August 16, 2016

Audit Coverage of Cost Allowability for Nuclear Waste Partnership, LLC, During Fiscal Years 2013 and 2014 Under Department of Energy Contract No. DE-EM0001971

Nuclear Waste Partnership, LLC (NWP) has managed and operated the Waste Isolation Pilot Plant (WIPP) under a contract with the Department of Energy since October 1, 2012.  WIPP is part of the Department’s Office of Environmental Management and was built to safely dispose of the Nation’s defense-related transuranic radioactive waste.  During fiscal years (FYs) 2013 and 2014, NWP incurred and claimed costs totaling $312,783,680.

NWP is required by its contract to account for all funds advanced by the Department annually on its Statement of Costs Incurred and Claimed, to safeguard assets in its care, and to claim only allowable costs.  The Department’s Cooperative Audit Strategy places reliance on the contractors’ internal audit function (Internal Audit) to provide audit coverage of the allowability of incurred costs claimed by the contractors.
Based on our assessment, nothing came to our attention to indicate that the allowable cost-related audit work performed by NWP’s Internal Audit for FYs 2013 and 2014 could not be relied upon.  We did not identify any material internal control weaknesses with the cost allowability audits, which generally met the International Standards for the Professional Practice of Internal Auditing prescribed by the Institute of Internal Auditors.  Furthermore, while NWP’s Internal Audit did not perform individual audits of each subcontractor due to staffing limitations, it performed statistical sampling of all subcontractor purchase order transactions in its testing of allowable costs.  NWP’s Internal Audit also performed sample testing of purchase order transactions for all subcontractors with incurred costs over $1 million.  We did not identify any material internal control weaknesses with audit coverage of subcontractor costs.  During FYs 2013 and 2014, NWP’s Internal Audit identified $392,468 in questioned costs, all of which had been resolved.

In our prior report, Assessment of Audit Coverage for Washington TRU Solutions, LLC, Under Department of Energy Contract DE-AC29-01AL66444 for Fiscal Year 2012 (OAS-V-14-13, August 2014), we noted that $11,899 in questioned FY 2010 costs related to an ongoing investigation were still unresolved.  We found that these questioned costs had since been resolved.

Topic: Management & Administration