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Audits, Inspections, and Evaluations

Report Number Title Issue Date Fiscal Year
OIG-16-135-D Hope Academy (Hope) in D’Iberville, Mississippi, received a Federal Emergency Management Agency (FEMA) Public Assistance award of $3.5 million for damages Hurricane Katrina caused in August 2005. Both FEMA and the Office of Inspector General had concerns about the eligibility of Hope as an applicant for assistance and about Hope’s purchase of land for permanent relocation of damaged properties.

>FEMA Should Recover $3.4 Million of the $3.5 Million Awarded to Hope Academy for Hurricane Katrina Damages 		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-16-01-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-16-136-D Calaveras County, California (County), received a $10.8 million grant for damages from the September 2015 Butte Fire. 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.

>Calaveras County, California, Needs Additional State and FEMA Assistance in Managing Its $10.8 Million FEMA Grant ( 		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-16-03-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-16-137-D At the time of our audit, FEMA estimated that the City of Eureka, Missouri (City), had sustained approximately $1.5 million in damages from flooding in December 2015. We conducted the audit early in the grant process to identify areas where the City may need additional technical assistance or monitoring to ensure compliance with Federal procurement requirements.

>City of Eureka, Missouri, Needs Additional Assistance and Monitoring to Ensure Proper Management of Its $1.5 Million FEMA Grant 		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-16-04-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-16-140-D The Town of North Hempstead, New York, (Town) received a $36.6 million Federal Emergency Management Agency (FEMA) grant award for damages from Hurricane Sandy, which occurred in October 2012. We audited four projects totaling $20.9 million for debris removal and emergency protective services.

>FEMA Should Recover $9.9 Million of $36.6 Million Awarded to the Town of North Hempstead, New York, for Hurricane Sandy Damages 		2016
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-16-05-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-16-139-D Time is of the essence in establishing a Joint Field Office (JFO) as the nexus of disaster response and recovery efforts. FEMA needs to implement consistent JFO selection guidance so its disaster response is effective, efficient and economical. This audit was conducted as a follow up to our prior report on the JFO Selection in New Jersey and as part of our 2015 disaster deployment efforts in Texas and South Carolina.

>FEMA Should Implement Consistent Joint Field Office Guidance 		2016
OIG-16-94-D Augusta-Richmond County, Georgia (County), received a $12.93 million grant award from the Georgia Department of Emergency Management (Georgia), a Federal Emergency Management Agency (FEMA) grantee, for damages resulting from a February 2014 severe winter storm. Our audit objective was to determine whether the County accounted for and expended FEMA funds according to Federal requirements.

>FEMA Held Augusta-Richmond County, Georgia, Accountable for Not Complying with Federal Contracting Requirements when Managing a 2014 Public Assistance Disaster Grant 		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-16-143-D The City of Louisville (City), Mississippi, received a Federal Emergency Management Agency (FEMA) grant award of $61.7 million for damages resulting from an April 2014 disaster. We had concerns about how effectively the City complied with the Public Assistance Alternative Procedures Pilot Program (PAAP program) authorized by the Sandy Recovery Improvement Act of 2013.

>FEMA Should Recover $25.4 Million in Grant Funds Awarded to Louisville, Mississippi, for an April 2014 Disaster 		2016
OIG-16-97-D Cimarron Electric Cooperative (Cimarron) received a $69.2 million Federal grant from the Oklahoma Department of Emergency Management (Oklahoma), a FEMA grantee, for damages resulting from a severe winter storm in February 2013. Our audit objective was to determine whether Cimarron accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines.

>FEMA Should Recover $51.2 Million in Grant Funds Awarded to Cimarron Electric Cooperative, Kingfisher, Oklahoma 		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-16-98 Since 2001, the Federal Emergency Management Agency’s (FEMA) Assistance to Firefighters Grant (AFG) Program has awarded fire departments and first responder organizations almost $10 billion through AFG and Staffing for Adequate Fire and Emergency Response (SAFER) grants. We reviewed whether recipients complied with grant requirements and guidance to prevent waste, fraud, and abuse of grant funds. This report on SAFER grants is being issued as a companion report to our report on AFG grants.

>FEMA's Grant Programs Directorate Did Not Effectively Manage Assistance to Firefighters Grant Program -SAFER Grants 		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-16-99-D Wildfires devastated the Berkeley Tuolumne Camp from August to October 2013. FEMA expects eligible damages, before deducting insurance, to exceed $12 million. 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.

>FEMA and California Need to Assist the City of Berkeley to Improve the Management of a $12 Million FEMA Grant 		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-16-100 Since 2001, the Federal Emergency Management Agency’s (FEMA) Assistance to Firefighters Grant (AFG) Program has awarded fire departments and first responder organizations almost $10 billion through AFG and Staffing for Adequate Fire and Emergency Response (SAFER) grants. We reviewed whether recipients complied with grant requirements and guidance to prevent waste, fraud, and abuse of grant funds. This report on AFG grants is being issued as a companion report to our previously issued report on SAFER grants.

>FEMA's Grant Programs Directorate Did Not Effectively Manage Assistance to Firefighters Grant Program - AFG Grants 		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-16-102-D We issued this advisory report to notify the Federal Emergency Management Agency (FEMA) of an issue that requires its immediate attention. During our audit ofFEMA’s initial response to the 2015 wildfires in Northern California, we observed personnel mishandling Personally Identifiable Information (PII) at disaster relief sites. FEMA officials need to take quick action to ensure the protection of PII in future disasters.

>FEMA Continues to Experience Challenges in Protecting Personally Identifiable Information at Disaster Recovery Centers 		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-16-103-D The 2015 California wildfires caused severe damage to Lake County, California (County). County officials estimate that disaster-related costs may exceed $25 million. Our audit objective was to determine whether the County’s policies, procedures, and business practices are adequate to account for and expend FEMA Public Assistance Program grant funds according to Federal regulations and FEMA guidelines.

>Lake County, California, Should Continue to Improve Procurement Policies, Procedures, and Practices 		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-16-104-D The Louisiana Office of Community Development (OCD) received $702.9 million in Federal Emergency Management Agency (FEMA) funds for hazard mitigation grant program (HMGP) work on 9,588 properties under Hurricanes Katrina and Rita. We received allegations that the timeliness of OCD payments was placing financial hardship on program contractors. Therefore, our objective was to determine whether OCD processed payments to contractors in a timely manner and according to Federal regulations, FEMA guidelines, and State laws. We did not verify the validity of costs claimed or completion of work.

>The Office of Community Development Paid Most Contractors in a Timely Manner for Hazard Mitigation Work on Louisiana Homes 		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-16-106-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 Was Generally Effective in Its Initial Response to the Severe Wildfires in California 		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-16-107-D At the time of our audit, FEMA had granted the Commission a $7.4 million grant for damages from severe storms, tornadoes, straight-line winds, and flooding that occurred in April and May 2014. We conducted this audit early in the grant process to identify areas where the Commission may need additional technical assistance or monitoring to ensure compliance with Federal requirements. What We

>The Baldwin County Commission Effectively Managed FEMA Grant Funds Awarded for Damages from Spring 2014 Storms 		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-16-109-D We prepared this report to assist recipients and subrecipients (grantees and subgrantees) of Federal Emergency Management Agency (FEMA) disaster assistance grants. We have updated this guide to include information on FEMA’s Public Assistance Program and Policy Guide (PAPPG) that supersedes many of the Public Assistance publications and individual policy documents. The PAPPG is effective for all emergencies and major disasters declared on or after January 01, 2016.

>Audit Tips For Managing Disaster-Related Project Costs 		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-15-127-D Jefferson Parish, Louisiana, (Parish) received an award of $18.1 million from the Louisiana Governor’s Office of Homeland Security and Emergency Preparedness (Louisiana), a FEMA grantee, for damages resulting from Hurricane Isaac, which occurred in August 2012. Our audit objective was to determine whether the Parish accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The Parish generally accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. However, we identified $129,480 of ineligible costs

>Jefferson Parish, Louisiana, Generally Accounted For and Expended FEMA Grant Funds Properly 		2015
OIG-15-52 KPMG LLP reviewed National Flood Insurance Program’s internal control over financial reporting. The resulting management letter contains four observations related to internal controls and other operational matters for management’s consideration. KPMG LLP noted deficiencies and the need for improvements in certain National Flood Insurance Program (NFIP) processes. These deficiencies did not meet the criteria to be reported in the Independent Auditors’ Report on DHS’ FY 2014 Financial Statements and Internal Control over Financial Reporting, dated November 14, 2014, included in DHS’ fiscal year (FY) 2014 Agency Financial Report. These observations are intended to improve internal control or result in other operating efficiencies.

>National Flood Insurance Program's Management Letter for DHS' FY 2014 Financial Statements Audit (Redacted) 		2015
OIG-15-128-D FEMA’s selection of the Hurricane Sandy JFO in Lincroft, New Jersey, was not cost effective because FEMA waited until after Hurricane Sandy struck. While FEMA’s policies and procedures provide FEMA disaster response officials flexibility in responding to the unique disaster circumstances, FEMA was unprepared to set up a cost-effective JFO in New Jersey. As a result, FEMA’s selection of the New Jersey JFO for Hurricane Sandy exposed the Federal Government to unnecessary costs and delayed JFO operations. By taking advantage of nearby Federal facilities or locating more affordable flexible office space, FEMA might have avoided these facility costs and saved significant Federal disaster funds. Additionally, FEMA could have saved over $1.5 million by taking corrective actions to reduce lease costs as the disaster workforce decreased.

>FEMA's Process for Selecting Joint Field Offices Needs Improvement 		2015
OIG-15-54 We contracted with the independent public accounting firm KPMG LLP to perform the audit of the consolidated financial statements of the U.S. Department of Homeland Security for the year ended September 30, 2014. KPMG LLP evaluated selected general information technology controls, information technology entity level controls, and business process application controls at the Federal Emergency Management Agency (FEMA). KPMG LLP determined that FEMA had taken corrective action to design and consistently implement certain account management and configuration management controls. However, KPMG LLP continued to identify general information technology control deficiencies related to security management, logical access, configuration management, segregation of duties, and contingency planning for FEMA’s core financial and feeder systems. Such control deficiencies limited FEMA’s ability to ensure the confidentiality, integrity, and availability of its critical financial and operational data.

>Information Technology Management Letter for the Federal Emergency Management Agency Component of the FY 2014 Department of Homeland Security Financial Statement Audit 		2015
OIG-15-129-D The City of Mankato, Minnesota (City) received a $939,719 grant for damages from a June 2014 disaster. 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.

>Mankato, Minnesota, Has Adequate Policies, Procedures, and Business Practices to Effectively Manage Its FEMA Public Assistance Grant Funding 		2015
OIG-15-65-D Holy Cross received an $89 million FEMA grant award for 2005 Hurricane Katrina damages to its campus in the Ninth Ward of New Orleans. By 2011, the school had completed work on 12 of its 16 projects. However, at the time of our audit, Louisiana had not submitted a final claim for the 12 projects and FEMA had closed only 1 large project. Holy Cross did not follow Federal procurement standards in awarding 21 contracts totaling $82.4 million. As a result, FEMA has no assurance that costs were reasonable. This is especially true for projects that FEMA funds at 100 percent of the costs. Further, the lack of open and free competition increased the risk of fraud, waste, and abuse and decreased opportunities for small businesses, minority-owned firms, and women’s business enterprises to compete for federally funded work. For the most part, we do not question costs that Holy Cross incurred to reopen school in January 2006, or to operate temporary facilities in the Ninth Ward. However, in 2007, Holy Cross decided to relocate from the Ninth Ward to the Gentilly neighborhood of New Orleans. Holy Cross set up a temporary campus in Gentilly in 2007 and began work on permanent facilities there in 2008. By 2007, exigent circumstances no longer existed, so Holy Cross should have procured competitive bids according to Federal regulations for the work in Gentilly.

>FEMA Should Disallow $82.4 Million of Improper Contracting Costs Awarded to Holy Cross School, New Orleans, Louisiana 		2015
OIG-15-130-D The City of Kenner, Louisiana (City), received a $5.4 million FEMA Public Assistance grant award for August 2012 Hurricane Isaac damages. Our audit objective was to determine whether the City accounted for and expended FEMA funds according to Federal regulations and FEMA guidelines. The City generally accounted for and expended FEMA Public Assistance grant funds according to Federal requirements. However, FEMA should recover $148,500 of the $5.4 million award because the City claimed project costs that insurance covered. In addition, the City awarded 12 contracts totaling $3.1 million, without taking the required affirmative steps to ensure the use of small and minority firms, women’s business enterprises, and labor-surplus area firms when possible. As a result, FEMA has little assurance that these types of firms had sufficient opportunities to bid on federally funded work.

>The City of Kenner, Louisiana, Generally Accounted For and Expended FEMA Grant Funds Properly 		2015
OIG-15-66-D The South Carolina Department of Transportation (Department) expects to claim about $165.2 million in Public Assistance grant funds for debris removal activities associated with a February 2014 severe winter storm. We conducted this audit early in the Public Assistance process to identify areas where the Department may need additional technical assistance or monitoring to ensure compliance with Federal requirements. The Department generally has established policies, procedures, and business practices to adequately account for and expend FEMA grant funds according to Federal regulations and FEMA guidelines. The Department has accounting systems in place to account for disaster costs on a project-by-project basis and has adequate support for costs it plans to claim under the grant award. Further, the contracts the Department awarded to accomplish work under the grant met Federal and FEMA procurement requirements.

>South Carolina Department of Transportation Has Adequate Policies, Procedures, and Business Practices to Effectively Manage Its FEMA Public Assistance Grant Funding 		2015
OIG-15-131-D This is our third audit of the FEMA Public Assistance grant the City received for 2005 Hurricane Katrina damages. For the majority of the $376 million we reviewed, the City of Biloxi, Mississippi (City) accounted for and expended FEMA funds according to Federal requirements. However, the City did not follow all Federal procurement standards for a contract totaling$21.7 million for management of an infrastructure project. As a result, full and open competition did not always occur, which increased the risk of fraud, waste, and abuse, and at least $8.1 million of the $21.7 million in contract costs was unreasonable.

>FEMA Should Recover $21.7 Million of $376 Million in Public Assistance Grant Funds Awarded to the City of Biloxi, Mississippi, for Hurricane Katrina Damages 		2015
OIG-15-67-D As of February 2014, the Port Authority requested an estimated $213 million in Public Assistance funding for 2012 Hurricane Sandy damages. We conducted this audit early in the Public Assistance process to identify areas where the Port Authority may need additional technical assistance or monitoring to ensure compliance with Federal grant requirements. At the time of the grant award, the Port Authority of New York and New Jersey (Port Authority) did not have adequate accounting and procurement policies and procedures in place to ensure compliance with Federal Emergency Management Agency (FEMA) grant requirements. However, in late 2013, the Port Authority made changes to its accounting and procurement policies and procedures for FEMA-funded work. These changes should provide FEMA reasonable assurance that the Port Authority has the capability to account for and expend FEMA grant funds according to Federal requirements.

>The Port Authority of New York and New Jersey's Recently Updated Policies, Procedures, and Business Practices Should Be Adequate to Effectively Manage FEMA Public Assistance Grant Funds 		2015
OIG-15-132-D The City of Duluth, Minnesota, (City) received a Public Assistance grant award of $13.34 million from Minnesota’s Department of Public Safety, Division of Homeland Security and Emergency Management (Minnesota), a FEMA grantee, for damages resulting from severe storms and flooding in June 2012. The City did not follow Federal procurement standards in awarding $3.08 million for 12 contracts—$1.54 million for 8 non-exigent contracts and $1.54 million for 4 exigent contracts. Although the City competitively awarded all but 3 of the 12 contracts we reviewed, it did not take required steps to provide opportunities to disadvantaged firms to bid on federally funded work, as Congress intended. Therefore, we question the $1.54 million the City claimed for eight contracts for non-exigent work. We generally do not question costs for work when lives and property are at risk. Therefore, of the $1.54 million the City claimed for exigent work, we question only $8,566 in markups on the cost because one of the City’s contractors billed on a prohibited cost-plus-percentage-of-cost basis.

>FEMA Should Recover $1.78 Million of Public Assistance Grant Funds Awarded to the City of Duluth, Minnesota 		2015
OIG-15-77 KPMG LLP reviewed the Federal Emergency Management Agency (FEMA) internal control over financial reporting. The management letter contains 15 observations related to internal control and other operational matters for management’s considerations.

>Federal Emergency Management Agency's Management Letter for DHS' FY 2014 Financial Statements Audit 		2015
OIG-15-133-D The Knoxville Utilities Board received a Public Assistance award of $5.2 million from the Tennessee Emergency Management Agency, a FEMA grantee, for damages resulting from severe storms and tornadoes in June 2011. We audited projects totaling $4.3 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 June 2011 		2015
OIG-15-89-D This report focuses solely on the FEMA's application of the Cost Estimating Format for the Port of Tillamook Bay, Oregon's (Port) most significant project, an alternate project totaling $44.6 mllion. FEMA officials did not use the Cost Estimating Format correctly in estimating damages to the Port’s railroad. Specifically, FEMA did not follow applicable laws, regulations, and guidelines because it used improper assumptions in calculating estimated project costs using the Cost Estimating Format. As a result, FEMA overstated the Port’s construction (base) and non-construction costs, which resulted in FEMA overfunding Alternate Project 936 by $8,021,884.

>FEMA Misapplied the Cost Estimating Format Resulting in an $8 Million Overfund to the Port of Tillamook Bay, Oregon 		2015

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

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