Grant

The Indiana Department of Homeland Security (Indiana) received $27.9 million in Federal Emergency Management Agency (FEMA) Hazard Mitigation Grant Program (HMGP) funds to disburse to eligible subgrantees for projects in 10 disasters declared from June 2004 to April 2014. Our objective was to determine whether Indiana administered the grant program in accordance with Federal regulations and ensured subgrantees properly accounted for and expended FEMA funds. Indiana unable to demonstrate it has procedures and processes to ensure compliance with all Federal monitoring and financial reporting requirements. Specifically, Indiana did not perform required subgrant monitoring during project implementation and post closeout; submit quarterly progress and financial reports that met requirements; and comply with financial management requirements to ensure subgrantees accounted for and expended FEMA grant funds according to Federal regulations and FEMA guidelines.

FEMA did not manage disaster relief grants and funds adequately and did not hold grant recipients accountable for properly managing disaster relief funds. We continue to identify persistent problems such as improper contract costs, and ineligible and unsupported expenditures as examples of this continued failure. Over the 7-year period, FYs 2009 to 2015, we found $1.64 billion, or 15 percent, in questioned costs out of the $10.9 billion that we audited, which we recommended FEMA disallow as ineligible and unsupported costs. In FY 2016, we found $155.6 million2, or 23 percent, in questioned costs out of the $686 million that we audited, confirming that FEMA is not making progress managing disaster relief funds adequately. We continue to identify persistent problems throughout FEMA’s grant process, we are concerned that billions of tax payer dollars remain at risk.

 

We determined that the County accounted for and expended the majority of FEMA grant funds according to Federal regulations and FEMA guidelines.  However, the County claimed $246,294 of ineligible and unsupported costs for two large projects.  County officials said these issues occurred because FEMA officials provided inconsistent guidance regarding the types of direct administrative costs that were eligible; and internal clerical errors for overstated material costs.  We recommended FEMA disallow $246,294 of ineligible and unsupported costs and provide clearer guidance for documenting eligible direct administrative costs.

We determined that Downe Township did not always follow Federal procurement standards in awarding contracts for disaster work.  We recommended that FEMA disallow $832,040 of $2.5 million in grant funds awarded to the Township.  The Township did not have support for $445,385 of the questioned costs.  We also recommended that the Administrator, FEMA Region II, deobligate unused project costs, and withhold $2.3 million in funds requested for additional project work until New Jersey provides assurance that the Township complies with all Federal procurement standards for FEMA funded work.  FEMA Region II concurred with all of our recommendations.

We determined the City has established adequate policies, procedures, and business practices to account for and expend Public Assistance grant funds according to Federal regulations and FEMA guidelines. Therefore, if the City follows its policies, procedures, and business practices it has in place, FEMA has reasonable, but not absolute assurance, that the City will properly manage the Public Assistance grant funds it receives. We did not identify any reportable issues and consider this audit closed.

We determined that the District’s accounting policies, procedures, and business practices are adequate to account for FEMA grant funds and insurance proceeds according to Federal regulations and FEMA guidelines.  However, the District’s procurement policies, procedures, and business practices were not adequate to meet minimum Federal standards and address key procurement elements such as to ensure no award is made to any party debarred or suspended from Federal assistance programs.  The District took immediate corrective actions and amended its procurement procedures to be compliant with Federal procurement standards.  Non-compliance occurred because District officials were not fully aware of the required procurement standards for Federal grants.  We recommended that FEMA direct Texas to continue providing technical assistance and closely monitor the District to ensure it complies with Federal procurement standards for awarding and administering disaster-related contracts to prevent improper spending of the estimated $12,854,705 ($9,641,029 Federal share) in contract costs for remaining permanent work.  FEMA agreed with the findings and recommendation in the report.