OIG report: FEMA botched oversight of $65M in María recovery funds
The Department of Homeland Security’s Office of Inspector General issued a report that ripped into how the Federal Emergency Management Agency (FEMA) managed some $65 million in Puerto Rico Disaster Case Management Program (PR-DCMP) funds.
The PR-DCMP intended to promote effective delivery of post-disaster case management services in partnership with the local governments. Specifically, the DCMP is designed to help individuals and families find resources to meet their disaster-caused unmet needs, in this case, after Hurricane María struck in September 2017.
Initially, it was the Puerto Rico Department of Housing that applied to manage the funds in September 2017, but it withdrew its petition — due to limited resources — and turned the efforts back to FEMA five months later, the OIG explained.
Because of the overwhelming number of Puerto Rico residents who registered for FEMA assistance, the agency decided to administer PR-DCMP services, which had some $72.8 million available, through nine nonprofits, or providers, with cooperative agreements.
The report did not reveal the names of the nonprofits that FEMA worked with.
The audit aimed to determine “to what extent FEMA managed the PR-DCMP funds in accordance with federal regulations and FEMA program requirements. FEMA awarded $72.8 million in DCMP funds to nine providers in Puerto Rico. Our scope encompassed $65 million paid to eight of the nine providers,” it stated.
Upon review of expenses, the OIG found thousands of dollars approved that lacked supporting documentation, it stated.
“FEMA did not manage the $65 million in PR-DCMP funds in accordance with federal regulations and FEMA program requirements. Because it administered the PR-DCMP services through eight providers with cooperative agreements, FEMA served as both the managing and oversight entity,” the OIG stated.
“As the oversight entity, FEMA did not establish adequate internal controls for separation of duties, written policies and procedures when the state is not the recipient, orrecords management,” it stated.
“As a result, FEMA has no assurance that $17.1 million paid to providers was all DCMP-related and necessary to perform DCMP activities. Additionally, FEMA cannot ensure the remaining $47.9 million of DCMP-related costs are adequately supported, thereby increasing the risk of fraud, waste, and abuse of funds,” the OIG stated.
In its audit, the OIG included three specific recommendations to FEMA: to establish internal controls to ensure proper separation of duties related to the review, approval, and disbursement of funds; establish policies and procedures for the DCMP when the program is not awarded to the State or Territory; and review all documentation supporting the $65 million DCMP reimbursements to the providers and ensure the documentation is adequate.
Meanwhile, FEMA did not concur with the observations, responding to each one.
On the first, FEMA told the OIG that it does not approve payments. Instead, the providers established accounts with the federal agency through which they processed their own fund drawdown requests. On the second, the agency stated that it has been engaged in ongoing improvements to its tools, procedures, and language to administer award funding. And on the third observation, FEMA stated it conducts an annual testing through a sample of transactions when program expenditures exceed $10 million in a fiscal year.
Now with Hurricane Fiona, the OIG confirmed it “will conduct additional work in Fiscal 2023 on FEMA’s continuing public assistance provided to Puerto Rico in response to Hurricane Maria during the intervening five years and will evaluate how Puerto Rico used federal public assistance funds to prepare for future weather-related events.”