FEMA Should Recover $9.3 Million of Ineligible and Unsupported Costs from Fox Waterway Agency in Fox Lake, Illinois

Fox Waterway Agency (Fox Waterway) received a $9.4 million award in Federal Emergency Management Agency (FEMA) grant funds for damages resulting from severe storms, straight-line winds, and flooding during April and May 2013. Our audit objective was to determine whether Fox Waterway expended FEMA funds according to Federal regulations and FEMA guidelines. Fox Waterway did not account for and expend FEMA funds according to Federal regulations and FEMA guidelines. The period of performance has expired for all projects, and Fox Waterway has not requested time extensions. Further, Fox Waterway officials could not tell us how much they had spent on disaster-related work or provide us documentation supporting all expenditures. Therefore, we question $9,367,187 of costs— $8,230,969 as ineligible and $1,136,218 as unsupported.