the public Accounts payable 19,524 22,132 Federal employee benefits payable (Note 6) 50,496 54,349 Other liabilities (Note 5) 17,175 29,973 Total with the public 87,195 106,454 Total Liabilities 108,510 127,344 Net Position Unexpended appropriations 328,773 305,238 Cumulative results of operations (Note 8) 41,725 49,830 Total Net Position 370,498 355,068 Total Liabilities and Net Position 479,008 482,412 The accompanying notes to the financial statements are an integral part of these statements.

As of September 30, 2022 2021

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 32 Consolidated Statements of Net Cost (IN THOUSANDS)

For the years ended September 30, 2022 2021 Nuclear Reactor Safety Gross costs 699,128 692,771 Less: Earned revenue (670,907)

(644,864)

Net Cost of Nuclear Reactor Safety (Note 9) 28,221 47,907 Nuclear Materials and Waste Safety Gross costs 196,573 201,368 Less: Earned revenue (66,356)

(67,038)

Total Net Cost of Nuclear Materials and Waste Safety (Note 9) 130,217 134,330 Net Cost of Operations 158,438 182,237 The accompanying notes to the financial statements are an integral part of these statements

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 33 Consolidated Statements of Changes in Net Position (IN THOUSANDS)

For the years ended September 30, 2022 2021 Unexpended Appropriations Beginning Balance 305,238 315,755 Appropriations received 150,619 129,813 Other adjustments (900)

(181)

Appropriations used (Note 11)

(126,184)

(140,149)

Net Change in Unexpended Appropriations 23,535 (10,517)

Total Unexpended Appropriations, ending balance 328,773 305,238 Cumulative Results of Operations Beginning Balance 49,830 64,919 Appropriations used (Note 11) 126,184 140,149 Nonexchange revenue (Note 11) 209 767 Imputed costs (Note 11) 24,149 26,999 Other (209)

(767)

Net Cost of Operations (158,438)

(182,237)

Net Change (8,105)

(15,089)

Cumulative Results of Operations 41,725 49,830 Net Position 370,498 355,068 The accompanying notes to the financial statements are an integral part of these statements.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 34 Combined Statements of Budgetary Resources (IN THOUSANDS)

For the years ended September 30, 2022 2021 Budgetary Resources Unobligated balance from prior-year budget authority, net 100,646

$ 109,673 (discretionary and mandatory)

Appropriations (discretionary and mandatory) 889,700 844,399 Spending authority from offsetting collections (discretionary and mandatory) 5,397 6,061 Total Budgetary Resources 995,743 960,133 Status of Budgetary Resources New obligations and upward adjustments (total) (Note 12) Unobligated balance, end of year 890,682 883,053 Apportioned, unexpired accounts 102,591 74,618 Exempt from apportionment, unexpired accounts Unapportioned, unexpired accounts 281 301 299 Unexpired unobligated balance, end of year 103,173 74,917 Expired unobligated balance, end of year 1,888 2,163 Unobligated balance, end of year (total) 105,061 77,080 Total Budgetary Resources 995,743 960,133 Outlays, Net, and Disbursements, Net Outlays, net (total) (discretionary and mandatory) 881,353 858,151 Distributed offsetting receipts (-)

(739,081)

(714,916)

Agency Outlays, net 142,272 143,235 The accompanying notes to the financial statements are an integral part of these statements.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 35 Notes to the Financial Statements (All tables are presented in thousands)

Note 1 - Summary of Significant Accounting Policies A. Reporting Entity The U.S. Nuclear Regulatory Commission (NRC) is an independent regulatory agency of the U.S. Federal Government that the Congress created to regulate the Nations civilian use of byproduct, source, and special nuclear materials to ensure adequate protection of public health and safety, to promote the common defense and security, and to protect the environment. Its purposes are defined by the Energy Reorganization Act of 1974, as amended, along with the Atomic Energy Act of 1954, as amended, which provide the foundation for regulating the Nations civilian use of nuclear materials.

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

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

B. Basis of Presentation These financial statements for FY 2022 and FY 2021 (prior year) are presented on a comparative basis. They report the financial position and results of operations of the NRC as required by the Chief Financial Officers Act of 1990 and the Government Management Reform Act of 1994. These financial statements were prepared from the books and records of the NRC in conformance with GAAP for Federal entities of the United States and the form and content for entity financial statements specified in OMB Circular A-136. GAAP for Federal entities are the standards prescribed by the Federal Accounting Standards Advisory Board (FASAB). The FASAB has been recognized by the American Institute of Certified Public Accountants (AICPA) as the official accounting standard setting authority for the Federal government. These statements are different from the financial reports prepared by the NRC in compliance with OMB directives, which are used to monitor and control the NRC's use of budgetary resources. The NRC has reclassified the FY2021 data for a comparable format.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 36 Presentation of the budget accounts on the Combining Statement of Budgetary Resources shows columns for the no-year Salaries and Expenses appropriation, which includes funding for the Office of the Commission; no-year and 2-year funds aggregated for the OIG, and the Nuclear Facility Fees, which reflects the Distributed Offsetting receipts.

The NRC collects miscellaneous receipts for information requests under the Freedom of Information Act; civil penalties; and interest, administrative, and penalty charges on delinquent debt. All miscellaneous receipts, when collected, are returned to the U.S. Treasury. The NRC has not presented these amounts on a Statement of Custodial Activity as the amounts involved are immaterial and incidental to the agency's operations and mission.

C. Budgets and Budgetary Accounting Budgetary accounting measures appropriation and consumption of budget spending authority or other budgetary resources and facilitates compliance with legal constraints and controls over the use of Federal funds. Under budgetary reporting principles, budgetary resources are used at the time of purchase. Assets and liabilities, which do not use current budgetary resources, are not reported, and only those liabilities for which valid obligations have been established are considered to use budgetary resources.

Congress passed the Consolidated Appropriations Act, 2022 that funded the NRCs budget at a level of $889.7 million for FY 2022. Congress also enacted the Additional Ukraine Supplemental Appropriations Act, 2022, which added $2 million to NRCs budget for FY 2022. NRCs total Salaries and Expenses appropriation for FY 2022 is $875.9 million. Not more than $9.5 million of the appropriation was made available for the costs of the Office of the Commission until September 30, 2023. Congress also enacted a 2-year appropriation of $13.8 million for the OIG, which is available for obligation through September 30, 2023.

Congress passed the Consolidated Appropriations Act, 2021 that funded the NRCs budget at a level of $844.4 million for FY 2021. Not more than $9.5 million of the appropriation was made available for the costs of the Office of the Commission until September 30, 2022. Congress enacted a 2-year appropriation of $13.5 million for expenses of the OIG, which is available for obligation through September 30, 2022.

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

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

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 37 E. Revenues and Other Financing Sources The NRC is required to offset its appropriations by revenue received during the FY from the assessment of fees. The NRC assesses two types of fees to recover its appropriation:

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

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

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

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

For accounting purposes, appropriations are recognized as a financing source (appropriations used) at the time goods and services are received. Periodically during the FY, appropriations recognized are reduced by the amount of assessed fees collected during the FY to the extent of new budget authority for the year. Collections that exceed 100 percent of the NRC's appropriation, excluding amounts appropriated for any fee-relief activity as identified by the Commission, generic homeland security activities, waste incidental to reprocessing activities, Nuclear Waste Fund activities, advanced reactor regulatory infrastructure activities, Inspector General services for the Defense Nuclear Facilities Safety Board, research and development at universities in areas relevant to the NRCs mission, and a nuclear science and engineering grant program, are held to offset subsequent years appropriations. The NRC recognizes appropriated expenses over the useful life of property and equipment as reflected by depreciation and amortization expense.

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

G. Accounts Receivable Accounts receivable consist of amounts that other Federal agencies and the public owe to the NRC. Amounts due from the public are presented net of an allowance for uncollectible accounts. The allowance is determined based on the age of the receivable and allowance rates established from historical experience. Receivables from Federal agencies are

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 38 expected to be collected; therefore, there is no allowance for uncollectible accounts for Federal agencies. An allowance for Federal agencies is considered based on FASAB Technical Bulletin 2020-01, but the NRC deems the Federal accounts receivable to be receivable based on historical experience.

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

I. Property and Equipment Property and equipment consist primarily of typical office furnishings, leasehold improvements, nuclear reactor simulators, and computer hardware and software. The costs of internal use software include the full cost of salaries and benefits for agency personnel involved in software development. The NRC has no real property as the land and buildings in which the NRC operates are leased through the GSA. The rent approximates the commercial rental rates for similar properties.

Property with a cost of $50,000 or more per unit and a useful life of 2 years or more is capitalized at cost and depreciated using the straight-line method over the useful life of the assets. Other property items are expensed when purchased. Normal repairs and maintenance are charged to expense as incurred.

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

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

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

Intragovernmental. The NRC records a liability to the U.S. Department of Labor (DOL) for Federal Employees Compensation Act (FECA) benefits paid by the DOL on behalf of the NRC. The NRC also accrued a liability to GSA for Broker Commission Credits received

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 39 by the NRC and annual step rent increases on the occupancy agreements for rent of NRC office space. The NRC amortizes the liability on a straight-line basis and pays GSA over the life of the occupancy agreements.

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

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

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

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

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

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

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

M. Annual, Sick, and Other Leave Annual leave is accrued as it is earned, and the accrual is reduced as leave is taken.

Each year, the balance in the accrued annual leave liability account is adjusted to reflect current pay rates. To the extent that current or prior-year funding is not available to cover annual leave earned but not taken, funding will be obtained from future financing sources.

Sick leave and other types of non-vested leave are expensed as taken.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 40 N. Retirement Plans The NRC employees belong to either the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS).

The NRC does not report on its financial statements FERS and CSRS assets, accumulated plan benefits, or unfunded liabilities, if any, applicable to its employees.

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

The NRC employees make mandatory contributions to their retirement plans through payroll deductions as required by law. For employees belonging to FERS and receiving an appointment before January 1, 2013, the NRC withheld 0.8 percent of base pay earnings and made an employer contribution of 17.3 percent in 2022 and 2021. In accordance with Public Law 112-96, Section 5001 of the Middle Class Tax Relief and Job Creation Act of 2012, employees hired after January 1, 2013, as Federal Employees Retirement System - Revised Annuity Employees (FERS-RAE) must pay 3.1 percent of their salary to retirement contributions with 15.5 percent in 2022 and 2021 for employer matching contributions. For employees hired after January 1, 2014, as Federal Employees Retirement System - Further Revised Annuity Employees (FERS-FRAE) must pay 4.4 percent of their salary to retirement contributions with 15.5 percent in 2022 and in 2021 for employer matching contributions. The sum is transferred to the Federal Employees Retirement Fund. For employees covered by CSRS, the NRC withholds 7 percent of base pay earnings. The NRC matched this withholding with a 7 percent contribution in 2022 and 2021.

The Thrift Savings Plan (TSP) is a retirement savings and investment plan for employees belonging to either FERS or CSRS. The maximum percentage of base pay that an employee participating in FERS or CSRS may contribute is unlimited, but it is subject to the maximum contribution of $20,500 in 2022 and $19,500 in 2021. For employees participating in FERS, the NRC automatically contributes 1 percent of base pay to the employee's account and matches contributions up to an additional 4 percent. For employees participating in CSRS, the NRC does match the contribution. The sum of the employees and the NRCs contributions is transferred to the Federal Retirement Thrift Investment Board.

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

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 41

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

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

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

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

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

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

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

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

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

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 42 R. Use of Management Estimates The preparation of the accompanying financial statements in accordance with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates.

S. Transfers In prior years, the NRC was a party to non-expenditure transfers of funds, as a receiving entity, from the U.S. Agency for International Development. The transfers were for the international development of nuclear safety and regulatory authorities in other countries. Transfers are legal delegations by one agency of its authority to obligate budget authority and outlay funds to another agency.

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

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

operating reactors and new reactors.

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

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

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 43 2020 Note 2 - Fund Balance with Treasury As of September 30, 2022 2021 Fund Balances Appropriated funds 383,963 376,478 Nuclear Waste Fund 281 320 Other fund types Total 384,244 376,798 Status of Fund Balance with Treasury Unobligated balance Available - Appropriated funds Unavailable Unapportioned, unexpired accounts Expired accounts Obligated balance not yet disbursed Non-budgetary funds with Treasury Anticipated Appropriation

$ 102,872 301 1,888 279,183 74,917 2,613 299,718 Total 384,244 $

376,798 The Fund Balance with Treasury consists of the unobligated and obligated budgetary account balances, including NWF activity. The NWF unobligated balance was $0.3 million as of September 30, 2022 and $0.3 million as of September 30, 2021.

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

Note 3 - Accounts Receivable As of September 30, 2022 2021 Intragovernmental Fee receivables and reimbursements 4,482 2,940 Receivables with the Public Materials and facilities fees-billed 4,725 $

3,991 Materials and facilities fees-unbilled 48,849 58,100 Other 2,054 2,420 Total Receivables with the Public 55,628 64,511 Less: Allowance for uncollectible accounts (1,967)

(2,786)

Total Receivables with the Public, Net 53,661 $

61,725 Total Accounts Receivable 60,110 67,451 Less: Allowance for uncollectible accounts (1,967)

(2,786)

Total Accounts Receivable, Net 58,143 $ 64,665 Refer to Note 1G, Summary of Significant Accounting Policies, Accounts Receivable for more information.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 44 Note 4 - Property and Equipment, Net As of September 30, 2022 Fixed Assets Class Service Years Acquisition Value Accumulated Depreciation and Amortization Net Book Value Equipment Leased equipment IT software IT software under development Leasehold improvements Leasehold improvements in progress 5

5 5

Life of related lease 14,549 463 62,607 239 57,575 3,408 (11,301)

(463)

(60,524)

(34,257) 3,248 2,082 239 23,318 3,408 Total 138,841 (106,545) 32,295 As of September 30, 2021 Fixed Assets Class Service Years Accumulated Acquisition Depreciation Value and Amortization Net Book Value Equipment 5

14,449 $

(9,929) 4,520 Leased equipment 5

463 (463)

IT software 5

68,169 (63,617) 4,552 IT software under development 1,701 1,701 Leasehold improvements Life of related lease 60,776 (35,461) 25,315 Leasehold improvements in progress 1,018 1,018 Total 146,576 $

(109,470) 37,106 For the years ended September 30, 2022 2021 Balance beginning of year

$ 37,106 46,764 Capitalized acquisitions 7,150 2,749 Disposals (2,753) (1,768)

Depreciation expense (9,208) (9,908)

Other

- (731)

Balance at end of fiscal year 32,295 $

37,106 In accordance with Statement of Federal Financial Accounting Standards (SFFAS) No. 44, "Accounting for Impairment of General Property, Plant, and Equipment Remaining in Use,"

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 45 Note 5 - Other Liabilities As of September 30, 2022 2021 Intragovernmental Liability to the U.S. Treasury General Fund for misc. receipts 360 $

152 Liability for advances from other agencies 17 16 Accrued workers' compensation 822 914 Accrued unemployment compensation 3

Employee benefit contributions 2,413 6,579

• Other liabilities 5,551 5,678 Total Intragovernmental Other Liabilities 9,163 13,342 With the Public Accrued salaries and benefits

$ 7,580 $ 20,946 Contract holdbacks, advances, capital lease liability, and other 1,819 1,001 Contingent Liabilities 250 250 Grants Payable 7,526 7,776 Total With the Public Other Liabilities 17,175 29,973 Total Intragovernmental and With the Public Other Liabilities 26,338 43,315

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

• Other liabilities are current except for the $5.6 million accrual for BCC and annual step rent increases on the existing occupancy agreements with GSA.

Note 6 - Liabilities Not Covered by Budgetary Resources As of September 30, 2022 2021 Intragovernmental FECA paid by DOL Accrued unemployment compensation Federal Employee Benefits Future FECA Employer Contributions & Payroll Taxes Payable Accrued annual leave Other Contingent Liabilities Other Liabilities 822 914 3

3,552 351 4,129 975 46,593 49,245 250 250 5,551 5,678 Total Liabilities Not Covered by Budgetary Resources 57,119 61,194 Total Liabilities Covered by Budgetary Resources 51,391 66,150 Total Liabilities 108,510 127,344 Liabilities not Covered by Budgetary Resources represents the amount of future funding needed to pay the accrued unfunded expenses as of September 30, 2022, and 2021. These liabilities are not funded from current or prior-year appropriations and assessments, but rather they

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 46 should be funded from future appropriations and assessments. Accordingly, future funding requirements have been recognized for the expenses that will be paid from future appropriations.

The projected annual benefit payments for FECA are discounted to present value. For FY 2022, projected annual payments were discounted to present value based on the OMBs interest rate assumptions, which were interpolated to reflect the average duration in years for income payments and medical payments. The interest rate assumptions used for FY 2022 discounting were 2.119 percent in year 1 and year 2 for wage benefits, and 1.973 percent in year 1 and year 2 for medical benefits. The NRC has reclassified the FY2021 data for a comparable format.

Note 7 - Leases As of September 30, 2022 2021 Assets Under Capital Leases:

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

Net Assets Under Capital Leases Future Lease Payments Due:

As of September 30, 2022 Fiscal Year Operating Operating Non-Cancellable Cancellable 2023 9,201 22,497 31,698 2024 9,324 21,910 31,234 2025 9,371 19,104 28,475 2026 9,419 17,977 27,396 2027 9,511 17,211 26,722 2028 and thereafter 5,430 95,935 101,365 Total Future Lease Payments 52,256 194,634 246,890 As of September 30, 2021 Fiscal Year Operating Operating Non-Cancellable Cancellable 2022 15,008 20,415 35,423 2023 11,368 19,650 31,018 2024 11,523 18,232 29,755 2025 9,738 18,404 28,142 2026 9,419 17,431 26,850 2027 and thereafter 24,899 88,299 113,198 Total Future Lease Payments 81,955 182,431 264,386

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 47 For Future Lease Payments, the NRC calculated the Capital Lease Liability as of September 30, 2022 and subtracted the imputed interest to arrive at the Total Future Lease Payments. The reproduction equipment is generally depreciated over 5 years using the straight-line method with no salvage value.

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

Occupied Property List Cancellable vs.

Noncancellable Lease Begin Date Lease End Date Headquarters: Office Building One &

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

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

Parking Non-cancellable 10/01/2020 11/02/2027 Headquarters: Lot 4 Non-cancellable 11/12/2018 11/11/2028 Headquarters: Warehouse Cancellable 12/01/2020 12/14/2021 Region I: King of Prussia, PA Non-Cancellable 8/1/2022 4/30/2032 Region II: Atlanta, GA Non-cancellable 12/01/2009 10/31/2022 Cancellable 11/01/2022 11/30/2024 Region III: Lisle, IL Cancellable 07/01/2013 07/31/2024 Region III: Naperville, IL Cancellable 08/01/2022 07/30/2037 Region IV: Arlington, TX Cancellable 08/01/2021 04/05/2026 TTC: Chattanooga, TN Non-cancellable 10/17/2016 10/16/2026 Cancellable 10/17/2026 10/16/2036 In the Three White Flint North (3WFN) office building, the NRC occupies 24,889 usable square feet and the NRC is no longer the primary tenant. The NRC occupies the Data center (half of fourth floor) and the Operations center (floor B1). The FDA and NIH occupy the other floors.

FDA and NIH have backfilled all of the space released by NRC in 3WFN, however, due to the terms of the occupancy agreement between GSA and NRC, NRC pays the delta between what the backfill tenant pays, and the true rental costs which currently equates to approximately $4.2

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 48 million of the $5.5 million of annual rent for 3WFN. NRC plans to vacate 3WFN entirely by moving the agency's remaining operations in 3WFN to OWFN by the lease expiration in November 2027. Therefore, NRC's annual rent and related costs are anticipated to reduce by

$5.5 million beginning in FY 2028.

In the Two White Flint North (2WFN) office building, the NRC occupies 266,204 usable square feet, 662 structured parking spaces, and 19 surface parking spaces. In FY 2021, NRC released the tenth floor of 2WFN which was subsequently backfilled by NIH. The lease bill for 2WFN will be approximately $0.9 million less per year (not including the repayment of un-earned rent abatement and broker commission credits of approximately $0.6 million repaid the first year).

NRC plans to release an additional two floors in TWFN in FY 2023 which will reduce the lease bill by approximately $1.8 million (not including the repayment of un-earned rent abatement and broker commission credits of approximately $1 million to be repaid over the first two years).

In FY 2021, the NRC signed a 10-year lease for the relocation of the Region I office for roughly half the size of the previous location. The NRC will occupy 32,539 useable square feet with an anticipated occupancy date of August 2022. The new lease for Region I will be approximately

$1.9 million dollars less per year.

The NRC leases for land and buildings do not have renewal options or contingent rental restrictions. The overall lease costs remain flat due to the elimination of the tenant improvement costs. No additional escalations are scheduled over the terms of the remainder of the Regional leases. The current leases for Regions 2, 3, and 4 expire in FY 2025, FY 2024, and FY 2026 respectively. We have a new lease for Region 3. Occupancy is not expected until FY 2024 and the lease period is for 15 years. Pending funding, GSA and NRC plan to solicit and negotiate new leases for each Region prior to the lease expirations listed above, for roughly half the current size of each location by incorporating a more contemporary design. By reducing the size of each Region by roughly half, the agency anticipates the regional rent and related costs to reduce by roughly half once the new leases are occupied. The lease for the warehouse has expired and GSA is in the process of negotiating a new lease anticipated no later than December 2022.

Note 8 - Cumulative Results of Operations Liabilities not covered by budgetary resources (Note 6)

(57,119)

(60,219)

Investment in property and equipment, net (Note 4) 32,295 37,106 Contributions from foreign cooperative research agreements 10,238 9,571 Nuclear Waste Fund 300 407 Office of the Commission (financed by Fees)

Accounts receivable - fees 55,623 62,480 Fee Collection Revenue Not Transferred Other 388 485 Cumulative Results of Operations 41,725 49,830 As of September 30, 2022 2021

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 49 Note 9 - Suborganization Program Cost For the fiscal years ended September 30, 2022 2021 Nuclear Reactor Safety:

Intragovernmental gross costs 200,888 205,900 Less: Intragovernmental earned revenue (48,412)

(44,506)

Intragovernmental net costs 152,476 161,394 Gross costs with the public 498,240 486,871 Less: Earned revenues from the public (622,495) (600,358)

Net costs with the public (124,255)

(113,487)

Total Net Cost of Nuclear Reactor Safety 28,221 47,907 Nuclear Materials and Waste Safety:

Intragovernmental gross costs 57,196 59,179 Less: Intragovernmental earned revenue (4,931) (4,892)

Intragovernmental net costs 52,265 54,287 Gross costs with the public 139,377 142,189 Less: Earned revenues from the public (61,425)

(62,146)

Net costs with the public 77,952 80,043 Total Net Cost of Nuclear Materials and Waste Safety 130,217 134,330 Nuclear Reactor Safety and Nuclear Materials and Waste Safety represent the NRC's two major programs as identified in the NRC Strategic Plan.

Note 10 - Exchange Revenues For the periods ended September 30, 2022 2021 Fees for licensing, inspection, and other services 732,223 707,798 Revenue from reimbursable work 5,040 4,104 Total Exchange Revenues 737,263 711,902 Earned revenues or exchange revenues arise when an entity provides goods and services to the public or another Government entity for a price. The NRCs revenues are primarily recorded at full cost for services provided for inspections, fees for licensing, and reimbursable work.

Note 11 - Financing Sources Other Than Exchange Revenue For the periods ended September 30, 2022 2021 Appropriations Used Collections are used to reduce the fiscal year's appropriations:

Funds consumed 865,304 854,841 Less: Collection of fees assessed (739,081)

(714,586)

Less: Nuclear Waste Fund Expense (39)

(106)

Less: Office of the Commission (financed by Fees)

Total Appropriations Used 126,184 140,149 Funds consumed include $66.5 million and $77.7 million through September 30, 2022, and 2021, respectively, of available funds from prior years. Current year funds consumed were

$798.8 million and $777.1 million through September 30, 2022 and 2021, respectively.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 50 For the fiscal years ended September 30, 2022 2021 Non-Exchange Revenue Civil penalties Miscellaneous receipts

$ 621 (412) 605 162 NonExchange Revenue Contra-Revenue 209 (209) 767 (767)

Total NonExchange Revenue, Net of Funds Returned to the U.S. Treasury For the periods ended September 30, 2022 2021 Imputed Financing Civil Service Retirement System

$ 2,164

$ 2,712 Federal Employees Retirement System 1,454 3,825 Federal Employee Health Benefit 20,454 20,385 Federal Employee Group Life Insurance 77 77 Judgments/Awards Total Imputed Financing 24,149

$ 26,999 Note 12 - Total Obligations Incurred For the periods ended September 30, 2022 2021 Direct Obligations Category A 886,028 $ 877,989 Exempt from Apportionment 19 456 Total Direct Obligations 886,047 878,445 Reimbursable Obligations 4,635 4,607 Total Obligations Incurred 890,682 883,053 Category A obligations consist of the NRC appropriations only. Obligations exempt from apportionment represent funds derived from the NWF.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 51 Note 13 - Undelivered Orders at the End of the Period As of September 30, 2022 2021 Intragovernmental:

Unpaid Undelivered Orders

$ (1,776)

$ 3,416 Paid Undelivered Orders 503 (1,133)

With the public:

Unpaid Undelivered Orders 235,378 235,319 Paid Undelivered Orders 3,818 4,950 Total Undelivered Orders

$ 237,923 242,552 Note 14 - Nuclear Waste Fund For FY 2022 and FY 2021, the NRCs budget did not include funds from the NWF. The funding provided to the NRC before FY 2014 and carried forward to subsequent years was for the purpose of performing activities associated with the DOE's application for a high-level waste repository at Yucca Mountain, NV.

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

A statute committing the Federal government to use specifically identified revenues and/or other financing sources that are originally provided to the Federal government by a non-federal source only for designated activities, benefits or purposes; Explicit authority for the fund to retain revenues and/or other financing sources not used in the current period for future use to finance the designated activities, benefits, or purposes; and A requirement to account for and report on the receipt, use, and retention of the revenues and/or other financing sources that distinguishes the fund from the Federal governments general revenues.

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

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

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

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

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

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 52 For the periods ended September 30, 2022 2021 Appropriations Received Expended Appropriations 39 $

106 Obligations Incurred 19 $

126 Unobligated Balances (includes recoveries of prior year obligations) 281 $

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

The NRC does not have any material differences between the budgetary resources reported on the SBR for FY 2021 and the FY 2021 actuals in the proposed President's Budget for FY 2023.

The reconciliation was based on actual numbers for FY 2021 because the Budget of the United States (also known as the Presidents Budget) was not published at the time that these financial statements were issued.

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 53 Note 16 - Reconciliation of Net Cost to Net Outlays For the fiscal year ended September 30, 2022 2022 Intra-governmental With the Public Total Net Cost 204,741 (46,303) 158,438 Components of the Net Cost That Are Not Part of Net Outlays Property, plant, and equipment depreciation (9,208)

(9,208)

Property, plant, and equipment disposal &

revaluation (2,753)

(2,753)

Increase/(decrease) in assets:

Accounts receivable, net 1,769 (8,290)

(6,521)

Other assets 453 29 482 (Increase)/decrease in liabilities:

Accounts payable (4,604) 2,626 (1,978)

Salaries and benefits 577 577 Other liabilities 6,830 13,171 20,001 Other Financing sources:

Federal employee retirement benefit costs paid by OPM and imputed to the agency (24,149)

(24,149)

Total Components if Net Cost That Are Not Part of Net Outlays (19,701)

(3,848)

(23,549)

Components of Net Outlays That Are Not Part of Net Cost Acquisition of capital assets 4,528 3,195 7,723 Total Components of Net Outlays That Are Not Part of Net Cost 4,528 3,195 7,723 Misc. Items:

Distributed offsetting receipts (739,081)

(739,081)

Custodial/Non-exchange revenue (412)

(621)

(1,033)

Non-Entity Activity 693 693 Appropriated Receipts for Trust/Special Funds 739,081 739,081 Total Other Reconciling Items 281 (621)

(340)

Net Outlays 189,849 (47,577) 142,272

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 54 Note 16 - Reconciliation of Net Cost to Net Outlays (continued)

For the fiscal year ended September 30, 2021 2021 Intra-governmental With the Public Total Net Cost of Operations 215,681

$ (33,444) 182,237 Components of the Net Cost That Are Not Part of Net Outlays Property, plant, and equipment depreciation Property, plant, and equipment disposal & revaluation Other - ADP Software Cost Capitalization (9,908)

(9,908)

(1,768) (1,768)

(731)

(731)

Subtotal Increase/(decrease) in assets:

Accounts receivable, net Other assets (273)

(1,132)

(12,407)

(12,407)

(5,782)

(6,055)

(51) (1,183)

Subtotal (Increase)/decrease in liabilities:

Accounts payable Salaries and benefits Other liabilities (1,405) 1,651 (417)

(5,833)

(7,238) 1,983 3,634 478 478 2,307 1,890 Subtotal Other Financing sources:

Federal employee retirement benefit cost paid by OPM and imputed to the Agency Subtotal 1,234 (26,999)

(26,999) 4,768 6,002 (26,999)

(26,999)

Total Components of Net Cost That Are Not Part of Net Outlays (27,170)

(13,472)

(40,642)

Components of Net Outlays That Are Not Part of Net Cost Acquisition of capital assets Financing sources:

Transfers out (in) without reimbursements 87 1,805 1,892 Total Components of Net Outlays That Are Not Part of Net Cost 87 1,805 1,892

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 55 Note 16 - Reconciliation of Net Cost to Net Outlays (continued)

For the fiscal year ended September 30, 2021 2021 Intra-governmental With the Public Total Misc. Items:

Distributed offsetting receipts (714,916)

(714,916)

Custodial/Non-exchange revenue 162 (605)

(443)

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

(252)

Net Outlays

$ 188,953

$ (45,718)

$ 143,235 Note 17 - Contingencies The NRC is subject to potential liabilities in various administrative proceedings, legal actions, environmental suits, and claims brought against it. In the opinion of the NRC's management and legal counsel, the ultimate resolution of these proceedings, actions, suits, and claims will not materially affect the financial position or net costs of the NRC.

Probable Likelihood of an Adverse Outcome:

As of September 30, 2022, the NRC was involved in a case with the likelihood of an adverse outcome being probable. The NRC accrued a legal contingency of $250 thousand. The estimated range of loss is $250 thousand on the lower end to $350 thousand on the upper end. As of September 30, 2021, the NRC was involved in a case with the likelihood of an adverse outcome being probable. NRC accrued a legal contingency of $250 thousand. The estimated range of loss is $250 thousand on the lower end to $350 thousand on the upper end.

Reasonably Possible Likelihood of an Adverse Outcome:

As of September 30, 2022, the NRC was involved in four reasonably possible cases that have an undetermined amount of potential loss. As of September 30, 2021, the NRC was involved in nine cases with the likelihood of an adverse outcome being reasonably possible with an estimated loss is $130 thousand on the lower end and $190 thousand on the upper end for one case. For the remaining eight cases the expected range of legal contingency loss is unknown.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 56 Note 18 - Financial Statements to Reclassified Financial Statements To prepare the Financial Report of the U.S. Government (Financial Report), the Department of the Treasury requires agencies to submit an adjusted trial balance, which is a listing of amounts by U.S. Standard General Ledger account that appear in the financial statements. Treasury uses the trial balance information reported in the Government-wide Treasury Account Symbol Adjusted Trial Balance System (GTAS) to develop a Reclassified Statement of Net Cost and a Reclassified Statement of Changes in Net Position for each agency, which are accessed using GTAS. Treasury eliminates all intragovernmental balances from the reclassified statements and aggregates lines with the same title to develop the Financial Report statements. This note shows the NRCs financial statements and the NRC's reclassified statements prior to elimination of intragovernmental balances and prior to aggregation of repeated Financial Report line items.

A copy of the 2021 Financial Report can be found here: Bureau of the Fiscal Service - Reports, Statements & Publications (treasury.gov) and a copy of the 2022 Financial Report will be posted to this site as soon as it is released.

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

The term non-Federal is used in this note to refer to Federal Government amounts that result from transactions with non-Federal entities. These include transactions with individuals, businesses, non-profit entities, and State, local, and foreign governments.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 57 Note 18 - Financial Statements to Reclassified Financial Statements (continued)

Statement of Net Cost to Reclassified Statement of Net Cost For the period ended September 30, 2022 NRC SNC Line Items Used to Prepare the Government-wide SNC Financial Statement Line Amount Total (Consolidated)

Reclassified Financial Statement Line 637,499 Non-Federal Costs Non-Federal Gross Cost 637,499 Total Non-Federal Costs Intragovernmental Costs 95,485 Benefit Program Costs Gross Costs 895,701 24,149 Imputed Costs 107,916 Buy/Sell Costs 4,528 Purchase of Assets (4,528) Purchase of Assets Offset 27,652 Other Expenses (w/o Reciprocals) 258,202 Total Intragovernmental Costs Total Gross Costs 895,701 895,701 Total Reclassified Gross Costs 683,920 Non-Federal Earned Revenue Earned Revenue 737,263 683,920 Total Non-Federal Revenue 53,343 Buy/Sell Revenue 53,343 Total Intragovernmental Earned Total Earned Revenue 737,263 737,263 Total Reclassified Earned Revenue Net Cost 158,438 $

158,438 Net Cost NRC does not have funds from dedicated collections.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 58 Statement of Changes in Net Position to Reclassified Statement of Changes in Net Position For the period ended September 30, 2022 NRC SCNP Line Items Used to Prepare the Government-wide SCNP Financial Statement Line Amount Total (Consolidated)

Reclassified Financial Statement Line Unexpended Appropriations 305,252 Net Position, Beginning of Period 149,719 Appropriations Received as Adjusted (126,184) Appropriations Used (Federal)

Unexpended Appropriations, 305,238 Beginning Balance Appropriations Received 149,719 Other Adjustments Appropriations Used (126,184)

Total Unexpended Appropriations 328,773 328,787 Total Unexpended Appropriations Cumulative Results of Operations 49,816 730 730 Net Position, Beginning of Period Non-Federal Non-Exchange Revenues Other Taxes and Receipts Total Non-Federal Non-Exchange Revenues Cumulative Results, Beginning 49,830 Balance Non-Exchange Revenues 730 Total Non-Exchange Revenues 730 730 Total Reclassified Non-Exchange Revenues Other (730)

Intragovernmental Other (693) Accrual of Collections Yet to be Transferred to a Treasury Accounting Symbols Other than the General Fund (37) Other Budgetary Financing Sources (730) Total Intragovernmental Other Total Other (730)

(730) Total Reclassified Other Imputed Financing 24,149 24,149 Imputed Financing Sources (Federal)

Total Financing Sources Net Cost of Operations 150,333 (158,438) 150,333 Total Financing Sources (158,438) Net Cost of Operations Ending Balance - Cumulative Results of Operations 41,725 41,711 Net Position - Ending Balance Total Net Position 370,498 $

370,498 Total Net Position NRC does not have funds from dedicated collections.

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 59 Required Supplementary Information Deferred Maintenance and Repairs for General Property, Plant, and Equipment Information on deferred maintenance and repairs (DM&R) is required under SFFAS 42, "Deferred Maintenance and Repairs: Amending Statements of Federal Financial Accounting Standards 6, 14, 29, and 32."

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

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

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

Deferred Maintenance and Repairs for the NRC Facilities, Other Structures, and Capital Equipment For the NRC leased facilities and capital equipment purchases, the NRC typically does not have any DM&R. The NRC had no DM&R for facilities, other structures, and capital equipment as of September 30, 2022, and 2021.

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

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 60 For the regional offices, the building management (lessor) is responsible for performing all required periodic maintenance to keep the systems and buildings in a good state of repair.

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

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

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

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 61 Deferred Maintenance and Repairs for Information Technology Infrastructure and Systems The NRC had no DM&R for IT Infrastructure and Systems as of September 30, 2022 and 2021.

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

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

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

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

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

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

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

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 62 Defining and Implementing Maintenance and Repair Policies in Practice All of the NRC IT infrastructure M&R activities are performed under various contracts which includes leasing of servers, computers, printers, and software and provides provisions for periodic monitoring, maintenance, and repairs. Replacement of miscellaneous equipment components and software is scheduled as needed when the equipment reaches the end of its useful life and before the equipment and software become obsolete. Desktops and laptops are upgraded on a 3-year rolling schedule so that they do not become obsolete.

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

For the critical IT infrastructure and support services (ITISS) contract, the main ranking factor is the age of the asset (e.g., desktop, laptop, printer), followed by cost and budget constraints.

However, when applicable, personnel safety is considered and is the highest priority.

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

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 63 Combining Statement of Budgetary Resources (IN THOUSANDS)

For the fiscal year ended September 30, 2022 Salaries and Expenses Office of the Inspector General Nuclear Facility Fees Total Budgetary Resources:

Unobligated balance from prior-year budget authority, net $ 95,506 5,141

$ 100,646 Appropriations 875,901 13,799 889,700 Spending authority from offsetting collections 5,227 169 5,396 Total Budgetary Resources

$ 976,634 19,109

$ 995,742 Memorandum Entries:

Net adjustments to unobligated balance brought forward, Oct 1 $ 24,055 $ 414 -

Status of Budgetary Resources:

$ 24,469 New obligations and upward adjustments (total) (Note 12)

$ 876,899 13,783

$ 890,682 Unobligated balance, end of period:

Apportioned, unexpired accounts 99,363 3,228 102,591 Exempt from apportionment, unexpired accounts 281 281 Unapportioned, unexpired accounts 301 301 Unexpired unobligated balance, end of year 99,644 3,529 103,173 Expired unobligated balance, end of year 92 1,796 1,888 Unobligated balance, end of year 99,736 5,325 105,061 Total Status of Budgetary Resources

$ 976,635 19,108

$ 995,743 Outlays Net and Disbursements Net:

Outlays Net and Disbursements Net 867,577 13,776 881,353 Distributed offsetting receipts (739,081)

(739,081)

Agency Outlays, Net

$ 867,577 13,776

$ (739,081)

$ 142,272 For the fiscal year ended September 30, 2021 Salaries and Expenses Office of the Inspector General Nuclear Facility Fees Total Budgetary Resources:

Unobligated balance from prior-year budget authority, net 103,980 5,363

$ 330 109,673 Appropriations 830,900 13,499 844,399 Spending authority from offsetting collections 5,954 107 6,061 Total Budgetary Resources 940,834 18,969 330

$ 960,133 Status of Budgetary Resources:

New obligations and upward adjustments (total) (Note 12)

$ 869,351 13,372

$ 330

$ 883,053 Unobligated balance, end of period:

Apportioned, unexpired accounts 71,085 3,533 74,618 Exempt from apportionment, unexpired accounts 299 299 Unapportioned, unexpired accounts Unexpired unobligated balance, end of year 71,384 3,533 74,917 Expired unobligated balance, end of year 99 2,064 2,163 Unobligated balance, end of year (total) 71,483 5,597 77,080 Total Status of Budgetary Resources

$ 940,834 18,969 330

$ 960,133 Outlays Net and Disbursements Net:

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

(714,916)

Agency Outlays, Net

$ 845,300 12,521

$ (714,586)

$ 143,235

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 64 Inspector Generals Letter Transmitting Independent Auditors Report

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 65

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 66

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 67 Independent Auditors Report

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 68

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 69

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 70

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 71

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 72

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 73

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 74

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 75 Managements Response to the Independent Auditors Report

Chapter 2 Financial Statements and Auditors Report FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 76

77 Chapter 3: Other Information

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 78 Inspector Generals Assessment of the Most Serious Management and Performance Challenges Facing the NRC

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 79

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 80

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Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 110 Summary of Financial Statement Audit and Management Assurances Summary of Financial Statement Audit for FY 2022 Audit Opinion Unmodified Restatement No Material Weaknesses Beginning Balance New Resolved Consolidated Ending Balance Management Controls over Financial Reporting 1

0 1

0 0

Total Material Weaknesses 1

0 1

0 0

Summary of Management Assurances for FY 2022 Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance Unmodified Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance None 0

0 0

0 0

0 Total Material Weaknesses 0

0 0

0 0

0 Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance Unmodified Material Weaknesses Beginning Balance New Resolved Consolidated Reassessed Ending Balance None 0

0 0

0 0

0 Total Material Weaknesses 0

0 0

0 0

0 Conformance with Financial Management System Requirements (FMFIA § 4)

Statement of Assurance Federal systems conform to financial management system requirements Non-conformances Beginning Balance New Resolved Consolidated Reassessed Ending Balance None 0

0 0

0 0

0 Total Non-conformances 0

0 0

0 0

0 Compliance with Section 803 (a) of the Federal Financial Management Improvement Act (FFMIA)

Agency Auditor

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

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

3. United States Standard General Ledger at the Transaction Level No Lack of Compliance Noted No Lack of Compliance Noted

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 111 Payment Integrity Risk Assessment The NRC is required to complete risk assessments to determine whether any programs were susceptible to making significant improper payments in accordance with PIIA. At this time, only intragovernmental transactions are exempt from PIIA requirements.

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

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

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

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

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

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 112 Agency Improvement of Payment Accuracy with the Do Not Pay Initiative The NRC uses the Treasurys Do Not Pay automated tools to monitor and reduce improper payments. This process has not resulted in the capture of any improper payments. Instead, the NRC captures improper payments through the agencys internal controls. The NRC uses the Federal Awardees Performance and Integrity Information System and other data systems such as the System for Award Management and financial reports to establish whether a contractor has the integrity and business ethics to receive a Federal contract and is otherwise responsible, which is consistent with applicable statutes and regulations.

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

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

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

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

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

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

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

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

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 113 NRCs Internal Control Program as required by the Integrity Act, includes Internal Control Planning where the Business Line Internal Control Plans are formally and independently reviewed by OCFOs Internal Control Team on a quarterly basis.

At a summary level, this review centers on the relatively high-risk areas including those that have recently been affected by changes or are perceived to have the potential for fraud, waste, or abuse.

The NRC consistently adheres to the requirements of OMB Circular A-23, Appendix A (reporting processes), Appendix B (purchase cards), and triennial implementation of Appendix C (improper payments). As the NRC has previously determined and documented that it is at low risk of improper payments, it performs a risk assessment every 3 years to determine whether there is sufficient risk to apply additional IPERIA requirements. The FY 2020 risk assessment confirmed that the NRC remains at low risk with regard to improper payments, including those that would arise from fraud.

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

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

Real Property The NRC does not own or lease real property. Each of the agencys occupancies are through agreements with the General Services Administration (GSA). At the end of fiscal year (FY) 2022, NRCs real property portfolio totaled approximately 896,790 usable square feet (USF), which represents a reduction of approximately 39,422 USF from the portfolio at the end of FY 2021.

The agency plans to reduce an additional 59,060 USF during FY 2023 by releasing two floors in Two White Flint North back to GSA. The agency planned to release another 29,083 USF square in June 2023 under a new lease for our Region 3 (Lisle, IL) location, however; the project was delayed due to a protest of GSAs lease award. NRC and GSA now anticipate the new space and associated reduction to be complete in FY 2024.

NRCs strategy is well underway to release a total of approximately 275,000 USF of office and warehouse space between FY 2020 through FY 2024. The strategy is updated at least annually and reflects a total portfolio reduction from 1.083M USF at the beginning of FY 2020 to approximately 0.808M USF through FY 2024. This represents a reduction of 25% of the agencys real property portfolio over the five-year period of FY 2020 through FY 2024. Once complete, the reductions are projected to save the agency over $12M million in annual rent and related costs. NRC anticipates reductions beyond FY 2024 as additional regional leases expire and USF requirements are reduced.

Reference:

Federal Real Property Public Data Set at https://www.gsa.gov/policy-regulations/policy/real-property-policy/asset-management/federal-real-property-profile-frpp/federal-real-property-public-data-set

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 114 Civil Monetary Penalty Adjustment for Inflation On November 2, 2015, the Federal Civil Penalties Inflation Adjustment Act of 1990 was amended by the Federal Civil Penalties Inflation Adjustment and Improvements Act of 2015 (Sec.701, Pub.L.114-74, 129 Stat.599). This act requires that the head of each Agency annually adjust for inflation the amounts of any civil monetary penalties assessed under statutes enforced by that agency.

As displayed in the table below, the NRC annually adjusts two civil penalty amounts for inflation, most recently on January 14, 2022. With respect to civil penalties for violations of the Atomic Energy Act of 1954, as amended, the NRC codifies the maximum civil penalty amount at 10 CFR 2.205, Civil Penalties, although individual penalties are assessed based on the class of licensee and severity of violation in accordance with the NRC Enforcement Policy (available at https://www.nrc.gov/docs/ML2132/ML21323A042.pdf). With respect to monetary penalties under the Program Fraud Civil Remedies Act, the NRC codifies the maximum penalty amount at 10 CFR 13.3, Basis for Civil Penalties and Assessments.

Penalty (Name of Penalty)

Statutory Authority Year Enacted Date of Current Adjustment Current Penalty Level Location for Penalty Update Details Maximum civil penalty for violations of the Atomic Energy Act Atomic Energy Act of 1954, as amended (42 U.S.C.

2282) 1980 January 2022

$326,163 Federal Register; 87 FR 2310 (January 14, 2022)

Fraudulent false claims and statements Program Fraud Civil Remedies Act (31 U.S.C.

3802) 1986 January 2022

$12,537 Federal Register; 87 FR 2310 (January 14, 2022)

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 115 Grants Oversight and New Efficiency Act Requirements Category 2-3 Years

>3-5 Years

>5 Years Number of Grants/Cooperative Agreements with Zero Dollar Balances 15 11 4

Number of Grants/Cooperative Agreements with Undisbursed Dollar Balances 47 17 3

Total Amount of Undisbursed Balances

$1,775,879

$240,271

$99,395 The expansion of NRCs grants program in FY2022 lead to slight increases in prior year grants requiring closeout due to resource constraints. During FY2023, the NRC will again prioritize closeouts, particularly targeting grants in order to reduce prior year open grants.

Climate-Related Financial Risk Protecting the environment is vital to the NRCs mission, as reflected in the agencys commitment to incorporating strategies that promote sustainability into its daily operations.

The NRC continues to comply with the goals stated in Executive Order 14008, Tackling the Climate Crisis at Home and Abroad, and views sustainability as an integral part of its business planning and decision-making.

The NRCs Chief Sustainability Officer (CSO) is the senior executive level manager responsible for promoting environmental and energy sustainability across the agency. The agencys CSO works with managers and employees to address the organization's approach to environmental responsibility and meeting the requirements in EO 14008.

The latest NRC Sustainability Report and Implementation Plan can be found at https://adamsxt.nrc.gov/navigator/AdamsXT/content/downloadContent.faces?objectStoreName

=MainLibrary&ForceBrowserDownloadMgrPrompt=false&vsId=%7bE4E178D4-A3DB-C939-8451-821CEDF00000%7d.

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 116 Acronyms and Abbreviations Acronym Full Title 3WFN Three White Flint North 10 CFR Title 10 of the Code of Federal Regulations AFR Agency Financial Report AO abnormal occurrence BCC Broker Commission Credits CARES Act Coronavirus Aid, Relief, and Economic Security Act, 2022 CFO Chief Financial Officer Charge Card Act Government Charge Card Abuse Prevention Act of 2012 COVID-19 coronavirus disease 2020 CSRS Civil Service Retirement System DATA Act Digital Accountability and Transparency Act of 2014 DM&R Deferred maintenance and repairs DNFSB Defense Nuclear Facilities Safety Board DOL U.S. Department of Labor ECERM Executive Committee on Enterprise Risk Management ERM Enterprise Risk Management FAIMIS Financial Accounting and Integrated Management Information System FASAB Federal Accounting Standards Advisory Board FDA U.S. Food and Drug Administration FECA Federal Employees Compensation Act of 1993 FERS Federal Employees Retirement System FERS-RAE Federal Employees Retirement System-Revised Annuity Employees FFMIA Federal Financial Management Improvement Act of 1996 FMFIA Federal Managers Financial Integrity Act of 1982 FR Federal Register FTE full-time equivalent FY fiscal year GAAP generally accepted accounting principles GAO U.S. Government Accountability Office GSA U.S. General Services Administration

Chapter 3 Other Information FY 2022 Agency Financial Report https://www.nrc.gov Protecting People and the Environment 117 Acronym Full Title IPERA Improper Payments Elimination and Recovery Act of 2010 IPERIA Improper Payments Elimination and Recovery Improvement Act of 2012 IPIA Improper Payments Information Act of 2002 IT information technology NEIMA Nuclear Energy Innovation and Modernization Act NIH National Institutes of Health NRC U.S. Nuclear Regulatory Commission NUREG Nuclear Regulatory Commission document identifier NWF Nuclear Waste Fund OCFO Office of the Chief Financial Officer OIG Office of the Inspector General OMB Office of Management and Budget OPM Office of Personnel Management PIIA Payment Integrity Information Act of 2020 PP&E property, plant, and equipment RPA Robotic Process Automation team SAT Senior Assessment Team SBR Statement of Budgetary Resources SFFAS Statement of Federal Financial Accounting Standards Treasury U.S. Department of the Treasury TTC Technical Training Center UF6 uranium hexafluoride UO2 uranium dioxide U.S.C.

United States Code USF usable square feet

NRC FORM 335 U.S. NUCLEAR REGULATORY COMMISSION (12-2010)

NRCMD 3. 7 BIBLIOGRAPHIC DATA SHEET (See instructions on the reverse)

1. REPORT NUMBER (Assigned by NRC, Add Vol., Supp, Rev.

, and Addendum Numbers, if any. )

NUREG-2220 Volume 6

2. TITLE AND SUBTITLE U.S Nuclear Regulatory Commission Fiscal Year 2022 Agency Financial Report

3. DATE REPORT PUBLISHED MONTH YEAR November 2022

4. FIN OR GRANT NUMBER

5. AUTHOR(S)

Christine Galster, Rosalyn Jones, Susan Jones, et al

6. TYPE OF REPORT Annual

7. PERIOD COVERED (Inclusive Dates)

Fiscal Year 2022

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

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

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

Same as above

10. SUPPLEMENTARY NOTES

11. ABSTRACT (200 words or less)

The Fiscal Year 2022 Agency Financial Report (AFR) presents the agency's financial results of operations which includes the audited annual financial statements of the NRC.

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

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

Agency Financial Report (AFR) Fiscal Year 2022

13. AVAILABILITY STATEMENT unlimited

14. SECURITY CLASSIFICATION (This Page) unclassified (This Report) unclassified

15. NUMBER OF PAGES

16. PRICE

United States Nuclear Regulatory Commission NUREG-2220, Volume 6 November 2022