Disaster Preparedness

KPMG, LLP found that the Federal Emergency Management Agency (FEMA) did not always ensure Virgin Islands Territorial Emergency Management Agency (VITEMA) and the Virgin Islands Department of Education (VIDE) established and implemented policies, procedures, and practices to account for and expend Public Assistance (PA) grant funds according to Federal regulations and FEMA guidance.  For example, VIDE did not have policies and procedures to address procurement-related conflicts of interest and related disciplinary actions.  This occurred because FEMA did not adequately train VIDE personnel and did not review these policies and procedures.  We made five recommendations that, when implemented, should improve management of FEMA PA grant funds, ensuring the funds are expended according to Federal regulations and FEMA guidance.  FEMA concurred with the recommendations. 

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

The Federal Emergency Management Agency’s (FEMA) Individuals and Households Program (IHP) has a robust process for collecting and verifying information provided by underinsured disaster applicants.  However, FEMA does not collect sufficient supporting documentation or verify applicants claiming to have no insurance are eligible for home repair assistance.  Rather, according to FEMA, it relies on applicant self-certifications because no comprehensive repository of homeowner’s insurance data exists, and any additional verification processes would delay home repair payments.  As a result, FEMA made and we are questioning, more than $3 billion in improper and potentially fraudulent payments to individuals since 2003.  Additionally, FEMA did not properly assess and report improper payment risks within IHP because it disregarded significant internal control deficiencies and prior audit findings when it evaluated program risks.  Therefore, IHP applicants who claimed no homeowner’s insurance received less oversight even though they posed the greatest risk for improper and fraudulent payments.  Without implementing changes to its home repair assistance processes, FEMA cannot ensure it is being a prudent steward of Federal resources and adequately assessing its risks of improper payments and fraud.  We made two recommendations to FEMA to improve its IHP home repair documentation, verification, and risk management processes.  FEMA non-concurred with the two report recommendations, resulting in both recommendations being unresolved and open.

FEMA needs to continue providing technical assistance to and monitoring of California’s Public Assistance grant funding management.  This helps avoid the risk of exposing millions of taxpayer dollars to fraud, waste, or mismanagement and violating the Robert T. Stafford Disaster Relief and Emergency Assistance Act. In doing so, FEMA can assist California in providing reasonable, but not absolute assurance that Public Assistance subgrant funds are spent in accordance with Federal regulations and FEMA guidelines.