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U.S. Department of Energy	             ORDER        
     Washington, D.C.			    DOE O 224.3

						Approved:  1-24-05
	

  

    
This directive was reviewed and certified as current and necessary by Susan J. Grant, Director, Office of Management, Budget and Evaluation/Chief Financial Officer, 1-24-05.
    
  




SUBJECT:	AUDIT RESOLUTION AND FOLLOW-UP PROGRAM 


1.	OBJECTIVES.

a.	Establish requirements and responsibilities for the timely, efficient, and effective 
resolution of open Inspector General (IG) and Government Accountability Office 
(GAO) audit findings and recommendations.

b.	Assign accountability to senior program element managers for the management of 
their respective audit resolution processes.

c.	Establish requirements and processes for reporting status of open audit findings 
and recommendations.

d.	Establish, and inform senior managers of, the authorities and processes for 
corporate oversight, review, and resolution of audit issues.

2.	CANCELLATIONS.  DOE 2300.1B, Audit Resolution and Followup, dated 6-8-92.  
Cancellation of a directive does not, by itself, modify or otherwise affect any contractual 
obligation to comply with the directive.  Cancelled directives that are incorporated by 
reference in a contract remain in effect until the contract is modified to delete the 
references to the requirements in the cancelled directives.

3.	APPLICABILITY.

a.	Primary DOE Organizations and the National Nuclear Security Administration 
(NNSA).  This Order applies to all Primary DOE Organizations and their 
cognizant field activities, and the NNSA.  However, certain exceptions or 
modifications to specific requirements are applicable to NNSA and have been 
noted as appropriate throughout the Order.  This Order also applies to the 
resolution of IG and GAO audits.  Primary DOE Organizations are listed in 
Attachment 1.  This Order also automatically applies to primary DOE 
organizations created after it is issued.

b.	Site/Facility Management Contractors.  This Order does not apply to contractors.

c.	Exclusions.  None.

4.	REQUIREMENTS.

a.	Audit Resolution and Follow-up Program.  Audit resolution and follow-up are 
integral parts of good management and, therefore, are key elements of senior 
management responsibilities.  Prompt and proper corrective actions are 
implemented to resolve findings, to address recommendations, and to improve the 
effectiveness and efficiency of DOE operations.

(1)	The Office of Management, Budget and Evaluation/Chief Financial 
Officer (OMBE/CFO) provides corporate leadership for the Department’s 
audit resolution and follow-up program and advises the Secretary on the 
status of the program.

(2)	Primary responsibility for effective audit resolution and follow-up, 
including the responsibilities listed below, rests with the head of each 
primary DOE organization or, within NNSA, the Associate Administrator 
for Management and Administration, including: 

(a)	Establishing and managing processes and procedures to resolve 
audit findings and recommendations to ensure all audit issues are 
addressed;
(b)	Reporting the status of open audit recommendations quarterly in 
the corporate tracking system, Departmental Audit Report 
Tracking System (DARTS);
(c)	Conducting follow-up assessments and/or reviews to ensure 
corrective actions have been fully implemented in accordance with 
management commitments established in final reports and/or 
management decisions;
(d)	Ensuring cognizant field activities are compliant with established 
audit resolution and follow-up requirements and processes;
(e)	Ensuring site and facility management contractors under their 
cognizance have systems in place to ensure resolution and 
settlement of audits, including subcontract audits conducted by 
other audit agencies such as the Defense Contract Audit Agency;
(f)	Reviewing IG and GAO report findings and recommendations 
assigned to other organizations to determine whether those findings 
and recommendations may be applicable within their organizations 
and whether actions need to be taken to resolve identified issues.

b.	Audit Reports.

(1)	IG audits and inspections and GAO audits resulting in public reports are 
management tools used to detect fraud, waste, and abuse in the 
Department and to promote economy and efficiency in the administration 
of the Department’s programs and operations.  Public inspection reports 
will be treated in accordance with the policies and procedures specified for 
audit reports herein.

(2)	Open IG audit findings and recommendations shall be resolved within 
6 months after issuance of the final audit report [Office of Management 
and Budget (OMB) Circular A-50, paragraph 8.a.(2)].  For IG audits, 
resolution is the point at which the primary organization and the auditors 
agree on actions to be taken on reported findings and recommendations 
(i.e., management concurs with the final audit report findings and 
recommendations or a management decision is issued).  For GAO audits, 
resolution occurs within 60 days after formal issuance of the report and is 
defined as the point at which the Agency responds to Congress [OMB 
Circular A-50 paragraphs 6.b.(3) and 8.b.(4)].  “Resolution” is not to be 
confused with “closure” which is explained in paragraph 4b(7) of this 
Order.

(3)	When an audit report contains recommendations for only one primary 
organization, audit resolution and follow-up responsibilities are assigned 
to that organization to prepare a management decision.  This organization 
is the Primary Action Activity (PAA).

(4)	When an audit report contains recommendations for multiple 
organizations, a PAA is designated by OMBE/CFO to coordinate audit 
resolution and follow-up and prepare the management decision.  The PAA 
coordinates the final management decision with other organizations cited 
in the report and other appropriate organizations impacted by the 
management decision.  Other organizations that are identified in the audit 
report or are required to coordinate on the final response are known as a 
Secondary Action Activity (SAA).  NNSA may provide a separate 
management decision, whether the PAA or SAA, when deemed 
appropriate by NNSA (with copy to OMBE/CFO). 

(5)	A corrective action plan that addresses each open recommendation is 
developed whenever an audit report contains at least one open 
recommendation and/or, for contract audits, contains questioned costs that 
need to be resolved.  The PAA approves action plans and ensures that 
milestones have been established and completed.  Corrective action plans 
are not required for preaward audits and audits performed solely to 
determine indirect cost rates.  NNSA is responsible for the development, 
approval, and completion of its own action plans.

(6)	Audit reports remain open until all recommendations have been closed and 
an assurance certification is issued by the head of the Primary DOE 
Organization or NNSA documenting that an assessment or review has 
been conducted and necessary corrective actions have been completed.

(7)	Closure of audit reports should generally take no longer than 1 year after 
issuance of the final report.  For closures that are scheduled to take longer 
than 1 year, a written justification is required in DARTS, subject to audit. 

c.	Departmental Audit Report Tracking System.

(1)	Quarterly status reports on an organization’s open audit recommendations 
are submitted to DARTS.  This system is maintained by OMBE/CFO and 
is a tool for tracking/monitoring the Department’s progress in resolving 
audit recommendations. 

(2)	A complete record of actions taken and milestones for all findings and 
recommendations, monetary and nonmonetary, is maintained in DARTS.

(3)	Field and/or Headquarters PAAs or NNSA input audit tracking and 
follow-up data into DARTS as required. 

(4)	Audit reports remain open in DARTS until the assurance certification is 
received by OMBE/CFO.

d.	Departmental Internal Control and Audit Review Council (DICARC).

(1)	DICARC is a council established to provide senior management oversight 
of the audit resolution and follow-up program.  The council convenes 
semiannually or when requested by the chairperson.

(2)	Membership includes the Director OMBE/CFO (Chairperson); the IG; the 
Principal Deputy Administrator for NNSA; the Assistant Secretary for 
Environmental Management; and a Headquarters Secretarial Officer 
appointed on a rotating basis by the Chairperson.  A nonvoting technical 
advisor from the Office of the Secretary will also serve on DICARC. 
 
(3)	DOE and NNSA Senior Procurement Executives attend council meetings 
when requested to address audit follow-up matters pertaining to 
procurement, acquisitions, or contracts.

(4)	Heads of primary organizations, or their designees, attend council 
meetings when requested to address audit follow-up matters pertaining to 
their organizations.

5.	RESPONSIBILITIES.

a.	Departmental Internal Control and Audit Review Council.

(1)	Provides guidance on corrective actions to be taken when designated 
officials have failed to make such determinations within the prescribed 
time frames (e.g., audit reports not resolved after 6 months or IG reports 
not closed after 1 year following the dates of the final reports).

(2)	Requires and/or recommends additional corrective actions when 
completed actions have not been sufficiently responsive to audit findings 
and recommendations.

(3)	Coordinates development of a management decision when the head of the 
primary organization is unable to resolve major disagreements with the IG.

b.	Director, Office of Management, Budget and Evaluation/Chief Financial Officer.

(Note:  The NNSA Associate Administrator for Management and Administration 
has delegated authority for carrying out the responsibilities in paragraphs 5b(1), 
(3), (4), (5), and (6) below on behalf of NNSA to the Director, Policy and Internal 
Controls Management, where applicable.)

The Director, OMBE/CFO, is designated by the Secretary as the Audit Follow-up 
Official to ensure the Department’s audit follow-up activities result in prompt and 
proper resolution of audit recommendations.  In addition, the Director, 
OMBE/CFO, chairs, and provides support to, DICARC; plans and schedules 
DICARC meetings; and notifies appropriate officials, including heads of primary 
organizations, when the meetings involve issues pertinent to their organizations.

(1)	Develops, implements, and maintains Department-wide audit resolution 
and follow-up policy, procedures, and tracking and reporting systems.  
NNSA develops and implements internal policies and procedures to 
support the Departmental process.

(2)	Notifies heads of primary organizations of specific audit reports for which 
a DARTS status report must be provided.

(3)	Reviews DARTS reports quarterly and assesses whether milestones 
established and corrective actions taken or planned are timely and 
responsive.  Provides periodic reports to Departmental senior 
management. 

(4)	Provides copies of DARTS status reports quarterly to the IG for review 
and comment.

(5)	Seeks resolution of differences regarding actions taken to effect closure of 
audit findings or recommendations.  Refers unresolved differences to 
DICARC.

(6)	Analyzes audit follow-up activity periodically to determine trends and 
system-wide problems and to recommend solutions.

c.	Inspector General.

(1)	Reviews DARTS status reports and notifies the Director, OMBE/CFO, of 
concerns or disagreements with corrective actions taken or planned.  The 
NNSA Director, Policy and Internal Controls Management, is also notified 
when issues involve NNSA.

(2)	Evaluates audit follow-up systems periodically and assesses whether the 
systems result in effective, prompt, and proper resolution and corrective 
action on audit recommendations.

(3)	Conducts follow-up reviews of closed audits, when appropriate, to assess 
whether corrective actions have been implemented.

(4)	Conducts audits of closure milestones for report closures scheduled to take 
longer than 1 year beyond issuance of the final report, as deemed 
appropriate.

d.	Heads of Primary DOE Organizations and Cognizant Field Activities and the 
Associate Administrator for Management and Administration, NNSA.

(Note:  The NNSA Associate Administrator for Management and Administration 
has delegated authority for carrying out the following responsibilities on behalf of 
NNSA to the Director, Policy and Internal Controls Management, where 
applicable.)

(1)	Develop and manage effective audit resolution and follow-up programs 
and provide mechanisms for maintaining up-to-date reporting in DARTS.

(a)	Maintain operating procedures and systems for audit resolution and 
follow-up.

(b)	Ensure controls are developed to provide timely, accurate, and 
complete responses to audit reports.

(c)	Provide instruction on audit follow-up processes and procedures to 
personnel within the primary organization or NNSA to ensure the 
prompt and proper resolution of audit findings and 
recommendations.

(d)	Track audit follow-up and confirm that necessary corrective 
actions have been completed.

(2)	Designate audit follow-up coordinators to serve as liaisons for their 
respective organizations with OMBE/CFO to coordinate and track audit 
resolution and follow-up activities.  The Director, Policy and Internal 
Controls Management, is the single audit coordinator for NNSA.

(3)	Designate audit action officers for each audit report that contains findings 
and recommendations pertaining to areas of the audit action officers’ 
assigned responsibilities, and ensure that action plan milestones are met.  
(For audit recommendations related to contracts and financial assistance 
agreements, the audit action officer is normally the contracting officer 
administering the award.)

(4)	When designated as the PAA, prepare management decisions to audit 
reports. Where audit recommendations apply to more than one activity, the 
PAA must request comments from, and coordinate the final consolidated 
response with, the SAAs.

(5)	Provide advance notification to the Associate Deputy Secretary and 
OMBE/CFO of sensitive issues that will be included in audit reports.  
This includes controversial findings, recommendations, or other issues 
of which senior management should be aware.

(6)	Ensure effective corrective actions have been implemented and have 
addressed audit report recommendations:

(a)	Conduct audit follow-up assessments or reviews and provide an 
Assurance of Effectiveness of Corrective Actions Taken (assurance 
certification) to OMBE/CFO to close out audit report 
recommendations.  Assurance certifications are signed by the head 
of the primary organization or his/her designee.  The Associate 
Administrator for Management and Administration is the certifying 
official for NNSA.  Field activities submit their assurances through 
their headquarters primary organization element.

(b)	Include the following statement in the assurance certification when 
all recommendations in operational audit reports have been 
subjected to an audit assessment or review.

“This is to confirm that an audit follow-up 
assessment or review has been completed on the 
subject audit report or recommendations contained 
in the audit report, and necessary corrective actions, 
if any, have been completed.”

The above statement should be followed by the name, title, date, 
and signature of the head of the primary organization or his/her 
designee.

(c)	Submit assurance certifications along with the 
corresponding DARTS Status Report for the quarter in 
which all corrective actions have been completed and 
follow-up assessments or reviews have been conducted.

(7)	Attend or provide representation at DICARC meetings upon request when 
items on the agenda pertain to their organizational areas of responsibility.

(8)	Ensure accountability of appropriate officials for effectiveness in carrying 
out audit resolution and follow-up activities.

6.	DEFINITIONS.  The following terms are used in this Order.  Because audit resolution 
and follow-up are the responsibilities of individuals from a variety of professional 
disciplines, some definitions may differ from generally accepted custom and usage.

a.	Assurance of Effectiveness of Corrective Actions Taken.  An assurance that audit 
follow-up assessments or reviews have been conducted on each recommendation 
in the audit report to ensure that corrective actions have satisfactorily addressed 
audit report recommendations.  The assurance must be provided before the audit 
report can be closed in DARTS.

b.	Audit.  Work performed following the Government Accountability Office’s 
Government Auditing Standards in examining financial statements and in 
reviewing (1) compliance with laws and regulations, (2) economy and efficiency 
of operations, (3) effectiveness in achieving program results, and (4) allowable 
costs claimed against the Department.

c.	Audit Follow-up Assessment.  An independent examination of operational audit 
status reports to determine whether audit recommendations have been adequately 
addressed and corrective actions implemented.  This may include an onsite 
verification review.  The assessment is performed by individuals not directly 
responsible for implementing the corrective actions.

d.	Audit Report.  For purposes of this Order, audit reports are limited to final reports 
detailing the results of IG and GAO audits.  Types of audit reports include (1) Financial audit 
report—include a review of the fairness of presentation of financial information, the 
effectiveness 
of related internal controls, and compliance with applicable laws and regulations; 
(2) Operational audit 
reports—include reviews of the operation and management of Departmental programs and 
administrative 
functions and generally involve actual or potential fraud, waste, 
error, or procedural deficiencies applicable to Departmental elements; and 
(3) Contractual audit reports—include both contract and financial assistance agreements.  Contractual 
audit reports 
 generally review costs claimed in the determination of allowable costs.  Those reports could 
also include fraudulent 
claims, compliance, economy, and efficiency audits of contract organizations when DOE is responsible 
for ensuring 
the necessary corrective actions are taken.

e.	Audit Resolution.  For IG audits, resolution is the point in the audit follow-up 
process when a management decision is made to act on audit findings, 
recommendations, or advice (as opposed to the completion of agreed upon 
actions).  For financial and operational audit reports, resolution normally takes 
place when the official management response on the audit recommendations is 
signed.  For contractual audit reports, audit resolution usually is evidenced when 
the contracting officer sends written notification to the audited organization 
initiating appropriate corrective actions, submitting a renegotiation 
memorandum/plan, or setting forth the basis and rationale for accepting or 
rejecting the audit report recommendations.  An audit report may be considered 
resolved despite the right of persons outside the Department to negotiate, appeal, 
or litigate.  For GAO reports, resolution is the point at which the Agency responds 
to Congress.

f.	Corrective Action Plan.  A formal written document that describes the specific 
steps and milestones necessary for completion of corrective actions.  The plan is 
submitted with management comments on the audit report or with the 
management decision, whichever is applicable.

g.	Inspection.  Work performed by the IG following the President’s Council on 
Integrity and Efficiency’s Quality Standards for Inspection in evaluating and 
reviewing the Department’s programs and operations for economy, efficiency, and 
effectiveness in achieving program results.

h.	Management Decision.  The final position taken by the PAA on the findings and 
recommendations identified by the IG and GAO in formal audit reports.

i.	Primary Action Activity (PAA).  The organization assigned primary management 
responsibility for the functional activity or program that is the principal subject of 
an audit report.

j.	Questioned Cost.  Any cost proposed or claimed for payment or reimbursement 
that is recommended for disallowance by the auditor because it does not appear to 
meet one or more of the following criteria:  reasonableness; allocability; cost 
accounting standards, where applicable; generally accepted accounting principles; 
applicable cost principles; or specific contract or financial assistance agreement 
provisions.  Questioned cost does not include audited costs which are questioned 
only because total incurred costs exceed the limit established in the contract or 
financial assistance agreement.

k.	Recommendation.  A course of action intended to correct a deficiency that was 
identified in an audit.  Recommendations include questionable costs in contractual 
audit reports.

l.	Secondary Action Activity (SAA).  Heads of primary organizations responsible 
for ancillary, technical, or legal aspects covered in an audit report.

7.	REFERENCES.

a.	Public Law 95-452, Inspector General Act of 1978, dated 10-12-78, and Public 
Law 100-504, Inspector General Act Amendments of 1988, dated 10-18-88, 
which establish Offices of Inspector General in specified departments and 
agencies.

b.	Public Law 101-576, Chief Financial Officers Act of 1990, dated 11-15-90, which 
strengthens financial management in the Federal Government by establishing a 
Chief Financial Officer in each cabinet level Agency and assigning to this position 
responsibility for budget, accounting, pricing, internal controls, and other financial 
management functions.

c.	Public Law 106-65, National Nuclear Security Administration Act, as amended, 
dated October 5, 1999, which establishes NNSA as a separately organized agency 
within the Department of Energy with the authorities and responsibilities for all 
programs and activities of the administration.

d.	Office of Management and Budget (OMB) Circular No. A-50 (revised), Audit 
Followup, dated 9-29-82, which provides the policies and procedures for use by 
executive agencies when considering reports issued by auditors where follow-up 
is necessary.  The Circular requires prompt resolution within 6 months of issuance 
(or 6 months after receipt if non-Federal audit) and prompt corrective actions on 
audit recommendations.  The circular further describes the role of the Agency 
audit follow-up official and strengthens procedures for audit resolution and 
follow-up.

e.	DOE O 221.3, Establishment of Management Decisions on Office of Inspector 
General Reports, which establishes the responsibilities and requirements for 
management decisions on Office of Inspector General audit and public inspection 
reports.

f.	DOE 2340.1C, Coordination of General Accounting Office Activities, dated 
6-8-92, which prescribes policies, responsibilities, and procedures for the 
coordination of GAO activities and actions required when GAO reports contain 
recommendations pertaining to the Department.

8.	CONTACT.  Requests for further information or assistance should be directed to the 
Office of the Director, Office of Management, Budget and Evaluation/Chief Financial 
Officer.

BY ORDER OF THE SECRETARY OF ENERGY:

KYLE E. McSLARROW
Deputy Secretary


ATTACHMENT 1. PRIMARY DOE ORGANIZATIONS TO WHICH DOE O 224.3 IS APPLICABLE

This Order applies to the Departmental organizations identified below and, by agreement, the 
National Nuclear Security Administration.  Requirements of this Order also apply to the 
cognizant field activities of the primary organizations.

Office of the Secretary
Office of the Chief Information Officer
Office of Civilian Radioactive Waste Management
Office of Congressional and Intergovernmental Affairs
Office of Counterintelligence
Departmental Representative to the Defense Nuclear Facilities Safety Board
Office of Economic Impact and Diversity
Office of Electric Transmission and Distribution
Office of Energy Assurance
Office of Energy Efficiency and Renewable Energy
Energy Information Administration
Office of Environment, Safety and Health
Office of Environmental Management
Office of Fossil Energy 
Office of General Counsel
Office of Hearings and Appeals
Office of the Inspector General
Office of Intelligence
Office of Legacy Management (Formerly Office of Worker and Community Transition)
Office of Management, Budget and Evaluation/Chief Financial Officer
Office of Nuclear Energy, Science and Technology
Office of Policy and International Affairs
Office of Public Affairs
Office of Science
Secretary of Energy Advisory Board
Office of Security and Safety Performance Assurance
Bonneville Power Administration
Southeastern Power Administration
Southwestern Power Administration
Western Area Power Administration

AVAILABLE ONLINE AT:				INITIATED BY:
http://www.directives.doe.gov			Office of Management, Budget and Evaluation/
							Chief Financial Officer