You are given two reports by the government agency.  

Report 1:
The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), as amended, establishes the process for states or tribal entities to request a presidential disaster declaration. The act also generally defines the federal government’s role during the response and recovery after a disaster and establishes the programs and process through which the federal government provides disaster assistance to state, local governments, tribal entities and individuals. In addition to its central role in recommending to the President whether to declare a disaster, FEMA has primary responsibility for coordinating the federal response when a disaster is declared as well as recovery, which typically consists of providing grants to assist state and tribal entities to alleviate the damage resulting from such disasters. Once a disaster is declared, FEMA provides assistance through the IA, Public Assistance, and Hazard Mitigation Assistance programs. For instance, some declarations may provide grants only for IA and others only for Public Assistance. Hazard Mitigation Assistance grants, on the other hand, are available for all declarations if the affected area has a FEMA-approved Hazard Mitigation plan. The process for requesting assistance is the same for the three types of assistance. Under the Stafford Act, states’ governors or tribal chief executives may request federal assistance, if state and tribal resources are overwhelmed after a disaster. As part of the request to the President, a governor or tribal chief executive must affirm that the state or tribe has implemented an emergency plan and that the situation is of such severity and magnitude that effective response is beyond the capabilities of the state or tribal entity, among other things. After a state or tribe submits a request for disaster declaration through FEMA’s regional office, the regional office is to evaluate the request and make a regional recommendation through the RVAR, which is submitted to FEMA headquarters for further review. The FEMA administrator then is to review the state’s or tribe’s request and the RVAR, and recommend to the President whether a disaster declaration is warranted. Figure 1 shows the process for a disaster declaration from the time a disaster occurs until the President approves or denies a declaration request. The IA program provides financial and direct assistance to disaster victims for expenses and needs that cannot be met through other means, such as insurance. The IA comprises five different programs as shown below. When states or tribal entities request disaster declarations, they may request assistance under any or all of the five programs. Likewise, when the President makes a disaster declaration, the declaration may authorize IA which may also include any or all of the five IA programs. 1. Individuals and Households Program provides assistance to eligible disaster survivors with necessary expenses and serious needs which they are unable to meet through other means, such as insurance. According to FEMA headquarter officials, direct assistance is provided to individuals to meet housing needs. 2. Crisis Counseling Program assists individuals and communities by providing community-based outreach and psycho-educational services. 3. Disaster Legal Services provides assistance through an agreement with the Young Lawyers Division of the American Bar Association for free legal help to survivors who are unable to secure legal services adequate to meet their disaster-related needs. 4. Disaster Case Management Program involves a partnership between a FEMA disaster case manager and a survivor to develop and carry out a Disaster Recovery Plan. 5. Disaster Unemployment Assistance provides unemployment benefits and reemployment services to individuals who have become unemployed as a result of a major disaster and who are not eligible for regular state unemployment insurance. In accordance with its responsibilities under the Stafford Act, FEMA issued a regulation in 1999 that outlines the six factors regional and headquarters officials are to consider when assessing requests for a disaster declaration and when developing a recommendation to the President for a federal disaster declaration. The regulation states that FEMA considers the six factors not only to evaluate the need for IA but also to measure the severity, magnitude, and impact of the disaster. The state or tribe provides information on these factors when submitting its disaster declaration request. The six factors for IA include the following: 1. Concentration of Damages—characterizes the density of the damage in individual communities. The regulation states that highly concentrated damages “generally indicate a greater need for federal assistance than widespread and scattered damages throughout a state.” For example, concentration of damage data includes the numbers of homes destroyed, homes with major or minor damages, and homes affected. 2. Trauma—the regulation provides conditions that might cause trauma including large numbers of injuries and deaths, large-scale disruption of normal community functions, and emergency needs such as extended loss of power or water. 3. Special Populations—FEMA considers the impact of the disaster on special populations, such as low-income populations, the elderly, or the unemployed. 4. Voluntary Agency Assistance—involves the availability and capabilities of voluntary, faith, and community-based organizations, and state and local programs to help meet both the emergency and recovery needs of individuals affected by disasters. 5. Insurance Coverage—addresses the level of insurance coverage among those affected by disasters. Because disaster assistance cannot duplicate insurance coverage, as recognized in the regulation, if a disaster occurred where almost all of the damaged dwellings were fully insured for the damage that was sustained, FEMA could conclude that a disaster declaration by the President was not necessary in accordance with this factor. 6. Average Amount of Individual Assistance by State—according to the regulation, there is no set threshold for recommending IA. However, it states that the averages, depicted in table 1, may prove useful to states and voluntary agencies as they develop plans and programs to meet the needs of disaster victims. The inference is that these averages generally indicate the amount of damages that could be expected for a state based on its size (small, medium, and large). The averages contained within the regulation and depicted in table 1 are based on disasters that occurred between July of 1994 and July of 1999. The President declared 57 percent of all IA declaration requests from calendars years 2008 through 2016, with total IA obligations of approximately $8.6 billion. FEMA received 294 IA declaration requests from calendar years 2008 through 2016. Of these, the President declared 168 requests (57 percent), and 51 percent of these declarations were from Regions IV and VI, as shown in table 2. Additionally, of the 126 IA declaration requests denied by the President, Regions X and IX had the highest percentage of denials, at 71 percent (10 out of 14) and 67 percent (12 out of 18), respectively, and Region I had the lowest percentage of denials at 13 percent (2 out of 15), as shown in table 3. See appendix I for the number of IA declarations requested, declared, and denied by states and tribes from each FEMA region for disaster declarations requested from calendar years 2008 through 2016. According to a FEMA headquarters official, when a disaster declaration is denied, FEMA sends a denial letter to states or tribes based on the review of all the information available. The letter generally states that the damage was not of such severity and magnitude as to be beyond the capabilities of the state, affected local governments, and voluntary agencies, and accordingly the supplemental federal assistance is not necessary. Of the emergency management officials we interviewed in 11 states, officials in five states reported that FEMA provided a rationale behind the denial, while officials in three states reported that no rationale was provided. Among the various types of disasters for which IA declaration requests were received, severe storms, flooding, and tornados accounted for the highest number of IA requests, with drought, fishery closure, and contaminated water being the least common, as shown in table 4. FEMA obligated a total of approximately $8.6 billion in IA for disaster declarations made from calendar years 2008 through 2016. These actual obligations were provided to 46 states and they ranged from less than $1 million to more than $1 billion as shown in figure 2. See appendix II for FEMA’s IA actual obligations by state and type of disasters for disaster declarations made from calendars years 2008 through 2016. Additionally, actual obligations for IA declarations made from calendar years 2008 through 2016 varied greatly by FEMA region, as also shown in figure 3. For example, FEMA Region VI had the highest obligations at around $3.3 billion. Region X had the lowest obligations at $24.8 million. As shown in table 5, the amount of obligations for disasters declarations also varied greatly by state. For example, Louisiana had the highest obligations at approximately $2 billion, followed by New York and Texas at about $1.3 billion and $1.1 billion, respectively. The state with the lowest obligations was the U.S. Virgin Islands at about $2,100. Six of FEMA’s 10 regional offices reported using all six regulatory factors when evaluating states’ or tribes’ IA declaration requests. Officials from the other 4 regions reported using five of the six factors, with the exception being the average amount of individual assistance by state factor. These officials noted that they do not use this factor because FEMA considers the factor to be outdated or they consider all of the factors holistically. Officials from FEMA’s regional offices also generally reported that the extent to which they consider the six IA regulatory factors equally in all cases varies, depending on the circumstances of the related disaster. Specifically, officials from 7 of the 10 regions stated that they use the regulatory factors on a case-by-case basis as certain factors are more relevant than others based on the disaster. For example, if a tornado hits a rural community and completely destroys all properties within the community with no death or injury, then the regulatory factor for trauma may not be as applicable, while the concentration of damages regulatory factor would have greater relevance. On the other hand, if a tornado hits the center of a town resulting in damages with death and injuries, then the trauma regulatory factor would become more important to consider. Additionally, officials in 3 of the 10 regions reported that in addition to the six regulatory factors, they also take into account institutional knowledge and staff experience when evaluating the regulatory factors. For example, officials in one region stated that their staff have more than 10 years of IA declaration experience, and as such, they are familiar with the extent of the information needed and collect the information accordingly. Based on our analysis of RVARs from July 2012 through December 2016 used to recommend approving or denying IA requests, FEMA regional offices did not consistently obtain and document information on all elements of the IA regulatory factors. As described earlier, FEMA regions are to use the RVAR to document information on the IA factors and to recommend to the FEMA administrator whether a disaster should be declared. According to FEMA headquarters officials, FEMA developed the RVAR template in June 2012 to help ensure consistency across regions when making recommendations to headquarters on IA declaration requests. Officials stated that prior to the template, information on the six factors was mainly provided in narrative format. The new template listed the various elements found within each of the six regulatory factors, guiding the regional offices to provide information based on those elements. For example, instead of providing a general narrative on the trauma factor, the new template listed the elements to be provided under trauma, such as the number of injuries and deaths, as well as information on power outages and disruption of other community functions and services. Also, instead of summarizing the concentration of damages factor, the template allowed regional offices to categorize the damage concentration as low, medium, high, or extreme. Furthermore, the template also provided a uniform format to present quantitative information such as the number of homes destroyed; whether home damages are major or minor; the number of homes affected; and level of home ownership. See appendix III for a sample RVAR template. We analyzed 81 RVARs developed by the 10 FEMA regions from July 2012 through December 2016 and found that regions did not consistently obtain and document information on all elements related to each of the six regulatory factors in their RVARs. As shown in table 6, all 81 RVARs had at least some elements documented but not all for each of the IA regulatory factors. For example, for the IA concentration of damages regulatory factor, the six elements to be addressed include the number of homes destroyed, damaged or affected, damage concentration, and damage to critical facilities. While 44 of the 81 RVARs documented all of the six elements, 37 documented some but not all of the elements. Similarly, for the trauma regulatory factor, the four elements to be addressed include injuries, death, power outages, and disruption of community functions. While 30 of the 81 RVARs documented all of the four elements, 51 documented some but not all of the elements. For the insurance coverage factor, while five RVARs documented all of the elements, 73 RVARs documented some but not all of the elements. Elements under this factor include home ownership, insurance, and flood insurance, when applicable. None of the six regulatory factors were fully documented across all RVARs. See appendix IV for detailed information on the extent to which all of the elements of the six regulatory factors were documented in the RVARs from July 2012 through December 2016. FEMA headquarters officials acknowledged that information related to all the elements for each of the IA regulatory factors were missing from the RVARs. They stated that they had not collected all information on all factors because one factor may have more weight than another based on the specific incident that has occurred. However, they also indicated that they do not fully know and have not evaluated all of the reasons why a region may have omitted information on an element of a factor. FEMA headquarters officials agreed that having complete information on all elements of the regulatory factors in the RVARs would assist in their recommendation process. Standards for Internal Control in the Federal Government suggest that agencies should establish and operate monitoring activities to ensure that internal controls—such as the documentation of all of the elements of the IA regulatory factors FEMA regions considered—are effective, and to take corrective actions as appropriate. Because it is unclear why regions are not completely documenting all elements related to the current six regulatory factors, such an evaluation could help FEMA identify whether any corrective steps are needed. Doing so could help FEMA ensure it is achieving its stated goals in providing consistency in the evaluation process and in the types of factors it considers. Officials we interviewed in 9 of the 10 FEMA regions and state emergency management offices in all 11 states reported the positive relationship they maintain with each other as a strength in the IA declaration process. For example, both FEMA regional officials and state emergency management officials stated that they have a good working relationship and are in regular communication via telephone or in-person meetings with each other. Also, state emergency management officials we spoke to stated that whenever they are in need of assistance, they know they can reach out to FEMA regional officials for assistance. However, FEMA regional and state emergency management officials we spoke to also reported various challenges with the process. These include the subjective nature of the IA regulatory factors given the lack of eligibility thresholds, the lack of transparency in the decision-making process, and difficulty gathering information on IA regulatory factors. Subjective nature of the IA factors and lack of eligibility thresholds. Officials from 9 of 10 FEMA regions stated the subjective nature of the IA program is a challenge; and officials in 6 of the 10 regions also said they found the lack of eligibility thresholds a challenge. An official in one region stated that unlike FEMA’s Public Assistance program, which has minimum thresholds for eligibility, it is unclear when states should apply for IA funds. Under the Public Assistance program, for example, for states or tribes to qualify for assistance, they must demonstrate that they have sustained a minimum of $1 million in damages and the impact of damages must amount to $1.00 per capita in the state. An official in another region explained that although the subjectivity of the IA factors provides flexibility in determining the type of IA program needed, having some quantifiable criteria could help officials explain to states why their requests were denied or approved. Similarly, officials we interviewed in 7 of the 11 states said they found the subjective nature of the factors with no threshold to be a challenge. A state emergency management official in one state said this subjectivity makes it difficult to determine whether or not the state should make an IA request. A state emergency management official in another state reported that the subjectivity can cause the IA declaration process to be inconsistent, and it is not always clear how or why certain declarations were approved and others were not. Further, a state emergency management official in an additional state also pointed to the subjective nature of the factors with no threshold as a reason for not being able to provide a more detailed rationale behind a declaration denial. To illustrate this, table 7 shows how four states requested IA declarations related to the same tornado in 2012 and varied in what they reported across the six IA factors, such as the levels of damages incurred, special populations among their residents, and insurance coverage. Two of these four states—Kentucky and Indiana—received IA declarations and the other two—Ohio and Illinois—were denied. Lack of transparency. Another challenge reported by FEMA regional and state emergency management officials was the lack of transparency in how FEMA evaluates and provides a recommendation to the President on whether a declaration is warranted. For example, officials we interviewed in 4 of 10 regions indicated the lack of transparency as a challenge. A FEMA official in one region stated that the region would like more transparency regarding what FEMA headquarters recommends to the President and whether the President’s decision aligns with FEMA’s recommendation. State emergency management officials we interviewed in 10 of 11 states also reported that lack of transparency with the IA process is a challenge. For example, an emergency management official in one state said it is not clear how or if FEMA considers all of the factors. Also, an emergency management official in another state reported that it was unclear to him why his state’s declaration request was denied while the requests of other states with similar incidents were declared. Difficulty gathering information on IA regulatory factors. Officials in 4 of 10 FEMA regions reported difficulty gathering information, such as income or insurance coverage, as a challenge. An official in one region stated that it is difficult to obtain information related to IA factors from states. For example, the official said that calculating the concentration of damages is difficult absent technical guidance from FEMA headquarters, as the current guidance only accounts for the number of structure damage but not the impact of damage. Further, officials in two FEMA regions stated that states lack a dedicated IA official, making it difficult for state officials, who play multiple roles, to provide the necessary information related to the IA factors in their IA declaration request. Additionally, a state emergency management official in one state also reported that lack of staff resources in her state makes it difficult to verify all the local damage assessments prior to making a declaration request. Pursuant to the Sandy Recovery Improvement Act of 2013, in November 2015, FEMA issued a Notice of Proposed Rulemaking to revise the six current IA regulatory factors to the following proposed factors: state fiscal capacity and resource availability; uninsured home and personal property losses; disaster-impacted population profile; impact to community infrastructure; casualties; and disaster-related unemployment. According to FEMA headquarters officials, the revisions aim to provide more objective criteria, clarify the threshold for eligibility, and speed the declaration. The officials said the proposed rule also seeks to provide additional clarity and guidance for all the established factors. Table 8 shows FEMA’s description of current and proposed IA factors. FEMA received public comments from 14 states in the Federal Register during the comment period for the proposed rule and proposed guidance. The 14 states expressed concern about the proposed factor for state fiscal capacity and resource availability, including the reliability and relevance of data sources such as total taxable resources. These states expressed concern that the data collection necessary to meet the new requirements would fall upon them, adding to the cost burden of completing an IA disaster declaration request. They also explained that the use of total taxable resources and other similar data is not an effective way to assess a state’s current ability to provide resources following a disaster. Also, these states indicated that the data points such as total taxable resources and per capita personal income that would be used to evaluate state fiscal capacity are outdated and inaccurate and would be an inefficient way to evaluate a state’s true fiscal capacity to respond to a disaster. Regarding the other five proposed factors, several states in their comments raised questions about ambiguities in interpreting the factors or the feasibility and cost of gathering related data. For example, in regards to the factor on disaster impacted population, five states expressed concern that the data required for the disaster-impacted population factor would be a cost burden to the state or that the data would be inappropriate for evaluation. Additionally, two states said unemployment related to a disaster incident for the disaster-related unemployment factor would be hard to quantify in the first 30 days following a disaster. They stated that this was especially an issue given that states work to submit an IA disaster declaration request as soon as possible following a disaster. According to the Office of Management and Budget’s Office of Information and Regulatory Affairs website, the projected date for finalization of the proposed rule is September 2018; however, as of April 2018, FEMA officials stated that they were not certain whether that timeframe would be met. Until the proposed rule is finalized, we will not know the extent to which the various challenges FEMA regions and state officials raised in our interviews and in comments on the proposed rule will be addressed. FEMA has obligated over $8.6 billion nationwide in IA from calendar years 2008 through 2016, highlighting the importance of FEMA’s evaluation of states’ and tribes’ IA declaration requests. FEMA’s regional offices evaluate the request and make a regional recommendation through the Regional Administrator’s Validation and Recommendation, which documents information on all relevant IA regulatory factors. FEMA has developed the Regional Administrator’s Validation and Recommendation to ensure regions consistently obtain and document the information needed by FEMA to make a disaster declaration recommendation to the President based on the IA regulatory factors. However, FEMA’s regional offices do not consistently obtain and document information on all elements of the current IA regulatory factors. Because it is unclear why regions are not always documenting all of the elements related to these factors, evaluating the reasons why could help FEMA identify if any corrective steps are needed. Doing so could also help FEMA ensure it is meeting its stated goals in providing consistency in the evaluation process and in the types of factors it considers. We recommend that the Administrator of FEMA evaluate why regions are not completing the Regional Administrator’s Validation and Recommendations for each element of the current IA regulatory factors and take corrective steps, if necessary. We provided a draft of this report to DHS for its review and comment. DHS provided written comments, which are summarized below and reproduced in full in appendix V. DHS concurred with the recommendation and described planned actions to address it. In addition, DHS provided written technical comments, which we incorporated into the report as appropriate. DHS concurred with our recommendation that FEMA evaluate why regions are not completing the Regional Administrator’s Validation and Recommendations for each element of the IA regulatory factors and take corrective steps, if necessary. DHS stated that a FEMA working group consisting of headquarters stakeholders will draft survey questions for FEMA region officials to identify the common reasons why an element of an IA regulatory factor may not be addressed within a RVAR. According to DHS, the working group will also analyze, assess, and present the findings of the survey responses to FEMA senior leadership, and if needed, FEMA will develop and send a memorandum to the regions with additional guidance regarding the appropriate preparation of RVARs. DHS stated that the estimated completion date is in the fall of 2018. These actions, if implemented effectively, should address the intent of our recommendation. We will send copies of this report to the Secretary of Homeland Security, the FEMA Administrator, and the appropriate congressional committees. If you or your staff have any questions about this report, please contact me at (404) 679-1875 or curriec@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix VI. Table 9 provides the total number of Individual Assistance declaration requests made, declared, and denied, by region, state, and tribe for disaster declarations requested from calendar years 2008 through 2016. Table 10 provides Federal Emergency Management Agency’s (FEMA) Individual Assistance (IA) actual obligations for declarations made from calendar years 2008 through 2016 by state and type of disaster. As part of the Federal Emergency Management Agency’s (FEMA) declaration process, FEMA’s regional offices are to evaluate states’ or tribes’ declaration requests, including the IA declaration request, and make a recommendation called the Regional Administrator’s Validation and Recommendation (RVAR) and submit the RVAR to FEMA headquarters. In June 2012, FEMA headquarters issued a template for FEMA regional offices to use in developing the RVAR as identified in figure 3. Tables 11 through 16 provide information on each element of the 6 Individual Assistance (IA) regulatory factors documented in the Regional Administrator’s Validation and Recommendation (RVAR) from July 2012 through December 2016 by the Federal Emergency Management Agency region. In addition to the contact named above, Aditi Archer (Assistant Director), Su Jin Yon (Analyst-In-Charge), Hiwotte Amare, Eric Hauswirth, Susan Hsu, Jun S. (Joyce) Kang, Christopher Keisling, Heidi Nielson, Hadley Nobles, Anne Rhodes-Kline, and Jerome (Jerry) Sandau made significant contributions to this report.

 

 Report 2:
The Forest Service’s mission includes sustaining the nation’s forests and grasslands; managing the productivity of those lands for the benefit of citizens; conserving open space; enhancing outdoor recreation opportunities; and conducting research and development in the biological, physical, and social sciences. The agency carries out its responsibilities in three main program areas: (1) managing public lands, known collectively as the National Forest System, through nine regional offices, 154 national forests, 20 national grasslands, and over 600 ranger districts; (2) conducting research through its network of seven research stations, multiple associated research laboratories, and 81 experimental forests and ranges; and (3) working with state and local governments, forest industries, and private landowners and forest users in the management, protection, and development of forest land in nonfederal ownership, largely through its nine regional offices. According to the Forest Service, it employs a workforce of over 30,000 employees across the country. However, this number grows by thousands in the summer months, when the agency hires seasonal employees to conduct fieldwork, respond to wildland fires, and meet the visiting public’s needs. The Office of the Chief of the Forest Service is located in Washington, D.C., with 27 offices reporting directly to the Office of the Chief, as illustrated in figure 1. The nine national forest regions, each led by a regional forester, oversee the national forests and grasslands located in their respective regions. Each national forest or grassland is headed by a supervisor, the seven research stations are each led by a station director, and a state and private forestry area is headed by an area director. The Forest Service collectively refers to its forest regions, research stations, and area as RSAs. The RSAs are organized differently according to their operations, and comparable operations within the RSAs, such as collections from reimbursable agreements, may be processed differently in the various regions and stations, resulting in highly decentralized operations. In addition, the offices of the Chief Financial Officer (CFO); Deputy Chief of Business Operations (includes the budget office); and eight other offices located in the Washington, D.C., headquarters also report directly to the Office of the Chief of the Forest Service. The Forest Service receives appropriations for its various programs and for specific purposes to meet its mission goals. Prior to fiscal year 2017, the Forest Service’s budgetary resources consisted primarily of no-year funds. Its budget office in Washington, D.C., initiates apportionment requests and monitors the receipt of Department of the Treasury (Treasury) warrants. Upon receipt of the warrant, the apportionment is recorded in the financial system and then the budget office develops an allocation summary detailing the allocation of its budget authority by fund, programs within the funds, and distribution of funds at the regional, station, and area levels. The Forest Service may also transfer funds from other appropriations to the appropriations account that funds its fire suppression activities when available funds appropriated for fire suppression and the Federal Land Assistance, Management, and Enhancement (FLAME) fund will be exhausted within 30 days. The Forest Service’s administrative policies, practices, and procedures are issued in its Directive System, which provides a unified system for issuing, storing, and retrieving internal direction that governs Forest Service programs and activities. The Directive System consists of the Forest Service’s manuals and handbooks. The manuals contain management objectives, policies, and responsibilities and provide general direction to Forest Service line officers and staff directors for planning and executing their assigned programs and activities. The handbooks provide detailed direction to employees and are the principal source of specialized guidance and instruction for carrying out directions issued in the manuals. Line officers at the national and RSA levels have authority to issue directives in the manuals and handbooks under their respective jurisdictions. The Forest Service’s policy states that the Directive System is the only place where Forest Service policy and procedures are issued. In addition to the Directive System, Forest Service staff have also developed standard operating procedures (SOP) and desk guides to supplement guidance provided in directives. However, the SOPs and desk guides are not part of the Forest Service Directive System and therefore are not official policy and procedures. While the Forest Service had documented processes for allotting its budgetary resources, it did not have an adequate process and related control activities for reasonably assuring that (1) amounts designated in appropriations acts for specific purposes are used as designated and (2) unobligated no-year appropriation balances from prior years were reviewed for their continuing need. In addition, the Forest Service did not have a properly designed and documented system for administrative control of funds. Finally, the Forest Service had not properly designed control activities for fund transfers for fire suppression activities under its Wildland Fire Management program. While the Forest Service had documented processes for allotting its budgetary resources, it did not have an adequate process and related control activities to reasonably assure that amounts designated in appropriations acts for specific purposes are used as designated—as required by the purpose statute, which states that “appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law.” We reviewed Forest Service documents about its budget authority processes, which included control objectives, related control activities, and processes over the allotment of its budgetary resources. We found that these documents, including manuals and handbooks, did not include an adequate process and related control activities for assuring that appropriated amounts are used for the purposes designated. For example, such a process would include the Forest Service allotting appropriated funds for specific programs or objects as provided in the applicable appropriation act, by either using specific budget line items already defined in the Forest Service’s financial system or creating new budget line items, as needed. Standards for Internal Control in the Federal Government states that management should define objectives clearly to enable the identification of risks and design appropriate control activities to achieve objectives and respond to the risks identified. As a result of the Forest Service not having an adequate process and related control activities for assuring that appropriated amounts are used for the purposes designated, the Forest Service did not properly allocate certain funds for specific purposes detailed in the appropriations acts for fiscal years 2015 and 2016. For example, in fiscal year 2015, the Forest Service did not set aside in its financial system the $65 million specified in the fiscal year 2015 appropriations act for acquiring aircraft for the next- generation airtanker fleet. According to Forest Service documents, as of January 6, 2016, $35 million of the designated funds was used for other purposes. In February 2017, we issued a legal opinion, related to the Forest Service’s use of the $65 million, which concluded that the Forest Service had failed to comply with the purpose statute. According to USDA’s Office of General Counsel, “this lack of any separate apportionment or account for the next-generation airtanker fleet was due to the fact that it was a new item, not included in the agency’s budget request, and added late in the appropriations process.” Similarly, in fiscal year 2016, the Forest Service did not create new budget line items to reserve in its financial system $75 million for the Forest Inventory and Analysis Program specified in the fiscal year 2016 appropriations act. Rather than creating a new budget line item for the program specified in the appropriations act, the funds were combined with an existing budget line item, making it difficult to track related budget amounts and actual expenditures. The lack of an adequate process and related control activities to reasonably assure that appropriated amounts are used for the purpose designated also increases the risk that the Forest Service may violate the Antideficiency Act. The Forest Service did not have a process and related control activities to reasonably assure that unobligated, no-year funds from prior years were reviewed for continuing need. We reviewed the Forest Service’s budget authority process document and related manuals and handbooks, which documented control objectives and procedures over its budgetary resources and the guidance for administrative control of funds. We found that these documents did not include a process for reviewing the Forest Service’s unobligated, no-year funds from prior years and related control activities to reasonably assure that such funds were reviewed for continuing need. Such reviews, if performed, may identify unneeded funds that could be reallocated to other programs needing additional budgetary resources, if consistent with the purposes designated in appropriations acts. The USDA Budget Manual states as a department policy that “agencies of the Department have a responsibility to review their programs continually and recommend, when appropriate, deferrals or rescissions.” The USDA Budget Manual further states the following: “Agency officials should remain alert to this responsibility since the establishment of reserves is an important phase of budgetary administration. If it becomes evident during the fiscal year that any amount of funds available will not be needed to carry out foreseeable program requirements, it is in the interest of good management to recommend appropriate actions, thereby maintaining a realistic relationship between apportionments, allotments, and obligations.” However, the Forest Service did not develop a directive addressing the control objectives, related risks, and control activities for implementing this USDA policy. Up until fiscal year 2017, Forest Service budgetary resources consisted primarily of no-year funds. At the beginning of each fiscal year, unobligated balances of no-year funds are carried forward and reapportioned to become part of budget authority available for obligation in the new fiscal year. Unobligated balances can increase during the fiscal year due to deobligation of prior years’ unliquidated obligations that the Forest Service determines it no longer needs. These resources are immediately available to the Forest Service to the extent authorized by law without further legislation or action from Office of Management and Budget (OMB) unless the apportionment states otherwise. According to Forest Service officials, unobligated funds reported in the Forest Service’s September 30, 2016, Statement of Budgetary Resources included $351 million in discretionary unobligated no-year funds, appropriated as far back as fiscal year 1999. The Forest Service did not identify and define a process and control objectives related to its review of unobligated no-year funds from prior years for continuing need. As a result, the Forest Service did not have reasonable assurance that prior no-year unobligated balances were properly managed and considered in its annual budget requests. This increased the risk that the Forest Service may make budget requests in excess of its needs. Additionally, the Forest Service could miss opportunities to use its prior year unobligated no-year funds more timely and effectively, for example, using these funds for other Forest Service program needs, if consistent with the purposes designated in appropriations acts. During our work, we brought this issue to management’s attention, and in response, Forest Service officials stated that the Forest Service is planning to develop a quarterly process to review available balances and, as needed, redirect funds to agency priorities. However, as of July 2017, the Forest Service had not yet developed this review process. Further, Congress rescinded about $18 million of the Forest Service’s prior year unobligated balances and required it to report unobligated balances quarterly within 30 days after the close of each quarter and appropriated multi-year funds instead of no- year funds to the Forest Service for fiscal year 2017. The Forest Service issued guidance related to administrative control of funds in manuals and handbooks, which USDA did not review and approve prior to their issuance. Based on our review of these documents, we found that the processes and related control activities over the administrative control of funds were dispersed in numerous manuals and handbooks, which may hamper a clear understanding of the overall system. Further, the system lacked key elements that would allow it to serve as an adequate system of administrative control of funds. For example, in its manuals and handbooks the Forest Service did not identify, by title or office, those officials with the authority and responsibility for obligating the service’s appropriated funds, such as funds for contracts, travel, and training. As a result, the responsibility for obligating funds was not clearly described and properly assigned in Forest Service policy as required by the USDA Budget Manual and OMB Circular No. A-11. OMB Circular No. A-11 states that the Antideficiency Act requires that the agency head prescribe, by regulation, a system of administrative control of funds, and OMB provided a checklist in appendix H to the circular that agencies can use for drafting their fund control regulations. This requirement is consistent with those in the USDA Budget Manual, which prescribes budgetary administration through a system of administrative controls for its component agencies, including the Forest Service. The USDA Budget Manual states that to the extent necessary for effective administration, (1) the heads of USDA component agencies may delegate to subordinate officials responsibilities in connection with the administrative distribution of funds within apportionments and allotments and the monitoring, control, and reporting of the occurrence of obligations and expenditures under apportionments and allotments and (2) the chain of such responsibility shall be clearly defined. In addition, USDA requires its component agencies to promulgate and maintain administrative control of funds regulation and to send such regulation to USDA’s Office of Program and Budget Analysis for review and approval prior to issuance. Because the Forest Service has not developed and issued a comprehensive system for administrative control of funds that considers all aspects of the budget execution processes, it cannot reasonably assure that (1) programs will achieve their intended results; (2) the use of resources is consistent with the agency’s mission; (3) programs and resources are protected from waste, fraud, and mismanagement; and (4) laws and regulations are followed. We also found that the Forest Service had not reviewed and updated most of its administrative control of funds guidance in the manuals and handbooks for over 5 years. The USDA Budget Manual requires each component to periodically review its funds control system for overall effectiveness and to assure that it is consistent with its agency programs and organizational structures. Further, Forest Service policy also requires routine review, every 5 years, of policies and procedures in its Directive System. According to Forest Service officials, when directives are up for review and update, a staff from the Office of Regulatory and Management Services (ORMS) sends an e-mail reminder to notify responsible personnel that updates to applicable directives are needed. However, we found that the Forest Service does not have adequate controls in place to monitor the reviews and any updates of the manuals and handbooks in its Directive System to reasonably assure that their efforts resulted in timely updates. As a result, the Forest Service is at risk that guidance for its system for administrative control of funds may lose relevance as processes change over time and control activities may become inadequate. The Forest Service did not have properly designed control activities over its process for fund transfers related to wildland fire suppression activities. The Forest Service receives appropriations for necessary expenses for (1) fire suppression activities on National Forest System lands, (2) emergency fire suppression on or adjacent to such lands or other lands under fire protection agreement, (3) hazardous fuels management on or adjacent to such lands, and (4) state and volunteer fire assistance. Transfer of funds from other Forest Service programs to its fire suppression activities occurs when the Forest Service has exhausted all available funds appropriated for the purpose of fire suppression and the FLAME fund. A key aspect of this process is assessing the FLAME forecast, which the Forest Service uses to predict the costs of fighting wildland fires for a given season, and developing a strategy to identify specific programs and the amounts that may be transferred to pay for fire suppression activities when needed. The process for reviewing the FLAME forecast and strategizing the fund transfers was documented in the Basic Budget Desk Guide created by staff in the Forest Service’s Strategic Planning and Budget Analysis Office. However, the desk guide did not contain evidence of review by responsible officials. As a result, the Forest Service lacked reasonable assurance that the desk guide was complete and appropriate for its use. The Basic Budget Desk Guide included a listing of actions to be performed by the analyst for reviewing the FLAME forecast report and developing a strategy for fund transfer from other programs. However, the desk guide did not specify the factors to be considered when developing the strategy. For example, it did not call for documentation addressing the rationale for the strategy or an assessment of the risk that the fund transfer could have on the programs from which the funds would be transferred. The desk guide also did not describe the review and approval of the strategy by a responsible official(s) prior to the fund transfer request sent to the Chief of the Forest Service. According to Standards for Internal Control in the Federal Government, management should design control activities to achieve objectives and respond to risks and that such control activities should be designed at the appropriate levels in the organizational structure. Further, management may design a variety of transaction control activities for operational processes, which may include verifications, authorizations and approvals, and supervisory control activities. The lack of properly designed control activities for supervisory review of the desk guide and strategy to identify the amounts for fund transfers does not provide the Forest Service reasonable assurance that the objectives of the fund transfers—including mitigating the risk of a shortfall of funding for other critical Forest Service program activities, such as payroll or other day-to-day operating costs—will be efficiently and effectively achieved. The Forest Service enters into various reimbursable agreements with agencies within USDA, other federal agencies, state and local government agencies, and nongovernment entities to carry out its mission for public benefit. The reimbursable agreements may be for the Forest Service to provide goods and services to a third party or to receive goods and services from a third party, or may be a partnership agreement with a third party for a common goal. According to Forest Service officials, the two distinct types of Forest Service reimbursable agreements are (1) fire incident cooperative agreements and (2) reimbursable and advanced collection agreements (RACA). The Forest Service did not have documented processes and related control activities for its fire incident cooperative agreements to reasonably assure the effectiveness and efficiency of its related fire incident operations. In addition, processes and related control activities applicable to RACAs were not adequately described in applicable manuals and handbooks in the Directive System, to reasonably assure that control activities could be performed consistently and effectively. Further, certain RACA processes in the Directive System had not been timely reviewed by management and did not reflect current processes. Moreover, as previously discussed, SOPs and desk guides developed in field offices related to RACA processes were not in the Forest Service’s Directive System. Finally, the Forest Service lacked control activities segregating incompatible duties performed by line officers and program managers in creating reimbursable agreements and the final disposition of related receivables. The Forest Service did not have documented processes and related control activities for its fire incident cooperative agreements to reasonably assure the effectiveness and efficiency of its related fire incident operations and reliable reporting internally and externally. As part of the service’s mission objective to suppress wildland fires, Forest Service officials stated that they enter into 5-year agreements referred to as master cooperative agreements with federal, state, and other entities. These agreements document the framework for commitment and support efficient and effective coordination and cooperation among the parties in suppressing fires, when they occur. The master cooperative agreements do not require specific funding commitments as amounts are not yet known. These agreements vary from region to region because of the differing laws and regulations pertaining to the participating states and other entities. These variations can also result in different billing and collection processes between regions. When a fire occurs, supplemental agreements, which are based on the framework established in the applicable master cooperative agreements, are signed by relevant parties for each fire incident. These agreements establish the share of fire suppression costs incurred by the Forest Service and amounts related to entities that benefitted from those fire suppression efforts. These supplemental agreements require commitment and obligation of funds. As indicated in figure 2, the Forest Service’s obligations for fire suppression activities ranged from $412 million to $1.4 billion over the 10-year period from fiscal years 2007 through 2016. In response to our request for documentation of processes and related control activities over its fire incident cooperative agreements, Forest Service officials stated that processes and related control activities over reimbursable agreements were applicable to both fire incident cooperative agreements and RACAs. However, based on our review of the Forest Service’s processes and related control activities over its reimbursable agreements, we found that the unique features of fire incident cooperative agreements (as compared to features of RACAs) were not addressed in the processes and related controls for reimbursable agreements. For example, there was no process and related control activities over the negotiation and review of (1) a fire incident master cooperative agreement, which is developed before a fire occurs, and (2) supplemental agreements, which are signed by all relevant parties after the start of a fire incident. These supplemental agreements detail, among other things, the terms for (1) fire department resource use, (2) financial arrangements, and (3) specific cost-sharing agreements. Another unique feature of fire incident cooperative agreements, which was not covered in process documents for its reimbursable agreements, was the preparation of the Cost Settlement Package. The preparation of this package does not start until after the fire has ended and the Forest Service has received and paid all bills. According to Forest Service officials, a fire incident is deemed to have ended when there are no more resources (firefighters and equipment) on the ground putting out the fire. However, this definition was not documented in the Forest Service’s manuals and handbooks in the Directive System. Based on our review of documentation that the Forest Service provided for four fire incidents, we found that for these incidents the Cost Settlement Packages and the billings took several months to years to complete after the fire incident. According to Forest Service officials, delays in preparing the Cost Settlement Package in many cases were due to parties involved in suppressing the fires taking a long time to submit their invoices to the Forest Service for payment. Because the preparation of Cost Settlement Packages was not included in the process documents, the Forest Service did not have a defined time frame for when, in relation to the end of the fire, the Cost Settlement Package must be completed. For example, in one case we reviewed, the bill for a cost settlement was sent 9 months after the fire occurred, and in another case, settlement occurred approximately 2 years after the fire occurred. For both fire incidents, based on the reports we reviewed, the fires were contained within a week or two, but the Forest Service does not have a policy for documenting the date when the fire incident is deemed to have ended. Because of the complexity of the process for negotiating and determining the reimbursable amounts from all the costs that the Forest Service pays for a fire incident, the reimbursable amounts may take time to negotiate, and subsequent billing to and collection from parties may take much longer. Forest Service officials stated that some receivables that were not going to be collected until after its financial system’s aging process for receivables deemed such receivables uncollectible and a bad debt are tracked in a spreadsheet outside its financial system. We found that the Forest Service did not have a documented process and related control activities to reasonably assure that its Budget Office was informed of these older receivables being tracked in a spreadsheet and the related progress of collection activities that local program managers and line officers perform, which could affect the reliability of the reported reimbursable receivable amounts. According to Standards for Internal Control in the Federal Government, management should internally communicate the necessary quality information to achieve the entity’s objectives. Without proper communication, important information, such as amounts that the Forest Service will receive from fire incident cost settlement negotiations, may not be considered in the Forest Service’s strategy for the effective and efficient management of fund transfers for fire suppression activities. Processes and related control activities applicable to RACAs were not adequately described in Forest Service manuals and handbooks in its Directive System. RACAs, which may be for research or other nonemergency purposes, are billed and collected based on previously agreed upon billing and collection terms. In accordance with the Forest Service’s Directive System, policies related to business processes, such as RACAs, are documented in its manuals while procedures for performing specialized activities are documented in its handbooks. We found that the manuals and handbooks in the Directive System did not adequately describe the processes and related control activities over the RACA processes to enable efficient and effective performance of the work by appropriate and responsible personnel. The manuals and handbooks related to RACAs state that a manager review the documentation to ensure that the funding supports the objective of the agreement, the agreement is the correct instrument for funding the project, all relevant terms and conditions have been included in the agreement, the entity’s financial strength and capability are acceptable, and all applicable regulations and OMB circulars have been addressed. However, there was no discussion in the manuals and handbooks about when the manager needs to perform the reviews and how these reviews were to be documented. Further, in response to our inquiry regarding procedures performed to assess the entity’s financial strength and capability are acceptable before a RACA is signed, Forest Service officials stated that there is currently no formal process for determining financial capability for RACAs. For reimbursable agreements, the Forest Service’s process documented in its handbook consisted of completing a creditworthiness checklist. However, the handbook did not describe procedures for (1) completing the checklist and (2) documenting responsible personnel’s review and approval of an entity’s acceptable financial capability. Standards for Internal Control in the Federal Government states that management should design control activities to achieve objectives and respond to risks. Management’s design of internal control establishes and communicates the who, what, when, where, and why of internal control execution to personnel. Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel. Further, the standards also explain that management clearly document internal control in a manner that allows the documentation to be readily available and properly managed and maintained. In addition, the manuals and handbooks applicable to the RACAs have not been timely reviewed by management, and had not been updated to reflect current processes. For example, the document that serves as direction for Forest Service personnel on how to enter into RACAs referred to an outdated financial system that was replaced in fiscal year 2013. Further, the manuals and handbooks for the RACA processes had no indication that they had been reviewed within the past 5 years. Forest Service policy requires routine review, every 5 years, of policies and procedures in its Directive System. According to Forest Service officials, a staff member from ORMS sends an e-mail to officials responsible for updating these policies and procedures. However, appropriate control activities have not been designed to reasonably assure that updates were made, reviewed, approved, and issued as needed for continued relevance and effectiveness. Without adequate descriptions of processes and related control activities in its manuals and handbooks over RACAs, the Forest Service is at risk that processes and related control activities may not be properly, consistently, and timely performed. Further, because it lacks a process and related controls for monitoring and reviewing the updates of the guidance and various process documents in the Directive System, the Forest Service is at risk that its policies and procedures may not provide appropriate agency-wide direction in achieving control objectives, particularly when financial systems change and old processes may no longer be applicable. SOPs and desk guides related to RACA processes were not in the Directive System and are not considered official Forest Service policy and procedures. Forest Service field staff responsible for various processes generally developed SOPs and desk guides to document day-to-day procedures for employees in carrying out RACA processes to supplement the manuals and handbooks. However, the SOPs and desk guides did not reference the applicable manuals and handbooks they supplemented. Further, the SOPs and desk guides did not provide descriptions of (1) review procedures for authorization, completeness, and validity of RACAs and related receivables; (2) detailed review procedures to be performed and by whom; (3) timing of review procedures; and (4) how to document the completion of the review procedures. Finally, SOPs and desk guides did not have evidence that responsible officials reviewed and approved them to authorize their use. These SOPs and desk guides are only available in the field office where these were developed, and if similar SOPs and desk guides were developed in other field offices, control activities and how they are performed could vary. We also noted that these SOPs and desk guides were not timely updated to reflect processes and systems currently in use. For example, there were many instances where the SOPs and desk guides referred to systems that the Forest Service no longer used. Standards for Internal Control in the Federal Government states that management should establish an organizational structure, assign responsibility, and delegate authority to achieve the entity’s objectives. Effective documentation assists in management’s design of internal control by establishing and communicating the who, what, when, where, and why of internal control execution to personnel. Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel and to achieve the entity’s objectives. Management assigns responsibility and delegates authority to key roles throughout the entity. As a result of the issues discussed above, the Forest Service is at risk that control activities may not be properly and consistently performed and its related control objectives may not be achieved efficiently and effectively. In addition, the Forest Service is at risk that knowledge for performing the control activities may be limited to a few personnel or lost altogether in the event of employee turnover. The Forest Service lacked control activities over the segregation of incompatible duties performed by line officers and program managers for reimbursable agreements and any adjustments affecting the final disposition of related receivables. Field offices manage the majority of Forest Service projects, including authorizing the agreements and monitoring related collection. The Forest Service line officer for fire incident cooperative agreements and program managers for RACA at the RSA, unit, or field levels initiate and develop the terms of the agreements and are also responsible for any subsequent negotiation of the agreements. In the process of negotiating and settling costs, the line officer or program manager has the authority to cancel or change related receivables that they deemed uncollectible. For example, in a fire incident, the line officer at the region or field level is involved in both developing a Cost Share Agreement and after the fire incident has ended, negotiating the Cost Settlement Package with parties involved in the agreement to determine the final settlement amount that the Forest Service will be reimbursed for expenses paid in suppressing the fire incident. Therefore, the line officer is responsible for initiating the Cost Share Agreement, modifying the Cost Settlement Package, and changing or canceling the related receivable, which represent conflicting duties. We also found that the Forest Service did not have any mitigating controls, such as independent approval of any adjustments affecting the final disposition of receivables, to mitigate the risk of these incompatible duties. Standards for Internal Control in the Federal Government states that management should design control activities to achieve objectives and respond to risks. Segregation of duties contributes to the design, implementation, and operating effectiveness of control activities. To achieve segregation of key functions, management can divide responsibilities among different people to reduce the risk of error, misuse, or fraud. This may include separating the responsibilities for authorizing or approving transactions, processing and recording them, and reviewing the transactions so that no one individual controls all key aspects of a transaction or event. Forest Service officials stated they did not consider segregating the conflicting duties related to reimbursable agreements because these line officers and program managers were most familiar with the terms of the agreement and the activities performed. However, a lack of adequate segregation of conflicting duties or proper monitoring and review of conflicting duties for receivables from reimbursable agreements could result in receivables not being collected, and an increased risk of fraud. The Forest Service’s processes and related control activities over review of unliquidated obligations were not properly designed to reasonably assure optimum utilization of funds and were inconsistent with USDA and Forest Service policy. Further, Forest Service manuals and handbooks related to the review of unliquidated obligations did not clearly describe control activities and were not timely reviewed by management. The Forest Service reported unliquidated obligations of approximately $2.6 billion and $2.5 billion in its financial statements as of September 30, 2015, and 2016, respectively. In fiscal year 2016, the Forest Service deobligated about $319 million of its unliquidated obligations from prior years. The Forest Service’s procedures related to the review of unliquidated obligations were not properly designed and were inconsistent with USDA and Forest Service policy. In accordance with USDA Departmental Regulation (Regulation 2230-001) and related Forest Service policy, the Forest Service identifies and reviews unliquidated obligations that have been inactive for at least 12 months to determine whether delivery or performance of goods or services is still expected to occur. Once a determination has been made that an unliquidated obligation can be deobligated, program or procurement personnel are to notify finance personnel, in writing, within 5 days of the determination to process the deobligation. Within 15 days of receipt of the written notification, the unliquidated obligations are to be adjusted in the financial management system. The Forest Service CFO is then to be notified in writing that the deobligation was processed. Within 1 month of the close of each quarter, the Forest Service CFO is to submit to USDA’s Associate CFO for Financial Operations a certification stating that the Forest Service has performed reviews of its unliquidated obligations and taken appropriate actions, such as promptly deobligating an unliquidated obligation that is no longer needed. However, the Forest Service’s quarterly certifications are inconsistent with USDA and Forest Service policy because the months included in each quarterly review do not line up with the months outlined in policy. For example, as shown in table 1, based on policy the certification due on October 31, covers the months July through September. However in practice, the certification that the Forest Service prepared for October 31 covers May through July. As a result, the review and certification for August and September would be delayed an entire quarter. According to Forest Service officials, it takes considerable time to produce accurate unliquidated obligations reports from USDA’s financial system and then distribute them to field offices. Therefore, there is not sufficient time for the field offices to review and deobligate amounts not needed from the unliquidated obligations balances to meet USDA’s certification timing and requirements. However, the Forest Service has not developed other processes and control activities that could help meet USDA and Forest Service policy and reasonably assure that unliquidated obligations are reviewed timely and appropriate actions are taken. As a result, there is an increased risk that the Forest Service may not achieve its control objectives of optimum utilization of funds and timely adjustments of obligated balances. The Forest Service’s process and related control activities over its review of unliquidated obligations and resulting certifications were not adequately described in manuals and handbooks in its Directive System. Further, the manuals and handbooks were not timely reviewed and updated to reflect processes and systems currently in use. In accordance with the Forest Service’s Directive System, policies are documented in its manuals while procedures for performing specialized activities are documented in its handbooks. However, we found that the Forest Service’s processes and related control activities for reviewing unliquidated obligations were not adequately described and documented in such manuals and handbooks. Although parts of the applicable section of the handbook referred to procedures, there were no detailed descriptions of the processes, and only references to objectives of the procedures for reviewing unliquidated obligations were listed. For example, in identifying unliquidated obligations for review, the narrative description of the procedures in the handbook states that the responsible obligating official must review each selected unliquidated obligation to determine whether (1) delivery or performance of goods or services has occurred or is expected to occur and (2) accounting corrections to the obligation data in the accounting system are necessary. The handbook also refers to an unliquidated obligations report listing the unliquidated obligations that must be reviewed. The narrative does not provide any detailed procedures that obligating officials or responsible personnel need to perform, how to perform those procedures, and how those control activities are to be documented. The guidance in the handbook was supplemented by two desk guides. However, the desk guides are outside the Forest Service’s Directive System and, as previously noted, the Directive System is the only place where the Forest Service’s policy and procedures are issued. In addition, these desk guides did not reference the applicable guidance in the Directive System that they were supplementing. Further, the process and related control activities for adjusting unliquidated obligations within 15 days of receipt of written notification, as stated in USDA’s policy, were not described in either the handbooks or the desk guides. Standards for Internal Control in the Federal Government states that management should design control activities to achieve objectives and respond to risks to achieve an effective internal control system. Management’s design of internal control establishes and communicates the who, what, when, where, and why of internal control execution to personnel. Documentation also provides a means to retain organizational knowledge and mitigate the risk of having that knowledge limited to a few personnel. Further, the standards also explain that management clearly document internal control in a manner that allows documentation to be readily available and that documentation be properly managed and maintained. In addition, manuals and handbooks for processes related to review and certification of unliquidated obligations had no evidence that they had been reviewed within the past 5 years for ongoing relevance and effectiveness. According to a Forest Service manual, all service-wide directives, except interim directives, shall be reviewed at least once every 5 years. The Forest Service does not have an effective process in place to monitor the reviews and any updates of the manuals and handbooks in its Directive System. As previously discussed, while ORMS sends an e- mail requesting that the applicable officials review and update the guidance in the manuals and handbooks, there is no follow-up process to help ensure that documents were reviewed and updated as needed. Because the Forest Service’s process and related control activities over its review and certification of unliquidated obligations were not adequately described in its manuals and handbooks, the Forest Service is at risk that its control activities may not reasonably assure that control objectives provide (1) optimum utilization of funds and (2) for unliquidated obligations that are no longer needed to be efficiently and effectively deobligated and made available for other program needs. Adequate processes and related control activities over the Forest Service’s budgetary resources are critical in reasonably assuring that these resources are timely and effectively available for its mission operations, including fire suppression. However, we identified deficiencies in the Forest Service’s processes and related controls over allotments, unobligated no-year funds from prior years, administrative control of funds, fund transfers, reimbursable agreements, and available funds from deobligation of unliquidated obligations. Deficiencies ranged from a lack of processes to control activities that were not properly designed, resulting in an increased risk that Forest Service funds may not be effectively and efficiently monitored and used. In addition, the Forest Service’s manuals and handbooks, which provide the directives for the areas we reviewed, had not been reviewed by management in accordance with the Forest Service’s 5-year review policy. Further, Forest Service staff prepared SOPs and desk guides that documented control activities, but they were not issued as official policy and had not been reviewed and approved by responsible officials. As a result, the Forest Service is at increased risk that the control activities may not be consistently performed across the agency and that the guidance in the SOPs and desk guides may not comply with agency policy in the Directive System. To improve internal controls over the Forest Service’s budget execution processes, we are making the following 11 recommendations: The Chief of the Forest Service should (1) revise its process and (2) design, document, and implement related control activities to reasonably assure that amounts designated in appropriations acts for specific purposes are properly used for the purposes specifically designated. (Recommendation 1) The Chief of the Forest Service should (1) develop a process and (2) design, document, and implement related control activities to reasonably assure that unobligated no-year funds from prior years are reviewed for continuing need. (Recommendation 2) The Chief of the Forest Service should (1) design, document, and implement a comprehensive system for administrative control of funds and (2) submit it for review and approval by USDA before issuance, as required by the USDA Budget Manual. (Recommendation 3) The Chief of the Forest Service should design, document, and implement control activities over the preparation and approval of a fire suppression fund transfers strategy, to specify all appropriate factors to be considered in developing and documenting the strategy, and incorporate these control activities into the Directive System. (Recommendation 4) The Chief of the Forest Service should design, document, and implement processes and related control activities for its fire incident cooperative agreements to reasonably assure efficient and effective operations and timely and reliable reporting of reimbursable receivables related to fire incident cooperative agreements, and incorporate them in the Directive System. (Recommendation 5) The Chief of the Forest Service should update the RACA manuals and handbooks to adequately describe the processes and related control activities applicable to RACAs to reasonably assure that staff will know (1) how and when to perform processes and control activities and (2) how to document their performance. (Recommendation 6) The Chief of the Forest Service should design, document, and implement segregation of duties or mitigating control activities over reimbursable agreements and any adjustments affecting the final disposition of related receivables. (Recommendation 7) The Chief of the Forest Service should modify, document, and implement control activities consistent with USDA and Forest Service policy to reasonably assure that unliquidated obligations are reviewed timely and appropriate actions are taken. (Recommendation 8) The Chief of the Forest Service should adequately describe the processes and related control activities for unliquidated obligations review and certification processes in manuals and handbooks within the Directive System. (Recommendation 9) The Chief of the Forest Service should develop, document, and implement a process and related control activities to reasonably assure that manuals and handbooks for allotments, reimbursable agreements, and review of unliquidated obligations are reviewed and updated every 5 years, consistent with Forest Service policy. (Recommendation 10) The Chief of the Forest Service should develop, document, and implement a process and related control activities to reasonably assure that SOPs and desk guides (1) clearly refer to guidance in the Directive System for allotments, reimbursable agreements, and review of unliquidated obligations and (2) are reviewed and approved by responsible officials prior to use. (Recommendation 11) We provided a draft of this report to USDA for comment. In its comments, reproduced in appendix III, the Forest Service stated that it generally agreed with the report and that it has made significant progress to address the report’s findings. Specifically, the Forest Service stated that its financial policies concerning budget execution have been revised to address our concerns with allotments, unliquidated obligations, commitments, and administrative control of funds as prescribed by OMB Circular No. A-11. Further, the Forest Service stated that it has undertaken an in-depth review of its unliquidated obligations and modified the certification process to comply with the USDA requirement. We are sending copies of this report to the appropriate congressional committees and to the Secretary of Agriculture and the Chief of the Forest Service. In addition, this report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff members have any questions about this report, please contact me at (202) 512-9869 or khana@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff members who made key contributions to this report are listed in appendix IV. Our objectives were to determine the extent to which the Forest Service properly designed control activities over (1) allotments of budgetary resources, its system for administrative control of funds, and any fund transfers between Forest Service appropriations; (2) reimbursables and related collections; and (3) unliquidated obligations. We reviewed the Forest Service’s process documents and control activities, policies and procedures from its manual and handbooks in its Directive System, and other guidance in the form of standard operating procedures (SOP) and desk guides to obtain an understanding of internal controls at the Forest Service related to our three objectives. We reviewed the control activities that the Forest Service identified to determine whether the activities would achieve the control objectives that the service identified and whether the activities were consistent with Standards for Internal Control in the Federal Government. We also reviewed recent relevant GAO and U.S. Department of Agriculture (USDA) Office of Inspector General reports to obtain background information related to the Forest Service’s budget execution processes. We evaluated the design of the Forest Service’s control activities based on data for fiscal year 2016. To address our first objective, we reviewed Forest Service process documents related to allotments and budget authority to obtain an understanding of control activities over the allotments of budgetary resources, its system for administrative control of funds, and any related fund transfers between Forest Service appropriations. The process documents included a list of control objectives and related control activities that the Forest Service had used to assess its internal controls. We also reviewed the related guidance in appendix H to Office of Management and Budget Circular No. A-11, Preparation, Submission, and Execution of the Budget for Administrative Control of Funds, to identify requirements that agencies must meet to ascertain whether their controls over funds management are properly designed. We interviewed key officials from the Forest Service’s Strategic Planning, Budget and Accountability Office to gain an understanding of their processes for allotments of budgetary resources, its system for administrative control of funds, and fund transfers between Forest Service appropriations for wildland fire suppression activities, including how each of their risk assessments were performed and their plans to mitigate the risks. We reviewed and analyzed the processes documented in the manuals and handbooks collectively referred to as directives to determine whether the processes and control activities were designed to achieve the Forest Service’s stated objectives. Specifically, we examined the Forest Service’s control activities to determine whether these sufficiently communicated the procedures to be performed and the documentation to be prepared. We also reviewed USDA Budget Manual to determine whether Forest Service guidance was consistent with USDA’s requirements for all of its component agencies, specifically requirements related to the administrative control of funds. To address our second objective, we reviewed the Forest Service’s policies, procedures, and other documentation and interviewed agency officials to develop an understanding of its processes related to reimbursable agreements and related collection activities. We first identified, through interviews with Forest Service officials, the different kinds of reimbursable agreements that the Forest Service enters into with other USDA components, other federal agencies, state and local government agencies, and nongovernment entities to carry out its mission for the benefit of the public. Two distinct types of reimbursable agreements include (1) fire incident cooperative agreements and (2) reimbursable and advanced collection agreements. We reviewed Forest Service process documents and templates related to these two types of reimbursable agreements provided to obtain an understanding of control activities over reimbursable processes. We reviewed the list of control objectives and related control activities that the Forest Service identified to determine whether the control activities were designed to achieve the applicable control objectives. To address our third objective, we reviewed the Forest Service’s policies, procedures, and other documentation related to and interviewed agency officials about unliquidated obligations to develop an understanding of the Forest Service’s review and certification processes for unliquidated obligations balances. We reviewed the Forest Service’s control activities related to its process for reviewing unliquidated obligations to obtain an understanding of control activities around its process and to determine whether the control activities were designed to achieve the applicable control objectives. Based on the results of our evaluation of the Forest Service’s design of internal control activities over the budget execution processes, we did not evaluate the implementation of the control activities or whether they were operating as designed. While our audit objectives focused on certain control activities related to (1) allotments of budgetary resources, the Forest Service’s system for administrative control of funds, and related fund transfers; (2) reimbursables and related collections for reimbursable agreements; and (3) unliquidated obligations, we did not evaluate all control activities and other components of internal control. If we had done so, additional deficiencies may or may not have been identified that could impair the effectiveness of the control activities evaluated as part of this audit. We conducted this performance audit from August 2016 to January 2018 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Standards for Internal Control in the Federal Government provides the overall framework for establishing and maintaining internal control. Internal control represents an agency’s plans, methods, policies, and procedures used to fulfill its mission, strategic plan, goals, and objectives. Internal control is a process by an entity’s oversight body, management, and other personnel to provide reasonable assurance that the objectives of the entity will be achieved. When properly designed, implemented, and operating effectively, it provides reasonable assurance that the following objectives are achieved: (1) effectiveness and efficiency of operations, (2) reliability of internal and external reporting, and (3) compliance with applicable laws and regulations. Internal control is not one event, but a series of actions that occur throughout an entity’s operations. The five components of internal control are as follows: Control Environment - The foundation for an internal control system that provides the discipline and structure to help an entity achieve its objectives. Risk Assessment - Assesses the risks facing the entity as it seeks to achieve its objectives and provides the basis for developing appropriate risk responses. Control Activities - The actions management establishes through policies and procedures to achieve objectives and respond to risks in the internal control system, which includes the entity’s information system. Information and Communication - The quality information management and personnel communicate and use to support the internal control system. Monitoring - Activities management establishes and operates to assess the quality of performance over time and promptly resolve the findings of audits and other reviews. An effective internal control system has each of the five components of internal control effectively designed, implemented, and operating with the components operating together in an integrated manner. In this audit, we assessed the design of control activities at the Forest Service related to its (1) allotments of budgetary resources and any related fund transfers between Forest Service appropriations, (2) reimbursables and related collections, and (3) review of unliquidated obligations. In addition to the contact named above, the following individuals made key contributions to this report: Roger Stoltz (Assistant Director), Meafelia P. Gusukuma (Auditor-in-Charge), Tulsi Bhojwani, Cory Mazer, Sabrina Rivera, and Randy Voorhees.

Question: Write a one-page summary of the report 1.

Answer: FEMA's IA program provides help to individuals to meet their immediate needs after a disaster, such as shelter and medical expenses. When a state, U.S. territory, or tribe requests IA assistance through a federal disaster declaration, FEMA evaluates the request against regulatory factors, such as concentration of damages, and provides a recommendation to the President, who makes a final declaration decision. GAO was asked to review FEMA's IA declaration process. This report examines (1) the number of IA declaration requests received, declared, and denied, and IA actual obligations from calendar years 2008 through 2016, (2) the extent to which FEMA accounts for the regulatory factors when evaluating IA requests, and (3) any challenges FEMA regions and select states reported on the declaration process and factors and any FEMA actions to revise them. GAO reviewed FEMA's policies, IA declaration requests and obligation data, and FEMA's RVARs from July 2012 through December 2016, the most recent years for which data were available. GAO also reviewed proposed rulemaking comments and interviewed FEMA officials from all 10 regions and 11 state emergency management offices selected based on declaration requests and other factors. From calendar years 2008 through 2016, the Department of Homeland Security's (DHS) Federal Emergency and Management Agency (FEMA) received 294 Individual Assistance (IA) declaration requests from states, U.S. territories, and tribes to help individuals meet their immediate needs after a disaster. Of these, the President declared 168 and denied 126 requests. Across the various types of IA declaration requests, severe storms (190) were the most common disaster type and drought (1) was among the least common. FEMA obligated about $8.6 billion in IA for disaster declarations during this period. GAO found that FEMA regions did not consistently obtain and document information on all elements of established IA regulatory factors when making IA recommendations to headquarters. Following a declaration request, a FEMA region is to prepare a Regional Administrator's Validation and Recommendation (RVAR)—a document designed to include data on each of the six IA regulatory factors for each declaration request as well as the regional administrator's recommendation. GAO reviewed all 81 RVARs from July 2012—the date FEMA began using the new RVAR template—through December 2016. GAO found that regions did not consistently obtain and document information for the elements required under the six regulatory factors (see table). For example, only 44 of the 81 RVARs documented all elements under the concentration of damage factor. By evaluating why regions are not completing all elements of each current IA regulatory factor, FEMA could identify whether any corrective steps are needed. Officials from the 10 FEMA regions and 11 states GAO interviewed, reported positive relationships with each other, but also cited various challenges with the IA declaration process and regulatory factors. For example, these officials told GAO that there are no established minimum thresholds for IA, making final determinations more subjective and the rationale behind denials unclear. However, as required by the Sandy Recovery Improvement Act of 2013, FEMA has taken steps to revise the IA factors by issuing a notice of proposed rulemaking. According to FEMA, the proposed rule aims to provide more objective criteria, clarify the threshold for eligibility, and speed up the IA declaration process. As of April 2018, the proposed rule was still under consideration. According to FEMA officials, they plan to finalize the rule in late 2018; therefore, it is too early to know the extent to which it will address these challenges. GAO recommends that FEMA evaluate why regions are not completing the RVARs for each element of the current IA regulatory factors and take corrective steps, if necessary. DHS concurred with the recommendation.