Report LA00-26

Results in Brief

Although the Agency for Nuclear Projects’ financial and administrative practices have improved, some weaknesses still exist. Over the last several years the Agency’s federal funding has been declining and its reliance on state funding increasing. Although the state funding had statutory and other requirements, the Agency did not comply with all these requirements. This resulted in about $65,500 of contingency fund money not being reverted at the end of fiscal year 1999. In addition, we issued an audit in 1995 that made several recommendations to improve the Agency’s contracting process. The Agency implemented many of the recommendations, but some of the recommendations could be better addressed. Finally, the Agency does not always follow other contract requirements and its system of management control could be improved.

Principal Findings

· The Agency did not request reimbursement from the U.S. Department of Energy for all possible contract expenditures during fiscal year 1999. Had reimbursement been requested, the Agency could have returned about $50,000 to the contingency fund at the end of fiscal year 1999.

· The Agency ordered over $23,000 of office supplies, furnishings and equipment during the last two weeks of June 1999 using emergency contingency funds. About $15,500 of these expenditures do not appear to fall within statutory requirements for the use of contingency funds.

· The Agency did not always take adequate steps to ensure the contract awarding process was controlled. The majority of contracts we reviewed either did not have adequate cost analyses prepared or did not have evidence that contractors’ qualifications were verified or were otherwise determined to be acceptable.

· Many of the contracts examined did not provide clear descriptions of expected deliverables. In addition, contract monitoring could be strengthened to ensure contract payments are appropriate and contractors comply with all contract terms and other state requirements.

· Although the Agency has developed a procedures manual, the manual could be improved to ensure better control of the Agency’s financial and administrative activities. During our review, we identified several issues where a better control system could have prevented or detected their occurrence.

Office of The Governor

Agency for Nuclear Projects

Agency Response

to Audit Recommendations

Recommendation

Number Accepted Rejected

1 Comply with statutory and other funding requirement. ___X____ _______

2 Seek reimbursement for all allowable expenditures from the Federal

Government. ___X____ _______

3 Improve the current procedures for estimating, analyzing, and comparing

contract costs ___X____ _______

4 Develop procedures for verifying contractor qualifications and reviewing

contractor invoices to ensure the appropriateness of the payments. ___X____ _______

5 Prepare contracts that clearly define the contract deliverables. ___X____ _______

6 Require contractors to submit proof of workers’ compensation insurance

prior to the commencement of contract work. ___X____ _______

7 Improve the system of management controls to promote sound financial

and administrative practices. ___X____ _______

Totals ___7____ ___0___