AUDIT REPORT

Audit of NRC’s Management of Import/Export Authorizations

OIG-12-A-13 April 20, 2012

All publicly available OIG reports (including this report) are accessible through

NRC’s Web site at: 

http:/www.nrc.gov/reading-rm/doc-collections/insp-gen/
UNITED STATES

NUCLEAR REGULATORY COMMISSION

WASHINGTON, D.C. 20555-0001

OFFICE OF THE

INSPECTOR GENERAL

April 20, 2012

MEMORANDUM TO: R. William Borchardt

Executive Director for Operations

J. E. Dyer

Chief Financial Officer

Margaret M. Doane

Director, Office of International Programs

FROM: Stephen D. Dingbaum /RA/

Assistant Inspector General for Audits

SUBJECT: AUDIT OF NRC’S MANAGEMENT OF IMPORT/EXPORT 

AUTHORIZATIONS (OIG-12-A-13)

Attached is the Office of the Inspector General’s (OIG) audit report titled, Audit of NRC’s

Management of Import/Export Authorizations.

The report presents the results of the subject audit. Agency comments provided on

March 8, 2012, and March 23, 2012, have been incorporated, as appropriate, into this 

report.

Please provide information on actions taken or planned on each of the 

recommendations within 30 days of the date of this memorandum. Actions taken or 

planned are subject to OIG followup as stated in Management Directive 6.1.

We appreciate the cooperation extended to us by members of your staff during the 

audit. If you have any questions or comments about our report, please contact me at 

415-5915 or Kathleen Stetson, Team Leader, Financial and Administrative Audit Team, 

at 415-8175.

Attachment: As stated 
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EXECUTIVE SUMMARY 

BACKGROUND

The U.S. Nuclear Regulatory Commission’s (NRC) mission is to regulate 

the Nation’s civilian use of nuclear materials to ensure protection of public 

health and safety, promote the common defense and security, and protect 

the environment. One of the agency’s statutorily mandated responsibilities

under the Atomic Energy Act of 1954, as amended (AEA), is to license the 

import and export of nuclear materials and equipment into and from the 

United States. 

NRC issues two types of licenses for the import and export of nuclear 

material: general licenses and specific licenses. The type of license 

required depends on the amount and type of nuclear material or equipment 

and the foreign country involved. A person may use an NRC general 

license as authority to import or export nuclear material or equipment if the 

item is covered by the NRC general licenses issued under regulation in Title 

10, Code of Federal Regulations (CFR), Part 110. If an import or export is 

not covered by the general license, a person must file an application with 

the Commission for a specific license. A specific import/export license is a 

paper document issued by the NRC on a case-by-case basis to a named 

person or entity for the proposed transaction(s) described in the license 

application form. 

NRC’s Office of International Programs (OIP) is assigned to process 

specific nuclear import/export licensing actions under 10 CFR Part 110 after 

receiving any necessary guidance from the Commission. OIP coordinates 

its license application review, as needed, with the Office of Federal and 

State Materials and Environmental Management Programs, the Office of 

Nuclear Security and Incident Response, the Office of Nuclear Material 

Safety and Safeguards, the Office of the General Counsel, and the 

Commission.
Audit of NRC’s Management of Import/Export Authorizations

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OIP also coordinates with State government officials and representatives of 

regional low-level radioactive waste interstate compacts1on applications for 

the import of waste materials. Additionally, OIP coordinates with the 

Departments of Energy and State on communications with foreign 

governments related to requirements of the AEA.

From Fiscal Year (FY) 2008 through FY 2010, OIP completed between 

123 and 139 licensing actions per year. OIP has nine staff that spend part 

of their work effort on processing import and export license applications. In 

FY 2010, according to Human Resources Management System records, 

OIP staff charged approximately 2,670 staff-hours to billable licensing 

activities. Other program offices involved in reviewing import/export 

applications estimated they expended approximately an additional 969 

staff-hours in support of billable import/export licensing activities during the 

same period.

OBJECTIVES

The audit objectives were to determine whether NRC (1) properly reviews

and approves import/export authorizations in a timely manner, (2) 

effectively coordinates this activity with other Federal agencies, and

(3) efficiently and effectively coordinates import/export authorizations 

internally.

RESULTS IN BRIEF

In general, OIP is properly reviewing and approving import/export 

license authorizations (applications) in a timely fashion and 

coordinates effectively with external stakeholders. However, the 

Office of the Inspector General (OIG) identified opportunities for 

improvement for more efficient and effective internal coordination on 

import/export authorizations. Specifically,

A. OIP does not have a systematic approach to biennial fee 

reviews and adjustments. 

B. OIP does not reconcile import/export license application 

revenue.

 

1 Under the Low-Level Radioactive Waste Policy Amendments Act of 1985, States were given the 

responsibility for disposal of their low-level radioactive waste. States were encouraged to enter into 

agreements (compacts) to dispose of waste in common facilities. Currently, there are 10 interstate 

compacts and 10 unaffiliated States.
Audit of NRC’s Management of Import/Export Authorizations

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C. OIP does not employ an adequate quality control review process 

over application files.

Addressing these concerns will strengthen NRC’s internal control over 

import/export licensing.

RECOMMENDATIONS

This report makes recommendations to improve the agency’s import/export 

licensing process. A consolidated list of these recommendations appears 

on page 25 of this report.

AGENCY COMMENTS

OIG met with NRC management officials and staff during a March 8, 2012, 

exit conference. Subsequent to the exit conference, the agency provided 

informal comments. On March 21, 2012, OIG provided a revised draft 

report to the agency that incorporated changes OIG deemed appropriate 

after consideration of the agency’s informal comments. OIG met with 

agency management and staff on March 23, 2012, to discuss additional 

suggested changes to the report; subsequently, OIG incorporated additional

informal comments into the draft report as appropriate. NRC staff reviewed 

the revised draft report and opted not to provide formal comments.
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ABBREVIATIONS AND ACRONYMS

AEA Atomic Energy Act of 1954, as amended

CFO Chief Financial Officer

CFR Code of Federal Regulations

DOI NBC Department of Interior National Business Center

FSME Office of Federal and State Materials and Environmental 

Management Programs

FTE Full-Time Equivalent 

FY Fiscal Year

GAO Government Accountability Office

HRMS Human Resources Management System

IAEA International Atomic Energy Agency

IOAA Independent Offices Appropriations Act of 1952

MD Management Directive

NMSS Office of Nuclear Material Safety and Safeguards

NRC Nuclear Regulatory Commission (or Commission)

NSIR Office of Nuclear Security and Incident Response

OBRA Omnibus Budget Reconciliation Act of 1990, as amended

OCFO Office of the Chief Financial Officer

OGC Office of the General Counsel

OIG Office of the Inspector General

OIP Office of International Programs

TAC Technical Assignment Control 
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TABLE OF CONTENTS

EXECUTIVE SUMMARY ............................................................................ i

ABBREVIATIONS AND ACRONYMS........................................................iv

I. BACKGROUND .............................................................................. 1

II. OBJECTIVES.................................................................................. 7

III. FINDINGS....................................................................................... 7

A. OIP Does Not Have a Systematic Approach to Biennial Fee 

Reviews and Adjustments.......................................................... 8

B. OIP Does Not Reconcile Import/Export License Application 

Revenue.....................................................................18

C. OIP Does Not Employ an Adequate Quality Control Review 

Process Over Application Files................................................ 22

IV. CONSOLIDATED LIST OF RECOMMENDATIONS ..................... 25

V. AGENCY COMMENTS................................................................. 26

APPENDIX

OBJECTIVES, SCOPE, AND METHODOLOGY........................... 27
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I. BACKGROUND

The U.S. Nuclear Regulatory Commission’s (NRC) mission is to regulate 

the Nation’s civilian use of nuclear materials to ensure protection of public 

health and safety, promote the common defense and security, and protect 

the environment. One of the agency’s statutorily mandated responsibilities

under the Atomic Energy Act of 1954, as amended (AEA) is to license the 

import and export of nuclear materials and equipment into and from the 

United States. 

NRC regulations governing the import/export licensing process are provided 

in Title 10, Code of Federal Regulations (10 CFR) Part 110, ―Export and 

Import of Nuclear Equipment and Material.‖ 10 CFR Part 110 prescribes 

licensing, enforcement, and rulemaking procedures for import and export 

licenses. 10 CFR Sections 110.8, 110.9, and 110.9a list the nuclear 

facilities, equipment, and materials under NRC import and export licensing 

authority (e.g., special nuclear,

2

source,

3

and byproduct material,

4

nuclear 

reactor components, and equipment). 

NRC issues two types of licenses for the import and export of nuclear 

material: general licenses and specific licenses. The type of license 

required depends on the amount and type of nuclear material or equipment 

and the foreign country involved. A person may use an NRC general 

license as authority to import or export nuclear material or equipment if the 

item is covered by the NRC general licenses issued under regulation in 

10 CFR Part 110. 10 CFR Sections 110.21 through 110.27 list the nuclear 

materials and equipment authorized for import or export under general

license. If an import or export is not covered by the general license, a 

person must file an application with the Commission for a specific license. 

A specific import/export license is a paper document issued by NRC on a 

 

2

Special nuclear material includes plutonium, uranium-233, or uranium enriched above 0.711 percent by weight in the 

isotope uranium-235.

3

Source material includes (1) Natural or depleted uranium, or thorium, other than special nuclear material,

or (2) Ores that contain by weight 0.05 percent or more of uranium, thorium, or depleted uranium.

4

Byproduct material includes any radioactive material (except special nuclear material) yielded in, or made radioactive 

by, exposure to the radiation incident to the process of producing or utilizing special nuclear material. 
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case-by-case basis to a named person or entity for the proposed 

transaction(s) described in the license application form.

Specific licenses are categorized as either non-Appendix P or 

Appendix P licenses. Non-Appendix P licenses refer to material and 

equipment described in 10 CFR 110 Appendixes A through O. 

These appendixes were codified into regulation between May 1978 

and November 2000 and cover a broad range of nuclear materials 

and equipment. Appendix P was codified into regulation on July 1, 

2005. Appendix P covers 16 specific radionuclides primarily used in 

industrial gauges and medical testing equipment.

This audit focuses on NRC’s processing of applications for new specific 

import/export licenses, amendments, and renewals—collectively referred to 

as import/export licensing actions—during Fiscal Year (FY) 2010. The 

Office of the Inspector General (OIG) previously audited this program in 

2004. That audit found that the Office of International Programs (OIP) 

approved license applications in a timely manner and coordinated 

effectively with other Federal agencies. However, license processing costs 

were under-recovered and internal quality control measures required 

improvement to correct documentation weaknesses. OIP developed written 

procedures and quality control checklists in response to those findings.

Office of International Programs Coordination Role

OIP is assigned to process specific nuclear import/export licensing actions 

under 10 CFR Part 110 after receiving any necessary guidance from the 

Commission. OIP coordinates its license application review, as needed, 

with the Office of Federal and State Materials and Environmental 

Management Programs (FSME), the Office of Nuclear Security and Incident 

Response (NSIR), the Office of Nuclear Material Safety and Safeguards 

(NMSS), the Office of the General Counsel (OGC), and the Commission, as 

follows:

FSME advises on nuclear waste importation and exportation.

NSIR confirms that physical security measures employed at 

foreign destinations are at least comparable to the 

recommendations in international guidance.
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NMSS confirms that export destinations are in compliance with 

nonproliferation commitments including International Atomic 

Energy Agency (IAEA) safeguards agreements.

OGC assists with legal matters pertaining to significant license 

application issues.

The Commission reviews certain applications based on criteria 

enumerated in 10 CFR Part 110.40.

OIP also coordinates with State government officials and representatives

of the regional low-level radioactive waste interstate compacts5on 

applications for the import of waste materials. Additionally, OIP coordinates

with the Departments of Energy and State on communications with foreign 

governments related to requirements of the AEA.

Within NRC, OIP coordinates financial reporting functions with the Office of 

the Chief Financial Officer (OCFO). This coordination includes determining 

that fee revenue is received and recorded on NRC’s financial records.

Processing of Import/Export Licensing Actions

To request a specific import/export licensing action, applicants submit a 

completed NRC Form 7, ―Application for NRC Export or Import License, 

Amendment, Renewal, or Consent Request(s),‖ and an established 

application fee to the OIP Deputy Director. Staff in OIP review the 

application for completeness, including receipt of the correct fee amount, 

and coordinate with other NRC and Federal agency staff to obtain their 

views on a proposed licensing action as necessary. Before issuing a 

license, OIP management is expected to perform a final review of the 

contents of the import/export file to confirm that all required 

communications, approvals, and documents are present.

 

5 Under the Low-Level Radioactive Waste Policy Amendments Act of 1985, States were given the 

responsibility for disposal of their low-level radioactive waste. States were encouraged to enter into 

agreements (compacts) to dispose of waste in common facilities. Currently, there are 10 interstate 

compacts and 10 unaffiliated States.
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From FY 2008 through FY 2010, OIP completed between 123 and 139 

licensing actions per year. (In any given year, some applications may be 

withdrawn by the applicant or returned by OIP to the applicant without 

action, and some may take more than a year to process.) Table 1 shows 

the number of specific import and/or export licensing actions completed 

according to OIP records for FY 2008 through FY 2010.

Table 1

Source: OIG analysis of OIP data

Fees charged by NRC for a specific import/export license are established in 

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‖ and are published annually in the CFR. These fees are 

intended to correspond to the level of effort required to process the various 

licenses. 

During FY 2010,

6

there were 11 levels of fees associated with 23 types of 

import/export licenses; fees ranged from $780 to process a minor 

amendment associated with an existing license to $16,900 to process a 

license application requiring review by the Commission. 

 

6

The audit period covered in this report is FY 2010, the most recent year for which complete data was 

available at the time of fieldwork.

136

139

123

100

110

120

130

140

2008 2009 2010

Number of Licensing Actions

Fiscal Years

Completed Licensing Actions FY 08 - FY 10
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NRC’s authority to collect fees derives from the Independent Offices 

Appropriations Act of 1952, as amended (IOAA), codified as 31 U.S. Code

9701 and the Omnibus Budget Reconciliation Act of 1990, as amended 

(OBRA). IOAA states that agency services are to be self-sustaining to the 

extent possible and that charges for services should be fair and based on 

cost to the Government. OBRA provides a statutory basis for cost recovery 

for NRC licensing and regulatory functions, stating, ―[A]ny person who 

receives a service or thing of value from the Commission shall pay fees to 

cover the Commission’s costs in providing any such service or thing of 

value.‖ 

Biennial Fee Review

In accordance with the Chief Financial Officers Act of 1990 (CFO Act), NRC 

is required, every 2 years, to review the fees it charges for services. 

Management Directive (MD) 4.6, License Fee Management Program, 

implements this legislative requirement and directs (1) the OCFO to

biennially review fees and (2) office directors to submit ―verified staff-hour 

data‖ to OCFO in support of the fee review. 

With regard to import/export licensing, OCFO establishes the fees based on 

the estimated average number of hours spent by program office staff 

processing specific license applications multiplied by the hourly rate 

established by OCFO.

7

 To support the biennial fee review, OIP estimates 

the average number of hours per license category spent by its staff 

processing applications and collects the same type of data from NSIR, 

NMSS, FSME, and OGC. These average hourly estimates are derived 

from analysis of Technical Assignment Control (TAC) codes that NRC staff 

use to capture their work activities in the agency’s time reporting system 

(the Human Resources Management System, or HRMS) and augmented by 

individuals’ recall of time spent on specific import/export licensing activities. 

OIP submits aggregated agency-wide hourly averages per license category

to OCFO with any recommendations concerning fee adjustments. OCFO 

multiplies OIP’s recommended average hours per license category by the 

OCFO-calculated professional hourly rate to establish fees for the coming 

year. 

 

7 OCFO’s calculation of the hourly rate is outside the scope of this audit.
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Budget

OIP has nine staff who spend part of their work effort on processing import 

and export license applications. In FY 2010, OIP budgeted six full-time 

equivalents (FTE) for license-related activities. Of the six FTEs, four are 

billable8for the review and processing of import/export license applications. 

The two non-billable FTEs are used for generic licensing activities such as 

research and answering general questions from licensees.

In FY 2010, according to HRMS records, OIP staff charged approximately 

2,670 staff-hours to billable licensing activities. Other program offices 

involved in reviewing import/export applications estimated they expended 

approximately an additional 969 staff-hours in support of billable 

import/export licensing activities during the same period. 

 

8

Billable FTEs are designed to recover the cost of providing individually identifiable services to specific 

applicants and holders of licenses.
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II. OBJECTIVES

The audit objectives were to determine whether NRC (1) properly 

reviews and approves import/export authorizations in a timely 

manner, (2) effectively coordinates this activity with other Federal 

agencies, and (3) efficiently and effectively coordinates import/export 

authorizations internally. The Appendix contains information on audit 

scope and methodology. 

III. FINDINGS

In general, OIP is properly reviewing and approving import/export license 

authorizations (applications) in a timely fashion and coordinates effectively

with external stakeholders. However, OIG identified opportunities for 

improvement for more efficient and effective internal coordination on 

import/export authorizations. Specifically,

A. OIP does not have a systematic approach to biennial fee 

reviews and adjustments.

B. OIP does not reconcile import/export license application 

revenue.

C. OIP does not employ an adequate quality control review 

process over application files.

Addressing these concerns will strengthen NRC’s internal control over 

import/export licensing.
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A. OIP DOES NOT HAVE A SYSTEMATIC APPROACH TO BIENNIAL FEE 

REVIEWS AND ADJUSTMENTS 

OIP employs an ad hoc and inconsistent approach to identifying the hours 

and license applications to include in the agency’s biennial review of costs

associated with import/export licensing activities. Specifically, OIP does not 

use a systematic method to:

Determine staff hours spent reviewing import/export license 

applications.

Determine the number of licensing applications per fee category.

Adjust the average number of hours assigned per import/export 

license category as a result of the biennial fee review.

These inconsistencies occur because OIP management does not provide 

sufficient quality control over data collection, data analysis, and use of 

biennial fee review results. As a result, OIP is not accurately charging

licensees, also known as customers, and not receiving full reimbursement 

for the cost of providing these services. 

NRC Responsibility To Examine Biennial Fee Review 

Information

NRC has the responsibility to ensure that data used in the mandated 

biennial fee review process is accurate and adjustments are made in a 

systematic manner so customers are charged equitable fees that reflect 

actual costs to the agency. 

Biennial Fee Review

In addition to requirements to collect fees, NRC is required at least 

biennially to evaluate the costs to provide the services for which it charges 

a fee. The CFO Act lays out the review requirements. The CFO Act states:

§902(a)(8) [NRC shall] review, on a biennial basis, the 

fees, ... imposed by the agency for services ... and 

make recommendations on revising those charges to 

reflect costs incurred by it in providing those services ....
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NRC has included biennial fee review guidance in its MD 4.6, License Fee 

Management Program, which provides direction for both the OCFO and 

NRC office directors with regard to fee review. Section III D. (4) requires 

office directors to:

Submit verified staff-hour data on a biennial basis to the 

CFO to support the determination of ―flat‖ fees used for the 

assessment of materials license fees under the IOAA and 

10 CFR Part 170. 

OIP’s policies and procedures mirror this requirement regarding the biennial 

fee review process. OIP has two separate policy documents, one for nonAppendix P applications, ―Procedures for Export/Import Licensing‖ (dated 

November 2004) and one for Appendix P applications, ―Appendix P License 

Processing Procedures‖ (undated). Both documents discuss the biennial 

fee review and, with the exception of specifying the number of fee 

categories, they are identical. 

OIP Employs an Ad Hoc Approach to the Biennial Fee Review 

Process 

OIP employs an ad hoc and inconsistent approach to identifying the hours 

and license applications to include in the agency’s biennial review of costs 

associated with import/export licensing. Specifically, OIP does not use a

systematic method to:

Determine staff hours spent processing import/export 

license applications.

Determine the number of licensing applications per fee 

category.

Adjust the number of hours assigned per import/export 

license category as a result of the biennial fee review. 

While OIP staff drafted biennial fee review procedures, they were not 

implemented in time for the most recent biennial fee review.
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Inconsistent Time Tracking

OIP uses unreliable and inconsistent methods to track staff time 

spent in support of import/export billable tasks in the biennial fee 

review process. As noted in the background section of this report,

OIP supports the agency’s biennial fee review by determining the 

number of hours OIP and other program office staff charged to 

processing specific import/export license applications in each of the 

various types of fee-billable licensing activities9during the biennial 

period under review. The OIP manager responsible for coordinating 

this effort explained that OIP and program office efforts are 

determined by compiling hours charged to each of the various HRMS 

TAC codes related to specific import/export activities and when this 

data is not available, talking with staff about what they worked on 

over the 2-year period.

Reliance on existing TAC codes to assess OIP staff time spent on 

import/export licensing activities has been problematic in that some 

staff appear to be using incorrect codes to report their time. For 

example, the codes used to track OIP time spent on import/export 

licensing activities changed during the biennial review period and

new code lists were distributed. The OIP manager recognized that 

staff needed further training on charging their time to the correct 

codes. Additionally, OIG’s analysis of OIP TAC code usage over the 

2-year period found OIP staff charged 18510 hours of import/export 

licensing activity to four codes associated with particular license

categories but for which no licensing applications were received, 

worked on, or licenses issued during the period for these categories. 

The OIP manager tries to compensate for imprecise use of TAC 

codes by asking OIP staff to convey their recollections of what they 

worked on, and how much time they spent working on specific 

import/export cases, over the 2-year period and then making 

adjustments to the TAC code data. However, OIP staff do not 

maintain documentation to confirm their recollections of what they 

worked on and the OIP manager did not document the rationale for 

 

9 No fees are charged for certain licenses issued to educational and governmental institutions. A list of fee 

exemptions may be found in 10 CFR Part 170.11. 

10 These 185 hours include 127 hours that OIP assigned to other licensing activities because of 

―mischarges‖ and 58 hours which were not included in the biennial fee review analysis because the activity 

was ―delete[d] w[ith the] 2010 rule change.‖
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any adjustments made to the TAC code data based on the 

recollections of OIP staff.

The OIP manager also relies on the recollections of non-OIP staff as to 

what import/export activity they worked on during the review period to 

compensate for TAC codes that are not specific enough to properly capture 

time spent on specific categories of import/export activity. For example, 

some non-OIP offices have import/export TAC codes that include both 

billable and non-billable activities. Furthermore, some non-OIP staff said 

they charge time to one of several codes depending on whether time has 

been charged to the code recently or not, without necessarily always 

charging the same TAC for the same task. The OIP manager compensates 

for the TAC code shortfalls by talking with non-OIP staff about what 

applications they worked on over the past 2 years. However, there is no 

documentation available to support non-OIP staff estimates of time spent 

on billable licensing activities, and limited documentation supporting the 

OIP manager’s adjustments to the non-OIP TAC code data. 

Inconsistent Categorization of License Applications

OIP staff also use inconsistent methods to determine if a particular type of 

application will be included in the counts of applications received and 

licenses issued that are used in the biennial fee review. OIP keeps 

information on active applications and licenses in two separate Microsoft 

Access tracking systems. All OIP licensing staff have access to both 

systems and can update records as information changes. OIP relies on the 

Access tracking systems to develop two Microsoft Excel spreadsheets to 

calculate the number of applications received and licensing actions 

completed during the biennial period. OIG compared the data in Access to 

the data in Excel and found that some applications listed in Access were 

not included in Excel. OIP staff provided conflicting answers as to whether 

certain types of application outcomes, such as those that are withdrawn by 

the applicant or returned by OIP to the applicant, are included in the 

biennial fee review count of applications. For example, of four applications 

listed as withdrawn in OIP’s Access tracking systems, two were included in 

the count of applications for the biennial fee review, and two were not. Five 

returned applications were shown in OIP’s Access tracking systems as 

completed; however, the Microsoft Excel spreadsheet shows four of these 

as ―in process‖ and one is not included. OIP could not provide any 
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documentation to support the varying treatment of these applications for 

purposes of the biennial review of fees.

Inconsistent Approach to Adjustments

OIP does not have a systematic approach for recommending adjustments 

in the hours that serve as the basis for the license fees charged to 

customers. OIG compared the fee hours11 for five major import/export 

license levels against biennial fee review hours reported for these activities 

and noted that while trends in biennial fee review data appear to indicate a 

need to make corresponding changes in customer fees, such adjustments

were not consistently made. 

Data in Table 2 compares the fee hours (shaded columns reflect fees 

published annually in CFRs) to biennial fee review hours by license level

developed as a result of OIP’s biennial fee review (unshaded columns). 

The dates at the top of the shaded columns are the effective dates for the 

published CFRs. The dates at the top of the unshaded columns reflect the 

biennial fee review period. Comparing an unshaded column to the shaded 

column to its right allows one to see the relationship between the biennial 

fee review results and the actual published fees. 

 

11 For comparison purposes, OIG converted fee amounts into hours by dividing the fee listed in 

10 CFR Part 170.21 by the professional staff hour rate in 10 CFR Part 170.20 to approximate the number 

of fee hours represented by each fee. 
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 Table 2

Comparison of Fee Hours to Review Hours by License Level

04 - 06 04 - 06 06 - 08 06 – 08 08 – 10 08 – 10 2011

CFRs

Biennial 

Fee 

Review

CFRs

Biennial 

Fee 

Review

CFRs

Biennial 

Fee 

Review

CFRs

Fee 

Hours*

Review

Hours

Fee 

Hours

Review

Hours

Fee 

Hours

Review

Hours

Fee 

Hours

Level 1** 65 81.4 65 69 65 76 65

Level 2 38 20.5 38 35 38 33 35

Level 3 12 20.9 16 13 16 15 16

Level 4 8 17.9 10 31 10 12 10

Level 5 1.5 8 3 4 3 16 5

* Fee hours are calculated from rate information in 10 CFR 170.20 and fees in 10 CFR 170.21.

** Levels correspond to the license classes found in 10 CFR 170.20 and 21: Level 1 = K1, 15A; Level 2 = K2, 

15B; Level 3 = K3, 15C; Level 4 = K4, 15D; and Level 5 = K5, 15E, 15R.

Source: OIG analysis of OIP and CFR information

Given that the biennial fee review results should be used to inform the fees 

published in the CFR, one would expect to see, for example, the 2004-2006 

study results reflected in 2006-2008 CFR adjustments. However, a 

comparison of fee hours reflected in the CFR fees to biennial fee review 

results showing hours spent on these license categories does not indicate a 

consistent relationship between these two data sets. For example, Table 2 

shows that Level 1 biennial fee review hours are consistently higher than 

fee hours used to calculate license costs in the CFR, but no adjustment has 

been made since 2004. Conversely, Level 2 biennial fee review hours are 

consistently lower than fee hours used to calculate license costs but no 

adjustment was made until 2011, and the fee hours used to calculate the 

license fee remain above actual hours. [Note: Numbers in bold indicate a 

change from the previously published information.]

OIP supervisory staff said that they did not recommend adjusting the hours 

for each license level for various reasons, including staff turnover and the 

resulting learning curve for new staff assigned to work on the licensing 

actions, significantly atypical cases that skew the data, and a wish not to 

introduce price uncertainty for license applicants. OIP supervisory staff also 

said they are sensitive to the impact of license costs on their customers.

Although OIP staff offered these explanations as examples of 
Audit of NRC’s Management of Import/Export Authorizations

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considerations taken into account when recommending adjustments in the 

fee schedule, they provided limited documentation to support their 

decisions or reflect OIP management discussion of the issues. 

Furthermore, OIP could only provide limited objective, written criteria used 

to support a decision whether to change the hours for each fee category. 

Insufficient Control Over Biennial Fee Review Data 

NRC’s approach to the biennial fee review is ad hoc and non-systematic 

because OIP management does not provide sufficient quality control over 

data collection, data analysis, and use of biennial fee review results. With 

regard to data collection within the office, OIP does not have written 

procedures for the proper charging of license types to specific TACs. 

Additionally, management changed TAC definitions five times during the 

latest biennial fee review period. According to OIP management, these 

changes were not sufficiently communicated to staff, and formal training

was not provided. Finally, supervisory staff do not always review the 

accuracy of import/export TACs charged by staff in HRMS to catch errors in 

a timely manner. 

OIP also has not communicated its requirements for TACs to support 

specific import/export activities to other program offices. There is no 

agreement between OIP and program offices as to which TACs should be 

used to report hours for billable fee activities and which hours should be 

included in OIP’s analysis. Nor is there agreement as to what activities are 

billable and which should be more properly categorized as overhead or preapplication work. 

Furthermore, OIP management does not provide sufficient quality control 

over data analysis and use of biennial fee review results. OIP staff 

provided OIG the data used to support the most recent biennial fee review. 

However, none of the supporting documentation contained a comparison 

with prior biennial fee review results. The biennial fee review results are 

reported to the CFO with only limited documentation of assumptions used 

for adjustments or written analysis to support recommendations. 

According to OIP managers, they know their caseload and specifics of their 

small program and thus are able to make judgments and adjustments 

based on program knowledge without formally documenting their reasoning.
Audit of NRC’s Management of Import/Export Authorizations

15

A well-managed biennial fee review process should include the following

quality control elements: 

Routine communications with and training for all involved 

staff in OIP and other program offices regarding 

requirements of the biennial fee review for billable 

import/export licensing activities.

Routine interim reviews and certification of HRMS data to 

ensure overall internal consistency in time reporting 

practices.

Documentation of the TAC number that should be charged 

for time spent on a particular license application on the 

checklist attached to the license application file.

Documentation of criteria on whether and when to include 

revised, returned without action, withdrawn, and 

terminated licenses in the count of applications and 

completed licensing actions.

Documentation of any assumptions and criteria used in 

collecting billable import/export licensing activities and 

their adjustments.

Documentation of assumptions and criteria used in 

determining whether to apply biennial fee review results to 

hours used in fee-setting. 
Audit of NRC’s Management of Import/Export Authorizations

16

NRC Under Recovered Its Costs

NRC is not accurately charging customers and not receiving full 

reimbursement for the cost of providing these services. The data in Table 3 

compares total hours billed to actual hours worked in the period per HRMS. 

In no period did the fees charged by OIP fully recover the costs associated 

with providing these services, as required by law. 

 Table 3

 Biennial Period 2004 - 2006 2004 - 2006

Hours Billed 2,297.25

Hours Worked 3,202.75

Under Recovery 28.27%

 Biennial Period 2006 - 2008 2006 - 2008

Hours Billed 5,641.50

Hours Worked 6,097.00

Under Recovery 7.47%

Biennial Period 2008 - 2010 2008 - 2010

Hours Billed 4,718.50

Hours Worked 5,864.50

Under Recovery 19.54%

Cost Recovery

Hours Billed to Hours Worked

Source: OIG analysis of OIP information

The estimated net effect of this ad hoc approach to the biennial fee review 

and adjustment process is that OIP is consistently not recovering the cost of 

providing import/export license application review services as required by 

law. 

OIG estimated the under recovery of import/export fees during FY 2010 by 

comparing (a) hours worked related to import/export application processing

multiplied by the professional hourly rate charged for these licensing 

activities against (b) the fee revenue ($611,000) reported by Department of 

the Interior, National Business Center (DOI NBC) for import/export activities 
Audit of NRC’s Management of Import/Export Authorizations

17

for the same time period. This comparison indicated that NRC under 

recovered import/export licensing costs by approximately $325,000.

12

 

Recommendation

OIG recommends that the Director, Office of International Programs:

1. Develop, document, and implement a systematic biennial fee 

review process.

OIG recommends that the Executive Director for Operations together with 

the Chief Financial Officer:

2. Develop program office TACs to specifically support import/export fee 

billable licensing activities in all offices which have a role in this 

licensing process.

 

12 3,638.75 hours as reported in HRMS x $257.22 professional hourly rate = $935,959.27 (rounded to 

$936,000) - $611,000 DOI NBC estimated fee revenue = $325,000 under recovery.
Audit of NRC’s Management of Import/Export Authorizations

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B. OIP DOES NOT RECONCILE IMPORT/EXPORT LICENSE 

APPLICATION REVENUE 

OIP recorded receipt of import/export license fees submitted by at least one 

applicant in internal office records, but did not forward the funds to NRC’s 

lockbox13 as required by OIP policy. This error occurred because OIP 

procedures describing the fee handling process do not specifically instruct 

OIP employees on how to deposit revenue and OIP staff thought OCFO 

personnel were making the deposits. Furthermore, OIP does not have 

adequate separation of duties related to revenue and does not perform an 

adequate reconciliation to verify that submitted import/export license fees 

are, in fact, deposited in the agency’s account. As a result, NRC has not 

recovered all the money owed for services rendered.

Revenue Collection Responsibility 

The Director of OIP is responsible for ensuring that import/export license 

revenue is received and properly tracked in NRC’s financial records. NRC’s 

MD 4.1, Accounting Policies and Practices, provides direction for both the 

OCFO and directors of offices that collect revenue. MD section 4.1-03 

directs these managers to ―Review and verify accounting information in 

agency accounting system reports for completeness and accuracy.‖ The 

Government Accountability Office in its Standards for Internal Control in the 

Federal Government emphasizes the need for control activities, including

proper segregation of duties (separate personnel with authority to authorize 

a transaction, process the transaction, and reconcile the transaction); 

proper authorization; and appropriate documentation of transactions such 

as revenue collections and deposits.

OIP policies state that the ―correct fee [must be] received‖ for an application 

to be considered complete. Further, ―All applications ... must include the 

required processing fee. Processing of the request [application] cannot 

begin without the receipt of such fee.‖

 

13 OIP policy provides that OIP staff should forward import/export license fee payments to the agency’s 

lockbox located in St. Louis, Missouri. 
Audit of NRC’s Management of Import/Export Authorizations

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Not All Fee Revenue Was Deposited

OIG identified several instances where OIP recorded receipt of 

import/export license fees, but the fee payments were not forwarded to the 

lockbox and subsequently deposited in NRC’s bank account. OIG 

compared FY 2010 data for one specific vendor from OIP records to DOI 

NBC records. Of the 15 FY 2010 transactions for this vendor, OIG 

identified eight instances where OIP recorded a $4,100 fee received, but 

DOI NBC did not have a record of the fees being deposited. Each instance 

concerned a credit card authorization provided by the applicant to NRC that 

was not forwarded to DOI NBC for processing. This happened over a 

period of at least 9 months. OIG staff provided OIP staff with information 

concerning the eight credit card authorizations that did not appear to have 

been received by DOI NBC. OIP and OCFO further researched these 

specific instances and NRC subsequently collected $32,800 for licenses 

issued, but for which NRC had not deposited the fees.

Inadequate Revenue Receipt and Reconciliation Procedures 

This error occurred because OIP procedures describing the fee handling 

process do not specifically instruct OIP staff on how to process credit card 

authorizations. Furthermore, OIP employees thought OCFO personnel 

were forwarding the authorizations to DOI NBC for processing. Similarly, 

OCFO employees assumed OIP staff were forwarding the authorizations to 

DOI NBC. OIP does not separate revenue receipt and recordation duties 

among several staff, so the error was not noticed during routine reviews by 

other staff. Furthermore, OIP does not perform an adequate reconciliation 

to verify that submitted import/export license fees are, in fact, deposited in 

the agency’s account and OIP supervisory staff do not conduct a routine 

year-end revenue reconciliation. 

Inadequate Revenue Receipt Procedures

OIP’s two policy and procedure documents provide inconsistent guidance 

related to the receipt of payments by check and neither document 

discusses how to handle payment by credit card. Non-Appendix P 

procedures state, ―The transmittal form will forward to the CFO [emphasis in 

original] a copy of the application and any check which has been received 

from the applicant ....‖ Appendix P procedures state, ―The transmittal form 

will be forwarded via Express Mail [emphasis in original] to the U.S. Bank, 
Audit of NRC’s Management of Import/Export Authorizations

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Government Lockbox ... a copy of the application and any check which has 

been received from the applicant ....‖ In addition to specifying different 

destinations for OIP to send transmittal forms and checks, the placement of 

the word ―copy‖ in the Appendix P procedures (―a copy of the application 

and any check‖) does not provide clear guidance on who should receive the 

original or the copy of the check. Finally, neither procedure addresses 

credit card authorizations or other means of payment.

14

 

According to an OCFO manager, it is OIP’s responsibility to send all 

payments to DOI NBC. 

Inadequate Revenue Reconciliation Procedures

OIP does not employ an effective revenue reconciliation process to identify 

the instances where funds have been received but not deposited. OIP staff 

receive a monthly report from DOI NBC detailing all deposits made, but 

they do not use that report to perform a formal revenue reconciliation. 

MD 4.1 requires the OIP Director to review and verify revenue reports; 

however, OIP’s internal policies and procedures are silent on the issue of 

funds reconciliation and separation of duties related to revenue receipt and 

recordation. Furthermore, there is no office performance evaluation metric 

related to revenue reconciliation. 

NRC Is Owed Money for Licenses

Prior to this audit, NRC had not deposited at least $32,800 for import/export 

licenses issued. Accordingly, NRC was not in compliance with OBRA 

because the import/export license revenue did not cover the Commission’s 

costs in providing their services.

In addition, OIP employees have not performed a reconciliation to confirm 

whether there are any other instances of undeposited revenue.

 

14 Other methods can include money orders and Intragovernmental Payment and Collection System transfers. 
Audit of NRC’s Management of Import/Export Authorizations

21

Recommendations

OIG recommends that the Director, Office of International Programs:

3. Develop one or more import/export licensing-related performance 

evaluation metric(s) related to revenue reconciliation.

4. Develop policies and procedures related to fee revenue which 

include effective internal control. Specifically,

Separation of duties related to fee revenue handling.

Monthly reconciliations of receipts to deposits.

Routine management review of fee revenue 

reconciliations.

5. Review and reconcile prior fee revenue receipts to licensing 

actions completed for which a fee was owed from 2008 – 2011 to 

verify that all revenue for import/export licenses has been 

collected and deposited.
Audit of NRC’s Management of Import/Export Authorizations

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C. OIP DOES NOT EMPLOY AN ADEQUATE QUALITY CONTROL 

REVIEW PROCESS OVER APPLICATION FILES 

Internal control standards require that all transactions be clearly 

documented and the documentation should be readily available for 

examination. However, OIP application files do not always contain 

required information to support the issuance of the license. Sixtythree percent of completed import/export files reviewed by OIG 

contained checklists that were incompletely filled out or were missing 

one or more items identified in OIP’s policies and procedures as 

required documentation. Files were incomplete because OIP does 

not employ an effective quality control process over file 

documentation and management’s review and approval process is 

inadequate. Incomplete file documentation and inadequate 

management review has resulted in instances where licenses were 

issued without proof that all required documentation was included. 

Without an adequate quality control process for compiling and 

reviewing import/export files prior to completion, there is an 

increased chance that NRC could erroneously issue a license. Such 

action would be contrary to NRC’s mission to ensure adequate 

protection of public health and safety, promote the common defense 

and security, and protect the environment.

Internal Control Standards 

GAO’s Standards for Internal Control in the Federal Government provide 

detailed guidance to all Federal agencies on the importance of internal 

control and a description of the elements of an effective control system. 

The standards highlight the importance of control activities, specifically 

―proper execution of transactions and events,‖ and ―accurate and timely 

recording of transactions and events.‖ Furthermore, ―[i]nternal control and 

all transactions and other significant events need to be clearly documented, 

and the documentation should be readily available for examination.‖ When 

applied to the import/export licensing process, this standard means that all 

significant events in the licensing process should be documented and this 

documentation is to be accurate and accessible. 
Audit of NRC’s Management of Import/Export Authorizations

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Checklists help ensure consistency and completeness in documenting all 

significant events. They are also a risk management tool to help OIP staff

meet NRC’s mission objectives. OIP uses import/export file checklists 

which are attached to each application file and include many of the required 

steps to complete an application. These checklists vary based on the 

application type and not all steps are required for all applications. 

Checklists provide a place for OIP staff to indicate whether the application 

is complete. The checklists provide areas to note coordination with other 

NRC offices and Federal agencies. 

Import/Export License Files Are Incomplete

OIG examined a sample of 19 import/export files from the total population of 

164 applications received and/or completed during FY 2010 and found that 

12 files (63 percent) were incomplete. Of the 12 incomplete files, 11 were 

missing one or more items on the checklist (e.g., checklist items left blank 

altogether, dates missing, and documentation missing from file) and 1 was 

missing the checklist itself. When checklist items are left blank there is no 

way to affirmatively determine whether the item is applicable. While the 

majority of the file omissions appear relatively minor, three were significant. 

In one case a license was issued without documentation of foreign 

government consent in the file. In another there was no documentation 

confirming that substantive issues raised during the review process were 

resolved before the license was issued. In the third, a license was issued 

for a combined import/export of an incorrect amount of nuclear material. 

Additionally, four licenses were issued even though the checklist indicated 

the application was incomplete. 

Ineffective Quality Control

Import/export files were incomplete because OIP does not employ an 

effective quality control process over file documentation. 

Additionally, the checklists do not necessarily contain all required 

steps, and all steps listed are not necessarily required. Although OIP 

procedures include a requirement for management review of nonAppendix P files before a license is issued, and OIP staff state that

management does perform such reviews, those reviews have not 

resulted in complete files and there was no documented evidence 

that a management review occurred. The Appendix P procedures do 
Audit of NRC’s Management of Import/Export Authorizations

24

not provide any requirement for file review in advance of issuing a 

license. 

Licenses Issued Without Required Complete Documentation 

Inadequate file review has resulted in quality control weaknesses where 

licenses were issued without certification that all required documentation 

had been gathered and reviewed prior to issuance of the license. Without 

an adequate management control process for compiling and reviewing 

import/export files prior to completion, there is an increased chance that 

NRC could erroneously issue a license. Such action would be contrary to 

NRC’s mission to ensure adequate protection of public health and safety, 

promote the common defense and security, and protect the environment.

Recommendations

OIG recommends that the Director, Office of International Programs:

6. Document applicability or non-applicability of all steps on all 

checklists and the dates the steps were completed.

7. Require that management document review and certification of 

license application file completeness before issuing an

import/export license. 
Audit of NRC’s Management of Import/Export Authorizations

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IV. CONSOLIDATED LIST OF RECOMMENDATIONS

OIG recommends that the Director, Office of International Programs:

1. Develop, document, and implement a systematic biennial fee 

review process.

OIG recommends that the Executive Director for Operations together with 

the Chief Financial Officer:

2. Develop program office TACs to specifically support import/export 

fee billable licensing activities in all offices which have a role in 

this licensing process.

OIG recommends that the Director, Office of International Programs:

3. Develop one or more import/export licensing-related performance 

evaluation metric(s) related to revenue reconciliation. 

4. Develop policies and procedures related to fee revenue which 

include effective internal control. Specifically,

Separation of duties related to fee revenue handling.

Monthly reconciliations of receipts to deposits.

Routine management review of fee revenue reconciliations.

5. Review and reconcile prior fee revenue receipts to licensing 

actions completed for which a fee was owed from 2008 – 2011 to 

verify that all revenue for import/export licenses has been 

collected and deposited.

6. Document applicability or non-applicability of all steps on all checklists 

and the dates the steps were completed.

7. Require that management document review and certification of license 

application file completeness before issuing an import/export license. 
Audit of NRC’s Management of Import/Export Authorizations

26

V. AGENCY COMMENTS

OIG met with NRC management officials and staff during a March 8, 2012, 

exit conference. Subsequent to the exit conference the agency provided 

informal comments. On March 21, 2012, OIG provided a revised draft 

report to the agency that incorporated changes OIG deemed appropriate 

after consideration of the agency’s informal comments. OIG met with 

agency management and staff on March 23, 2012, to discuss additional 

suggested changes to the report; subsequently, OIG incorporated additional

informal comments into the draft report as appropriate. NRC staff reviewed 

the revised draft report and opted not to provide formal comments.
Audit of NRC’s Management of Import/Export Authorizations

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Appendix

OBJECTIVES, SCOPE, AND METHODOLOGY 

OBJECTIVES

The audit objectives were to determine whether NRC (1) properly 

reviews and approves import/export authorizations in a timely 

manner, (2) effectively coordinates this activity with other Federal 

agencies, and (3) efficiently and effectively coordinates

import/export authorizations internally.

SCOPE

This audit focused on reviewing the management and internal controls over

the import/export licensing program during FY 2010. We conducted this 

performance audit at NRC headquarters (Rockville, Maryland) from 

June 2011 through November 2011. Internal controls related to the audit 

objectives were reviewed and analyzed. Throughout the audit, auditors 

were aware of the possibility or existence of fraud, waste, or misuse in the 

program.

METHODOLOGY

OIG reviewed relevant Federal regulations regarding import/export 

licensing, charging fees, reviewing fees, and coordinating with other NRC 

offices and Executive Branch agencies. Specifically, we reviewed the 

Omnibus Budget Reconciliation Act of 1990, as amended; the Chief 

Financial Officers Act of 1990, as amended, and the Atomic Energy Act of 

1954, as amended. OIG also reviewed agency guidance, including 

management directives and office policies and procedures that pertain to 

import/export license fees, and a prior NRC OIG audit report related to this 

topic. A sample of license files for FY 2010 was also examined.

Additionally, OIG reviewed and analyzed data related to the import/export 

licensing process. Specifically, OIG reviewed the supporting documentation 

and data for five biennial fee reviews conducted from 2004 – 2010. OIG 

also reviewed import/export license fee revenue data from OCFO and DOI 

NBC.
Audit of NRC’s Management of Import/Export Authorizations

28

OIG interviewed staff at the Departments of Energy and State regarding 

NRC’s coordination with other Federal agencies. OIG also interviewed staff 

at headquarters in Rockville, Maryland, who participate in activities related 

to the management of import/export license application processing. These 

interviews were conducted to obtain staff insights into the oversight and 

implementation of the import/export license fee process. 

We conducted this performance audit in accordance with generally 

accepted Government auditing standards. Those standards require that we 

plan and perform the audit to obtain sufficient, appropriate evidence to 

provide a reasonable basis for our findings and conclusions based on our 

audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our audit 

objectives. 

The audit work was conducted by Kathleen M. Stetson, Team Leader; Terri 

L. Cooper, Audit Manager; Mary W. Meier, Senior Auditor; and Harluxsh S. 

Gill, Student Intern.