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Audits, Inspections, and Evaluations

Report Number Title Issue Date Fiscal Year
OIG-16-86-D The April 2013 fertilizer plant explosion devastated the City of West, Texas, killing 15 people and leveling homes in a 5-block radius. The West School Administration received a $5.1 million Federal Emergency Management Agency (FEMA) grant from the Texas Division of Emergency Management, a FEMA grantee, for emergency measures. Our audit objective was to determine whether West School Administration accounted for and expendedFEMA funds according to Federal requirements.

>The West School Administration Effectively Accounted for the FEMA Emergency Grant Funds Awarded for the West, Texas Fertilizer Plant Explosion 		2016
OIG-16-85-D FROM: John E. McCoy II

Assistant Inspector General for Audits

SUBJECT: Office of Inspector General Emergency Management Oversight Team Deployment Audits

Audit Report Numbers OIG-13-84, OIG-13-117, OIG-13-124, OIG-14-50-D, OIG-14-111-D, OIG-15-92-D, OIG-15-102-D, OIG-15-105-D, OIG-16-53-D, OIG-16-85-D, OIG-16-106-D, OIG-17-37-D

After completing an internal review of our audits related to multiple Emergency Management Oversight Team (EMOT) projects, we have decided to permanently remove the subject reports from our public website.

Our internal review found the subject reports may not have adequately answered objectives and, in some cases, may have lacked sufficient and appropriate evidence to support conclusions. Answering objectives with sufficient and appropriate evidence is required under Government Auditing Standards or Quality Standards for Inspection and Evaluation. In an abundance of caution, we believe it best to recall the reports and not re-issue them.

Going forward, our EMOTs will deploy during the response phase of a disaster to identify and alert the Federal Emergency Management Agency (FEMA) and its stakeholders of potential issues or risks if they do not follow FEMA and other Federal requirements. The EMOT’s reviews will not be conducted under Government Auditing Standards. The teams will continue to observe and identify potential risk areas that will be addressed by future traditional audits, if necessary.

A complete list of the projects removed from our website is attached. You should not place any reliance on these reports.

Please contact me at (202) 254-4100 if you have any questions.

>FEMA's Initial Response to the 2015 Texas Spring Severe Storms and Flooding 		2016
OIG-16-78-D The City of Evans, Colorado (City) received a $10.8 million grant from Colorado, a Federal Emergency Management Agency (FEMA) grantee, for damages from severe storms and flooding in September 2013. We conducted this audit early in the grant process to identify areas where the City may need additional technical assistance or monitoring to ensure compliance.

>Colorado Should Provide the City of Evans More Assistance in Managing FEMA Grant Funds 		2016
OIG-16-72 The Chief Financial Officers Act of 1990 (Public Law 101-576) and the Department Of Homeland Security Financial Accountability Act (Public Law 108-330) require us to conduct an annual audit of the Department of Homeland Security’s (DHS) consolidated financial statements and internal control over financial reporting

>Federal Emergency Management Agency's Management Letter for DHS' FY 2015 Financial Statements Audit 		2016
OIG-16-67-D The Town of Lyons, Colorado (Town), received a $36 million Public Assistance grant for damages from a September 2013 flood. We conducted this audit early in the grant process to identify areas where the Town may need additional technical assistance or monitoring to ensure compliance with Federal requirements.

>Lyons and Colorado Officials Should Continue to Improve Management of $36 Million FEMA Grant 		2016
OIG-16-66-D The Municipality of Villalba, Puerto Rico (Municipality), received a $2.58 million grant awar from the Puerto Rico Emergency Management Agency (Puerto Rico), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Irene in August 2011.

>FEMA Should Disallow $1.30 Million of $2.58 Million in Public Assistance Grant Funds Awarded to the Municipality of Villalba, Puerto Rico, for Hurricane Irene Damages 		2016
OIG-16-63-D San Bernardino County,California (County), receive a $16.5 million Public Assistance grant award for damages resulting from California wildfires that occurred from October 2007 through March 2008. We audited $14.3 million of the $16.5 million gross award.

>San Bernardino County, California, Generally Accounted for and Expended FEMA Public Assistance Funds Properly 		2016
OIG-16-60-D The Municipality of Jayuya, Puerto Rico (Municipality), received a $4.46 million grant award from the Puerto Rico Emergency Management Agency (Puerto Rico), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Irene in August 2011. We audited projects totaling $3.54 million to determine whether the Municipality accounted for and expended FEMA funds according to Federal requirements. For the projects we reviewed, the Municipality generally accounted for and expended FEMA funds according to Federal requirements. However, we did identify $267,960 (Federal share $200,970) of costs that FEMA should disallow. These costs consisted of $237,695 of duplicate benefits and $30,265 of unsupported project costs.

>FEMA Should Recover $267,960 of $4.46 Million in Public Assistance Grant Funds Awarded to the Municipality of Jayuya, Puerto Rico, for Hurricane Irene Damages 		2016
OIG-16-59 Public Law 110-53, Implementing Recommendations of the 9/11 Commission Act of 2007, requires the Department of Homeland Security (DHS) Office of Inspector General (OIG) to audit individual states’ management of Homeland Security Grant Program (HSGP) awards. We audited the State of Maryland, which was awarded $35 million from FEMA for fiscal years 2011–13. In most instances, Maryland distributed and spent the HSGP awards in compliance with applicable laws and regulations; however, the State lacked adequate controls over more than $10.8 million in grant funds we reviewed. This occurred because FEMA and the State did not ensure adequate management and oversight of HSGP funds.

>Maryland's Management of Homeland Security Grant Program Awards for Fiscal Years 2011-13 		2016
OIG-16-52-D The Pueblo of Jemez, New Mexico (Pueblo), received a Public Assistance grant award of $1.6 million from the New Mexico Department of Homeland Security and Emergency Management (New Mexico), a Federal Emergency Management Agency (FEMA) grantee, for damages from severe storms, flooding, and mudslides that occurred in September 2013. The Pueblo accounted for disaster costs on a project-by-project basis. However, the Pueblo did not follow Federal procurement standards in awarding five contracts totaling $312,117. As a result, full and open competition did not occur and FEMA has no assurance that small and minority businesses and women’s business enterprises had sufficient opportunities to bid on federally funded work. In some instances, FEMA also has no assurance that costs were reasonable.

>FEMA Should Recover $312,117 of $1.6 Million Grant Funds Awarded to the Pueblo of Jemez, New Mexico 		2016
OIG-16-53-D FROM: John E. McCoy II

Assistant Inspector General for Audits

SUBJECT: Office of Inspector General Emergency Management Oversight Team Deployment Audits

Audit Report Numbers OIG-13-84, OIG-13-117, OIG-13-124, OIG-14-50-D, OIG-14-111-D, OIG-15-92-D, OIG-15-102-D, OIG-15-105-D, OIG-16-53-D, OIG-16-85-D, OIG-16-106-D, OIG-17-37-D

After completing an internal review of our audits related to multiple Emergency Management Oversight Team (EMOT) projects, we have decided to permanently remove the subject reports from our public website.

Our internal review found the subject reports may not have adequately answered objectives and, in some cases, may have lacked sufficient and appropriate evidence to support conclusions. Answering objectives with sufficient and appropriate evidence is required under Government Auditing Standards or Quality Standards for Inspection and Evaluation. In an abundance of caution, we believe it best to recall the reports and not re-issue them.

Going forward, our EMOTs will deploy during the response phase of a disaster to identify and alert the Federal Emergency Management Agency (FEMA) and its stakeholders of potential issues or risks if they do not follow FEMA and other Federal requirements. The EMOT’s reviews will not be conducted under Government Auditing Standards. The teams will continue to observe and identify potential risk areas that will be addressed by future traditional audits, if necessary.

A complete list of the projects removed from our website is attached. You should not place any reliance on these reports.

Please contact me at (202) 254-4100 if you have any questions.

>FEMA's Initial Response to the Severe Storms and Flooding in South Carolina 		2016
OIG-16-49 FEMA’s Homeland Security Grant Program (HSGP) provides funds to state, territorial, local, and tribal governments to enhance their ability to prepare for, prevent, protect, respond to, and recover from terrorist attacks, major disasters, and other emergencies. FEMA has not adequately analyzed recurring Office of Inspector General recommendations to implement permanent changes to improve its oversight of HSGP. This occurred because FEMA has not clearly communicated internal roles and responsibilities, and does not have policies and procedures for conducting substantive trend analysis of audit recommendations. Without sufficiently analyzing audit findings and recommendations, FEMA may not be able to develop proactive solutions to recurring and systemic problems, resulting in missed opportunities to improve the management and oversight of its HSGP.

>Analysis of Recurring Audit Recommendations Could Improve FEMA's Oversight of HSGP 		2016
OIG-16-46 KPMG, LLP evaluated selected general IT controls and business process application controls at the Federal Emergency Management Agency (FEMA). KPMG, LLP determined that FEMA took corrective actions to address certain prior-year IT control deficiencies. For example, FEMA made improvements by designing and consistently implementing certain account management and configuration management controls. However, KPMG, LLP continued to identify general IT control deficiencies related to security management, access controls, segregation of duties, configuration management, and contingency planning for FEMA’s core financial and feeder systems. Collectively, these deficiencies limited FEMA’s ability to ensure that critical financial and operational data were maintained in such a manner as to ensure their confidentiality, integrity, and availability.

>Information Technology Management Letter for the Federal Emergency Management Agency Component of the FY 2015 Department of Homeland Security Financial Statement Audit 		2016
OIG-16-47 FEMA does not provide adequate oversight of the WYO program under the National Flood Insurance Program (NFIP). Specifically, FEMA is not using the results from its Financial Control Plan reviews to make program improvements; is not performing adequate oversight of the Special Allocated Loss Adjustment Expense reimbursement process; and does not have adequate internal controls to provide proper oversight of the appeals process. These conditions exist because FEMA does not have adequate guidance, resources, or internal controls. As a result of this inadequate oversight, FEMA is unable to ensure that WYO companies are properly implementing the NFIP and is unable to identify systemic problems in the program. Furthermore, without adequate internal controls in place, FEMA’s NFIP funds may be at risk for fraud, waste, abuse, or mismanagement.

>FEMA Does Not Provide Adequate Oversight of Its National Flood Insurance Write Your Own Program 		2016
OIG-16-43-D The Authority received an $8.04 million Public Assistance grant award from the Puerto Rico Emergency Management Agency (Puerto Rico), a FEMA grantee, for damages resulting from Hurricane Irene in August 2011. Our audit objective was to determine whether the Authority accounted for and expended FEMA funds according to Federal requirements. The Puerto Rico Electric Power Authority, Puerto Rico, (Authority) generally accounted for and expended Public Assistance grant funds according to Federal regulations and Federal Emergency Management Agency (FEMA) guidelines. However, the Authority did not comply with the Single Audit Act, which requires non-Federal entities that expend $500,000 or more in a year in Federal awards to obtain a single or program-specific audit for that year. Although the Authority did not take steps to ensure that it met the Single Audit Act requirements, Puerto Rico, as grantee, is responsible for ensuring that its subgrantee (the Authority) is aware of and complies with grant requirements. As a result of this deficiency, FEMA and Puerto Rico did not have an opportunity to review the Single Audit report that would have made them aware of any potential issues with the Authority’s administration of the FEMA grant.

>The Puerto Rico Electric Power Authority Effectively Managed FEMA Public Assistance Grant Funds Awarded for Hurricane Irene in August 2011 		2016
OIG-16-41 In 2011, the former FEMA Chief Security Officer hired two employees with criminal convictions in their backgrounds. Our analysis of employee records from 2011 to 2014 in the Office of the Chief Security Officer’s Fraud and Internal Investigations Division disclosed two more employees with criminal conduct in their backgrounds. FEMA’s Office of the Chief Security Officer no longer employs these four individuals. FEMA premium pay records from 2011 to 2014 for employees in the Fraud and Internal Investigations Division showed that division management allowed employees to violate FEMA’s premium pay policy for compensatory time in 2014; premium pay requests from the same period did not reveal any overtime violations. As a result of hiring employees with criminal backgrounds or conduct, the Office of the Chief Security Officer spent $349,944 unnecessarily. Finally, from 2013 to 2014, the Office of the Chief Security Officer misused the Disaster Relief Fund by allowing employees to perform non-disaster­related activities, which violates the Stafford Act and may also be a potential Antideficiency Act violation.

>Response to Allegations of Mismanagement in FEMA's Office of the Chief Security Office 		2016
OIG-16-42-D At the time of our audit, the Federal Emergency Management Agency (FEMA) estimated that the City of Colorado Springs, Colorado, (City) had sustained approximately $3.6 million in damages from storms in 2015. We conducted this audit early in the grant process to identify areas where the City may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The City has established policies, procedures, and business practices to account for and expend FEMA Public Assistance grant funds according to Federal regulations and FEMA guidelines. Therefore, if the City follows those policies, procedures, and business practices, FEMA has reasonable assurance that the City will properly manage its FEMA grant.

>Colorado Springs, Colorado, Has Adequate Policies, Procedures, and Business Practices to Effectively Manage Its FEMA Public Assistance Grant Funding 		2016
OIG-16-40-D Colorado Springs Utilities, Colorado (Utilities), received a $937,367 Public Assistance grant for damages from storms occurring May through June 2015. We conducted this audit early in the grant process to identify areas where the Utilities may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The Utilities has established policies, procedures, and business practices to account for and expend Federal Emergency Management Agency (FEMA) Public Assistance grant funds according to Federal regulations and FEMA guidelines. Therefore, if the Utilities follow those policies, procedures, and business practices, FEMA has reasonable assurance that the Utilities will properly manage its FEMA grant.

>Colorado Springs Utilities, Colorado, Has Adequate Policies, Procedures, and Business Practices to Effectively Manage Its FEMA Public Assistance Grant Funding 		2016
OIG-16-38-D Oakwood Healthcare System, Inc. (Hospital), in Dearborn, Michigan, received a gross award of $15.2 million from the Michigan State Police Emergency Management and Homeland Security Division (Michigan), and FEMA grantee, for damages resulting from severe storms and flooding in August 2014. The Hospital did not always account for and expend FEMA grant funds according to Federal regulations and FEMA guidelines. Although the Hospital competitively awarded contracts for most non-exigent work, it did not always take the required affirmative steps to ensure the use of small and minority firms, women’s business enterprises, and labor surplus area firms when possible; and did not include all required contract provisions in its contracts. However, we did not question the costs because insurance proceeds covered essentially all the repair costs except for the insurance deductible. We also found that the Hospital did not initially account for labor costs properly. However, after we identified the improperly supported costs, Hospital employees corrected the records to reflect actual costs the Hospital incurred.

>Oakwood Healthcare System, Dearborn, Michigan, Needed Additional Assistance in Managing its FEMA Public Assistance Grant Funding 		2016
OIG-16-36-D The University of Wisconsin-Superior received an $8.6 million FEMA grant from Wisconsin Emergency Management, and FEMA grantee, for damages resulting from severe storms and flooding in June 2012. Our audit objective was to determine whether the University accounted for and expended FEMA funds according to Federal requirements. The University effectively accounted for and expended FEMA Public Assistance grant funds according to Federal regulations and FEMA guidelines.

>The University of Wisconsin-Superior Effectively Managed FEMA Grant Funds Awarded for Severe Storms and Flooding in June 2012 		2016
OIG-16-35-D The Town of Jamestown, Colorado, (Town) received a $10.4 million Federal Emergency Management Agency (FEMA) grant award for damages resulting from severe storms, flooding, landslides, and mudslides that occurred in September 2013. We conducted this audit early in the grant process to identify areas where the Town may need additional technical assistance or monitoring to ensure compliance with Federal requirements. Most of the Town’s policies, procedures, and business practices are adequate to account for and expend Public Assistance grant funds according to Federal regulations and FEMA guidelines. The Town accounted for disaster-related costs on a project-by-project basis. The Town also has adequate procurement policies and procedures in place that are consistent with Federal procurement standards. Further, the Town’s insurance procedures and practices are adequate to ensure that the Town can properly manage anticipated insurance proceeds. Although the Town had adequate policies, procedures, and business practices, at the time of our audit, the Town lacked the personnel with the necessary financial expertise to perform financial management activities according to Federal standards.

>Jamestown, Colorado, Needs Additional Assistance and Monitoring to Ensure Proper Management of Its $10.4 Million FEMA Grant 		2016
OIG-16-33-D The City of Boulder, Colorado, received a FEMA grant award of $19 million for damages resulting from severe storms, flooding, landslides, and mudslides that occurred during September 2013. We conducted this audit early in the grant process to identify areas where the City may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The City’s policies, procedures, and business practices are adequate to account for and expend Public Assistance grant funds according to Federal regulations and FEMA guidelines. The City accounted for and properly supported disaster-related costs on a project-by-project basis. Additionally, the City has adequate procurement policies and procedures in place that are consistent with applicable Federal procurement standards. Moreover, the City’s insurance procedures and practices are adequate to ensure that the City can properly manage anticipated insurance proceeds. Therefore, the City can provide FEMA and Colorado (FEMA’s grantee) reasonable assurance that it has the capacity to comply with Federal grant requirements for this disaster.

>Boulder, Colorado, Has Adequate Policies, Procedures, and Business Practices to Manage Its FEMA Grant Funding 		2016
OIG-16-24-D The City of Tuscaloosa, Alabama (City) received a $40.4 million grant, of which insurance covered all but $10.1 million. The Public Assistance grant was for damages from severe storms, tornadoes, straight-line winds, and flooding that occurred in April and May 2011. We audited $4.2 million of the $10.1 million net amount awarded. The City did not always account for and expend Federal Emergency Management Agency (FEMA) funds according to Federal regulations and FEMA guidelines. These issues occurred primarily because the grantee (Alabama) did not ensure that the City understood and complied with Federal procurement requirements and the process for applying actual insurance proceeds to reduce eligible costs.

>FEMA Should Recover $1.2 Million of $10.1 Million in Grant Funds Awarded to Tuscaloosa, Alabama, for a 2011 Disaster 		2016
OIG-16-23-D We audited $4 million of the $6 million of Federal Emergency Management Agency (FEMA) Public Assistance grant funds awarded to the City of San Diego, California (City), for damages resulting from heavy rainfall and flooding that occurred on December 17, 2010, through January 4, 2011. The City generally accounted for FEMA funds adequately, but did not always expend the funds according to Federal regulations and FEMA guidelines.

>FEMA Should Disallow $1.2 Million of $6.0 Million in Public Assistance Program Grant Funds Awarded to the City of San Diego, California 		2016
OIG-16-21-D The City of Longmont, Colorado (City), needs additional assistance from the Colorado Division of Homeland Security and Emergency Management (Colorado) and the Federal Emergency Management Agency (FEMA) to provide reasonable assurance that it properly manages its $55.1 million FEMA grant. We identified weaknesses in the City’s policies, procedures, and business practices for procurement, insurance, and accounting that place the City in jeopardy of losing its Federal funding. The City received a $55.1 million Public Assistance award for damages from a September 2013 flood. We conducted this audit early in the grant process to identify areas where the City may need additional technical assistance or monitoring to ensure compliance with Federal requirements.

>Longmont and Colorado Officials Should Continue to Improve Management of $55.1 Million FEMA Grant 		2016
OIG-16-22-D Except for minor problems with equipment costs, the City has adequate policies, procedures, and business practices in place to account for and expend FEMA Public Assistance Program grant funds according to Federal regulations and FEMA guidelines. During the audit, we identified $138,959 of ineligible equipment costs and $62,177 of unsupported equipment costs.

>The City of Austin, Texas, Has Adequate Policies and Procedures to Comply with FEMA Public Assistance Grant Requirements 		2016
OIG-16-14 The Department of Homeland Security’s (DHS) Port Security Grant Program (PSGP), which is administered by the Federal Emergency Management Agency (FEMA), provides funding to port authorities, facility operators, and other eligible entities to help protect critical port infrastructure from terrorism. FEMA awarded the Lower Mississippi River Port-wide Strategic Security Council (Council) approximately $108 million in PSGP grant funds from fiscal years 2008 to 2013. We determined whether the Council managed, distributed, and spent PSGP funds in compliance with Federal laws, regulations, and guidance. About 73 percent of the nearly $108 million awarded to the Council to protect critical port infrastructure remains unspent. In addition, we identified more than $9.2 million in questioned costs. This occurred because the Council did not always follow Federal laws, regulations, or grant guidance; and FEMA failed to provide proper oversight. As a result, major Lower Mississippi River ports may be less prepared in the event of a terrorist attack.

>Lower Mississippi River Port-wide Strategic Security Council Did Not Always Properly Manage, Distribute, or Spend Port Security Grant Funds 		2016
OIG-16-13 We conducted this audit to determine whether the Federal Emergency Management Agency (FEMA) and the Colorado Division of Homeland Security and Emergency Management (DHSEM) were sufficiently monitoring the Emergency Management Performance Grant (EMPG) program to ensure that funds were used in accordance with grant program guidelines and other applicable state and Federal laws. DHSEM needs to improve its grants management and internal controls over its financial systems. In addition, it needs to improve its maintenance of supporting documentation for all EMPG transactions, and monitoring of subgrantees. Without adequate grants management, financial controls, and retention of detailed supporting documentation for transactions and EMPG expenditures were not always recorded timely; inaccurate amounts were recorded; grants were improperly closed out; and financial reports submitted to FEMA were inaccurate.

>Oversight of the Colorado Emergency Management Performance Grant Program Needs Improvement 		2016
OIG-16-12-D The City of Birmingham, Alabama, received a Public Assistance award of $13.2 million from the Alabama Emergency Management Agency, a FEMA grantee, for damages resulting from tornadoes and severe storms in April 2011. We audited projects totaling $11.3 million to determine whether the City accounted for and expended FEMA funds according to Federal requirements. For the projects we reviewed, the City generally accounted for and expended FEMA Public Assistance grant funds according to Federal requirements.

>FEMA The City of Birmingham, Alabama, Generally Managed FEMA Grant Funds for April 2011 Tornadoes and Severe Storms Properly 		2016
OIG-16-10 The Federal Emergency Management Agency (FEMA) has taken steps to improve its IT management since our 2011 audit, but more remains to be done. Specifically, FEMA has developed numerous IT planning documents but has not effectively coordinated, executed, or followed through on these plans. Without effective IT planning, FEMA risks making limited progress improving IT needed to support the agency’s mission. Although FEMA has improved its IT governance through establishing an IT Governance Board, these efforts have not yet been fully effective. FEMA has struggled to implement effective agency-wide IT governance, in part because the Chief Information Officer has not had sufficient control and budget authority to effectively lead the agency’s decentralized IT environment. Without effective agency-wide IT governance, FEMA’s IT environment has evolved over time to become overly complex, difficult to secure, and costly to maintain.

>FEMA Faces Challenges in Managing Information Technology 		2016
OIG-16-09-D DeKalb County, Georgia, received a $3.3 million grant award from the Georgia Department of Emergency Management, a FEMA grantee, for damages resulting from a September 2009 flood. Our audit objective was to determine whether the County accounted for and expended FEMA funds according to Federal requirements. The County did not account for FEMA funds on a project-by-project basis as Federal regulations and FEMA guidelines require. We also identified $93,620 (Federal share $70,215) of unneeded project funding that FEMA can deobligate and put to better use. Finally, the County’s claim included $411,929 (Federal share $308,947) of unsupported or ineligible costs.

>FEMA Should Recover $505,549 of $3.3 Million in Public Assistance Grant Funds Awarded to DeKalb County, Georgia, for Damages from a September 2009 Flood 		2016
OIG-16-11 Since 2001, FEMA provided first responder organizations with more than $9 billion through the AFG and Staffing for Adequate Fire and Emergency Response (SAFER) programs. According to FEMA, it began using the eGrants system in 2003 to manage the funds awarded through these programs. However, the eGrants system does not comply with Department of Homeland Security (DHS) information system security requirements. Specifically, access to the eGrants system is not controlled or limited because FEMA instructs grantees to share usernames and passwords within the grantee’s organization and with contractors who manage grants. As a result, someone other than the primary point of contact can take action or make changes in eGrants without the grantee’s knowledge. Additionally, in June 2014, DHS’s Office of Cyber Security advised FEMA it should not authorize eGrants to operate because it poses an unacceptable level of risk to the agency. FEMA’s Chief Information Officer acknowledged the high level of risk posed by system deficiencies and vulnerabilities. Despite the known system deficiencies and risks, FEMA authorized the continued use of the system.

>Security Concerns with Federal Emergency Management Agency's eGrants Grant Management System 		2016
OIG-16-05-D FEMA requested our assistance in determining whether its preliminary proposal to provide permanent or semi-permanent housing construction to the Oglala Sioux Tribe of the Pine Ridge Indian Reservation is consistent with Federal statutes and regulations and FEMA guidelines. FEMA has begun disaster recovery efforts in response to a disaster declaration for severe storms, straight-line winds, and flooding that occurred in May 2015. In limited circumstances, section 408 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) grants the Federal Emergency Management Agency (FEMA) the authority to provide individuals or households affected by a disaster permanent or semi­permanent housing. However, to ensure the integrity of the Individual Assistance program, FEMA should adequately document the facts and circumstances that justify this decision. FEMA should also ensure that its proposed actions are the most cost-effective solution to the Oglala Sioux Tribe’s unique housing problems as compared to other alternatives.

>FEMA's Plan to Provide Permanent or Semi-Permanent Housing to the Oglala Sioux Tribe of the Pine Ridge Indian Reservation in South Dakota 		2016
OIG-16-04-D FEMA has no assurance that mission-assigned fuel deliveries for New York went only to FEMA-designated recipients. We reviewed the $6.37 million FEMA paid the Defense Logistics Agency for 1.7 million gallons of fuel. However, of this amount, we found incomplete and questionable supporting documentation for $4.56 million in fuel deliveries. Therefore, we could not verify the eligibility of the recipients that received this fuel. In addition, the Defense Logistics Agency delivered $1.81 million of fuel to recipients outside the mission assignment’s scope of work. As a result, FEMA cannot be sure that any of the fuel went to approved power restoration or emergency public transportation work in New York, as FEMA intended.

>FEMA Has No Assurance that Only Designated Recipients Received $6.37 Million in Fuel 		2016
OIG-16-03-D FEMA’s Program Guide for the Alternative Procedures pilot program and letters of undertaking provide acceptable guidance in most areas to ensure compliance with Federal rules and regulations. However, our review of seven large dollar value projects valued at $3.9 billion identified weaknesses in five areas of guidance: (1) estimating project costs; (2) responding to Office of Inspector General (OIG) audits; (3) managing cash responsibly; (4) applying insurance proceeds; and (5) obtaining insurance for future losses. These weaknesses put Federal funds at greater risk of fraud, waste, and abuse. Correcting these weaknesses will better ensure that participants in the pilot program will follow Federal requirements when spending Federal funds. Further, to protect the Federal taxpayer from inflated estimates, FEMA’s oversight should include additional steps to assess the accuracy of subgrantee fixed-cost estimates that exceed certain thresholds. In addition, FEMA needs to make other changes to comply with the Stafford Act and protect the integrity of the program.

>Clearer Guidance Would Improve FEMA's Oversight of the Public Assistance Alternative Procedures Pilot Program 		2016
OIG-16-01-D FEMA spent more than $1.4 billion under the Individuals and Households Program on more than 182,900 applicants with losses related to Hurricane Sandy, as of April 2015. We reviewed FEMA’s process for verifying applicants’ insurance policies at the time of registration for this program. Before authorizing Individuals and Households Program payments, FEMA does not verify the accuracy of applicants’ “no insurance coverage” self-certifications. This condition exists because a reliable and comprehensive database does not exist for FEMA to verify the status of applicants’ insurance coverage. Consequently, FEMA relies on self-certification and legal statements on the application to ensure accuracy of applicants’ “no insurance coverage” information. FEMA is thereby exposing Federal disaster assistance funds to possible duplicate, improper, or fraudulent payments. We determined that FEMA paid approximately $250 million in homeowners’ assistance to more than 29,000 Hurricane Sandy applicants who may have had private insurance.

>FEMA Faces Challenges in Verifying Applicants' Insurance Policies for the Individuals and Households Program 		2016
OIG-15-152-D At the time of our audit, Mount Carmel Baptist Church (Mount Carmel) did not have adequate policies, procedures, and business practices to account for and expend FEMA grant funds according to Federal regulations and FEMA guidelines. Although the disaster occurred in 2013, Mount Carmel had not begun work to repair any of its damaged facilities and, therefore, had not incurred any costs for disaster-related work. In addition, Mount Carmel may lack the financial stability to meet the required 25 percent non-Federal cost share for the grant award. Finally, a Mount Carmel affiliate did not always comply with Federal grant requirements for a past Federal grant it received from another Federal agency. Therefore, FEMA should place special award conditions as needed on Mount Carmel though additional requirements.

>Mount Carmel Baptist Church in Hattiesburg, Mississippi Needs Assistance to Ensure Compliance with FEMA Public Assistance Grant Requirements 		2015
OIG-15-151-D The Borough received a $7 million grant award from the New Jersey Office of Emergency Management (New Jersey), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Sandy, which occurred in October 2012. We conducted this audit early in the grant process to identify areas where the Borough may need assistance in managing Federal funds. The Borough of Spring Lake, New Jersey, (Borough) accounted for disaster costs on a project-by-project basis and met applicable Federal regulations in processing disaster related procurement transactions. However, the Borough completed one large project below the estimated project cost, and about $2.0 million remains obligated for that project. Therefore, FEMA should deobligate the $2.0 million in unneeded funds as soon as possible and put those funds to better use. In addition, the Borough could not provide adequate support for emergency and permanent restoration work totaling $798,317. The Borough also had not applied insurance proceeds totaling $431,507 against claims for eligible project costs. Therefore, the $431,507 represents ineligible duplicate benefits, because FEMA cannot fund costs that insurance covers. These findings occurred, in part, because the Borough did not effectively coordinate with New Jersey to ensure Borough compliance with FEMA grant requirements.

>FEMA Should Recover $2.0 Million in Unneeded Funds and Disallow $1.2 Million of $7 Million in Grant Funds Awarded to Spring Lake, New Jersey, for Hurricane Sandy 		2015
OIG-15-149-D Riverside General Hospital (Riverside) received a $32.4 million award from the Texas Division of Emergency Management (Texas), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Ike in September 2008. At FEMA’s request, we audited $32.4 million, or 100 percent of the grant award. Riverside’s misuse of Federal funds did not end in 2012 with the indictment and departure of its Chief Executive Officer and others on charges of bilking Medicare out of $158 million. Following the indictments, Riverside’s remaining management continued to misuse and mismanage Federal funds—this time, FEMA funds. By 2013, Texas had advanced $17.6 million of the $32.4 million FEMA grant to Riverside. Riverside alleged that it spent $13.2 million of the $17.6 million received for disaster expenses. However, Riverside completely disregarded Federal grant requirements, and Texas did not adequately monitor Riverside’s grant activities. In fact, Riverside spent $7.9 million to fund its hospital operations and other unverifiable items. Further, Riverside awarded $12.2 million in disaster-related contracts without competition and did not always account for or support the grant funds. Therefore, we question the entire $32.4 million grant award, including $17.6 million in advanced funds and $14.8 million in unused funds.

>FEMA Should Recover $32.4 Million in Grant Funds Awarded to Riverside General Hospital, Houston, Texas 		2015
OIG-15-147-D The City of Asbury Park, New Jersey, (City) received a $9.3 million Public Assistance grant award from the New Jersey Office of Emergency Management (New Jersey), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from Hurricane Sandy, which occurred in October 2012. Our audit objective was to determine whether the City accounted for and expended FEMA funds according to Federal requirements. The City generally accounted for and expended FEMA funds for permanent work according to Federal regulations and FEMA guidelines. However, the City did not provide adequate support for $771,461 of the $798,819 it had claimed for debris removal and emergency work at the time of our audit. As a result, FEMA has no assurance that these costs are valid and eligible. FEMA initially estimated that debris and emergency work would exceed $2 million. Because we conducted this audit early in the grant cycle, the City has an opportunity to supplement deficient documentation or locate missing documentation before too much time elapses. FEMA should disallow any costs the City cannot adequately support and direct New Jersey to assist the City in properly supporting the costs it has claimed and additional costs the City plans to claim. The City also did not include all federally required contract provisions in five contracts totaling $3.9 million. We did not question these contract costs, because this instance of noncompliance did not cause negative consequences and because the City otherwise complied with Federal procurement standards.

>Asbury Park, New Jersey, Needs Assistance in Supporting More Than $2 Million in FEMA Grant Funds for Hurricane Sandy Debris and Emergency Work 		2015
OIG-15-146-D This is our sixth annual “capping” report summarizing our disaster-related audits. Our first five annual reports focused solely on our Public Assistance and Hazard Mitigation grant audits. This year, we added the results of our non-grant audits to reflect all of our work related to Disaster Relief Fund activities. In fiscal year (FY) 2014, we issued reports on 61 audits of FEMA grants, programs, and operations funded from the Disaster Relief Fund: 49 grant audits and 12 program audits. The 61 reports contained 159 recommendations, with potential monetary benefits of $1 billion, which included $971.7 million reported for grant audits and $29.3 million reported for program audits. The $971.7 million represents 28 percent of the $3.44 billion in grant funds we audited in FY 2014. One Hazard Mitigation Grant Program audit resulted in $812 million of the $971.7 million of potential monetary benefits. We continue to find problems with grant management, ineligible and unsupported costs, and noncompliance with Federal contracting requirements. The 12 program audits included 3 audits of FEMA’s initial response to disasters, 4 audits related to issues we identified during our audits of FEMA’s disaster responses, and 5 other audits of FEMA programs or operations. The 12 program audit reports recommended improvements to FEMA programs or operations and the recoupment of a $29.3 million debt that a state owed to FEMA. FEMA has been proactive in responding to our FY 2014 recommendations.

>Summary and Key Findings of Fiscal Year 2014 FEMA Disaster Grant and Program Audits 		2015
OIG-15-148-D The City received a $248.3 million grant for 2005 Hurricane Katrina damages. In this third audit of the grant, we reviewed $142.1 million FEMA approved for 43 permanent repair projects. At the time of our audit, the City had not completed work on all projects and, therefore, had not submitted a final claim for all project expenditures. For most of the projects in our audit scope, the City of Gulfport, Mississippi, (City) accounted for and expended Federal Emergency Management Agency (FEMA) funds according to Federal regulations and FEMA guidelines. However, the City did not comply with Federal procurement requirements when awarding two contracts for project management services valued at $10.4 million, of which $4.2 million was unreasonable. City officials were not aware that Federal procurement regulations prohibited the use of a qualifications-based contracting method for program management services. However, the grantee (Mississippi) is responsible for ensuring that its subgrantee (the City) is aware of and complies with Federal requirements, as well as for providing technical assistance and monitoring grant activities.

>FEMA Should Recover $4.2 Million of $142.1 Million in Grant Funds Awarded to the City of Gulfport, Mississippi, for Hurricane Katrina Damages 		2015
OIG-15-145-D The Federal Emergency Management Agency (FEMA) Region III and the West Virginia Division of Homeland Security and Emergency Management (West Virginia) requested our assistance at FEMA’s Joint Field Office in Charleston, West Virginia to provide assurance that FEMA is complying with Public Assistance and Federal grant requirements regarding the eligibility of damages to the runway safety area at Yeager Airport in Charleston, West Virginia. FEMA opened the Joint Field Office in response to a disaster declaration for severe winter storms, flooding, landslides, and mudslides that occurred in March 2015. FEMA should take reasonable steps to determine whether the damage to the runway safety area (i.e., the Engineered Arresting structure) at Yeager Airport is the direct result of the disaster, and, if so, that a duplication of benefits does not occur. Further, FEMA should fully document such determinations in the agency’s official disaster records. This action should provide reasonable assurance that FEMA obligates Public Assistance funding only for eligible work, thus preventing future large deobligations or recoveries for work that FEMA or an audit may later determine to be ineligible.

>OIG Deployment Activities at FEMA's Joint Field Office in Charleston, West Virginia -Yeager Airport 		2015
OIG-15-143-D Rock County Highway Department, Minnesota, (Department) received a $1.25 million grant for damages from a 2014 disaster. We conducted this audit early in the grant process to identify areas where the Department may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The Department has established policies, procedures, and business practices to account for and expend Federal Emergency Management Agency (FEMA) Public Assistance grant funds according to Federal regulations and FEMA guidelines.

>Rock County, Minnesota, Highway Department Has Adequate Policies, Procedures, and Business Practices to Effectively Manage Its FEMA Public Assistance Grant Funding 		2015
OIG-15-142-D The Puerto Rico Department of Housing received two Federal Emergency Management Agency (FEMA) grant awards totaling $186.13 million to implement the New Secure Housing Program following Hurricane Georges in September 1998. In August 2012, the Puerto Rico Department of Housing submitted final expenditure claims totaling $184.34 million. FEMA requested that we audit these claims to facilitate closeout of the grants. The Puerto Rico Department of Housing did not always account for and expend FEMA grant funds awarded for the New Secure Housing Program according to Federal requirements. Of the $179.98 million of construction costs the Puerto Rico Department of Housing claimed, we found that $90.79 million was ineligible. The majority of these findings occurred because the Puerto Rico Emergency Management Agency, as the grantee, should have done a better job of managing the grants.

>The Puerto Rico Department of Housing Did Not Properly Administer $90.79 Million of FEMA Grant Funds Awarded for the New Secure Housing Program 		2015
OIG-15-141-D The Township of Brick, New Jersey (Township) received a $14.57 million Public Assistance grant award from the New Jersey Office of Emergency Management (New Jersey), a Federal Emergency Management Agency (FEMA) grantee, resulting from Hurricane Sandy damages in October 2012. Our audit objective was to determine whether the Township accounted for and expended FEMA funds according to Federal requirements. FEMA should disallow $2.78 million in grant funds awarded to the Township. Although the Township generally accounted for FEMA funds on a project-by-project basis, it did not fully comply with Federal and FEMA procurement requirements in awarding contracts for disaster work, resulting in $1,496,131 in unreasonable debris removal costs. The unreasonable costs represent the difference between hourly rates the Township paid its contractors and the hourly rates that the State of New Jersey negotiated for statewide debris removal activities and made available to all municipalities within the state. Therefore, we question the unreasonable costs as ineligible. We also question as ineligible $1,286,255 of unrelated hazard mitigation costs. However, these costs may be eligible under other FEMA projects or programs. Therefore, the Township should work with New Jersey and FEMA to determine the eligibility of the hazard mitigation costs we question.

>FEMA Should Disallow $2.78 Million of $14.67 Million in Public Assistance Grant Funds Awarded to the Township of Brick, New Jersey, for Hurricane Sandy Damages 		2015
OIG-15-139-D Los Alamos County, New Mexico, (County) received a $5.1 million award from the New Mexico Department of Homeland Security and Emergency Management Agency, a FEMA grantee, for damages resulting from severe storms and flooding in September 2013. Our audit objective was to determine whether the County accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The County generally accounted for and expended Federal Emergency Management Agency (FEMA) Public Assistance grant funds according to Federal requirements. However, the County did not always comply with Federal procurement standards in awarding its three largest contracts for disaster work totaling $1.9 million. Specifically, the County did not take all required affirmative steps to assure the use of small, minority, women-owned, and labor-surplus area firms when possible. However, although the County did not take the specific steps that Federal procurement standards require, it did award all three contracts to these types of disadvantaged firms. In addition, the County’s contractors performed adequately and billed for their work appropriately. Therefore, we did not question costs because the County’s noncompliance with Federal requirements did not negatively impact the Federal government. County officials said that they were not aware of this requirement, but would update their policies and procedures to include this Federal procurement standard for future disasters.

>Los Alamos County, New Mexico, Generally Accounted For and Expended FEMA Grant Funds Properly 		2015
OIG-15-136-D St. Tammany Parish (Parish) received awards totaling $15.3 million from the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Louisiana), a Federal Emergency Management Agency (FEMA) grantee, for the Hazard Mitigation Grant Program resulting from four federally declared disasters. The Parish’s hazard mitigation projects generally met FEMA’s eligibility requirements; and the Parish’s project management generally complied with applicable regulations and guidelines. However, the Parish did not always account for and expend grant funds according to Federal regulations and FEMA guidelines. We audited 11 projects totaling $14.98 million, or 98 percent of the total $15.3 million award. However, at the time of our audit, the Parish had completed only 4 of the 11 projects and had claimed project costs of $6.9 million for the 11 projects in our audit scope. We found $609,271 in ineligible project costs and $320,108 in unsupported project costs for total questioned costs of $929,379. These findings occurred, in part, because Louisiana has not properly managed its grants. Most significantly, Louisiana had not developed and implemented a comprehensive strategy to close all Hazard Mitigation Grant Program projects.

>FEMA Should Recover $929,379 of Hazard Mitigation Funds Awarded to St. Tammany Parish, Louisiana 		2015
OIG-15-135-D On August 24, 2014, a magnitude 6.0 earthquake struck northern California. FEMA expects eligible damages in Napa County, California (County), from the earthquake and aftershocks to exceed $6 million. We conducted this audit early in the grant process to identify areas where the County may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The County has adequate policies, procedures, and business practices to account for Public Assistance grant funds according to Federal regulations and Federal Emergency Management Agency (FEMA) guidelines. The County can account for disaster costs on a project-by-project basis and is able to adequately support repair costs. Additionally, the County’s insurance procedures and practices are adequate to ensure that the County can properly manage anticipated insurance proceeds. The County also has adequate procurement policies and procedures that are consistent with Federal procurement standards. However, the County did not follow Federal procurement standards or its own contracting requirements when it awarded, without competition, a non-emergency grant management contract for $973,778. Therefore, we question $973,778 as ineligible contract costs.

>Napa County, California, Needs Additional Technical Assistance and Monitoring to Ensure Compliance with Federal Regulations 		2015
OIG-15-134-D The Knoxville Utilities Board received a Public Assistance award of $2.7 million from the Tennessee Emergency Management Agency, a FEMA grantee, for damages resulting from severe storms and tornadoes in April 2011. We audited projects totaling $2.5 million. For the projects we reviewed, the Utility properly accounting for and expended FEMA funds according to Federal requirements.

>The Knoxville Utilities Board Effectively Managed FEMA Public Assistance Grant Funds Awarded for Damages from Tornadoes and Severe Storms in April 2011 		2015

*NDAA, Pub. L. 117-263, section 5274 Response Received. View responses

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