ML24323A074
| ML24323A074 | |
| Person / Time | |
|---|---|
| Issue date: | 11/12/2024 |
| From: | OIG Watch, Sikich CPA LLC |
| To: | NRC/EDO |
| References | |
| OIG-NRC-25-A-02 | |
| Download: ML24323A074 (1) | |
Text
Page 1 of 6 INDEPENDENT AUDITORS REPORT Inspector General United States Nuclear Regulatory Commission Chair United States Nuclear Regulatory Commission In our audit of the fiscal year 2024 financial statements of the United States Nuclear Regulatory Commission (NRC), we found:
The financial statements as of and for the fiscal year ended September 30, 2024, are presented fairly, in all material respects, in accordance with accounting principles generally accepted in the United States of America; The NRC maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024; and, No reportable noncompliance for fiscal year 2024 with provisions of applicable laws, regulations, contracts, and grant agreements we tested.
The following sections contain:
- 1. Our report on the NRCs financial statements and on internal control over financial reporting, including an other-matter paragraph related to the prior-period financial statements having been audited by a predecessor auditor, required supplementary information (RSI), and other information included with the financial statements; and,
- 2. Other reporting required by Government Auditing Standards, which is our report on the NRCs compliance and other matters. This section also includes a summary of the NRCs comments on our report.
REPORT ON THE AUDITS OF THE FINANCIAL STATEMENTS AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING Opinion on the Financial Statements We have audited the financial statements of the NRC, which comprise the consolidated balance sheet as of September 30, 2024, and the related consolidated statement of net cost, consolidated statement of changes in net position, and combined statement of budgetary resources for the fiscal year then ended; and the related notes to the financial statements (collectively, the basic financial statements).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the NRC as of September 30, 2024, and its net cost of operations, changes in net position, and budgetary resources for the fiscal year then ended, in accordance with accounting principles generally accepted in the United States of America.
Page 2 of 6 Opinion on Internal Control over Financial Reporting We also have audited the NRCs internal control over financial reporting as of September 30, 2024, based on criteria established under 31 U.S.C. § 3512(c), (d), commonly known as the Federal Managers Financial Integrity Act of 1982 (FMFIA).
In our opinion, the NRC maintained, in all material respects, effective internal control over financial reporting as of September 30, 2024, based on criteria established under the FMFIA.
During our fiscal year 2024 audit, we identified deficiencies in the NRCs internal control over financial reporting that we do not consider to be material weaknesses or significant deficiencies.1 Nonetheless, these deficiencies warrant the NRC managements attention. We have communicated these matters to the NRC management and, where appropriate, will report on them separately.
Basis for Opinions We conducted our audits in accordance with Generally Accepted Auditing Standards (GAAS) in the United States of America; standards applicable to financial statement audits contained in Generally Accepted Government Auditing Standards (GAGAS), issued by the Comptroller General of the United States; and guidance contained in Office of Management and Budget (OMB)Bulletin 24-02, Audit Requirements for Federal Financial Statements. Our responsibilities under those standards and OMB Bulletin 24-02 are further described in the Auditors Responsibilities for the Audits of the Financial Statements and Internal Control over Financial Reporting subsection of our report. We are required to be independent of the NRC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
Other Matters The NRCs financial statements and internal control over financial reporting as of and for the year ended September 30, 2023, were audited by other auditors, whose Independent Auditors Report thereon dated November 09, 2023, expressed an unmodified opinion on those financial statements and internal control over financial reporting. We were not engaged to audit, review, or apply any procedures to the NRCs fiscal year 2023 financial statements and internal control over financial reporting and, accordingly, we do not express an opinion or any other form of assurance on the fiscal year 2023 financial statements and internal control over financial reporting.
Responsibilities of Management for the Financial Statements and Internal Control over Financial Reporting Management is responsible for (1) the preparation and fair presentation of the financial statements in accordance with U.S. generally accepted accounting principles; (2) preparation, measurement, and presentation of the RSI in accordance with U.S. generally accepted accounting principles; (3) preparation and presentation of other information included in the NRCs Annual Financial Report (AFR), and verification of the consistency of that information with the audited financial statements and the RSI; (4) design, implementation, and maintenance of effective internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; (5) assessment of the effectiveness of internal control over financial reporting based on the criteria established under the FMFIA; and, (6) assessment of the effectiveness of internal control over financial reporting as of September 30, 2024, included in the Federal Managers Financial Integrity Act Statement in the Managements Discussion and Analysis (MD&A) section of the AFR.
1 A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the entitys financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Page 3 of 6 Auditors Responsibilities for the Audits of the Financial Statements and Internal Control over Financial Reporting Our objectives are to (1) obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and whether effective internal control over financial reporting was maintained in all material respects, and (2) issue an auditors report that includes our opinions.
Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit of the financial statements or an audit of internal control over financial reporting conducted in accordance with GAAS, GAGAS, and OMB guidance will always detect a material misstatement or a material weakness when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements, including omissions, are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgments made by a reasonable user based on the financial statements.
In performing an audit of financial statements and an audit of internal control over financial reporting in accordance with GAAS, GAGAS, and OMB guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audits.
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements in order to obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions.
Obtain an understanding of internal control relevant to our audit of the financial statements in order to design audit procedures that are appropriate in the circumstances.
Obtain an understanding of internal control relevant to our audit of internal control over financial reporting, assess the risks that a material weakness exists, and test and evaluate the design and operating effectiveness of internal control over financial reporting based on the assessed risk.
Our audit of internal control also considered the NRCs process for evaluating and reporting on internal control over financial reporting based on criteria established under the FMFIA. We did not evaluate all internal controls relevant to operating objectives as broadly established under the FMFIA, such as those controls relevant to preparing performance information and ensuring efficient operations. We limited our internal control testing to testing controls over financial reporting. Our internal control testing was for the purpose of expressing an opinion on whether effective internal control over financial reporting was maintained, in all material respects.
Consequently, our audit may not identify all deficiencies in internal control over financial reporting that are less severe than a material weakness.
Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
Perform other procedures we consider necessary in the circumstances.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audits, significant audit findings, and certain internal control-related matters that we identified during the audits.
Page 4 of 6 Definition and Inherent Limitations of Internal Control over Financial Reporting An entitys internal control over financial reporting is a process effected by those charged with governance, management, and other personnel. The objectives of internal control over financial reporting are to provide reasonable assurance that:
Transactions are properly recorded, processed, and summarized to permit the preparation of financial statements in accordance with U.S. generally accepted accounting principles, and assets are safeguarded against loss from unauthorized acquisition, use, or disposition, and Transactions are executed in accordance with provisions of applicable laws, including those governing the use of budget authority, regulations, contracts, and grant agreements, noncompliance with which could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent, or detect and correct, misstatements due to fraud or error. We also caution that projecting any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Required Supplementary Information Accounting principles generally accepted in the United States of America and OMB Circular No. A-136, Financial Reporting Requirements, require that the MD&A and other RSI be presented to supplement the basic financial statements. Such RSI is the responsibility of management and, although not a part of the basic financial statements, is required by the Federal Accounting Standards Advisory Board (FASAB) and OMB, who consider it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, and historical context.
We have applied certain limited procedures to the RSI in accordance with auditing standards generally accepted in the United States of America. These procedures consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with managements responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit, and we do not express an opinion or provide any assurance on the information because the limited procedures we applied do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information The NRCs other information contains a wide range of information, some of which is not directly related to the financial statements. This information is presented for purposes of additional analysis and is not a required part of the financial statements or the RSI. Management is responsible for the other information included in the NRCs Agency Financial Report. The other information comprises the Inspector Generals Assessment of the Most Serious Management and Performance Challenges Facing the NRC, Summary of Financial Statement Audit and Management Assurances, Payment Integrity, Real Property, Civil Monetary Penalty Adjustment for Inflation, Grants Oversight and New Efficiency Act Requirements, Climate-Related Financial Risk, and Acronyms and Abbreviations but does not include the financial statements and our Report on the Audits of the Financial Statements and on Internal Control Over Financial Reporting thereon.
Our opinion on the financial statements does not cover the other information, and we do not express an opinion or any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.
Page 5 of 6 OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS Report on Compliance and Other Matters In connection with our audit of the NRCs financial statements, we tested compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements consistent with our auditors responsibilities discussed below. We also performed tests of compliance with certain provisions of the Federal Financial Management Improvement Act (FFMIA). However, providing an opinion on compliance with FFMIA was not an objective of our audit, and accordingly, we do not express such an opinion.
Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant Agreements Our tests for compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements disclosed no instances of noncompliance or other matters for fiscal year 2024 that would be reportable under GAGAS. In addition, our tests of compliance with the FFMIA Section 803(a) requirements disclosed no instances in which the NRCs financial management systems did not comply substantially with (1) federal financial management systems requirements, (2) applicable federal accounting standards, or (3) application of the U.S. Government Standard General Ledger (USSGL) at the transaction level. However, the objective of our tests was not to provide an opinion on compliance with laws, regulations, contracts, and grant agreements applicable to the NRC. Accordingly, we do not express such an opinion.
Basis for Results of Our Tests for Compliance with Laws, Regulations, Contracts, and Grant Agreements We performed our tests of compliance in accordance with GAGAS.
Responsibilities of Management for Compliance with Laws, Regulations, Contracts, and Grant Agreements The NRC management is responsible for complying with laws, regulations, contracts, and grant agreements applicable to the NRC, including ensuring the NRCs is in in substantial compliance with FFMIA requirements.
Auditors Responsibilities for Tests of Compliance with Laws, Regulations, Contracts, and Grant Agreements Our responsibility is to test compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements that have a direct effect on the determination of material amounts and disclosures in the NRCs financial statements, including whether the NRC complies substantially with the FFMIA Section 803(a) requirements, and to perform certain other limited procedures. Accordingly, we did not test compliance with all laws, regulations, contracts, and grant agreements applicable to the NRC. We caution that noncompliance may occur and not be detected by these tests.
Intended Purpose of Report on Compliance with Laws, Regulations, Contracts, and Grant Agreements The purpose of this report is solely to describe the scope of our testing of compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements, and the results of that testing, and not to provide an opinion on compliance. This report is an integral part of an audit performed in accordance with GAGAS in considering compliance. Accordingly, this report on compliance with laws, regulations, contracts, and grant agreements and other matters is not suitable for any other purpose.
NRCs Comments The NRCs comments on this report are included in Exhibit A. The NRC concurred with our report.
Alexandria, VA November 12, 2024 Sikich CPA LLC
Exhibit A The NRCs Response to Audit Conclusions Page 6 of 6