KPMG, LLC found the Federal Emergency Management Agency (FEMA) did not provide adequate guidance to the Virgin Islands Emergency Management Agency (VITEMA) and the Virgin Islands Housing Finance Agency (VIHFA) and that VITEMA and VIHFA did not adequately manage FEMA Public Assistance (PA) funds. Also, VITEMA and VIHFA did not always ensure the accuracy of project funding information or promptly notify FEMA about significant project cost overruns. This occurred because FEMA did not provide the necessary guidance to and oversight of VITEMA and VIHFA to properly manage PA funds. Because of these deficiencies, PA programs are at increased risk of mismanagement and expenditure of funds for unallowable activities. We made seven recommendations to improve VITEMA’s and VIHFA’s management of FEMA PA funds, ensuring they are expended according to Federal regulations and FEMA guidance. FEMA concurred with the recommendations.