A new report from the U.S. Department of Homeland Security’s Office of Inspector General found that a lack of sufficient oversight of FEMA’s COVID-19 Emergency Protective Measures Grants led to more than $8.1 billion in questionable costs and $1.5 billion in over-obligated funds.
The OIG audited FEMA’s COVID-19 pandemic recovery measures to ensure the funding provided to the agency reached its intended recipients and sub recipients and were used as required. The audit found that due to insufficient oversight of the public assistance grants, FEMA obligated $1.5 billion in funds that could have been better used in other disasters, disbursed $8.1 billion in costs that have yet to be determined allowable, and made $32.8 million in improper payments.
The OIG said it reviewed a sample of grants to ensure that the funds were used as intended. In one state, FEMA over-obligated the state’s medical staffing grant and did not determine the cost allowability of the $8.1 drawdown by the same state. In addition, the OIG reviewed a sample of 20 other grants and found an estimated $32. 8 million in improper payments.
“These issues occurred due to the unprecedented circumstances surrounding the COVID-19 pandemic and FEMA not following established requirements when delivering Public Assistance funding,” the report said. “For example, for the medical staffing grant, FEMA did not validate the reasonableness of cost estimates provided by the state before obligating funds. Further, FEMA experienced delays in its improper payment reviews of the state’s expended funds due to an increased workload from COVID-19 and other major disasters.”
The report also found that FEMA “delayed taking action to recoup unsupported costs it identified in its improper payment reviews and instead worked with the state to maximize reimbursements during the review process.”
The OIG made seven recommendation to improve FEMA’s oversight of the grants: assess and update its review process; review unliquidated obligations for all the COVID-19 project worksheets; conduct an incurred cost audit of all expenditures for the state medical staffing project worksheet and disallow ineligible costs; implement Validate As You Go policies; resolve questioned costs for $32. 8 million identified in the report; ensure that costs are properly documents and review before disbursement; and comply with the requirement to issue determination memorandums to subrecipients when ineligible costs are found.
FEMA agreed with all the recommendations and has complied with five of them. The agency has 30 days to comply with the two outstanding recommendations – a review of unliquidated obligations for all COVID-19 project worksheets, and an incurred cost audit of all expenditures for the state medical staffing project worksheet, and recovering any ineligible costs identified.